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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-8598
A. H. BELO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-0135890
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 655237
DALLAS, TEXAS 75265-5237
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 977-6606
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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SERIES A COMMON STOCK, $1.67 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: SERIES B COMMON
STOCK, $1.67 PAR VALUE
----------------------
(Title of class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
nonaffiliates on January 31, 1996, based on the closing price for the
registrant's Series A Common Stock on such date as reported on the New York
Stock Exchange, was approximately $1,109,387,351. *
Shares of Common Stock outstanding at January 31, 1996: 38,258,754 shares.
(Consisting of 28,978,861 shares of Series A Common Stock and 9,279,893 shares
of Series B Common Stock.)
* For purposes of this calculation the market value of a share of Series B
Common Stock was assumed to be the same as the share of Series A Common
Stock into which it is convertible.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's Proxy Statement relating to the Annual
Meeting of Shareholders to be held May 8, 1996 are incorporated by reference
into Part III (Items 10, 11, 12 and 13).
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A. H. BELO CORPORATION
FORM 10-K
TABLE OF CONTENTS
<TABLE>
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PAGE
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PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 8
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . 8
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 9
Item 8. Financial Statements and Supplementary Data (see Index to Financial Statements
below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . 15
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . 15
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . 15
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . 15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Earnings for the years ended December 31, 1995, 1994 and 1993 . . . . . . . 22
Consolidated Balance Sheets as of December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 23
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1995, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 . . . . . . 26
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Management's Responsibility for Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 37
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PART I
ITEM 1. BUSINESS
A. H. Belo Corporation (the "Company" or "Belo") owns and operates seven
network-affiliated VHF television stations in the top 60 U.S. television
markets and the largest daily newspaper in the Dallas-Fort Worth metropolitan
area. The Company's broadcast group reaches 8 percent of all U.S. television
households and its principal newspaper, The Dallas Morning News, has the
country's seventh largest Sunday circulation (800,147) and eighth largest daily
circulation (534,197). The Company believes the success of its media franchises
is built upon providing local news, information and community service of the
highest caliber. These principles have attracted and built relationships with
viewers, readers and advertisers and have guided the Company's success for 154
years.
Three of the Company's seven stations are in the top 12 television markets:
WFAA (ABC) Dallas-Fort Worth; KHOU (CBS) Houston; and KIRO (UPN)
Seattle-Tacoma. These major metropolitan areas are among the fastest growing in
the country. All of the Company's stations are ranked either number one or two
in overall sign-on/sign-off audience delivery, with the exception of KIRO,
which was acquired by the Company in 1995. The Company, through its subsidiary
Belo Productions, Inc. and a partnership with Universal Press Syndicate,
produces and distributes original programming to its station group and to
various outside purchasers.
The Dallas Morning News is one of the leading newspaper franchises in
America. The Dallas Morning News' success is founded upon the highest standards
of journalistic excellence, with a special emphasis on local news, information
and community service. The newspaper's outstanding reporting and editorial
initiatives have earned six Pulitzer Prizes since 1986. As the leading
newspaper in the Dallas-Fort Worth market, The Dallas Morning News' success is
measured by its high circulation and volume of advertising. In late 1995 and
early 1996, the Company expanded its publishing division by acquiring two daily
newspapers serving Bryan-College Station, Texas and Owensboro, Kentucky. The
Company also publishes nine other community newspapers in the Dallas-Fort Worth
suburban area and operates a commercial printing business.
Note 13 to the Consolidated Financial Statements contains information about
the Company's industry segments for the years ended December 31, 1995, 1994 and
1993.
TELEVISION BROADCASTING
The Company's television broadcast operations began in 1950 with the
acquisition of WFAA in Dallas-Fort Worth shortly after the station commenced
operations. In 1984, the Company significantly expanded its television
broadcast operations with the purchase of its four stations in Houston,
Sacramento, Hampton-Norfolk and Tulsa. In June 1994 and February 1995, the
Company acquired its stations in New Orleans and Seattle, respectively.
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The following table sets forth information for each of the Company's
stations and their markets:
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NUMBER OF STATION
COMMERCIAL STATION AUDIENCE
MARKET YEAR NETWORK STATIONS IN RANK IN SHARE IN
MARKET RANK(1) STATION ACQUIRED AFFILIATION CHANNEL MARKET(2) MARKET(3) MARKET(4)
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Dallas-Fort Worth 8 WFAA 1950 ABC 8 13 1 20%
Houston . . . . . 11 KHOU 1984 CBS 11 13 1* 16%
Seattle-Tacoma . 12 KIRO 1995 UPN 7 8 4* 8%
Sacramento . . . 21 KXTV 1984 ABC 10 9 2 14%
Hampton-Norfolk . 40 WVEC 1984 ABC 13 7 1* 18%
New Orleans . . . 41 WWL 1994 CBS 4 7 1 28%
Tulsa . . . . . . 59 KOTV 1984 CBS 6 7 2 19%
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* Tied with one or more other stations in the market.
(1) Market rank is based on the relative size of the television market or
Designated Market Area ("DMA") among the 211 generally recognized DMAs in
the United States, based on November 1995 Nielsen estimates.
(2) Represents the number of television stations (both VHF and UHF)
broadcasting in the market, excluding public stations and national cable
channels.
(3) Station rank is derived from the station's rating which is based on
November 1995 Nielsen estimates of the number of television households
tuned to the Company's station for the Sunday-Saturday, 7:00 a.m. to 1:00
a.m. period ("sign-on/sign-off") as a percentage of the number of
television households in the market.
(4) Station audience share is based on November 1995 Nielsen estimates of the
number of television households tuned to the Company's station as a
percentage of the number of television households with sets in use in the
market for the sign-on/sign-off period.
Generally, rates for national and local spot advertising sold by the
Company are determined by each station, which receives all of the revenues, net
of agency commissions, for that advertising. Rates are influenced both by the
demand for advertising time and the popularity of the station's programming.
Commercial television stations generally fall into one of three categories.
The first category of stations historically consisted of stations affiliated
with one of the three major national networks (ABC, CBS and NBC). In recent
years, Fox has effectively evolved into the fourth major network. The second
category is comprised of stations affiliated with newer national networks, such
as United Paramount Network ("UPN") and the WB (Warner Brothers) Television
Network. The third category includes independent stations that are not
affiliated with any network and that rely principally on local and syndicated
programming.
Three of the Company's stations are affiliated with ABC, three are
affiliated with CBS and one is affiliated with UPN. Each of the Company's
network affiliation agreements provides the affiliated station with the right
to broadcast all programs transmitted by the network with which the station is
affiliated. In return, the network has the right to sell most of the
advertising time during such broadcasts. Each station receives a specified
amount of network compensation for broadcasting network programming, with the
exception of the Company's UPN affiliate. To the extent a station's preemptions
of network programming exceed a designated amount, such compensation may be
reduced. Such payments are also subject to decreases by the network during the
term of an affiliation agreement under other circumstances with provisions for
advance notice and right of termination by the station in the event of a
reduction in such payments. The Company has renegotiated its affiliation
agreements with both CBS and ABC, resulting in an increase in the compensation
paid by each network to the Company in return for a long-term extension of each
of the agreements. Final documentation of the new ABC affiliation agreements
has not been completed although the Company is receiving its increased
compensation under the new agreements.
Affiliation with a television network can have a significant influence on
the revenues of a television station because the audience share drawn by a
network's programming can affect the rates at which a station can sell
advertising time. The television networks compete for affiliations with
licensed television stations through program commitments and local marketing
support. From time to time, local television stations also solicit network
affiliations on the basis of their ability to provide a network better access
to a particular market.
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NEWSPAPER PUBLISHING
The Company's principal newspaper, The Dallas Morning News, was established
in 1885. It is published seven days a week. In 1963, the Company acquired its
suburban newspaper operation. In late 1991, after years of intense competition,
The Dallas Morning News' principal newspaper competitor, the Dallas Times
Herald, ceased operations and the Company purchased its assets. In late 1995
and early 1996, the Company expanded its publishing division by acquiring two
daily newspapers serving Bryan-College Station, Texas and Owensboro, Kentucky.
The following table sets forth information concerning the Company's daily
newspaper operations:
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CIRCULATION(1)
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NEWSPAPER LOCATION DAILY SUNDAY
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The Dallas Morning News . . . . . . . . . . Dallas, TX 534,197 800,147
Bryan-College Station Eagle . . . . . . . . Bryan-College Station, TX 20,381 26,326
Owensboro Messenger-Inquirer . . . . . . . Owensboro, KY 32,363 33,398
</TABLE>
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(1) Average paid circulation for the six months ended September 30, 1995,
according to the unaudited Publisher's Statement of the Audit Bureau of
Circulations, an independent agency (the "Audit Bureau").
The Dallas Morning News provides coverage of local, state, national and
international news. The Dallas Morning News is distributed throughout the
Southwest, though its circulation is concentrated primarily in the twelve
counties surrounding Dallas.
The Dallas Morning News strives to serve the public interest by maintaining
a strong and independent voice in matters of public concern. It is the policy
of the Company to allocate such resources as may be necessary to maintain
excellence in news reporting and editorial comment in The Dallas Morning News.
The Dallas Morning News serves a large readership in its primary market.
Average paid circulation for the six months ended September 30, 1995 was
534,197 daily, up 1.8 percent from the 1994 average daily circulation of
524,567. Sunday's average paid circulation was 800,147, up slightly from
the six months ended September 30, 1994 average of 797,206.
The basic material used in publishing The Dallas Morning News is newsprint.
The average unit cost of newsprint consumed during 1995 was sharply higher than
that of the prior year due to market-wide price increases throughout the year.
The Company expects the full-year effect of the 1995 newsprint price increases
to result in even higher newsprint expense in 1996. The Company cannot predict
at this time whether newsprint prices will increase further in 1996. At
present, newsprint is purchased from nine suppliers. During 1995, the
Company's three largest providers of newsprint supplied approximately one-half
of the newspaper's requirements, but the Company is not dependent on any one of
them. Management believes its sources of newsprint, along with alternate
sources that are available, are adequate for its current needs.
DFW Suburban Newspapers, Inc. publishes six paid and two free newspapers
for suburban communities in the Dallas-Fort Worth metropolitan area. These
publications are delivered either one or two days a week. Each of the
Company's community publications has its own sales, circulation, news and
editorial personnel, and several of the publications maintain separate offices.
All administrative functions are centralized and all of the newspapers are
printed at a plant in Arlington, Texas. This plant is owned and operated by
DFW Printing Company, Inc., which, in addition to printing the suburban
newspapers, is the site of the Company's commercial printing operations. The
Company also publishes a newspaper twice-a-week and a free weekly in Rockwall,
Texas.
COMPETITION
The success of broadcast operations depends on a number of factors,
including the general strength of the economy, the ability to provide
attractive programming, audience ratings, relative cost efficiency in reaching
audiences as compared to other advertising media, technical capabilities and
governmental regulations and policies. The Company's television broadcast
stations compete for advertising revenues directly with other media such as
newspapers (including those owned and operated by the Company), other
television stations, radio stations, cable
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television systems, outdoor advertising, magazines and direct mail advertising.
The four major national television networks are represented in each
television market in which the Company has a television broadcast station.
Competition for advertising sales and local viewers within each market is
intense, particularly among the network-affiliated television stations.
The entry of local telephone companies into the market for video
programming services, as permitted under the Telecommunications Act of 1996,
(the "1996 Act"), can be expected to have a significant impact on competition
in the television industry. The Company is unable to predict the effect that
these or other technological and related regulatory changes will have on the
broadcast television industry or the future results of the Company's
operations.
The Dallas Morning News competes for advertising with television and radio
stations (including a television station owned and operated by the Company),
magazines, direct mail, cable television, billboards and other newspapers
(including other newspapers owned and operated by the Company). Also competing
with The Dallas Morning News is the Fort Worth Star-Telegram, owned by The Walt
Disney Company.
REGULATION OF TELEVISION BROADCASTING
The Company's television broadcasting operations are subject to the
jurisdiction of the Federal Communications Commission ("FCC") under the
Communications Act of 1934, as amended (the "Act"). Among other things, the
Act empowers the FCC to assign frequency bands; determine stations'
frequencies, location and power; issue, renew, revoke and modify station
licenses; regulate equipment used by stations; impose penalties for violation
of the Act or of FCC regulations; impose fees for processing applications and
other administrative functions; and adopt regulations to carry out the Act's
provisions. The Act also prohibits the assignment of a broadcast license or
the transfer of control of a broadcast licensee without prior FCC approval.
Under the Act, the FCC also regulates certain aspects of the operation of cable
television systems and other electronic media that compete with broadcast
stations.
The Act would prohibit the Company's subsidiaries from continuing as
broadcast licensees if record ownership or power to vote more than one-fourth
of the Company's stock were to be held by aliens, foreign governments or their
representatives, or by corporations formed under the laws of foreign countries.
The Act previously would have prohibited the Company's subsidiaries from
continuing as broadcast licensees if any officer or more than one-fourth of the
directors of the Company were aliens. The 1996 Act, however, eliminated the
restriction on alien officers and directors.
Prior to the passage of the 1996 Act, television broadcast licenses were
granted for a period of five years. Renewal applications were granted without a
hearing if there were no competing applications or issues raised by petitioners
to deny such applications that would cause the FCC to order a hearing. If
competing applications were filed, a full comparative hearing was required.
Under the 1996 Act, the statutory restriction on the length of a broadcast term
was amended to allow the FCC to grant broadcast licenses for terms of up to
eight years. The 1996 Act also requires renewal of a broadcast license if the
FCC finds that (1) the station has served the public interest, convenience, and
necessity; (2) there have been no serious violations of either the Act or the
FCC's rules and regulations by the licensee; and (3) there have been no other
serious violations which taken together constitute a pattern of abuse. In
making its determination, the FCC cannot consider whether the public interest
would be better served by a person other than the renewal applicant. Under the
1996 Act competing applications for the same frequency may be accepted only
after the Commission has denied an incumbent's application for renewal of
license.
An application for renewal of the broadcast license for WFAA, which expired
August 1, 1993, is pending before the FCC. The station's license is, by
statute, continued pending action thereon. The current license expiration
dates for each of the Company's other television broadcast stations are as
follows: KHOU, August 1, 1998; KIRO, February 1, 1999; KXTV, December 1, 1998;
WVEC, October 1, 1996; WWL, June 1, 1997; and KOTV, June 1, 1998.
FCC ownership rules limit the total number of television broadcast stations
that may be under common ownership, operation and control, or in which a single
person or entity may hold office or have more than a specified interest or
percentage of voting power. FCC rules also place certain limits on common
ownership, operation and control of, or cognizable interests or voting power
in, (a) broadcast stations serving the same area, (b) broadcast
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stations and daily newspapers serving the same area and (c) television
broadcast stations and cable systems serving the same area. The 1996 Act
eliminated a statutory prohibition against common ownership of television
broadcast stations and cable systems serving the same area, but left the FCC
rule in place. The 1996 Act also stipulates that the FCC should not consider
the repeal of the statutory ban in any review of its applicable rules. The
Company's ownership of The Dallas Morning News and WFAA, which are both located
in the Dallas-Fort Worth area and serve the same market area, predates the
adoption of the FCC's rules regarding cross-ownership, and the Company's
ownership of The Dallas Morning News and WFAA has been "grandfathered" by the
FCC.
The FCC ownership rules affect the number, type and location of newspaper,
broadcast and cable television properties that the Company might acquire in the
future. For example, under current rules, the Company generally could not
acquire any daily newspaper, broadcast or cable television properties in a
market in which it now owns or has an interest deemed attributable under FCC
rules in a television station, except that the FCC's rules and policies (as
modified in the 1996 Act) provide that waivers of these restrictions would be
available to permit the Company's acquisition of radio stations in any of the
markets in which the Company currently owns television stations (other than
Tulsa) or of "satellite" television stations located within a parent station's
grade B service contour which rebroadcast all or most of the parent station's
programming.
The FCC has instituted proceedings looking toward possible relaxation of
certain of its rules regulating television station ownership and changes in the
standards used to determine what type of interests are considered to be
attributable under its rules. In addition, the 1996 Act directs the FCC to (a)
eliminate the restrictions on the number of television stations (nationwide)
that a person or entity may directly or indirectly own, operate or control or
have a cognizable interest in and raise the limitation on the aggregate
audience reach of commonly owned stations from 25 percent to 35 percent of the
total national audience, and (b) conduct a rule making proceeding to determine
whether to modify its limitations on the number of television stations that one
entity may own or have an interest in within the same television market.
The FCC has significantly reduced its past regulation of broadcast
stations, including elimination of formal ascertainment requirements and
guidelines concerning amounts of certain types of programming and commercial
matter that may be broadcast. There are, however, FCC rules and policies, and
rules and policies of other federal agencies, that regulate matters such as
network-affiliate relations, cable systems' carriage of syndicated and network
television programming on distant stations, political advertising practices,
obscene and indecent programming, equal employment opportunity, application
procedures and other areas affecting the business or operations of broadcast
stations. The FCC has eliminated its former rules which restricted network
participation in program production and syndication. The FCC also recently
eliminated the prime time access rule ("PTAR"), effective August 30, 1996. The
PTAR currently limits the ability of some stations within the fifty largest
television markets to broadcast network programming (including syndicated
programming previously broadcast over a network) during prime time hours. The
elimination of PTAR could increase the amount of network programming broadcast
over a station affiliated with ABC, NBC or CBS. The U.S. Supreme Court refused
to review a lower court decision that upheld FCC action invalidating most
aspects of the Fairness Doctrine, which had required broadcasters to present
contrasting views on controversial issues of public importance. The FCC may,
however, continue to regulate other aspects of fairness obligations in
connection with certain types of broadcasts.
The FCC has adopted rules to implement the Children's Television Act of
1990, which, among other provisions, limits the permissible amount of
commercial matter in children's television programs and requires each
television station to present educational and informational children's
programming. The Commission is currently considering proposals for stricter
children's programming requirements. Most significant among the FCC's
suggested new rules is a requirement that broadcasters provide a specific
hourly minimum amount of children's programming on a regular basis. Although
the FCC has not yet proposed an explicit quantitative requirement, it has
called for comment on various examples, such as a three to five hour-per-week
minimum obligation.
The FCC also has adopted various regulations to implement certain
provisions of the Cable Television Consumer Protection and Competition Act of
1992 ("1992 Cable Act") which, among other matters, includes provisions
respecting the carriage of television stations' signals by cable television
systems and requiring mid-license term review of television stations' equal
employment opportunity practices. Certain provisions of the 1992 Cable Act,
including the provisions respecting cable systems' carriage of local television
stations, are the subject of pending judicial review proceedings. Moreover,
the 1992 Cable Act was amended in certain important respects by the 1996 Act.
Most notably, the 1996 Act repeals the cross-ownership ban between cable and
telephone entities and
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the FCC's current video dial tone rules. These provisions, among others,
foreshadow significant future involvement in the provision of video services by
telephone companies.
The FCC recently proposed the adoption of rules for implementing digital
advanced television ("ATV") service in the United States. Implementation of
digital ATV would improve the technical quality of television signals
receivable by viewers and give television broadcasters the flexibility to
provide new services, including high-definition television ("HDTV")
simultaneously with multiple programs of standard definition television
("SDTV") and data transmission. Within the next few months, the FCC is
expected to release two additional proposals that address, respectively, the
ATV broadcasting standard and an ATV channel allotment and assignment plan. As
currently proposed, each existing broadcaster would be loaned, for a finite
transition period, a second channel on which to transmit ATV signals
simultaneously with the current analog television broadcast. At the end of the
transition, analog TV transmissions would cease and the ATV channels might be
reassigned to a smaller segment of the broadcasting spectrum, and the vacated
spectrum would be reallocated and auctioned for use by other radio services.
Recent debates in Congress, however, call into question whether the
transition to ATV will proceed as planned. Several senators favor giving the
FCC the authority -- or even requiring the Commission -- to auction the second
channels. Such authority or direction could be contained in budget legislation
or a stand-alone spectrum law. The Company cannot predict the effect of
existing and proposed federal regulations and policies on its broadcast
business.
The foregoing does not purport to be a complete summary of all the
provisions of the Act or the regulations and policies of the FCC thereunder.
Proposals for additional or revised regulations and requirements are pending
before and are being considered by Congress and federal regulatory agencies
from time to time. Also, various of the foregoing matters are now, or may
become, the subject of court litigation, and the Company cannot predict the
outcome of any such litigation or the impact on its broadcast business.
EMPLOYEES
As of December 31, 1995, the Company had 3,489 full-time employees. An
additional 173 employees were added on January 1, 1996 following the Owensboro
acquisition. Of the total workforce of 3,662, Belo has 234 employees, located
principally at its Dallas, Texas; Seattle, Washington; and New Orleans,
Louisiana television stations, that are represented by various employee unions.
The Company believes its relations with all of its employees are good.
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ITEM 2. PROPERTIES
The studios and offices of WFAA occupy Company-owned facilities in downtown
Dallas. The station's transmitting tower and antennas, which are located in
Cedar Hill, Texas, are jointly owned by the Company and the owner and operator
of the Fox television affiliate in Dallas.
KHOU operates from Company-owned facilities located in Houston. The
station's transmitter and tower are located near DeWalt, Texas.
KIRO operates from Company-owned facilities located in Seattle, Washington.
This property also includes a production facility and other office space. The
station's transmitting facility and tower are also located in Seattle.
KXTV operates from Company-owned facilities located in Sacramento,
California. The station's tower and transmitter building, which are located in
Sacramento County, California, are owned by a joint venture between the Company
and the owner and operator of the CBS television affiliate in West Sacramento.
KXTV leases the transmitter site from the joint venture.
WVEC operates from Company-owned facilities in Hampton and Norfolk,
Virginia. The transmitting facility in Driver, Virginia includes a tower and
antenna. WVEC also leases additional building space adjacent to the
Company-owned facilities that is used by the marketing and business
departments.
WWL operates from Company-owned facilities in New Orleans, Louisiana. The
transmitting facility and tower are located in Gretna, Louisiana. WWL also
leases space in New Orleans, which is used as an additional broadcast studio.
KOTV operates from Company-owned facilities located in Tulsa, Oklahoma.
The station's transmitting system is located near Tulsa. The transmitter site
and tower are owned by a joint venture between the Company and the owner and
operator of the NBC television affiliate in Tulsa.
The Company owns and operates a newspaper printing facility in Plano, Texas
(the "North Plant"), in which eight high-speed offset presses are housed to
print The Dallas Morning News. The remainder of The Dallas Morning News'
operations are housed in a Company-owned five-story building in downtown
Dallas. This facility is equipped with computerized input and photocomposition
facilities and other equipment that is used in the production of both news and
advertising copy.
The Bryan-College Station Eagle operates from Company-owned facilities in
Bryan, Texas and the Owensboro Messenger-Inquirer's Company-owned facilities
are in Owenbsoro, Kentucky.
DFW Suburban Newspapers, Inc. and DFW Printing Company, Inc. operations are
located at a Company-owned plant in Arlington, Texas. This facility is pledged
as security for certain industrial revenue bonds issued in 1985. The Company
also owns a small facility in Rockwall, Texas.
The Company's corporate operations, several departments of The Dallas
Morning News and certain broadcast administrative functions have offices that
are located in downtown Dallas in a portion of a 17-story office building owned
by the Company.
All of the foregoing operations utilize additional leasehold interests in
their respective activities.
The Company believes its properties are in good condition and well
maintained, and that such properties are adequate for present operations.
7
<PAGE> 10
ITEM 3. LEGAL PROCEEDINGS
There are legal proceedings pending against the Company, including a number
of actions for alleged libel. In the opinion of management, liabilities, if
any, arising from these actions would not have a material adverse effect on the
consolidated results of operations or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of shareholders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered
by this Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's authorized common equity consists of 150,000,000 shares of
Common Stock, par value $1.67 per share. The Company has two series of Common
Stock outstanding, Series A and Series B. Shares of the two series are
identical in all respects except that Series B shares are entitled to ten votes
per share on all matters submitted to a vote of shareholders, while the Series
A shares are entitled to one vote per share; transferability of the Series B
shares is limited to family members and affiliated entities of the holder; and
Series B shares are convertible at any time on a one-for-one basis into Series
A shares. Shares of the Company's Series A Common Stock are traded on the New
York Stock Exchange (NYSE symbol: BLC). There is no established public trading
market for shares of Series B Common Stock. The Company has also issued
certain Preferred Stock Purchase Rights that accompany the outstanding shares
of the Company's Common Stock. On February 28, 1996, the Company's Board of
Directors authorized the amendment and restatement of the Company's preferred
share purchase rights plan which was originally adopted in 1986 and was
scheduled to expire in March 1996. See Note 8 to the Consolidated Financial
Statements.
On June 9, 1995, the Company completed a two-for-one stock split in the
form of a stock dividend whereby one additional share of Series A and Series B
Common Stock was issued for each share of Series A and Series B Common Stock
outstanding on May 19, 1995, the record date for the split. The effect of the
stock split was to double the number of shares outstanding and reduce per
share amounts by one-half. Total shareholders' equity and the proportionate
ownership in the Company of individual shareholders was not affected by the
stock split. All earnings and dividends per share, weighted average shares
outstanding and share trading prices in this report have been restated to
reflect the stock split.
The following table lists the high and low trading prices and the closing
prices for Series A Common Stock as reported by the New York Stock Exchange for
the last two years.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
CASH
DIVIDENDS
HIGH LOW CLOSE DECLARED
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Fourth Quarter $36 3/4 $32 1/2 $34 3/4 $.08
Third Quarter $36 3/4 $29 $34 3/8 $.08
Second Quarter $32 5/8 $28 3/16 $30 5/8 $.08
First Quarter $30 1/4 $27 13/16 $29 $.075
-------------------------------------------------------------------------------------
1994
Fourth Quarter $28 5/8 $23 3/4 $28 1/4 $.075
Third Quarter $26 1/8 $21 11/16 $25 3/8 $.075
Second Quarter $25 3/16 $21 9/16 $21 9/16 $.075
First Quarter $27 1/2 $23 7/8 $24 $.075
-------------------------------------------------------------------------------------
</TABLE>
Effective for the second quarter of 1996, the Company will increase its
quarterly dividend to $.11 per share.
8
<PAGE> 11
On January 31, 1996, the closing price for the Company's Series A Common
Stock, as reported on the New York Stock Exchange, was $35 3/4. The
approximate number of shareholders of record of the Series A and Series B
Common Stock at the close of business on such date was 684 and 549,
respectively.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected financial data of the Company for
each of the five years in the period ending December 31, 1995. For a more
complete understanding of this selected financial data, please see Management's
Discussion and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statements, including the Notes thereto.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Broadcasting revenues (A) $ 322,642 $ 258,040 $ 209,083 $ 201,241 $ 181,848
Newspaper publishing revenues (B) 409,099 369,366 335,651 314,701 249,737
Other (C) 3,602 719 101 - -
- -------------------------------------------------------------------------------------------------------------
Net operating revenues $ 735,343 $ 628,125 $ 544,835 $ 515,942 $ 431,585
=============================================================
Net earnings (D) $ 66,576 $ 68,867 $ 51,077 $ 37,170 $ 12,392
=============================================================
Per share amounts (E):
Net earnings per common and
common equivalent share $ 1.68 $ 1.70 $ 1.26 $ .95 $ .32
Cash dividends declared $ .315 $ .30 $ .28 $ .27 $ .26
- -------------------------------------------------------------------------------------------------------------
Total assets $1,154,022 $ 913,791 $ 796,156 $ 758,527 $ 746,384
Long-term debt $ 557,400 $ 330,400 $ 277,400 $ 302,151 $ 337,100
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Broadcasting revenues for 1995 include 11 months of KIRO, which was
purchased by the Company on February 1, 1995. Broadcasting revenues for
1994 include seven months of WWL, which was purchased by the Company on
June 1, 1994.
(B) In December 1991, the Company purchased substantially all of the operating
assets of the Dallas Times Herald newspaper.
(C) Other includes revenues associated with the Company's television production
subsidiary and programming distribution partnership. The Company sold its
interest in the partnership in February 1996.
(D) Net earnings for 1993 include an increase of $6,599,000 (16 cents per
share) representing the cumulative effect of adopting Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
effective January 1, 1993.
(E) Per share amounts have been adjusted to reflect the two-for-one common
stock split effected as a stock dividend on June 9, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is an owner and operator of seven network-affiliated television
stations and an established newspaper publisher. The Company's television
broadcast operations began in 1950 with the acquisition of WFAA in Dallas. In
1984, the Company expanded its broadcast operations through the acquisition of
four television stations in Houston, Sacramento, Hampton-Norfolk and Tulsa. In
June 1994 and February 1995, the Company acquired television stations in New
Orleans and Seattle, respectively. The Company's principal newspaper is The
Dallas Morning News. In December 1995, the Company purchased a daily newspaper
in Bryan-College Station, Texas. Comparability of year-to-year results and
financial condition are affected by these acquisitions. In the first quarter
of 1996, the Company acquired a daily newspaper in Owensboro, Kentucky and sold
its interest in its programming distribution partnership, Maxam Entertainment.
The Company depends on advertising as its principal source of revenues. As
a result, the Company's operations are sensitive to changes in the economy,
particularly in the Dallas-Fort Worth metropolitan area. The Company also
derives revenues, to a much lesser extent, from the circulation revenue of its
newspaper operations and from compensation paid by the networks to its
television stations for broadcasting network programming.
9
<PAGE> 12
CONSOLIDATED RESULTS OF OPERATIONS
1995 Compared to 1994
The Company recorded 1995 net earnings of $66,576,000 or $1.68 per share,
compared to $68,867,000 or $1.70 per share in 1994. Results for 1995 include a
non-recurring charge for early retirement costs of $1,254,000 (2 cents per
share) and a non-recurring gain of $2,406,000 ($1,564,000 after tax, or 4 cents
per share) on the sale of the Company's remaining investment in Stauffer
Communications, Inc. ("Stauffer") stock. Excluding these non-recurring items,
1995 adjusted net earnings were $1.66 per share. Net earnings for 1994
included the reversal of $631,000 of accrued music license fees (1 cent per
share) and a net after-tax charge of $1,567,000 (4 cents per share) for the
donation of Stauffer stock to a charitable foundation. The donation of
Stauffer stock included a $9,271,000 gain on the write-up of the shares to fair
market value, less a charge of $16,675,000 for the subsequent donation of the
shares, and a related income tax benefit of $5,837,000. Excluding these
non-recurring items, adjusted 1994 net earnings were $1.73 per share.
Interest expense in 1995 was $29,987,000 compared to $16,112,000 in 1994. A
significant portion of this increase resulted from the increase in average
interest rates in 1995 to approximately 6.3 percent from 4.8 percent in 1994.
Additionally, higher debt levels as a result of the two recent broadcast
acquisitions (KIRO in Seattle, Washington in February 1995 for $162,500,000 and
WWL in New Orleans, Louisiana in June 1994 for $110,000,000) contributed to the
increase in 1995 interest expense. Other, net for 1995 included the gain on
the sale of the Company's remaining investment in Stauffer stock while 1994
included the charge for the donation of Stauffer shares to a charitable
foundation. The effective tax rate for 1995 of 40 percent is higher than the
1994 effective tax rate of 36.2 percent due to the tax benefit associated with
the Stauffer stock donation in 1994.
1994 Compared to 1993
The Company recorded 1994 net earnings of $68,867,000 or $1.70 per share,
compared to $51,077,000 or $1.26 per share in 1993. Results for 1993 included
a $6,599,000 increase (16 cents per share) representing the cumulative effect
of adopting Statement of Financial Accounting Standards ("SFAS") No. 109 in
January 1993. This increase was partially offset in the third quarter, when
the Company recorded a $2,249,000 (6 cents per share) adjustment to deferred
taxes following an increase in the federal income tax rate. Earnings in 1993
also included a $5,822,000 (9 cents per share) non-recurring restructuring
charge related primarily to the write-off of goodwill and a reduction in the
carrying value of production assets associated with the Company's suburban
newspaper operations. The Company also recorded a reversal of accrued music
license fees in 1993 of $3,349,000 (5 cents per share). Excluding these items,
adjusted net earnings for 1993 were $1.20 per share.
Interest expense in 1994 was $16,112,000 compared to $15,015,000 in 1993.
The increase from 1993 to 1994 was due primarily to higher debt levels
associated with the purchase of the New Orleans station, offset by savings from
lower interest rates. Average interest rates on total debt were 4.8 percent
and 5.4 percent in 1994 and 1993, respectively. Other, net for 1994 included
the net charge for the Stauffer transaction while 1993 included a gain on the
sale of two parcels of non-operating real estate. The effective tax rate for
1994, including the tax benefit from the Stauffer stock donation, was 36.2
percent. The 1993 effective rate of 41.1 percent included the increase in
deferred tax expense associated with the increase in the federal income tax
rate, partially offset by the reversal of certain tax accruals due to other
aspects of the tax legislation. Excluding these unusual items, the comparable
effective tax rates for 1994 and 1993 were 38.9 percent and 39.5 percent,
respectively.
BROADCASTING
1995 Compared to 1994
Broadcast revenues in 1995, which include 11 months of revenue for the
Seattle station, were $322,642,000. These revenue totals represent an increase
of 25 percent (3.3 percent on a same-station basis) over 1994 revenues of
$258,040,000, which included seven months of revenue for the New Orleans
station. The Company's television broadcast subsidiaries contributed 43.9
percent of total 1995 revenues compared to 41.1 percent in 1994.
Revenues in all broadcast advertising categories, with the exception of
political advertising, were higher during 1995 compared to 1994, both as
reported and on a same-station basis. Political advertising revenues in 1994
were
10
<PAGE> 13
strong due to several active gubernatorial and senate races, while 1995
political activity was relatively slow. Local advertising revenues increased
by 28.5 percent overall (6.8 percent on a same-station basis), primarily due
to increases at the Dallas, Hampton-Norfolk and New Orleans stations. The
Company's Sacramento station, which changed its network affiliation during 1995
and experienced a sizable shift from local to national advertising, showed a
slight decline in local advertising revenues. Automobile advertising was a
significant factor in the stations' local market gains. National advertising
revenues increased in 1995 over 1994 as well, primarily during the first half
of the year. However, the majority of the 20.6 percent increase in national
advertising in 1995 was due to the addition of the Seattle station in February
and a full-year effect of the New Orleans station. On a same-station basis,
national revenues were up 2.1 percent year-to-year. The most significant
increases in national advertising occurred at the Sacramento and
Hampton-Norfolk stations, although all other Company stations demonstrated a
slight increase in national advertising revenues as well. Network compensation
payments increased in 1995 following the renegotiation of the Company's network
affiliation contracts in the latter part of 1994.
Broadcast earnings from operations were $83,921,000 in 1995 compared to
$81,319,000 in 1994, an increase of 3.2 percent (2.7 percent on a same-station
basis). Broadcast earnings from operations in 1995 included 11 months of the
Seattle station's operations while 1994 results included seven months of the
New Orleans station's operations. Operating margins in 1995 and 1994 were 26
percent and 31.5 percent, respectively. On a same-station basis, margins in
1995 and 1994 were 32.1 percent and 32.3 percent, respectively. Higher 1995
operating costs and lower margins were due in part to significant increases in
news and programming costs as the Seattle station began developing a new format
when its affiliation changed from CBS to UPN. Salaries, wages and employee
benefits increased 35.7 percent over 1994 due to the addition of the Seattle
station and the full-year effect of the New Orleans station. On a same-station
basis, these costs increased 4.7 percent due to merit increases and more
employees. Other production, distribution and operating costs for 1995
increased only marginally over 1994 on a same-station basis. Depreciation and
amortization expenses increased in 1995 due to the broadcast acquisitions in
mid-1994 and early 1995.
1994 Compared to 1993
Broadcast revenues in 1994, which included seven months of revenue for the
New Orleans station were $258,040,000, an increase of 23.4 percent over 1993
revenues of $209,083,000. The Company's television broadcast subsidiaries
contributed 41.1 percent of total 1994 revenues compared to 38.4 percent in
1993.
Each station contributed to the increase in revenues during 1994 with
improvement in every revenue category. Local advertising revenues, which
improved 25.5 percent overall (12.7 percent on a same-station basis), were up
most significantly at the Dallas, Houston and Tulsa stations. Automobile
advertising was a significant factor in each of the stations' local market
gains in 1994. National revenues benefited from the broadcast of the 1994
Winter Olympics on the Company's CBS-affiliated stations, but were offset
somewhat by revenue losses associated with the baseball strike and the move of
NFL Football from CBS to the Fox network. Political revenues were up
considerably in 1994 due to active gubernatorial and senate races in several
states. Network compensation increases from the renegotiation of the Company's
network affiliation agreements began in the third quarter of 1994.
Broadcast earnings from operations were $81,319,000 in 1994 compared to
$63,317,000 in 1993. Broadcast earnings from operations in 1994 included seven
months of the New Orleans station's operations. Also included in broadcast
earnings from operations in 1994 and 1993 were increases in earnings of
$631,000 and $3,349,000, respectively, for the reversal of certain music
license fee accruals from previous years. Excluding the music license fee
adjustments, broadcast earnings from operations for 1994 and 1993 were
$80,688,000 and $59,968,000, respectively. The increase was due to revenue
improvements, partially offset by higher operating costs. Salaries, wages and
employee benefits were higher in 1994 due to increases in sales commissions,
more employees, merit increases, higher performance-based bonuses and an
increase in benefit costs. Other production, distribution and operating costs
were higher in 1994 than in 1993 (excluding the music license fee adjustments)
due primarily to increased contract rates for several syndicated program
packages and costs to produce a new local morning show and weekly news show at
the Dallas station. Advertising and promotion costs, as well as repair and
maintenance expenses, were also higher in 1994. These increases were slightly
offset by lower bad debt and outside services expense. Depreciation and
amortization expenses increased as a result of the acquisition of the New
Orleans station.
11
<PAGE> 14
NEWSPAPER PUBLISHING
1995 Compared to 1994
In 1995, newspaper publishing revenues represented 55.6 percent of total
revenues, compared to 58.8 percent in 1994. Although publishing revenues
increased 10.8 percent in 1995 from 1994, they decreased as a percent of total
revenues due to broadcast acquisitions. Advertising revenues account for
approximately 88 percent of publishing revenues, while circulation revenues
represent approximately 10 percent. Other publishing revenues, primarily
commercial printing, contribute the remainder.
Newspaper advertising volume for The Dallas Morning News, the Company's
principal newspaper, is measured in column inches. Volume for the last three
years was as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------------------------
In thousands 1995 1994 1993
------------------------------------------------------------------------
<S> <C> <C> <C>
Full-run ROP inches (1):
Classified 2,125 2,189 2,069
Retail 1,429 1,524 1,661
General 254 271 262
------------------------------------------------------------------------
Total 3,808 3,984 3,992
------------------------------------------------------------------------
</TABLE>
(1) Full-run ROP inches refers to the number of column inches of
display and classified advertising that is printed and distributed
in all editions of the newspaper.
Revenues from newspaper publishing in 1995 were $409,099,000, an increase
of 10.8 percent over 1994 revenues of $369,366,000. Due to dramatically higher
newsprint prices in 1995, a series of advertising rate increases were put into
effect during the year at The Dallas Morning News. These rate increases
resulted in higher revenues in the three major advertising categories despite
the volume declines that resulted from the higher rates. Classified
advertising linage was down 2.9 percent from 1994 while revenues were up 18.6
percent. Retail advertising revenues increased 4.2 percent due to higher
rates, while volumes were lower by 6.2 percent. General advertising revenues
improved 7.9 percent, although auto and bank advertising volumes decreased
significantly, contributing to the overall 6.3 percent decline in linage.
Preprint revenues increased 9.3 percent in 1995 from 1994 due to increased
activity from electronics retailers. The Dallas Morning News' circulation
revenues increased 8.8 percent over 1994 due to an increase in daily single
copy prices and the full-year effect of 1994 increases in home delivery and
Sunday single copy prices. Circulation volume increased slightly in 1995 over
1994.
Despite significant increases in newsprint prices, newspaper publishing
earnings from operations for 1995 were $69,999,000, up 5.2 percent over 1994
earnings of $66,568,000. Operating margins were 17.1 percent in 1995 compared
to 18 percent in 1994. Revenue increases were partially offset by total
operating costs that were 12 percent higher than 1994. Newsprint, ink and
other supplies expense in 1995 increased 29.2 percent over last year. Driving
this increase were market-wide newsprint price increases. The average cost per
ton in 1995 at The Dallas Morning News increased 44.2 percent over 1994. A
reduction in tons used during 1995 helped offset the effect of these price
increases to some extent. Reductions in newsprint usage came as a result of
better waste control, fewer news columns, lower ad linage and promotional space
and the elimination of a marginally profitable Sunday magazine. All other cost
categories for the newspaper publishing segment increased only slightly due to
efforts to control costs to offset the effect of the newsprint price increases.
The Company expects 1996 newsprint, ink and other supplies expense to
increase over 1995, due to the full-year effect of the 1995 newsprint price
increases. The Company anticipates that the higher expense will be offset by
advertising rate increases implemented in the second half of 1995 and at the
beginning of 1996. The Company cannot predict at this time the effect of
proposed newsprint price increases for 1996.
1994 Compared to 1993
Revenues from newspaper publishing in 1994 were $369,366,000, an increase
of 10 percent over 1993 revenues of $335,651,000. Classified and general
advertising revenues at The Dallas Morning News contributed the majority of
the increase in year-to-year revenue gains. Linage in these two categories
increased 5.8 percent and 3.3 percent,
12
<PAGE> 15
respectively, which, combined with rate increases, resulted in an increase in
classified and general advertising revenues of $27,580,000. Strong demand for
employment advertising and a strong automotive market accounted for the
improvement in classified linage. The telecommunications industry was a
significant component of the general advertising increase. Retail ROP revenues
for 1994 decreased slightly when compared to 1993 due to volume declines of 8.3
percent, offset by a rate increase. The retail volume declines were primarily
attributable to a shift by certain department stores to preprints, revenues
from which increased 15.6 percent over 1993. Circulation revenues in 1994 were
up 2.1 percent from 1993 despite a slight decrease in the Sunday average
circulation due to price increases in April and July.
Newspaper publishing earnings from operations in 1994 were $66,568,000
compared to $44,293,000 in 1993. Earnings from operations in 1993 included the
$5,822,000 restructuring charge related to the Company's suburban newspaper
operations. Excluding this one-time charge, comparable 1993 earnings from
operations were $50,115,000. The 32.8 percent increase in 1994 from adjusted
1993 earnings from operations was due to the revenue increase, partially offset
by a 6 percent increase in operating expenses. Salaries, wages and employee
benefits increased in 1994 due to more employees, merit increases, higher
performance-based bonuses and an increase in related benefit costs. Other
production, distribution and operating costs were also higher due to increased
distribution and outside solicitation expenses associated with circulation
efforts and higher advertising and promotion expense. Rack conversion costs to
accommodate a Sunday single copy price increase also contributed to higher 1994
expense. Depreciation expense increased due to a full year's depreciation of
The Dallas Morning News' North Plant expansion project that was completed in
late 1993. Newsprint expense was only slightly higher in 1994 compared to 1993.
The increase was primarily due to slightly higher consumption, which was offset
somewhat by lower average prices.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations is the Company's primary source of
liquidity. During 1995, net cash provided by operations was $96,601,000,
compared to $138,785,000 in 1994. The decrease was due primarily to changes in
working capital. One of the most significant working capital changes was in
the value of on-hand inventory at the end of 1995, due to both higher newsprint
tonnage in inventory and substantially higher prices. The timing of accounts
payable and income tax payments also contributed significantly to the decrease
in 1995 net cash provided by operations. Net cash provided by operations was
sufficient to fund capital expenditures, common stock dividends and a portion
of current year stock repurchases.
On February 1, 1995, the Company acquired KIRO in Seattle, Washington. The
purchase price was $162,500,000 in cash, plus transaction costs. KIRO was
purchased using funds from the Company's revolving credit agreement described
below. On December 26, 1995, the Company again used the revolving credit
agreement to complete the acquisition of the Bryan-College Station Eagle. On
January 1, 1996, the Company acquired the Owensboro Messenger-Inquirer by
issuing notes payable to the seller. These notes are due in various
installments over the next four years.
At December 31, 1995, the Company had access to an $800,000,000 variable
rate revolving credit agreement, on which borrowings at that time were
$480,000,000. The agreement expires and the debt thereunder matures on July
28, 2000 with an extension to July 28, 2001 at the request of the Company and
with the consent of the participating banks. From time to time, short-term
unsecured notes are also used as a source of financing. Based on the Company's
intent and ability to renew short-term notes through the revolving credit
facility, short-term borrowings are classified as long-term. At December 31,
1995, $71,000,000 in short-term notes were outstanding. Total debt outstanding
increased by $227,000,000 from December 31, 1994, primarily due to acquisitions
and share repurchases.
Because substantially all of the Company's outstanding debt is currently at
floating interest rates, the Company is subject to interest rate volatility.
Weighted average interest rates at the end of 1995 were approximately 6.1
percent.
During 1995, the Company spent $63,400,000 to repurchase treasury stock at
an average price of $31.28 per share. The Company has in place a stock
repurchase program authorizing the purchase of up to $2,500,000 of Company
stock annually, and the Company has authority to purchase an additional
3,591,200 shares under another Board authorization.
13
<PAGE> 16
At December 31, 1995, the Company's ratio of long-term debt to total
capitalization was 58.9 percent, compared to 46.3 percent at the end of 1994.
The change during 1995 was due to additional borrowings to finance acquisitions
and the effect on debt and shareholders' equity of the share repurchases.
Capital expenditures in 1995 were $40,830,000. Capital projects included
additional production equipment and major building renovations at The Dallas
Morning News, the completion of a building and studio remodeling project at the
Company's Houston station and the purchase of broadcast equipment for other
stations. The Company expects to finance future capital expenditures using
cash generated from operations and, when necessary, borrowings under the
revolving credit agreement. Total capital expenditures in 1996 are expected to
be approximately $45,000,000 and relate primarily to additional newspaper
publishing equipment, the renovation of certain operating facilities and the
purchase of certain broadcast equipment. As of December 31, 1995, required
future payments for capital expenditures in 1996 were $7,881,000.
The Company paid dividends of $12,279,000 or 31 1/2 cents per share on
Series A and Series B Common Stock outstanding during 1995 compared to
$11,984,000 or 30 cents per share in 1994. The Company expects to pay higher
dividends in 1996 due to an increase in the quarterly dividend rate beginning
in the second quarter of 1996 and an increase in shares outstanding upon
consummation of an equity offering discussed below.
The Company believes its current financial condition and credit
relationships are adequate to fund current obligations and near-term growth.
The Company has filed a registration statement relating to a public offering of
5,000,000 shares of Series A Common Stock. It is expected that the net
proceeds from the offering will be used to repay existing debt to provide
liquidity for general corporate purposes, including possible future
acquisitions.
OTHER MATTERS
In early 1996, Congress passed the Telecommunications Act of 1996 (the
"1996 Act"), the most comprehensive overhaul of the country's
telecommunications laws in more than 60 years. The Company cannot predict the
effect on its business of the 1996 Act or of proposed or possible future
legislation, regulations and policies. During the debate prior to the passage
of the 1996 Act, Congress considered whether to grant the FCC authority to
auction the second channels necessary for the implementation of digital
advanced television. The 1996 Act did not grant the FCC such authority, but
such authority could be contained in future budget legislation or in a
stand-alone spectrum law. See "Regulation of Television Broadcasting".
NEW ACCOUNTING STANDARD
In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". This Statement established accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. SFAS No. 121 will be
effective beginning in 1996. Management does not anticipate that the adoption
of SFAS No. 121 will have any effect on the consolidated financial position of
the Company.
14
<PAGE> 17
INFLATION
The net effect of inflation on the Company's revenues and earnings from
operations has not been material in the last few years.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, together with the report of
independent auditors, are included elsewhere in this document. Financial
statement schedules have been omitted because the required information is
contained in the Consolidated Financial Statements or related notes, or because
such information is not applicable.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the headings "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Shareholders," "Executive Officers of the Company" and "Election of Directors"
contained in the definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 8, 1996, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the heading "Executive Compensation and
Other Matters" and "Election of Directors" contained in the definitive Proxy
Statement for the Company's Annual Meeting of Shareholders to be held on May 8,
1996, is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the heading "Outstanding Capital Stock and
Stock Ownership of Directors, Certain Executive Officers and Principal
Shareholders" contained in the definitive Proxy Statement for the Company's
Annual Meeting of Shareholders to be held on May 8, 1996, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the headings "Executive Compensation and
Other Matters" and "Election of Directors" contained in the definitive Proxy
Statement for the Company's Annual Meeting of Shareholders to be held on May 8,
1996, is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The financial statements listed in the Index to Financial Statements
included in the Table of Contents are filed as part of this report.
(2) The financial schedules required by Regulation S-X are either not
applicable or are included in the information provided in the Notes to
Consolidated Financial Statements, which are filed as part of this
report.
15
<PAGE> 18
(3) Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by A.H. Belo Corporation with the
Securities and Exchange Commission, as indicated. Exhibits marked
with a tilde (~) are management contracts or compensatory plan
contracts or arrangements filed pursuant to Item 601 (b)(10)(iii)(A)
of Regulation S-K. All other documents are filed with this report.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to the
Company's Annual Report on Form 10-K dated March 19, 1992 (the
"1991 Form 10-K"))
3.2 * Certificate of Correction to Certificate of Incorporation dated
May 13, 1987 (Exhibit 3.2 to the Company's Annual Report on Form
10-K dated March 18, 1993 (the "1992 Form 10-K"))
3.3 * Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987 (Exhibit 3.3
to the 1991 Form 10-K)
3.4 * Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988 (Exhibit 3.4 to the 1992 Form 10-K)
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 3, 1995
3.6 * Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
(Exhibit 3.5 to the 1992 Form 10-K)
3.7 * Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.6 to the 1992 Form 10-K)
3.8 * Bylaws of the Company, effective February 22, 1995 (Exhibit 3.7
to the Company's Annual Report on Form 10-K dated March 8, 1995
(the "1994 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock are
set forth in Exhibits 3.1-3.8 above
4.2 * Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the 1992 Form
10-K)
4.3 * Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the Company's
Annual Report on Form 10-K dated March 20, 1989)
4.4 Form of Rights Agreement as Amended and Restated, as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation
10.1 Contracts relating to television broadcasting:
(1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC
(2) Form of Agreement for Affiliation between KXTV in
Sacramento, California and ABC
(3) Contract for Affiliation between KHOU-TV in Houston, Texas
and CBS
(4) Contract for Affiliation between WWL-TV in New Orleans,
Louisiana and CBS
</TABLE>
16
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.2 Financing agreements:
* (1) Loan Agreement dated October 1, 1985, between City of
Arlington Industrial Development Corporation and
Dallas-Fort Worth Suburban Newspapers, Inc. (Exhibit
10.5(2) to the 1991 Form 10-K)
* (2) Letter of Credit and Reimbursement Agreement dated as of
June 2, 1987, between Dallas-Fort Worth Suburban
Newspapers, Inc. and The Sanwa Bank, Limited, Dallas Agency
covering $6,400,000 City of Arlington Industrial
Development Corporation Industrial Development Revenue
Bonds (Exhibit 10.5(3) to the 1991 Form 10-K)
* (3) Credit Agreement dated as of August 5, 1994 among the
Company and Citicorp Securities, Inc., as Syndication
Agent, The First National Bank of Chicago, as
Administrative Agent, Texas Commerce Bank National
Association, as Documentation Agent and The Banks Listed
Therein, as Lenders (Exhibit 10.4(1) to the Second Quarter
1994 Form 10-Q)
* (4) First Amendment to Credit Agreement dated as of July 28,
1995 (Exhibit 10.4(1) to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995)
* (5) Amendment and Waiver Agreement dated as of August 5, 1994,
by and between the Company and The Sanwa Bank, Limited,
Dallas Agency (Exhibit 10.4(4) to the 1994 Form 10-K)
10.3 Compensatory plans:
*~(1) Management Security Plan (Exhibit 10.4(1) to the 1991 Form
10-K)
*~(2) 1986 Long-Term Incentive Plan (Exhibit 10.4(7) to the 1991
Form 10-K)
*~(3) Amendment No. 1 to 1986 Long-Term Incentive Plan (Exhibit
10.4(8) to the 1991 Form 10-K)
*~(4) Amendment No. 2 to 1986 Long-Term Incentive Plan (Exhibit
10.3(9) to the 1992 Form 10-K)
*~(5) Amendment No. 3 to 1986 Long-Term Incentive Plan (Exhibit
10.3(10) to the 1993 Form 10-K)
*~(6) Amendment No. 4 to 1986 Long-Term Incentive Plan (Exhibit
10.3(11) to the 1993 Form 10-K)
*~(7) Amendment No. 5 to 1986 Long-Term Incentive Plan (Exhibit
10.3(12) to the 1993 Form 10-K)
*~(8) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit
10.3(13) to the 1992 Form 10-K)
~(9) Amendment No. 7 to 1986 Long-Term Incentive Plan
~(10) The A. H. Belo Corporation Employee Savings and
Investment Plan Amended and Restated February 2, 1996
~(11) The G. B. Dealey Retirement Pension Plan (as Amended
and Restated Generally Effective January 1, 1989)
*~(12) Master Trust Agreement, effective as of July 1, 1992,
between A. H. Belo Corporation and Mellon Bank, N. A.
(Exhibit 10.3(26) to the 1993 Form 10-K)
</TABLE>
17
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
*~(13) A. H. Belo Corporation Supplemental Executive Retirement
Plan (Exhibit 10.3(27) to the 1993 Form 10-K)
*~(14) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N. A. (Exhibit 10.3(28) to the
1993 Form 10-K)
~(15) Summary of A. H. Belo Corporation Executive Compensation
Plan
~(16) A. H. Belo Corporation 1995 Executive Compensation Plan
~(17) A. H. Belo Corporation Employee Thrift Plan, effective
January 1, 1995
~(18) First Amendment to A.H. Belo Corporation Employee Thrift
Plan
~(19) Second Amendment to A. H. Belo Corporation Employee Thrift
Plan
~(20) Master Defined Contribution Trust Agreement by and between
A. H. Belo Corporation and Mellon Bank, N.A.
~(21) First Amendment to Master Defined Contribution Trust
Agreement
~(22) Second Amendment to Master Defined Contribution Trust
Agreement
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (filed electronically with the
Securities and Exchange Commission)
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
A. H. BELO CORPORATION
By: /s/ Robert W. Decherd
-----------------------------------
Robert W. Decherd
Chairman of the Board, President
& Chief Executive Officer
Dated: February 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Robert W. Decherd Chairman of the Board, President February 28, 1996
- ---------------------------------- & Chief Executive Officer
Robert W. Decherd
/s/ Ward L. Huey, Jr. Vice Chairman of the February 28, 1996
- ---------------------------------- Board and President,
Ward L. Huey, Jr. Broadcast Division
/s/ Burl Osborne Director, President, Publishing February 28, 1996
- ---------------------------------- Division and Publisher and Editor,
Burl Osborne The Dallas Morning News
/s/ John W. Bassett, Jr Director February 28, 1996
- ----------------------------------
John W. Bassett, Jr.
/s/ Judith L. Craven, M.D., M.P.H. Director February 28, 1996
- ----------------------------------
Judith L. Craven, M.D., M.P.H.
/s/ Roger A. Enrico Director February 28, 1996
- ----------------------------------
Roger A. Enrico
/s/ Dealey D. Herndon Director February 28, 1996
- ----------------------------------
Dealey D. Herndon
/s/ Lester A. Levy Director February 28, 1996
- ----------------------------------
Lester A. Levy
/s/ Arturo Madrid, Ph.D. Director February 28, 1996
- ----------------------------------
Arturo Madrid, Ph.D.
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James M. Moroney, Jr. Director and Former February 28, 1996
- ---------------------------------- Chairman of the Board
James M. Moroney, Jr.
/s/ Hugh G. Robinson Director February 28, 1996
- ----------------------------------
Hugh G. Robinson
/s/ William T. Solomon Director February 28, 1996
- ----------------------------------
William T. Solomon
/s/ Thomas B. Walker, Jr. Director February 28, 1996
- ----------------------------------
Thomas B. Walker, Jr.
/s/ J. McDonald Williams Director February 28, 1996
- ----------------------------------
J. McDonald Williams
/s/ Michael D. Perry Senior Vice President and February 28, 1996
- ---------------------------------- Chief Financial Officer
Michael D. Perry
/s/ Dunia A. Shive Vice President/Finance February 28, 1996
- ----------------------------------
Dunia A. Shive
</TABLE>
20
<PAGE> 23
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
A. H. Belo Corporation
We have audited the accompanying consolidated balance sheets of A. H. Belo
Corporation and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of A. H. Belo
Corporation and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.
/S/ERNST & YOUNG LLP
Dallas, Texas
January 24, 1996
21
<PAGE> 24
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31,
============================================================================================================
In thousands, except per share amounts 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET OPERATING REVENUES
Broadcasting (Note 2) $322,642 $ 258,040 $209,083
Newspaper publishing 409,099 369,366 335,651
Other 3,602 719 101
- ------------------------------------------------------------------------------------------------------------
Total net operating revenues 735,343 628,125 544,835
- ------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits (Notes 5 and 6) 204,833 178,264 161,170
Other production, distribution and operating costs (Note 7) 196,506 166,187 145,310
Newsprint, ink and other supplies 137,994 106,270 105,395
Depreciation 42,270 32,854 25,281
Amortization 17,177 13,551 12,383
Restructuring charge (Note 9) - - 5,822
- ------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 598,780 497,126 455,361
- ------------------------------------------------------------------------------------------------------------
Earnings from operations 136,563 130,999 89,474
- ------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSE
Interest expense (Note 3) (29,987) (16,112) (15,015)
Other, net (Note 10) 4,438 (6,990) 1,119
- ------------------------------------------------------------------------------------------------------------
Total other income and expense (25,549) (23,102) (13,896)
- ------------------------------------------------------------------------------------------------------------
EARNINGS
Earnings before income taxes and cumulative
effect of change in accounting 111,014 107,897 75,578
Income taxes (Note 4) 44,438 39,030 31,100
- ------------------------------------------------------------------------------------------------------------
Earnings before cumulative effect of change in accounting 66,576 68,867 44,478
Cumulative effect of change in accounting for
income taxes (Note 4) - - 6,599
- ------------------------------------------------------------------------------------------------------------
Net earnings $ 66,576 $ 68,867 $ 51,077
======================================
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings before cumulative effect of change in accounting $ 1.68 $ 1.70 $ 1.10
Cumulative effect of change in accounting $ - $ - $ .16
Net earnings $ 1.68 $ 1.70 $ 1.26
======================================
Weighted average common and common equivalent
shares outstanding 39,646 40,446 40,408
======================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
22
<PAGE> 25
CONSOLIDATED BALANCE SHEETS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
ASSETS December 31,
- -------------------------------------------------------------------------------------------------------------
In thousands 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 12,846 $ 9,294
Accounts receivable (net of allowance of
$4,164 and $3,959 in 1995 and 1994, respectively) 120,541 99,825
Inventories 20,336 9,439
Deferred income taxes (Note 4) 5,223 7,641
Other current assets 6,360 4,138
- -------------------------------------------------------------------------------------------------------------
Total current assets 165,306 130,337
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 26,708 19,803
Buildings 155,877 126,632
Broadcast equipment 159,909 118,816
Newspaper publishing equipment 210,362 188,006
Other 51,156 40,369
Advance payments on plant and equipment
expenditures (Note 7) 6,479 28,352
- -------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 610,491 521,978
Less accumulated depreciation 248,650 209,824
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 361,841 312,154
- -------------------------------------------------------------------------------------------------------------
Intangible assets, net (Note 2) 571,060 422,217
Other assets, at cost (Note 5) 55,815 49,083
- -------------------------------------------------------------------------------------------------------------
Total assets $1,154,022 $913,791
- -------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 26
CONSOLIDATED BALANCE SHEETS (CONTINUED)
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY December 31,
- ----------------------------------------------------------------------------------------------------------------
In thousands, except share data 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 28,569 $ 27,308
Accrued compensation and benefits 24,773 26,170
Advance subscription payments 9,392 7,935
Other accrued expenses 7,483 5,203
Income taxes payable (Note 4) 4,836 10,074
Property taxes payable 4,214 3,909
Accrued interest payable 2,401 3,138
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 81,668 83,737
- ----------------------------------------------------------------------------------------------------------------
Long-term debt (Note 3) 557,400 330,400
Deferred income taxes (Note 4) 114,729 110,324
Other liabilities 11,761 6,795
Commitments and contingent liabilities (Note 7)
Shareholders' equity (Notes 6 and 8):
Preferred stock, $1.00 par value. Authorized
5,000,000 shares; none issued.
Common stock, $1.67 par value. Authorized
150,000,000 shares;
Series A: Issued 28,961,753 and 14,238,888 shares
at December 31, 1995 and 1994, respectively; 48,366 23,779
Series B: Issued 9,280,179 and 5,621,988 shares
at December 31, 1995 and 1994, respectively. 15,498 9,389
Additional paid-in capital 97,930 124,431
Retained earnings 230,203 230,959
- ----------------------------------------------------------------------------------------------------------------
Total 391,997 388,558
Less deferred compensation -- restricted shares 3,533 6,023
- ----------------------------------------------------------------------------------------------------------------
Total shareholders' equity 388,464 382,535
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,154,022 $913,791
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
24
<PAGE> 27
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
In thousands, except share and per share amounts Three years ended December 31, 1995
- --------------------------------------------------------------------------------------------------------------
COMMON STOCK
Additional
Shares Shares Paid-in Retained
Series A Series B Amount Capital Earnings
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 13,433,969 6,157,489 $32,718 $94,005 $161,297
Exercise of stock options 505,295 87,326 990 16,252
Restricted shares awarded 37,192 62 1,830
Change in restricted share valuation 746
Amortization of restricted
shares
Forfeiture of restricted shares (10,990) (18) (450)
Tax benefit from long-term
incentive plan 4,068
Net earnings 51,077
Cash dividends declared
($.28 per share) (11,128)
Conversion of Series B
to Series A 501,716 (501,716)
- --------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 14,467,182 5,743,099 $33,752 $116,451 $201,246
Exercise of stock options 234,545 12,500 412 7,240
Restricted shares awarded 48,360 81 2,576
Change in restricted share valuation 188
Amortization of restricted
shares
Forfeiture of restricted shares (810) (1) (25)
Tax benefit from long-term
incentive plan 1,828
Purchase of treasury stock
Retirement of treasury stock (644,000) (1,076) (3,827) (27,170)
Net earnings 68,867
Cash dividends declared
($.30 per share) (11,984)
Conversion of Series B
to Series A 133,611 (133,611)
- --------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 14,238,888 5,621,988 $33,168 $124,431 $230,959
Exercise of stock options 405,448 18,590 708 8,674
Amortization of restricted
shares
Forfeiture of restricted shares (27,905) (48) (917)
Change in restricted share valuation 698
Tax benefit from long-term
incentive plan 3,427
Two-for-one stock split 15,137,977 4,709,794 33,146 (32,618)
Purchase of treasury stock
Retirement of treasury stock (1,862,848) (3,110) (5,765) (55,053)
Net earnings 66,576
Cash dividends declared
($.315 per share) (12,279)
Conversion of Series B
to Series A 1,070,193 (1,070,193)
- --------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 28,961,753 9,280,179 $63,864 $97,930 $230,203
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------
In thousands, except share and per share amounts Three years ended December 31, 1995
- -----------------------------------------------------------------------------------------------
TREASURY STOCK Deferred
Compensation-
Shares Restricted
Series A Amount Shares Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 - $ - $(6,778) $281,242
Exercise of stock options 17,242
Restricted shares awarded (1,892) -
Change in restricted share valuation (746) -
Amortization of restricted
shares 3,781 3,781
Forfeiture of restricted shares 285 (183)
Tax benefit from long-term
incentive plan 4,068
Net earnings 51,077
Cash dividends declared
($.28 per share) (11,128)
Conversion of Series B
to Series A -
- -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1993 - $ - $(5,350) $346,099
Exercise of stock options 7,652
Restricted shares awarded (2,657) -
Change in restricted share valuation (188) -
Amortization of restricted
shares 2,166 2,166
Forfeiture of restricted shares 6 (20)
Tax benefit from long-term
incentive plan 1,828
Purchase of treasury stock (644,000) (32,073) (32,073)
Retirement of treasury stock 644,000 32,073 -
Net earnings 68,867
Cash dividends declared
($.30 per share) (11,984)
Conversion of Series B
to Series A -
- -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994 - $ - $(6,023) $382,535
Exercise of stock options 9,382
Amortization of restricted
shares 2,718 2,718
Forfeiture of restricted shares 470 (495)
Change in restricted share valuation (698) -
Tax benefit from long-term
incentive plan 3,427
Two-for-one stock split (316,000) (528) -
Purchase of treasury stock (1,546,848) (63,400) (63,400)
Retirement of treasury stock 1,862,848 63,928 -
Net earnings 66,576
Cash dividends declared
($.315 per share) (12,279)
Conversion of Series B
to Series A -
- -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 - $ - $(3,533) $388,464
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
25
<PAGE> 28
CONSOLIDATED STATEMENTS OF CASH FLOWS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CASH PROVIDED (USED) Years ended December 31,
==============================================================================================================
In thousands 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net earnings $66,576 $68,867 $ 51,077
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 59,447 46,405 37,664
Deferred income taxes 6,823 1,428 10,969
Non-cash adjustments and allowances 205 1,842 209
Cumulative effect of change in accounting (Note 4) - - (6,599)
Restructuring charge (Note 9) - - 5,822
Other, net (4,012) 1,549 1,262
Net change in current assets and liabilities:
Accounts receivable (19,732) (20,067) (5,211)
Inventories and other current assets (12,918) 8,234 (6,685)
Accounts payable 1,270 10,187 (1,338)
Accrued compensation and benefits (2,043) 5,554 2,466
Other accrued liabilities 3,533 (2,815) (5,518)
Income taxes payable (1,811) 16,682 4,362
Accrued interest payable (737) 919 (3,662)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operations 96,601 138,785 84,818
- --------------------------------------------------------------------------------------------------------------
INVESTMENTS
Capital expenditures (40,830) (47,371) (62,130)
Acquisitions (Note 2) (217,428) (110,058) -
Asset dispositions 4,506 2,400 2,458
- --------------------------------------------------------------------------------------------------------------
Net cash used for investments (253,752) (155,029) (59,672)
- --------------------------------------------------------------------------------------------------------------
FINANCING
Borrowings for acquisitions 216,934 110,000 -
Net proceeds from (payments on) debt 10,066 (57,000) 175,000
Repayment of long-term notes - - (200,000)
Payments of dividends on stock (12,279) (11,984) (11,128)
Net proceeds from exercise of stock options 9,382 7,652 17,242
Purchase of treasury stock (63,400) (32,073) -
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing 160,703 16,595 (18,886)
- --------------------------------------------------------------------------------------------------------------
Net increase in cash and
temporary cash investments 3,552 351 6,260
- --------------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of year 9,294 8,943 2,683
Cash and temporary cash investments at end of year $12,846 $ 9,294 $8,943
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES (Note 11)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
26
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
A) Principles of Consolidation The consolidated financial statements
include the accounts of A. H. Belo Corporation (the "Company" or
"Belo") and its wholly-owned subsidiaries after the elimination of all
significant intercompany accounts and transactions.
Certain amounts for the prior years have been reclassified to conform
to the current year presentation.
B) Statements of Cash Flows For the purpose of the Consolidated
Statements of Cash Flows, the Company considers all highly liquid debt
instruments purchased with a remaining maturity of three months or
less to be temporary cash investments. Such temporary cash
investments are classified as available for sale and carried at fair
value.
C) Accounts Receivable Accounts receivable are net of a valuation
reserve that represents an estimation of amounts considered
uncollectible. Expense for such uncollectible amounts, which is
included in other production, distribution and operating costs, was
$5,888,000, $4,506,000 and $4,617,000 in 1995, 1994 and 1993,
respectively. Accounts written off during these years were
$5,683,000, $4,231,000 and $4,408,000, respectively.
D) Inventories Inventories, consisting primarily of newsprint, ink and
other supplies used in printing newspapers, are stated at the lower of
average cost or market value.
E) Property, Plant and Equipment Depreciation of property, plant and
equipment is provided principally on a straight-line basis over the
estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------
ESTIMATED
USEFUL LIVES
------------------------------------------------------------
<S> <C>
Buildings and improvements 5-20 years
Newspaper publishing equipment 5-20 years
Broadcast equipment 7-15 years
Other 3-10 years
------------------------------------------------------------
</TABLE>
F) Intangible Assets, Net Intangible assets, net consists of excess cost
over values assigned to tangible assets of purchased subsidiaries and
is amortized primarily on a straight-line basis over 40 years. At
December 31, 1995 and 1994, approximately $27,683,000 and $18,949,000,
respectively, of intangible assets, net is attributable to subscriber
lists associated with certain newspaper transactions. These assets
are carried at their appraised values and are amortized on a
straight-line basis over estimated useful lives of 18 years. The
carrying value of intangible assets is periodically reviewed to
determine whether impairment exists. In 1993, the Company determined
that excess cost associated with its suburban newspaper operations was
not recoverable. (See Note 9). Accumulated amortization of intangible
assets was $143,503,000 and $126,326,000 at December 31, 1995 and
1994, respectively.
G) Stock options Stock options granted to employees are accounted for
using the intrinsic value of the options granted. Because it is the
Company's policy to grant stock options at market price on the date of
the grant, the intrinsic value is zero and therefore, no compensation
expense is recorded.
H) Earnings Per Common and Common Equivalent Share Earnings per common
and common equivalent share are based on the weighted average number
of shares outstanding during the period, including common equivalent
shares representing dilutive stock options. Earnings per share and
certain other share amounts have been restated to reflect a
two-for-one stock split. (See Note 8).
27
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
I) Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
NOTE 2: ACQUISITIONS
- --------------------------------------------------------------------------------
On June 1, 1994, Belo acquired the assets of television station WWL-TV, the
CBS affiliate in New Orleans, Louisiana, for $110,000,000 in cash plus
transaction costs. On February 1, 1995, Belo acquired television station
KIRO-TV in Seattle, Washington. The purchase price was $162,500,000 in cash
plus transaction costs. These acquisitions have been accounted for as
purchases.
The costs of the acquisitions have been allocated on the basis of the
estimated fair market value of the assets acquired. These allocations resulted
in intangibles of $81,673,000 for WWL-TV and $122,753,000 for KIRO-TV. These
amounts are being amortized on a straight-line basis over 40 years.
The pro forma financial results of operations below assume the transactions
were financed with the revolving credit facility at the average rates paid in
each of these periods, and include certain other purchase price adjustments
regarding depreciation, amortization and income taxes. The pro forma financial
results further assume the transactions were completed at the beginning of
January 1994:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
In thousands, except per share amounts 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C>
Net operating revenues $ 738,338 $ 689,023
Net earnings $ 65,812 $ 68,453
Net earnings per common and
common equivalent share $ 1.66 $ 1.69
-----------------------------------------------------------------------------
</TABLE>
A change of .125 percent in revolving debt rates would affect the pro forma
net earnings by $215,000. The pro forma financial information is provided for
informational purposes only and is not necessarily representative of the
operating results that would have occurred had the acquisitions been completed
as of the indicated date, nor are they indicative of future operating results.
On December 26, 1995, Belo completed the acquisition of the Bryan-College
Station Eagle, a daily newspaper serving Bryan-College Station, Texas. The
acquisition, which was financed with the revolving credit facility, has been
accounted for as a purchase. The pro forma financial information above does
not include the operations of this acquisition due to immateriality.
NOTE 3: LONG TERM DEBT
- --------------------------------------------------------------------------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
In thousands 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreement $480,000 $305,000
Short-term unsecured notes classified
as long-term debt 71,000 19,000
Industrial Revenue Bonds 6,400 6,400
--------------------------------------------------------------------------------
Total $557,400 $330,400
--------------------------------------------------------------------------------
</TABLE>
At the end of 1995, the Company had a revolving credit facility for
$800,000,000. Borrowings of revolving debt were $480,000,000 and $305,000,000
at December 31, 1995 and 1994, respectively. Loans under the revolving credit
agreement bear interest at a rate based, at the option of the Company, on the
bank's alternate base rate, LIBOR or competitive bid. The rate obtained
through competitive bid is either a Eurodollar rate or a rate agreed to by the
Company and the bank. At December 31, 1995, the weighted average borrowing
rate was 6.1 percent. The agreement also provides for a facility fee of .125
percent on the total commitment. Borrowings
28
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
under the agreement mature upon expiration of the agreement on July 28, 2000,
with an extension to July 28, 2001, at the request of the Company and with the
consent of the participating banks.
The revolving credit agreement contains certain covenants, including the
maintenance of cash flow in relation to both the Company's leverage and its
fixed charges and a limitation on repurchases of the Company's stock. The
Company is in compliance with these covenants at December 31, 1995.
During 1995, the Company used various short-term unsecured notes as an
additional source of financing. For the years ended December 31, 1995 and
1994, the average interest rate on this debt was slightly lower than the
revolving debt rate. Due to the Company's intent to renew the short-term notes
and its continued ability to refinance this debt on a long-term basis through
its revolving credit agreement, $71,000,000 and $19,000,000 of short-term notes
outstanding at December 31, 1995 and 1994, respectively, have been classified
as long-term.
In 1995, 1994 and 1993, the Company incurred interest costs of $30,944,000,
$16,250,000 and $16,976,000, respectively, of which $957,000, $138,000 and
$1,961,000, respectively, were capitalized as components of construction cost.
Average interest rates on total debt were approximately 6.3 percent, 4.8
percent and 5.4 percent during 1995, 1994 and 1993, respectively.
At December 31, 1995, the Company had outstanding letters of credit of
$7,708,000 issued in the ordinary course of business.
Because substantially all of the Company's debt is due under the variable
rate revolving credit agreement, no significant differences exist between the
carrying value and fair value.
NOTE 4: INCOME TAXES
- --------------------------------------------------------------------------------
Effective January 1, 1993, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes" changing to the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. As permitted by SFAS
No. 109, prior years' financial statements were not restated to reflect the
change. The cumulative effect of adopting SFAS No. 109 as of January 1, 1993
increased 1993 net earnings by $6,599,000 or 16 cents per share.
Income tax expense for the years ended December 31, 1995, 1994 and 1993
consists of the following:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 32,094 $32,548 $17,385
State 5,521 5,054 2,746
---------------------------------------------------------------------------------------------
Total current 37,615 37,602 20,131
Deferred 6,823 1,428 10,969
---------------------------------------------------------------------------------------------
Total $ 44,438 $39,030 $31,100
---------------------------------------------------------------------------------------------
Effective tax rate 40.0% 36.2% 41.1%
---------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Income tax provisions for the years ended December 31, 1995, 1994 and 1993
differ from amounts computed by applying the applicable U.S. federal income tax
rate as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected income tax expense $ 38,855 $37,764 $26,452
Amortization of excess cost 2,235 2,235 2,235
State income taxes 3,692 3,494 2,601
Stock donation (Note 10) - (3,245) -
Effect of 1% rate increase on deferred taxes - - 2,249
Reduction for change in law regarding
amortization of acquired intangible asset - - (1,000)
Other (344) (1,218) (1,437)
--------------------------------------------------------------------------------------------
$ 44,438 $39,030 $31,100
--------------------------------------------------------------------------------------------
</TABLE>
Significant components of the Company's deferred tax liabilities and assets
as of December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
In thousands 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Excess tax depreciation and amortization $ 105,035 $ 103,621
Deferred gain on sale of assets 4,294 4,751
Loss on investment 10,867 7,730
Expenses deductible for tax purposes in a year
different from the year accrued 6,211 5,053
Other 463 464
------------------------------------------------------------------------------------
Total deferred tax liabilities $ 126,870 $ 121,619
------------------------------------------------------------------------------------
Deferred tax assets:
State taxes $ 4,620 $ 4,541
Deferred compensation 5,126 4,490
Expenses deductible for tax purposes in a year
different from the year accrued 3,200 5,887
Other 4,418 4,018
------------------------------------------------------------------------------------
Total deferred tax assets $ 17,364 $ 18,936
------------------------------------------------------------------------------------
Net deferred tax liability $ 109,506 $ 102,683
------------------------------------------------------------------------------------
</TABLE>
NOTE 5: EMPLOYEE RETIREMENT PLANS
- --------------------------------------------------------------------------------
The Company sponsors a noncontributory defined benefit pension plan
covering substantially all employees. The benefits are based on years of
service and the average of the employee's five consecutive years of highest
annual compensation earned during the most recently completed ten years of
employment.
The funding policy is to contribute annually to the plan an amount at least
equal to the minimum required contribution for a qualified retirement plan, but
not in excess of the maximum tax deductible contribution.
30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
The following table sets forth the plan's funded status and prepaid pension
costs (included in other assets on the Consolidated Balance Sheets) at December
31, 1995 and 1994:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
In thousands 1995 1994
------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ (82,119) $ (64,476)
Accumulated benefit obligation $ (84,597) $ (66,378)
Projected benefit obligation for service
rendered to date $ (107,817) $( 86,462)
Plan assets at fair value, invested primarily
in equity securities 95,291 75,709
------------------------------------------------------------------------------------
Plan assets less than projected benefit obligation (12,526) (10,753)
Unrecognized net loss 34,350 30,285
Unrecognized net transition asset being recognized
over 12.3 years (2,837) (4,069)
Unrecognized prior service cost (2,866) (2,241)
------------------------------------------------------------------------------------
Prepaid pension cost $ 16,121 $ 13,222
------------------------------------------------------------------------------------
</TABLE>
The net periodic pension cost (benefit) for the years ended December 31,
1995, 1994 and 1993 includes the following components:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 3,697 $3,666 $ 2,284
Interest cost on projected benefit obligation 7,331 6,461 5,782
Actual return on plan assets (17,035) (604) (9,294)
Net amortization and deferral 9,498 (6,563) 1,784
---------------------------------------------------------------------------------------------
Net periodic pension cost $ 3,491 $2,960 $ 556
---------------------------------------------------------------------------------------------
</TABLE>
Assumptions used in the accounting for the defined benefit plan are as
follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
1995 1994 1993
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining benefit obligation 7.25% 8.50% 7.50%
Discount rate in determining net periodic pension
cost 8.50% 7.50% 9.00%
Expected long-term rate of return on assets 10.25% 10.25% 10.25%
Rate of increase in future compensation 5.50% 6.00% 5.00%
---------------------------------------------------------------------------------------------
</TABLE>
The Company sponsors a defined contribution plan that covers substantially
all of its employees. Subject to certain dollar limits, employees may
contribute a percentage of their salaries to this plan, and the Company will
match a portion of the employee's contributions. The Company's contributions
totaled $3,170,000, $2,568,000 and $1,825,000 in 1995, 1994 and 1993,
respectively.
The Company also sponsors non-qualified retirement plans for key employees.
Expense for the plans recognized in 1995, 1994 and 1993 was $1,089,000,
$1,232,000 and $1,412,000, respectively.
31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 6: LONG TERM INCENTIVE PLANS
- --------------------------------------------------------------------------------
The Company has long-term incentive plans under which awards may be granted
to employees in the form of incentive stock options, non-qualified stock
options, restricted shares or performance units, the values of which are based
on the long-term performance of the Company. In addition, options may be
accompanied by stock appreciation rights and limited stock appreciation rights.
Rights and limited rights may also be issued without accompanying options.
Cash-based bonus awards are also available under one of the plans. The plans
also provide for grants of non-qualified stock options to non-employee
directors.
Stock-based activity in the long-term incentive plans is summarized in the
following table:
<TABLE>
<CAPTION>
LONG TERM INCENTIVE PLANS
=============================================================================================================
NON-QUALIFIED STOCK OPTIONS RESTRICTED SHARES
OPTION
SHARES SHARES PRICE SHARES PRICE
SERIES A SERIES B PER SHARE SERIES A PER SHARE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Outstanding at Jan. 1, 1993 1,618,517 145,436 $20-40 291,815 $29-42
Granted 317,955 - 40-49 37,192 49-53
Exercised (505,295) (87,326) 20-40 - -
Vested - - - (106,225) 29-53
Canceled (61,285) - 29-40 (10,990) 29-49
- -------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1993 1,369,892 58,110 $22-49 211,792 $29-53
Granted 322,795 - 50-53 48,360 53-57
Exercised (234,545) (12,500) 22-49 - -
Vested - - - (46,971) 30-57
Canceled (7,002) - 29-49 (810) 29-43
- -------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1994 1,451,140 45,610 $24-53 212,371 $29-57
Two-for-one stock split 1,310,337 41,570 12-30 211,891 15-31
Granted 474,300 225,000 30-35 - -
Exercised (405,448) (18,590) 12-27 - -
Vested - - - (117,261) 15-35
Canceled (26,142) - 15-27 (27,905) 15-35
- -------------------------------------------------------------------------------------------------------------
Outstanding at Dec. 31, 1995 2,804,187 293,590 $12-35 279,096 $15-35
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The non-qualified options granted to employees under the Company's
long-term incentive plans become exercisable in cumulative installments over a
period of three years. On December 31, 1995, of the 3,097,777 options
outstanding, 1,827,884 were exercisable at prices ranging from $12 to $27.
Shares of Common Stock reserved for grants under the plans were 3,849,727 and
250,531 at December 31, 1995 and 1994 respectively.
A provision for the restricted shares is made ratably over the restriction
period. Expense recognized under the plans for restricted shares was
$2,223,000, $2,146,000 and $3,598,000 in 1995, 1994 and 1993, respectively.
NOTE 7: COMMITMENTS AND CONTINGENT LIABILITIES
- --------------------------------------------------------------------------------
The Company is involved in certain claims and litigation related to its
operations. In the opinion of Management, liabilities, if any, arising from
these claims and litigation would not have a material adverse effect on the
consolidated financial position or results of operations of the Company.
Commitments for the purchase of broadcast film contract rights totaled
approximately $131,383,000 at December 31, 1995 for broadcasts scheduled
through August 2000.
Advance payments on plant and equipment expenditures at December 31, 1995
primarily relate to newspaper production equipment, broadcast equipment and
building renovations and improvements. Required future payments for capital
expenditures for 1996 and 1997 are $7,881,000 and $2,275,000, respectively.
32
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Total lease expense for property and equipment was $3,435,000, $3,131,000
and $5,447,000 in 1995, 1994 and 1993, respectively. Lease expense was lower
in 1994 following the Company's 1993 purchase of the building in which it had
been leasing office space.
Future minimum rental payments for operating leases are not material.
NOTE 8: COMMON AND PREFERRED STOCK
- --------------------------------------------------------------------------------
The Company has two series of common stock authorized, issued and
outstanding, Series A and Series B. The shares are identical except that
Series B shares are entitled to ten votes per share on all matters submitted to
a vote of shareholders, while the Series A shares are entitled to one vote per
share. Transferability of the Series B shares is limited to family members and
affiliated entities of the holder. Series B shares are convertible at any time
on a one-for-one basis into Series A shares.
Each outstanding share of common stock is accompanied by one preferred
share purchase right, which entitles shareholders to purchase 1/100 of a share
of Series A Junior Participating Preferred Stock. The rights will not be
exercisable until a party either acquires beneficial ownership of 30 percent of
the Company's common stock or makes a tender offer for at least 30 percent of
its common stock. At such time, each holder of a right (other than the
acquiring person or group) will have the right to purchase common stock of the
Company with a value equal to two times the exercise price of the right, which
is initially $150 (subject to adjustment). In addition, if the Company is
acquired in a merger or business combination, each right can be used to
purchase the common stock of the surviving company having a market value of
twice the exercise price of each right. Once a person or group has acquired 30
percent of the common stock but before 50 percent of the voting power of the
common stock has been acquired, the Company may exchange each right (other than
those held by the acquiring person or group) for one share of Company common
stock (subject to adjustment). The Company may reduce the 30 percent threshold
or may redeem the rights. The number of shares of Series A Junior Participating
Preferred Stock reserved for possible conversion of these rights is equivalent
to 1/100 of the number of shares of common stock issued and outstanding plus
the number of shares reserved for options outstanding and for grant under the
1995 Executive Compensation Plan. The rights will expire in 2006, unless
extended.
On June 9, 1995, the Company completed a two-for-one stock split in the form
of a dividend, issuing one additional share of Series A and Series B common
stock for each corresponding share outstanding, as of the May 19, 1995 record
date. The effect of the stock split was to double the number of shares
outstanding and reduce per share amounts by one-half. All earnings and
dividends per share, weighted average shares outstanding and share trading
prices in this report have been restated to reflect the stock split.
The Company has in place a stock repurchase program authorizing the purchase
of up to $2,500,000 of Company stock annually, and the Company has authority to
purchase an additional 3,591,200 shares under another Board authorization.
NOTE 9: RESTRUCTURING CHARGE
- --------------------------------------------------------------------------------
The Consolidated Statement of Earnings for 1993 includes a $5,822,000 (9
cents per share) charge related to Dallas-Fort Worth Suburban Newspapers, Inc.
("DFWSN"), that consists primarily of the write-off of goodwill and a reduction
in the carrying value of production assets to their fair value. The production
assets adjusted include building and improvements and publishing equipment.
The charge was recognized in conjunction with the decision to restructure DFWSN
upon the determination that the carrying value of these assets was not
recoverable. Fair value of production assets was determined principally by
market value. The restructuring was substantially completed in January 1994.
NOTE 10: OTHER INCOME AND EXPENSE
- --------------------------------------------------------------------------------
In 1994, Belo donated 58,835 shares of Stauffer Communications, Inc. stock
to The A. H. Belo Corporation Foundation. The fair market value of the shares
at the time of the transfer, as determined by an outstanding tender offer from
a third party, exceeded the carrying value of the stock, resulting in a gain of
$9,271,000, which was offset by a charge for the charitable contribution of the
shares in the amount of $16,675,000. The transaction, net of a $5,837,000
income tax benefit, resulted in a decrease in 1994 net earnings of $1,567,000
(4 cents per share). In 1995, Belo sold its remaining investment in Stauffer
Communications, Inc., resulting in a gain of $2,406,000 ($1,546,000 after-tax
or 4 cents per share).
33
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION
- --------------------------------------------------------------------------------
Net cash provided by operations reflects cash payments for interest and
income taxes during the years ended December 31, 1995, 1994 and 1993 as
follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid, net of amounts capitalized $30,724 $14,564 $18,677
Income taxes paid, net of refunds $39,427 $26,618 $15,679
-------------------------------------------------------------------------------------------
</TABLE>
NOTE 12: SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
Effective January 1, 1996, the Company acquired the Owensboro
Messenger-Inquirer, a daily newspaper serving Owensboro, Kentucky. Notes
payable, which are due in various installments over the next four years and are
backed by letters of credit, were issued to complete the transaction. The
acquisition was accounted for as a purchase.
Subsequent to year-end, Belo completed the sale of its interest in its
programming distribution partnership, Maxam Entertainment. The Company will
record a gain on the transaction in the first quarter of 1996.
NOTE 13: INDUSTRY SEGMENT INFORMATION
- --------------------------------------------------------------------------------
The Company operates in two primary industries: television broadcasting and
newspaper publishing. Operations in the broadcast industry involve the sale of
air time for advertising and the broadcast of entertainment, news and other
programming. The Company's television stations are located in Dallas and
Houston, Texas; Seattle, Washington; Sacramento, California; Norfolk, Virginia;
New Orleans, Louisiana; and Tulsa, Oklahoma. Operations in the newspaper
publishing industry, which are located primarily in the Dallas-Fort Worth
metropolitan area, involve the sale of advertising space in published issues,
the sale of newspapers to distributors and individual subscribers and
commercial printing. The Company's other industry segment is comprised of
miscellaneous operating ventures associated primarily with television
production and distribution. Prior to 1995, these operations were grouped with
the broadcasting segment. Information for periods prior to 1995 has been
reclassified to conform to the current year presentation.
34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Selected segment data for the years ended December 31, 1995, 1994 and 1993
is as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
In thousands 1995 1994 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenues
Broadcasting (A) $ 322,642 $ 258,040 $ 209,083
Newspaper publishing 409,099 369,366 335,651
Other 3,602 719 101
-----------------------------------------------------------------------------------------------
$ 735,343 $ 628,125 $ 544,835
-----------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (A) $ 83,921 $ 81,319(C) $ 63,317(B)
Newspaper publishing 69,999 66,568 44,293(C)
Other (3,972) (874) (77)
Corporate expenses (13,385) (16,014) (18,059)
-----------------------------------------------------------------------------------------------
$ 136,563 $ 130,999 $ 89,474
-----------------------------------------------------------------------------------------------
Identifiable assets
Broadcasting (A) $ 726,766 $ 566,766 $ 444,940
Newspaper publishing (D) 341,025 271,179 263,855
Other 8,126 1,381 1,235
Corporate 78,105 74,465 86,126
-----------------------------------------------------------------------------------------------
$1,154,022 $ 913,791 $ 796,156
-----------------------------------------------------------------------------------------------
Depreciation and amortization
Broadcasting (A) $ 37,795 $ 25,077 $ 20,039
Newspaper publishing 20,916 20,716 17,374
Other 31 2 -
Corporate 705 610 251
-----------------------------------------------------------------------------------------------
$ 59,447 $ 46,405 $ 37,664
-----------------------------------------------------------------------------------------------
Capital expenditures
Broadcasting (A) $ 19,605 $ 24,561 $ 16,996
Newspaper publishing 19,217 22,227 36,765
Other 154 62 -
Corporate 1,854 521 8,369
-----------------------------------------------------------------------------------------------
$ 40,830 $ 47,371 $ 62,130
-----------------------------------------------------------------------------------------------
</TABLE>
(A) In 1995, Broadcasting segment data includes the operations of
KIRO-TV, which Belo purchased on February 1, 1995. Results for
1994 include the operations of WWL-TV, which Belo purchased on
June 1, 1994. (See Note 2).
(B) Broadcasting earnings from operations include the reversal of
certain music license fee accruals of $631,000 (1 cent per share)
in 1994 and $3,349,000 (5 cents per share) in 1993.
(C) Included in Newspaper publishing earnings from operations in 1993
is a $5,822,000 (9 cents per share) restructuring charge
consisting primarily of the write-off of goodwill and a reduction
in the carrying value of production assets related to the
restructuring of DFWSN. (See Note 9).
(D) Publishing assets at December 31, 1995 include the assets of the
Bryan-College Station Eagle, which was purchased by the Company on
December 26, 1995.
35
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. Belo Corporation and Subsidiaries
NOTE 14: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Following is a summary of the unaudited quarterly results of operations for
1995 and 1994:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Net operating revenues
Broadcasting (A) $ 69,689 $ 88,276 $ 78,678 $ 85,999
Newspaper publishing 93,300 101,166 102,433 112,200
Other 50 327 1,340 1,885
- -------------------------------------------------------------------------------------------------------------
$163,039 $ 189,769 $ 182,451 $ 200,084
- -------------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (A) $ 15,234 $ 26,526 $ 17,311 $ 24,850
Newspaper publishing 15,468 17,919 15,767 20,845
Other (1,094) (922) (1,025) (931)
Corporate expenses (4,097) (3,879) (3,928) (1,481)
- -------------------------------------------------------------------------------------------------------------
$ 25,511 $ 39,644 $ 28,125 $ 43,283
- -------------------------------------------------------------------------------------------------------------
Net earnings $ 11,443 $ 21,198(B) $ 12,792 $ 21,143
- -------------------------------------------------------------------------------------------------------------
Net earnings per common and
common equivalent share $ .28 $ .53 $ .33 $ .54
- -------------------------------------------------------------------------------------------------------------
1994
Net operating revenues
Broadcasting (A) $ 49,101 $ 63,208 $ 66,265 $ 79,466
Newspaper publishing 82,921 91,107 93,262 102,076
Other 25 622 55 17
- -------------------------------------------------------------------------------------------------------------
$132,047 $ 154,937 $ 159,582 $ 181,559
- -------------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (A) $ 11,712 $ 21,052 $ 19,257 $ 29,298
Newspaper publishing 10,908 17,716 18,220 19,724
Other (214) (3) (174) (483)
Corporate expenses (3,222) (3,361) (4,618) (4,813)
- -------------------------------------------------------------------------------------------------------------
$ 19,184 $ 35,404 $ 32,685 $ 43,726
- -------------------------------------------------------------------------------------------------------------
Net earnings $ 10,038 $ 19,511 $ 15,748(B) $ 23,570
- -------------------------------------------------------------------------------------------------------------
Net earnings per common
and common equivalent share: $ .24 $ .48 $ .39 $ .59
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Broadcasting results include the operations of KIRO-TV since February 1,
1995 and WWL-TV since June 1, 1994. (See Note 2.)
(B) Net earnings for the third quarter of 1994 include the net charge of
$1,567,000 related to the Stauffer Communications, Inc. stock donation (see
Note 10). A corresponding after-tax gain of $1,564,000 related to the sale
of Belo's remaining investment in Stauffer Communications, Inc. is
reflected in second quarter 1995 net earnings.
36
<PAGE> 39
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The Management of A. H. Belo Corporation is responsible for the preparation of
the Company's consolidated financial statements, as well as for their integrity
and objectivity. Those statements are prepared using generally accepted
accounting principles, they include amounts that are based on our best
estimates and judgments, and we believe they are not misstated due to material
fraud or error. Management has also prepared the other information in the
Annual Report and is responsible for its accuracy and its consistency with the
financial statements.
Management maintains a system of internal control that is designed to provide
reasonable assurance of the integrity and reliability of the financial
statements, the protection of assets from unauthorized use or disposition, and
the prevention and detection of fraudulent financial reporting. This system of
internal control provides for appropriate division of responsibility, and is
documented in written policies and procedures. These policies and procedures
are updated as necessary and communicated to those employees having a
significant role in the financial reporting process. Management continually
monitors the system of internal control for compliance.
Management believes that as of December 31, 1995, the Company's system of
internal control is adequate to accomplish the objectives described above.
Management recognizes, however, that no system of internal control can ensure
the elimination of all errors and irregularities, and it recognizes that the
cost of the internal controls should not exceed the value of the benefits
derived.
Finally, Management recognizes its responsibility for fostering a strong
ethical climate within the Company according to the highest standards of
personal and professional conduct, and this responsibility is delineated in the
Company's written statement of business conduct. This statement of business
conduct addresses, among other things, the necessity for due diligence and
integrity, avoidance of potential conflicts of interest, compliance with all
applicable laws and regulations, and the confidentiality of proprietary
information.
/s/ Robert W. Decherd
Robert W. Decherd
Chairman of the Board, President and Chief Executive Officer
/s/ Michael D. Perry
Michael D. Perry
Senior Vice President and Chief Financial Officer
37
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company (Exhibit 3.1 to the Company's Annual Report on Form 10-K dated
March 19, 1992 (the "1991 Form 10-K")) N/A
3.2 Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (Exhibit 3.2 to the Company's
Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form 10-K")) N/A
3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated April 16, 1987
(Exhibit 3.3 to the 1991 Form 10-K) N/A
3.4 Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (Exhibit 3.4 to the
1992 Form 10-K) N/A
3.5 Certificate of Amendment of Certificate of Incorporation of the Company dated May 3, 1995
---
3.6 Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4,
1988 (Exhibit 3.5 to the 1992 Form 10-K) N/A
3.7 Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (Exhibit 3.6 to the 1992
Form 10-K) N/A
3.8 Bylaws of the Company, effective February 22, 1995 (Exhibit 3.7 to the Company's Annual Report on Form 10-K
dated March 8, 1995 (the "1994 Form 10-K")) N/A
4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.6 above
4.2 Specimen Form of Certificate representing shares of the Company's Series A Common Stock (Exhibit 4.2 to the
1992 Form 10-K) N/A
4.3 Specimen Form of Certificate representing shares of the Company's Series B Common Stock (Exhibit 4.3 to the
Company's Annual Report on Form 10-K dated March 20, 1989) N/A
4.4 Form of Rights Agreement as Amended and Restated, as of February 28, 1996 between the Company and Chemical
Mellon Shareholder Services, L.L.C, a New York banking corporation
---
10.1 Contracts relating to television broadcasting:
(1) Form of Agreement for Affiliation between WFAA-TV in Dallas, Texas and ABC
---
(2) Form of Agreement for Affiliation between KXTV in Sacramento, California and ABC
(3) Contract for Affiliation between KHOU-TV in Houston, Texas and CBS
---
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
(4) Contract for Affiliation between WWL-TV in New Orleans, Louisiana and CBS
---
10.2 Financing agreements:
(1) Loan Agreement dated October 1, 1985, between City of Arlington Industrial Development Corporation and
Dallas-Fort Worth Suburban Newspapers, Inc. (Exhibit 10.5(2) to the 1991 Form 10-K) N/A
(2) Letter of Credit and Reimbursement Agreement dated as of June 2, 1987, between Dallas-Fort Worth Suburban
Newspapers, Inc. and The Sanwa Bank, Limited, Dallas Agency covering $6,400,000 City of Arlington
Industrial Development Corporation Industrial Development Revenue Bonds (Exhibit 10.5(3) to the 1991 Form
10-K) N/A
(3) Credit Agreement dated as of August 5, 1994 among the Company and Citicorp Securities, Inc., as
Syndication Agent, The First National Bank of Chicago, as Administrative Agent, Texas Commerce Bank
National Association, as Documentation Agent and The Banks Listed Therein, as Lenders (Exhibit 10.4(1) to
the Second Quarter 1994 Form 10-Q) N/A
(4) First Amendment to Credit Agreement dated as of July 28, 1995 (Exhibit 10.4(1) to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1995) N/A
(5) Amendment and Waiver Agreement dated as of August 5, 1994, by and between the Company and The Sanwa Bank,
Limited, Dallas Agency (Exhibit 10.4(4) to the 1994 Form 10-K) N/A
10.3 Compensatory plans:
(1) Management Security Plan (Exhibit 10.4(1) to the 1991 Form 10-K) N/A
(2) 1986 Long-Term Incentive Plan (Exhibit 10.4(7) to the 1991 Form 10-K) N/A
(3) Amendment No. 1 to 1986 Long-Term Incentive Plan (Exhibit 10.4(8) to the 1991 Form 10-K) N/A
(4) Amendment No. 2 to 1986 Long-Term Incentive Plan (Exhibit 10.3(9) to the 1992 Form 10-K) N/A
(5) Amendment No. 3 to 1986 Long-Term Incentive Plan (Exhibit 10.3(10) to the 1993 Form 10-K) N/A
(6) Amendment No. 4 to 1986 Long-Term Incentive Plan (Exhibit 10.3(11) to the 1993 Form 10-K) N/A
</TABLE>
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
(7) Amendment No. 5 to 1986 Long-Term Incentive Plan (Exhibit 10.3(12) to the 1993 Form 10-K) N/A
(8) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(13) to the 1992 Form 10-K) N/A
(9) Amendment No. 7 to 1986 Long-Term Incentive Plan
---
(10) The A. H. Belo Corporation Employee Savings and Investment Plan Amended and Restated February 2, 1996
---
(11) The G. B. Dealey Retirement Pension Plan (as Amended and Restated Generally Effective January 1,
1989)
---
(12) Master Trust Agreement, effective as of July 1, 1992, between A. H. Belo Corporation and Mellon Bank,
N.A. (Exhibit 10.3(26) to the 1993 Form 10-K) N/A
(13) A. H. Belo Corporation Supplemental Executive Retirement Plan (Exhibit 10.3(27) to the 1993 Form 10-K) N/A
(14) Trust Agreement dated February 28, 1994, between the Company and Mellon Bank, N.A. (Exhibit 10.3(28) to
the 1993 Form 10-K) N/A
(15) Summary of A. H. Belo Corporation Executive Compensation Plan
---
(16) A. H. Belo Corporation 1995 Executive Compensation Plan
---
(17) A. H. Belo Corporation Employee Thrift Plan, effective January 1, 1995
---
(18) First Amendment to A.H. Belo Corporation Employee Thrift Plan
---
(19) Second Amendment to A. H. Belo Corporation Employee Thrift Plan
---
(20) Master Defined Contribution Trust Agreement by and between A. H. Belo Corporation and Mellon, Bank,
N.A.
---
(21) First Amendment to Master Defined Contribution Trust Agreement
---
(22) Second Amendment to Master Defined Contribution Trust Agreement
---
21 Subsidiaries of the Company
---
23 Consent of Ernst & Young LLP
---
27 Financial Data Schedule (filed electronically with the Securities and Exchange Commission) N/A
</TABLE>
<PAGE> 1
EXHIBIT 3.5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
A. H. Belo Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the corporation
held on February 22, 1995, resolutions were duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of the corporation,
declaring said amendment to be advisable and calling a meeting of the
stockholders of the corporation for consideration thereof. The proposed
amendment, in the form adopted by the Board of Directors of the corporation, is
as set forth in Appendix A to this Certificate.
SECOND: That at the next annual meeting of the stockholders of the
corporation thereafter duly convened and held, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware, the
necessary number of shares as required by statute and by the corporation's
Certificate of Incorporation were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of the corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
duly executed by its Chairman of the Board and attested to by its Secretary,
and caused its corporate seal to be affixed hereto as of the 3rd day of May,
1995.
A. H. BELO CORPORATION
By: /s/ ROBERT W. DECHERD
---------------------------------
Chairman of the Board
[Corporate Seal]
ATTEST: /s/ MICHAEL J. MECARTHY
-----------------------------
Secretary
<PAGE> 2
THE STATE OF TEXAS Section
Section
COUNTY OF DALLAS Section
On the ______ day of __________________, 1995, before me personally
appeared Robert W. Decherd, the Chairman of the Board of A. H. Belo
Corporation, to me known to be the person described in and who executed the
foregoing instrument, and acknowledged that he executed the same in the
capacity indicated, that it is the act and deed of such corporation, and that
the facts stated therein are true.
----------------------------------
Notary Public
My Commission Expires:
- ------------------------- ----------------------------------
Print Name
<PAGE> 3
APPENDIX A
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
OF A. H. BELO CORPORATION
The third paragraph of Article Four, Section 1, shall be deleted and replaced
with the following:
If the shares are issued in two or more series, the remaining
shares of Common Stock may be issued by the Board of Directors as
shares of Series A Common Stock (herein called "Series A Stock"),
and/or designated and issued as shares of Series B Common Stock
(herein called "Series B Stock"), and/or as shares of Series C Common
Stock (herein called "Series C Stock"). After completion of the
initial distribution of Series B Stock, the corporation shall not
issue any additional shares of Series B Stock if such issuance would
result in the Series A Stock being excluded from trading on the New
York Stock Exchange, the American Stock Exchange, and other national
stock exchanges and also being excluded from quotation on the NASDAQ
(as defined herein) or any other national quotation system then in
use. Subject to the foregoing, the Board of Directors shall have the
authority to fix the number of shares constituting any such series,
and to increase or decrease the number of shares of any series prior
to or after the issuance of shares of that series, but not below the
number of shares of such series then outstanding. In case the number
of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status of authorized but unissued
shares of Common Stock.
<PAGE> 1
EXHIBIT 4.4
AMENDED AND RESTATED RIGHTS AGREEMENT
Agreement, dated as of March 10, 1986, as amended and restated
as of February 28, 1996, between A.H. Belo Corporation, a Delaware corporation
(the "Company"), and Chemical Mellon Shareholder Services, L.L.C., a New York
banking corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on March 20,
1986, each Right representing the right to purchase one one-hundredth of a
share of Series A Junior Participating Preferred Stock of the Company having
the rights and preferences set forth in the form of Certificate of Designations
attached hereto as Exhibit A, upon the terms and subject to the conditions
herein set forth, and has further authorized the issuance of one Right with
respect to each Common Share that shall become outstanding between March 20,
1986 and the earlier of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are defined in Sections 3 and 7 hereof).
This Agreement has been amended from time to time in
accordance with the terms hereof by Supplements Nos. 1, 2, 3, 4, 5, and 6. The
Board of Directors of the Company has determined to further amend this
Agreement to extend the term of the Rights authorized hereunder for a period of
10 years and to include certain features intended to increase the
effectiveness hereof. In addition, the Board of Directors of the Company has
determined to restate this Agreement such that all amendments hereto, including
certain amendments effected as of the date hereof, are reflected herein.
<PAGE> 2
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 30% or more of the total number of Common
Shares then outstanding, but shall not include the Company, any
wholly-owned Subsidiary (as such term is hereinafter defined) of the
Company or any employee benefit plan of the Company or any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to
the terms of such plan. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to 30% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 30% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the
-2-
<PAGE> 3
Company and shall, after such share purchases by the Company, become
the Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be
an "Acquiring Person," as defined pursuant to the foregoing provisions
of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person,"
as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
(b) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on March 10, 1986.
"Associate," used to indicate a relationship with any Person,
shall mean (i) any corporation or organization (other than the Company
or a direct or indirect subsidiary of the Company) of which such
Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity
securities, (ii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a
trustee or in a similar fiduciary capacity, and (iii) any relative or
-3-
<PAGE> 4
spouse of such Person, or any relative of such spouse, who has the
same principal residence as such Person.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants
or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to
vote such security (1) arises
-4-
<PAGE> 5
solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except to the extent contemplated
by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State
of Texas are authorized or obligated by law or executive order to
close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Dallas, Texas time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Dallas, Texas
time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean shares of Series A Common Stock, Series B Common
Stock, and/or Series C Common
-5-
<PAGE> 6
Stock. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which
ultimately controls such first-mentioned Person.
(g) "Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(h) "Preferred Shares" shall mean shares of Series A
Junior Participating Preferred Stock of the Company.
(i) "Shares Acquisition Date" shall mean the first date
of public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(j) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts
-6-
<PAGE> 7
such appointment. The Company may from time to time appoint such co-Rights
Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth day after the date of commencement of, or first public announcement of
the intent of any Person (other than the Company, any wholly-owned Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to the terms
of any such Plan) to commence, a tender or exchange offer the consummation of
which would result in beneficial ownership by a Person of 30% or more of the
total number of the outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Shares registered in the names
of the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send, by first-class, insured, postage-prepaid mail, to
each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"),
-7-
<PAGE> 8
evidencing one Right for each Common Share so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On March 20, 1986 or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on March 20, 1986, at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of March 20, 1986, until the
Distribution Date, the Rights will be evidenced by such certificates registered
in the names of the holders thereof together with a copy of the Summary of
Rights. Until the Distribution Date (or the earlier of the Redemption Date or
Final Expiration Date (as such terms are defined in Section 7 hereof)), the
surrender for transfer of any certificate for Common Shares outstanding on
March 20, 1986, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.
(c) Certificates for Common Shares issued after March 20,
1986 but prior to the earlier of the Distribution Date or the Redemption Date
or the Final Expiration Date (as such terms are defined in Section 7) shall
have impressed on, printed on, written on or otherwise affixed to them a legend
in substantially the following form:
-8-
<PAGE> 9
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
A.H. Belo Corporation and Chemical Bank, dated as of March 10,
1986, amended and restated as of February 28, 1996 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of A.H. Belo
Corporation. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. A.H. Belo Corporation will mail to the holder
of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under
certain circumstances, Rights beneficially owned by Acquiring
Persons (as defined in the Rights Agreement) may become null
and void.
With respect to such certificates containing a legend in substantially the
foregoing form, until the Distribution Date, the Rights associated with the
Common Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificate
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred Shares and of
assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on
-9-
<PAGE> 10
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 22 hereof, the Right Certificates, in
each such case, on their face shall entitle the holders thereof to purchase
such number of Preferred Shares as shall be set forth therein at the price per
one-hundredth of a Preferred Share set forth therein (the "Purchase Price"),
but the number of such Preferred Shares and the Purchase Price shall be subject
to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or any Executive Vice President, Senior vice President or
Vice President, and by the Secretary, an Assistant Secretary, Treasurer or an
Assistant Treasurer of the Company, either manually or by facsimile signature,
and have affixed thereto the Company's seal or a facsimile thereof. The Right
Certificates shall not be valid for any purpose unless countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before counter-signature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and
delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer
-10-
<PAGE> 11
of the Company to sign such Right Certificate, although at the date of the
execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal offices, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right Certificates, the number
of Rights evidenced on its face by each of the Right Certificates and the date
of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date (as such terms
are defined in Section 7 hereof), any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Preferred Shares as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall
-11-
<PAGE> 12
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall countersign and deliver to the person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the
Rights
-12-
<PAGE> 13
Agent, together with payment of the Purchase Price for each one one-hundredth
of a Preferred Share as to which the Rights are exercised, at or prior to the
close of business on the earlier of (i) the close of business on March 20, 2006
(the "Final Expiration Date"), or (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), or (iii) the
time at which such Rights are exchanged as provided for in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall be, as of February
28, 1996, $150, shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below, and as of February
28, 1996 each Right shall entitle the holder thereof to purchase one one-
hundredth of a Preferred Share, subject to the terms and conditions herein set
forth.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9 in cash, or by
certified check or cashier's check payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares
to be purchased and the Company
-13-
<PAGE> 14
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company hereby directs the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section
14, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated
by such holder and (iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assignee, subject to the
provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the
-14-
<PAGE> 15
Rights Agent for cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Shares.
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights.
So long as the Preferred Shares issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the
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time of delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a person other
than, or the issuance or delivery of certificates for the Preferred Shares in a
name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for Preferred Shares upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for Preferred Shares is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable transfer
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taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the Company
are closed, such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
business day on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Preferred Shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation),
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except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in
the event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per
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share market price of the Company's Common Shares (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such event. In the
event that any Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder
of such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person
whose Rights would be void pursuant to the preceding sentence or any Associate
or Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence shall be
cancelled.
(iii) In the event that there shall not be
sufficient Common Shares issued but not outstanding or authorized but unissued
to permit the exercise in full of the
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Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
current per share market price of the Preferred Shares (as defined in Section
11(d)) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on
such record date plus the
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number of additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price
may be paid in consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness or
assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current per share market price of the Preferred Shares (as defined in Section
11(d)) on such record date, less
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the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any date shall be
deemed to be the average of the daily closing prices per share of such Common
Shares for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the event
that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Shares of a
dividend or distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares, and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or distribution,
then, and in each such case, the current market price shall be appropriately
adjusted to reflect the current market price per Common Share equivalent. The
closing price for each day shall be the last sale price, regular way, or,
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in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Shares are
not listed or admitted on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading, or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq National Market ("NASDAQ")
or such other system then in use, or, if on any such date the Common Shares are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Common Shares are listed or admitted to trading is open
to the transaction of business or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of
Texas are not authorized or obligated by law or executive order to close. For
purposes of this Section 11(d)(i), the term "Common Shares", when used with
reference to the Company, shall mean shares of Series A Common Stock.
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<PAGE> 24
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall be
determined in the same manner as set forth above for Common Shares in clause
(i) of this Section 11(d). If the current per share market price of the
Preferred Shares cannot be determined in the manner provided above, the
"current per share market price" of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Shares
(approximately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value
per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a common share or other share or one-millionth of a Preferred Shares as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years
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from the date of the transaction which requires such adjustment or (ii) the
date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a) through (c), inclusive, and
the provisions of Section 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
Preferred Shares purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price per
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<PAGE> 26
one one-hundredth of a Preferred Share, that number of one one-hundredths of a
Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of Preferred Shares purchasable
upon the exercise of a Right. Each of the rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at
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<PAGE> 27
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders or record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Shares issuable upon the exercise of
the rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder.
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(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date of the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in it sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the
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Preferred Shares, issuance wholly for cash if any of Preferred Shares at less
than the current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in subsection
(b) of this Section 11, hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the February 28,
1996 and prior to the Distribution Date, the Company shall (i) declare or pay
any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Preferred Share purchasable upon proper
exercise of each Right shall be determined by multiplying the number of shares
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before such event
and the denominator of which is the number of Common Shares outstanding
immediately after such event, and (ii) each Common Share outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each Common Share outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in this Section
11(n) shall be made
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<PAGE> 30
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an event occurs
which would require an adjustment under Section 11(a)(ii) and this Section
11(n), the adjustments provided for in this Section 11(n) shall be in addition
and prior to any adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares and the Preferred Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Right Certificate in accordance
with Section 26 hereof; provided, however, that no failure to prepare or file
such certificate, or to mail such summary thereof, shall void or impair the
effectiveness of any adjustment referred to herein.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. In the event, directly or indirectly, (a) the Company
shall consolidate with, or merge with and into, any other Person (other than
(x) any employee benefit plan of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan or (y) a wholly-owned
Subsidiary of the Company, and pursuant to such consolidation or merger all of
the Common Shares of the Company are converted into the right to receive Common
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<PAGE> 31
Shares of such Subsidiary on a share-for-share basis), (b) any Person (other
than any employee benefit plan of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan) shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provisions shall be made so
that (i) each holder of a Right (except as otherwise provided therein) shall
thereafter have the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement, such number of Common Shares of such other
Person (including the Company as successor thereto or as the surviving
corporation) as shall be equal to the result obtained by (X) multiplying the
then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)) and dividing that
product by (Y) 50% of the current per share market price of the Common Shares
of such other Person (determined pursuant to Section 11(d)) on the date of
consummation of such
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consolidation, merger, sale or transfer; (ii) the issuer of such Common Shares
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of
shares of its Common Shares in accordance with Section 9) in connection with
such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be practicable, in
relation to the shares of its Common Shares thereafter deliverable upon the
exercise of the Rights. The Company shall not enter into any transaction of
the kind referred to in this Section 13 if at the time of such transaction
there are any rights, warrants, instruments or securities outstanding or any
agreement or arrangements which, as a result of the consummation of such
transaction, would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. The Company shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto the Company
and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidation or sales or other
transfers.
In the event the Company shall consolidate with, or merge with
and into, a wholly-owned Subsidiary of the Company and pursuant to such
consolidation or merger all
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of the Common Shares of the Company are converted into the right to receive
Common Shares of such Subsidiary on a share-for-share basis, then proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement, the same number of one
one-hundredths of a Preferred Share of such Subsidiary (which Preferred Shares
shall be as nearly identical as practicable to the Preferred Shares as defined
herein) as the number of one one-hundredths of a Preferred Share of the Company
for which a Right is then exercisable; (ii) such Subsidiary shall thereafter be
liable for, and shall assume, by virtue of such consolidation or merger, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such Subsidiary; and (iv)
such Subsidiary shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Preferred Shares in accordance with
Section 9) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be practicable, in relation to its Preferred Shares thereafter
deliverable upon exercise of the Rights. The Company shall not consummate any
such consolidation or merger unless prior thereto the Company and such
Subsidiary shall have executed and delivered to the Rights Agent a supplemental
agreement so providing.
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Section 14. Fractional Rights and Fractional Shares. (a)
The Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a) the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
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making a market in the Rights the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-hundredth of a Preferred Share may, at the election of the company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred shares. In lieu of fractional Preferred Shares that are not
integral multiples of the one-hundredth of a Preferred Share, the Company
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of the Preferred Share. For purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)) for the Trading Day immediately prior to the date of
such exercise.
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(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of actions given to the Right
Agent under Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Right Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations
of any Person subject to this Agreement.
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<PAGE> 37
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the
Preferred Shares or any other securities of the Company which
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may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any right Certificate, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in Section 25), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
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<PAGE> 39
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares or Common Shares or
for other securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of its counsel as
set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt
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<PAGE> 40
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates by their acceptance thereof, shall be bound:
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<PAGE> 41
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent, and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except
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<PAGE> 42
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3, 11,
13, 23 or 24, or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
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<PAGE> 43
(f) The Company agrees that it will perform, execute
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
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<PAGE> 44
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated
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<PAGE> 45
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be, or shall
be affiliated with, a corporation organized and doing business under the laws
of the United States or of the State of Texas or of the State of New York or of
the State of Delaware (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of Texas or the State of New York or the State of Delaware), in good
standing, having a principal office in the State of Texas or in the State of
New York or in the State of Delaware, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares and Preferred Shares, and mail a notice thereof in
writing to the registered holders of the
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<PAGE> 46
Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per share and the number
of kind or class of shares or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to such time as any Person
becomes an Acquiring Person redeem all but not less than all the then
outstanding Rights at a Redemption price of $.01 per right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the February 28, 1996 (such redemption price being hereinafter
referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the
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<PAGE> 47
holders of Rights shall be to receive the Redemption Price. Within 10 days
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for shares of Series A Common Stock or
Series B Common Stock at an exchange ratio of one share of Series A Common
Stock or Series B Common Stock, as determined by the Board of Directors, per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction
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<PAGE> 48
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding
Common Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50%
or more of the voting power of the Common Shares then outstanding.
Section 25. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to the holder
of its Preferred Shares (other than a regular quarterly cash dividend) or (b)
to offer to the holder of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), or (d) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, or (e) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company
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<PAGE> 49
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least 20 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
shares, whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then, in any such case, the Company shall as soon
as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the
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<PAGE> 50
company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
A.H. Belo Corporation
Communications Center
Dallas, Texas
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice of demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Chemical Mellon Shareholder Services, L.L.C.
85 Challenger Road, Overpeck Centre, 4th Floor
Ridgefield, New Jersey 07660
Attention: Vice President/Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any
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<PAGE> 51
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder, which the Company and the Rights Agent may deem
necessary or desirable, including but not limited to extending the Final
Expiration Date and, provided that at the time of such amendment there is no
Acquiring Person, the period of time during which the Rights may be redeemed,
and which shall not adversely affect the interests of the holders of Right
Certificates. Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person amend this
Agreement to lower the thresholds set forth in Sections 1(a) and 3(a) to not
less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan) and (ii)
10%.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the Benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the
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<PAGE> 52
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State, except that the rights,
duties and obligations of Chemical Mellon Shareholder Services, L.L.C. under
this Agreement shall be governed by the laws of the State of New York without
reference to the choice of law doctrine of such state.
Section 32. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
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<PAGE> 53
Section 33. Descriptive Headings. Descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
A.H. BELO CORPORATION
Attest:
By By
------------------------------ ------------------------------
Title: [Name and Title]
CHEMICAL MELLON SHAREHOLDER
SERVICES, L.L.C.
Attest:
By By
------------------------------ ------------------------------
Title: [Name and Title]
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<PAGE> 1
EXHIBIT 10.1(1)
CONTRACTS RELATING TO TELEVISION BROADCASTING
The Company has renegotiated its affiliation agreements with ABC (the
"Network"), resulting in an increase in the compensation paid by the Network
to the Company in return for long-term extension of each of the agreements.
Final documentation of the new ABC agreements has not been completed,
although the Company is receiving its increased compensation under the new
agreements.
Attached is the most recent draft of the renegotiated Agreement for
Affiliation (the "Agreement") between WFAA-TV in Dallas, Texas and ABC. The
Company anticipates that the final version of the Agreement will not materially
differ from the attached draft.
<PAGE> 2
PRIMARY TELEVISION AFFILIATION AGREEMENT
WFAA-TV, Inc.
Communications Center
606 Young Street
Dallas, TX 75202-4810
TELEVISION STATION: WFAA - Dallas, TX
Gentlemen:
The following shall constitute the agreement between American Broadcasting
Companies, Inc. ("ABC" or "we") and WFAA-TV, Inc. ("you"), in order that your
station may continue to serve the public interest, convenience and necessity.
We and you hereby mutually agree upon the following plan of network cooperation
which shall replace the affiliation agreement between WFAA Television, Inc. and
us dated September 21, 1989 (and subsequently assigned to WFAA-TV, Inc.), as
amended:
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. PRIMARY AFFILIATION. You agree to serve as our primary
affiliate to broadcast Network Television Programs, in the community to which
your station is licensed by the Federal Communications Commission, subject to
the conditions and limitations set forth herein. As used in this Agreement,
Network Television Programs means television programs which are part of the
network schedule for the then current September to September television season,
broadcast on a national television basis and in the time period established for
such broadcast by ABC. (Network
<PAGE> 3
2
Television Programs will also be referred to herein as "network programs,"
"television programs," "programs" or "programming" or in the singular of such
terms.)
B. FIRST CALL RIGHTS. To enable you to serve as our primary
affiliate, we agree to offer you first call on the right to broadcast Network
Television Programs, in the time period established by ABC for their broadcast,
in the community to which your station is licensed by the Federal
Communications Commission ("First Call Rights"), for reception by the general
public in places to which no admission is charged. Notwithstanding the
foregoing, ABC shall have the right to authorize any television broadcasting
station regardless of the community to which it is licensed by the FCC, to
broadcast any network presentation of a subject we deem to be of immediate
national significance including, but not limited to, a Presidential address.
1. You agree that, within 15 days of the date of our offer of a
First Call Right to a regularly scheduled network program, you
will advise us of your acceptance (if requested to do so by
the terms of our offer) or rejection. With respect to any
network program not regularly scheduled, you will advise us of
your acceptance or rejection of our offer of a First Call
Right within 72 hours (exclusive of Saturdays, Sundays and
holidays) after such offer has been received at your
<PAGE> 4
3
station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the
date of our offer with respect to regularly scheduled network
programs or less than 72 hours after our offer has been
received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or
rejection of such offer as promptly as possible, but in no
event after the first broadcast time specified in such offer.
Acceptance by you of our offer of a First Call Right shall
constitute your agreement to broadcast subject network program
in accordance with the terms of this Agreement and of our
offer to you. As an ABC primary affiliate, you are obligated
to accept the substantial majority of the ABC network programs
offered to you. Your failure to do so shall constitute a
material breach of this Agreement entitling ABC, in addition
to all other remedies, to terminate this Agreement on fourteen
(14) days written notice to you.
2. You will be offered "First Call Rights" with respect to:
a. Network Sponsored Programs. "Network sponsored
programs", as used in this Agreement, shall mean those Network
Television Programs which contain one or more commercial
announcements paid for by or on behalf of one
<PAGE> 5
4
or more ABC Network advertisers.
You agree to broadcast network sponsored programs in their
entirety, including but not limited to the network commercial
announcements ordered for your station, network
identifications, program promotional material or credit
announcements contained in such programs which you accept,
without interruption or deletion or addition of any kind.
Notwithstanding the foregoing, you may substitute other ABC
promotional announcements in lieu of program promotional
material which is inaccurate as it pertains to your station.
It is also understood that no commercial announcement,
promotional announcement or public service announcement will
be broadcast by you during any interval within a network
program designated by ABC as being for the sole purpose of
making a station identification announcement.
b. Network Sustaining, Cooperative and Spot Carrier
Programs.
i) We will from time to time offer you live or
recorded Network Television Programs identified as
sustaining programs, cooperative programs or spot
carrier programs. Except as set forth below in
subparagraphs (ii) and (iii), you agree to
<PAGE> 6
5
broadcast such programs which you accept in their
entirety without interruption or deletion or addition
of any kind.
ii) The network sustaining programs which we may
offer to you may not, without our prior written
consent, be sold by your station for commercial
sponsorship or interrupted for commercial
announcements or used for any purpose other than
sustaining broadcasting.
iii) You may carry the cooperative or spot carrier
programs on the same basis as regular sustaining
programs or you may offer them for commercial
sponsorship on terms and conditions specified by us
at the time such programs are offered to you.
C. PROGRAM DELIVERY. By means satisfactory to us, we will
arrange, at our own expense, for programs to be delivered to your station.
II. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 1st day
of September, 1994, and shall continue until [ * ].
* Confidential information has been omitted and filed separately with the SEC.
<PAGE> 7
6
III. NETWORK STATION COMPENSATION
A. You will be entitled to receive an Annual Compensation
Guarantee (net of affiliation fees and payable monthly in equal installments)
as set forth in subparagraph B for (i) the first year of this agreement and
(ii) for each year thereafter during the term hereof provided that the
following conditions are satisfied in the year immediately preceding each such
year including the first year (subject to your station's rights to reject or
substitute programming pursuant to paragraphs VI(C) (a) and (b) of this
Agreement):
1. your station maintains the same level of clearances of ABC
network programs as it maintained in the 1993-1994 television season
(i.e., the last two quarters of 1993 and the first two quarters of
1994) (the "1994 Season");
2. your station's preemption levels for network programming do
not exceed such preemption levels during the 1994 Season; and
3. Nightline will be cleared on a "live" basis beginning no later
than January 2, 1995;
B. The Annual Compensation Guarantee shall be [ * ] Dollars,
provided, that for any period when Nightline is cleared on a live basis, the
Annual
* Confidential information has been omitted and filed separately with the SEC.
<PAGE> 8
7
Compensation Guarantee shall be [ * ] Dollars.
C. Your entitlement to the annual compensation guarantee in any
particular year after the first year hereof is dependent on your satisfaction
for the immediately preceding year (including the first year hereof) of the
conditions set out immediately above in subparagraph A. For any year following
a year in which such conditions have been satisfied, your compensation will be
in the amount of the guarantee (plus any additional compensation due under
subparagraph D immediately below). For any year following a year in which such
conditions have not been satisfied, your compensation will be determined
instead solely by the formula set forth in Schedule A attached hereto and made
a part hereof.
D. For any year (including the first year hereof) in which your
annual compensation will be in the amount of the guarantee, your compensation
under the formula set forth in Schedule A will be compared with the guarantee
and if such compensation is greater than such guarantee, you will be paid the
difference as additional compensation for that year.
E. During any year in which the annual compensation guarantee set
forth in subparagraphs A and B above does not apply, we reserve the right to
reevaluate and change at any time (a) the network station rate set forth in
Schedule A, (b) the percentage(s)
* Confidential information has been omitted and filed separately with the SEC.
<PAGE> 9
8
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect ninety (90) days prior to the effective
date of any such change. If the effect of such changes would be to decrease
your annual network compensation under Schedule A by more than 25%, you may, if
you so elect, terminate this affiliation agreement by giving us prior written
notification within forty-five (45) days after the date of our notice to you.
IV. NETWORK NON-DUPLICATION PROTECTION
You shall be entitled to network non-duplication protection
provided as and to the extent set forth in Rider One to this Agreement, which
is attached hereto and made a part hereof.
V. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein,
shall mean the substitution of a special commercial in place of a regularly
scheduled network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at
our request, furnish such personnel and equipment as may be necessary
to (a) broadcast cut-in announcements from your station alone, or (b)
originate from your station cut-in announcements to one or more other
stations, without regard to whether or not your station is requested
to broadcast said cut-in announcement(s). Notwithstanding anything
contained in
<PAGE> 10
9
this Agreement, you may refuse to broadcast any such cut-in
announcement in the community to which your station is licensed by the
FCC if, in your opinion, it is not in the public interest, convenience
or necessity, but you shall nevertheless furnish such personnel and
equipment as may be necessary to originate such cut-in announcement(s)
from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized
by us and then only in accordance with the instructions furnished to
you. You will be supplied, as promptly as possible, with the material
and instructions for these announcements.
3. We may cancel any order for cut-in announcements without
liability on our part, provided we do so upon not less than
twenty-four (24) hours' notice to you, failing which, we will pay you
the compensation you would have received if the announcement(s) had
continued as scheduled for twenty-four (24) hours following receipt by
you of such notice of cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the applicable table set
forth in Schedule B hereto and hereby made a part hereof.
<PAGE> 11
10
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein,
shall mean a visual commercial announcement, made by you on behalf of a local
dealer of a network advertiser, not exceeding ten seconds of a one-minute
network commercial announcement or five seconds of a thirty-second network
commercial announcement projected by means of a slide and not utilizing more
than two (2) slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at
our request, furnish such personnel and equipment as may be necessary
to broadcast "local tag announcements".
2. Local tag announcements shall be broadcast in accordance with
our instructions. The network advertiser shall supply to you or
purchase from you, as promptly as possible, the slide(s) for each
local tag announcement. Local tag announcements shall not be
accompanied by oral announcements unless the network advertiser shall
make direct requests of you therefor and shall have assumed sole
responsibility for payment of such oral announcements.
3. We may cancel any order for local tag announcements without
liability on our part provided we do so upon not less than twenty-four
(24) hours' notice to you, failing which we will pay you the
compensation you would have received if the local tag announcement(s)
had continued as scheduled for
<PAGE> 12
11
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each local tag announcement which you broadcast, we shall
compensate you in accordance with the applicable table set forth in
Schedule B hereto and hereby made a part hereof.
VI. GENERAL
A. We may at any time, upon notice to you, substitute for any
scheduled network program another network program, except that if such other
network program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a network sponsored program in which event you shall be compensated
in accordance with Section III of this Agreement.
B. Nothing contained in this Agreement shall be construed to
prevent or hinder us, at any time upon notice to you as soon as practicable,
from cancellling one or more network programs, whether sponsored or sustaining,
in which event you shall receive no compensation for any such canceled network
sponsored program(s).
C. With respect to network programs offered or already accepted
pursuant to this Agreement, nothing herein contained shall be construed to
prevent or hinder you from exercising your rights
<PAGE> 13
12
under Federal Communications Commission rules to:
a) reject or refuse network programs which you reasonably believe
to be unsatisfactory, unsuitable or contrary to the public interest;
or
b) substitute a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected
or for which you have substituted a program which is of greater local or
national importance. With respect to programs already accepted hereunder, you
shall give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such
notice impracticable (e.g., coverage of breaking news or other unscheduled
events), in which case you agree to give us as much advance notice as possible
under the circumstances. Such notice shall include a statement of the reason(s)
you believe that a rejected or refused network program is unsatisfactory,
unsuitable or contrary to the public interest, and/or that a substituted
program is of greater local or national importance.
In addition to all other remedies, we shall have the right, upon
thirty (30) days' notice, to terminate your "First Call
<PAGE> 14
13
Rights" on any series of Network programs already accepted hereunder and
withdraw all future episodes of that series if one or more individual program
episode(s) is pre-empted by you for any reason other than those set forth in (a)
and (b) above.
We shall also have the right, upon thirty (30) days' notice, to
terminate your "First Call Rights" concerning any series of Network programs
already accepted hereunder and to withdraw all future episodes of that series
if three or more individual program episodes are pre-empted by you in any
thirteen-week period, whether or not such pre-emptions are for the reasons set
forth in (a) and (b) above. Such thirteen-week periods shall be measured
consecutively from the first broadcast date of the program series in question.
We reserve the right not to offer you the "First Call Rights" for the
next broadcast season on any series of Network program as to which we have
terminated your "First Call Rights" and withdrawn future episodes of that
series pursuant to this Paragraph and which has been placed by ABC on another
station serving your market.
D. You will submit to us in writing, upon forms provided by us
for that purpose, such reports covering network programs broadcast by your
station as ABC may request from time to time. To verify your carriage of
network commercial announcements, identifications and program promotional
material, we may require
<PAGE> 15
14
delivery by you, within five (5) days of our request, copies of your official
station logs, air checks or broadcast tapes.
E. Neither you nor we shall incur any liability hereunder because
of our failure to deliver, or your failure to broadcast, any or all network
programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to deliver
or broadcast.
F. You agree to notify us of any application made to the
Federal Communications Commission to modify your station's transmitter
location, power, frequency or hours of operation within ten (10) days of the
filing of such application. In the event that the transmitter location, power,
frequency or hours of operation of your station are changed at any time so that
your station is of less value to us as a network outlet than it is as of the
effective date of this agreement, including but not limited to, as a result of
additional overlap of your station's broadcast signal with that of another ABC
affiliate, we will have the right to terminate this Agreement upon thirty (30)
days' advance written notice.
G. Unless we exercise our right of termination set forth in this
paragraph, this Agreement shall be binding on any assignee or transferee of
your station's license. You agree not to assign or
<PAGE> 16
15
to transfer any of the rights or privileges granted to you under this Agreement
without our prior consent in writing, which consent shall not be unreasonably
withheld. You also agree that if any application is made to the Federal
Communications Commission pertaining to an assignment or a transfer of control
of your license, or any interest therein, you shall notify us in writing
immediately of the filing of such application. Except as to assignments or
transfers of control comprehended by Section 73.3540(f) of the Rules and
Regulations of the Federal Communications Commission, we shall have the
unilateral right to terminate this Agreement effective as of the effective date
of any assignment or transfer of control (voluntary or involuntary) of your
license or any interest therein, provided ABC shall have given you notice in
writing of such termination within thirty (30) days after we have been advised
that such application for assignment or transfer has been filed with the
Federal Communications Commission. If you fail to notify us of the assignment
or transfer of control of your station's license, we shall have the unilateral
right, as a non-exclusive remedy, to terminate this Agreement within thirty
(30) days of receiving notice of said assignment or transfer or control.
You agree that you shall not consummate any assignment or transfer of
control of your station's license until you have procured and delivered to us,
in form satisfactory to us, the acknowledgment of the proposed assignee or
transferee that, upon
<PAGE> 17
16
consummation of the assignment or transfer of control of your station's
license, the assignee or transferee will assume and perform this Agreement in
its entirety without limitation of any kind. You agree that in view of the
uniqueness of the plan of network cooperation set forth in this Agreement and
the fact that money damages would be inadequate to compensate ABC for the
breach of your obligations hereunder, in addition to all other remedies, ABC
shall be entitled to obtain equitable relief to enforce the obligations set
forth in this paragraph.
H. Your rights under this Agreement are limited to the First Call
Rights to Network Television Programs pursuant to the terms herein. You agree
not to authorize, cause, permit or enable the use of any program which we
supply to you herein for any purpose other than broadcasting by your station
pursuant to the terms herein, in the community to which your station is
licensed by the Federal Communications Commission, for reception by the general
public in places to which no admission is charged. You agree when you are
authorized to tape a program for subsequent broadcast that the recording will
be broadcast not more than once in its entirety and will be erased within six
(6) hours of use. All rights not specifically granted to you by this Agreement
with respect to the broadcast, exhibition or use of Network Television Programs
shall be retained by ABC.
<PAGE> 18
17
I. ABC will continue to offer your station substantially the same
local commercial availabilities at substantially the same times as are
presently offered to ABC affiliates generally, or will provide a comparable
economic benefit to the station.
J. Except with our prior written consent and except upon such
terms and conditions as we may impose, you agree not to authorize, cause,
permit or enable anything to be done whereby a recording on film, tape or
otherwise is made or a recording is broadcast, of a program which has been, or
is being, broadcast on our network, or a rebroadcast is made of the broadcast
transmission of your station during any hours when your station is broadcasting
a program provided by ABC.
K. With respect to any and all promotional material issued by you
or under your direction or control, you agree to abide by any and all
restrictions of which we advise you pertaining to the promotion of a network
program(s) scheduled to be broadcast by you in your community, including, but
without limitation, on-the-air promotion, billboards, and newspaper or other
printed advertisements, announcements or promotions.
L. You agree to maintain for your television station such
licenses, including performing rights licenses as now are or hereafter may be
in general use by television broadcasting stations and necessary for you to
broadcast the television programs which we
<PAGE> 19
18
furnish to you hereunder. We will clear all music in the repertory of ASCAP and
of BMI used in our network programs, thereby licensing the broadcasting of such
music in such programs over your station. You will be responsible for all music
license requirements for any commercial or other material inserted by you
within or adjacent to our network programs in accordance with this agreement.
M. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the
film or tape recordings necessary to deliver the programs to you. Such film or
tape recorded programs shall be used only for a single television broadcast
over your station. Positive prints of film or tape recorded programs are to be
shipped by us, shipping charges prepaid, and you agree to return to us or to
forward to such television station as we designate, shipping charges prepaid,
each print or copy of said film or tape recording received by you hereunder,
together with the original reels and containers furnished therewith. You will
return or forward all prints in the same condition as received by you, ordinary
wear and tear excepted, immediately after a single TV broadcast over your
station. In the event you damage a print of any film or tape recorded program
which is delivered to you, or fail to return or forward the original reels and
containers furnished therewith, as aforesaid, you agree to pay the cost of
replacing the complete print, original reels and/or containers as and when
billed by us.
<PAGE> 20
19
N. No inducements, representations or warranties except as
specifically set forth herein have been made by any of the parties to this
Agreement. This Agreement constitutes the entire contract between the parties
hereto and no provision thereof shall be changed or modified, nor shall this
Agreement be discharged in whole or in part, except by an agreement in writing,
signed by the party against whom the change, modification or discharge is
claimed or sought to be enforced; nor shall any waiver of any of the conditions
or provisions of this Agreement be effective and binding unless such waiver
shall be in writing and signed by the party against whom the waiver is
asserted, and no waiver of any provision of this Agreement shall be deemed to
be a waiver of any preceding or succeeding breach of the same or of any other
provision.
O. All notices, demands, requests or other communications which
may be or are required to be given or made by ABC or you pursuant to this
Agreement (except for our program offers and your notices of acceptance or
rejection, if required, of such offers and any other program information or
program administration communications) shall be delivered (postage or fee
prepaid) by first-class mail, express mail, express delivery service or by
facsimile transmission addressed as follows:
(a) If to you:
[station or owner]
[address, phone and fax numbers]
with a copy (which shall not constitute notice) to:
<PAGE> 21
20
[station attorney]
[address, phone and fax numbers]
(b) If to ABC:
Ms. Maureen Lesourd
Senior Vice President
Affiliate Relations
ABC Television Network
77 West 66 Street, 2nd Floor
New York, NY 10023-6298
Phone: 212-456-6493 / Fax: 212-456-7450
with a copy (which shall not constitute notice) to:
Roger Goodspeed, Esq.
Capital Cities/ABC, Inc.
Law & Regulation Department
77 West 66 Street, 16th Floor
New York, NY 10023-6298
Phone: 212-456-7593 / Fax: 212-456-6202
or to such other person, address or facsimile number as you or ABC may
designate by written notice.
P. This Agreement and all questions relating to its validity,
interpretation, performance, and enforcement (including, without limitation,
provisions concerning limitations of action), shall be governed by and
construed in accordance with the laws of the State of New York, notwithstanding
conflict-of-laws doctrines of any state or other jurisdictions to the contrary.
Q. Upon termination of this Agreement, the consent theretofore
granted to broadcast our network programs or use ABC logos or trademarks shall
be deemed immediately withdrawn and you shall have no further rights of any
nature whatsoever in such
<PAGE> 22
21
programs, logos or trademarks.
R. The parties hereto acknowledge that, in view of the uniqueness
of the plan of network cooperation set forth in this Agreement, in the event
that one party's obligations under this Agreement are not performed in
accordance with its terms, the other party would not have an adequate remedy at
law and therefore agree that each party hereto shall be entitled to specific
performance of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
S. You agree to indemnify and hold ABC and its parent
corporation, subsidiaries and their respective officers, directors, agents and
employees, successors and assigns harmless from and against any and all claims
made against us and all damages, liabilities, costs and expenses incurred as a
result of such claims, including reasonable attorney's fees, arising out of the
broadcast by ABC of any material supplied by you to ABC in accordance with this
Agreement, and we agree to indemnify and hold you harmless from and against any
and all claims made against you and all damages, liabilities, costs and
expenses incurred as a result of such claims, including reasonable attorney's
fees, arising out of the broadcast by you of any material provided by ABC to
you in accordance with this Agreement. It is understood that the foregoing
indemnities shall apply only with respect to materials that are broadcast
without change from the form and content in which such materials were
originally provided and in
<PAGE> 23
22
strict conformance to any instructions or limitations given by the party
providing the material. Each party will notify the other promptly of any
litigation or claim to which such indemnity applies and will cooperate fully in
the defense at the other party's request. The provisions of this paragraph
shall survive the expiration or sooner termination of this agreement.
T. Nothing in this Agreement shall create any partnership,
association, joint venture, fiduciary or agency relationship between ABC and
you.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By:
----------------------------------
Accepted this day of
-----
, 19
- ------------------ ---
Licensee: WFAA-TV, Inc.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 24
RIDER ONE
You shall be entitled to network non-duplication protection, as
defined by Rule 76.92 of the Federal Communications Commission Rules, as
follows:
a. The geographic zone of network non-duplication protection
shall be the Area of Dominant Influence ("ADI") (as defined by
Arbitron) in which your station is located, or any lesser zone
pursuant to any geographic restrictions contained in the Federal
Communications Commission rules and regulations, now or as
subsequently modified.
b. Network non-duplication protection shall extend to all ABC
television network programs that you broadcast in accordance with this
agreement. Protection shall not extend to individually pre-empted
programs of an otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior
to the live time period designated by us for broadcast of that network
program by your station, and shall end at 12:00 Midnight on the
seventh day following that designated time period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
<PAGE> 25
SCHEDULE A
STATION COMPENSATION
(a) We will pay you within a reasonable period of time after the close of
each four or five week accounting period, as the case may be, for
broadcasting each network sponsored program or portion thereof
hereunder, except those specified in paragraph (b) hereof, which is
broadcast over your station during the live time period* therefor, the
amount resulting from multiplying the following:
(i) Your network station rate of (1) [ * ]
Dollars during any period when your annual
compensation guarantee of [ * ] Dollars
is in effect, (2) [ * ] Dollars during
any period when your annual compensation
guarantee of [ * ] Dollars is in effect,
or (3) such other applicable rate, pursuant
to the terms of Section III of the Agreement;
by
(ii) the percentage set forth in the table below
opposite such applicable time period or such
other percentage applicable pursuant to the
terms of Section III of the Agreement; by
* Confidential information has been omitted and filed separately with the SEC.
<PAGE> 26
(iii) the fraction of an hour substantially
occupied by such program or portion there;
of;
by
(iv) the fraction of the aggregate length of all
commercial availabilities** during such
program or portion thereof occupied by
network commercial announcements***.
* Live time period, as used herein, means the time
period or periods as specified by us in our initial
offer of a network program for the broadcast of such
program over your station.
** Commercial availability, as used herein, means a
period of time made available by us during a network
sponsored program for one or more network commercial
announcements or local cooperative commercial
announcements.
*** Network commercial announcement, as used herein,
means a commercial announcement broadcast over your
station during a commercial availability and paid for
by or on behalf of one or more of our network
advertisers, not including, however, announcements
consisting of billboards, credits, public service
announcements, promotional announcements, and
announcements required by law.
<PAGE> 27
For each network sponsored program or portion thereof, except those specified
in paragraph (b) hereof, which is broadcast by your station during a time
period other than the live time period therefor, we will pay you as if your
station had broadcast such program or portion thereof during such live time
period, except that:
(i) if the percentage set forth above opposite
the time period during which your station
broadcast such program or portion thereof is
less than that set forth opposite such live
time period, then we will pay you on the
basis of the time period during which your
station broadcast such program or portion
thereof.
(b) Payment For Other Programs
We will establish such compensation arrangements as we and you shall agree upon
prior to the expiration of the applicable periods of time for program
acceptance, as set forth in Paragraph I(B) of this affiliation agreement, for
all network sponsored programs broadcast by your station consisting of:
(i) Sports programs;
(ii) special events programs (including, but not
limited to, special news programs, awards
programs, entertainment specials and
miniseries);
<PAGE> 28
(iii) programs for which we specified a live time
period, which time period straddles any of
the time period categories in the table in
paragraph (a) above; and
(iv) any other programs which we may designate
from time to time.
(c) Deductions
(i) From the amounts we are to pay you for
station compensation hereunder, we shall
throughout the term of this affiliation
agreement deduct during each accounting
period a sum equal to 168% of your station's
network rate, or such other percentage
applicable pursuant to the terms of Section
III of the Agreement, for each week of said
period.
(ii) We will deduct a sum equal to the total of
whatever fees, if any, may have mutually been
agreed upon by you and us with respect to
local cooperative commercial announcements
broadcast during the applicable accounting
period for which your station is being
compensated.
<PAGE> 29
SCHEDULE B
COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S)
A. CUT-IN ANNOUNCEMENTS
I. With respect to programs broadcast by you during the time
period(s) specified by us in our initial offer for such
programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast during the time period(s)
specified by us in our initial offer for such program, we will
pay you the amount resulting from multiplying your network
station rate (set forth in Section II of the agreement) by the
percentage for cut-in announcement(s) set forth in the
applicable Table in Section C below opposite such applicable
time period.
II. With respect to programs broadcast by you with our consent
during time period(s) other than that specified by us in our
initial offer of such programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast by you with our consent
during a time period other than that specified by us in our
initial offer of such program, we will pay you an amount as
set forth in Section A.I. above, except that:
<PAGE> 30
(i) if the percentage set forth in the applicable
Table in Section C below for cut-in announcement(s)
opposite the time period during which your station
actually broadcast the program in which you broadcast
or originated such cut-in announcement(s) is less than
that set forth opposite the applicable time period
specified in our initial offer of such program, then
we will pay you for each cut-in announcement(s) on
the basis of the time period during which your
station actually broadcast such program.
III. With respect to programs broadcast by you in a time period
which straddles any of the time period categories set forth in
the applicable Table in Section C below.
In the event that we offer you a program for broadcast in a
time period which straddles any of the time period categories
set forth in the applicable Table in Section C below, and you
broadcast such program within which you also broadcast or
originate one or more cut-in announcement(s), we will pay you
such amounts as we and you shall have agreed upon prior to
your broadcast or
<PAGE> 31
origination of such cut-in announcement(s).
B. LOCAL TAG ANNOUNCEMENTS
I. With respect to programs broadcast by you during the time
period(s) specified by us in our initial offer for such
programs.
For each local tag announcement you broadcast within a
program, which program is broadcast during the time period(s)
specified by us in our initial offer for such program, we will
pay you the amount resulting from multiplying your network
station rate (set forth in Section II of the agreement) by the
percentage for each local tag announcement set forth in the
applicable Table in Section C below opposite such applicable
time period.
II. With respect to programs broadcast by you with our consent
during time Period(s) other than that specified by us in our
initial offer of such programs.
For each local tag announcement you broadcast within a
program, which program is broadcast by you with our consent
during a time period other than that specified by us in our
initial offer of such program, we will pay you an amount as
set forth in Section B.I. above, except that:
<PAGE> 32
(i) if the percentage set forth in the applicable
Table in Section C below for each local tag
announcement opposite the time period during which
your station actually broadcast the program in which
you broadcast such local tag announcement is less
than that set forth opposite the applicable time
period specified in our initial offer of such
program, then we will pay you for each local tag
announcement on the basis of the time period during
which your station actually broadcast such program.
III. With respect to programs broadcast by you in a time period
which straddles any of the time period categories set forth in
the applicable Table in Section C below. In the event that we
offer you a program for broadcast in a time period which
straddles any of the time period categories set forth in the
applicable Table in Section C below, and you broadcast such
program within which you also broadcast one or more local tag
announcement(s), we will pay you such amounts as we and you
shall have agreed upon prior to your broadcast of such local
tag announcement(s).
<PAGE> 1
EXHIBIT 10.1(2)
CONTRACTS RELATING TO TELEVISION BROADCASTING
The Company has renegotiated its affiliation agreements with ABC (the
"Network") with respect to its Sacramento, California station (KXTV), resulting
in an increase in the compensation paid by the Network to the Company in
return for long-term extension of the agreement. Final documentation of the new
ABC agreement has not been completed, although the Company expects the agreement
to be substantially in the form of the WFAA agreement except for the
compensation provisions which are peculiar to KXTV. The final documents will be
filed upon completion.
<PAGE> 1
EXHIBIT 10.1(3)
CBS TELEVISION NETWORK
A Division of CBS Inc.
AFFILIATION AGREEMENT
-------------
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York,
New York 10019 ("CBS"), and KHOU-TV, INC., P.O. Box 11, Houston, Texas 77001
("Broadcaster"), licensed to operate television station KHOU-TV at Houston,
Texas on channel number 11 ("Affiliated Station"), hereby mutually covenant and
agree, as of the 9th day of December, 1994, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station
those Network Programs which are to be broadcast on a network basis by any
television broadcast station licensed to operate in Affiliated Station's
community of license. (See Rider I.)
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement,
Broadcaster may accept such offer only by notifying CBS, by means of CBS's
computer-based communications system, of such acceptance within 72 hours
(exclusive of Saturdays, Sundays and holidays), or such longer period as CBS
may specify therein, after such offer; provided, however, that, if the first
broadcast referred to in such offer is scheduled to occur less than 72 hours
after the making of the offer, Broadcaster shall notify CBS of the acceptance
or rejection of such offer as promptly as possible and in any event prior to
the first broadcast time specified in such offer. Such acceptance shall
constitute Broadcaster's agreement that Affiliated Station will broadcast such
Network Program or Programs in accordance with the terms of this Agreement and
of such offer, and so long, as Affiliated Station so broadcasts such Network
Program or Programs, CBS will not, subject to its rights in the program
material, authorize the broadcast thereof on a network basis by any other
television broadcast station licensed to operate in Affiliated Station's
community of license; provided, however, that CBS shall have the right to
authorize any television broadcast station, wherever licensed to operate, to
broadcast any Network Program consisting of an address by the President of the
United States of America on a subject of public importance or consisting of
coverage of a matter of immediate national concern. If, as to any Network
Program offered hereunder, Broadcaster does not notify CBS as provided for in
this Paragraph l(b), Broadcaster shall have no rights with respect to such
Network Program, and CBS may offer such Network Program on the same or
different terms to any other television broadcast station or stations licensed
to operate in Affiliated
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<PAGE> 2
Station's community of license; provided, however, that, if any Network Program
offered hereunder is accepted, by Affiliated Station, upon any other terms or
conditions to which CBS agrees in writing, then the provisions of this
Agreement shall apply to the broadcast of such Network Program except to the
extent such provisions are expressly varied by the terms and conditions of such
acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to
it for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods
specified by CBS in its initial offer of a Network
Program to Broadcaster for the broadcast of such
Network Program over Affiliated Station; (ii)
"Affiliated Station's Network Rate" shall be
$ [ ** ] and is used herein solely for purposes
of computing payments by CBS to Broadcaster; (iii)
"Commercial Availability" means a period of time made
available by CBS during a Network Commercial Program
for one or more Network Commercial Announcements or
local cooperative commercial announcements; and (iv)
"Network Commercial Announcements" means a commercial
announcement broadcast over Affiliated Station during
a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not
include announcements consisting of billboards,
credits, public service announcements, promotional
announcements and announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
(ii) the percentage set forth below opposite such time
period (which, unless otherwise specified, is
expressed in Affiliated Station's then-current local
time); by
(iii) the fraction of an hour substantially occupied by
such program or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof
occupied by Network Commercial Announcements.
* Effective February 2, 1996 Affiliated Station's Network Rate will be
increased to $ [ ** ]. (See Rider II.)
** Confidential information has been omitted and filed separately with the SEC.
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<PAGE> 3
Table
<TABLE>
<S> <C>
Monday through Friday
6:00 a.m. - 9:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%
9:00 a.m. - 11:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
11:00 a.m. - 3:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
3:00 p.m. - 5:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 7:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
7:00 p.m. - 10:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
Saturday
7:00 a.m. - 8:00 a.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
8:00 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 7:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
7:00 p.m. - 10:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
Sunday
10:30 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 6:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
6:00 p.m. - 10:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
</TABLE>
For each Network Program or portion thereof, except those specified in
Paragraph 2(c) hereof, which is broadcast by Affiliated Station during a time
period other than the Live Time Period therefor and the Live Time Period for
which is set forth in the table above, CBS shall pay Broadcaster as if
Affiliated Station had broadcast such program or portion thereof during such
Live Time Period, except that:
(i) if the percentage set forth above opposite the time
period during which Affiliated Station broadcast such
program or portion thereof is less than that set
forth opposite such Live Time Period, then CBS shall
pay Broadcaster on the basis of the time period
during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during
which Affiliated Station broadcast such program is
not set forth in the table above, then CBS shall pay
Broadcaster in accordance with Paragraph (c) hereof.
(c) Payment or Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than
those daypart percentages set forth in the table in Paragraph 2(b) hereinabove)
shall be used in computing payment to Affiliated Station:
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<PAGE> 4
<TABLE>
<S> <C>
Monday-Friday Daytime Game shows . . . . . . . . . . . . . . . . . 15%
Monday-Friday Continuing Dramas . . . . . . . . . . . . . . . . . 6%
Monday-Friday Late Night Daypart . . . . . . . . . . . . . . . . . 47.8% per telecast for live
clearance or 12.8% per telecast for
delayed clearance
Monday-Friday CBS EVENING NEWS . . . . . . . . . . . . . . . . . . 5%
CBS Sports programs . . . . . . . . . . . . . . . . . . . . . . . 0%
CBS SUNDAY MORNING and FACE THE NATION . . . . . . . . . . . . . . 8%
</TABLE>
Notwithstanding the payment obligations set forth in Paragraph 2(b)
above, CBS shall pay Broadcaster such amounts as specified in CBS's program
offer for Network Programs broadcast by Affiliated Station consisting of (i)
special event programs (including, but not limited to, such programs as awards
programs, mini-series, movie specials, entertainment specials, special-time-
period broadcasts of regularly-scheduled series, and news specials such as
political conventions, election coverage, presidential inaugurations and
related events), (ii) paid political programming, and (iii) programs for which
CBS specified a Live Time Period, or which Affiliated Station broadcast during
a time period, any portion of which is not set forth in the table above.
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there
shall be deducted, for each week of the term of this Agreement, a sum equal to
168% of Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a
re-evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of
compensation payments to stations in markets of varying size, the size of any
general reduction of the Network Rate of CBS's affiliated stations pursuant to
this Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+) Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced according until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the
end of each four-week or five-week accounting period of CBS for Network
Commercial Programs broadcast during such accounting period.
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<PAGE> 5
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such
reports as CBS may reasonably request concerning the broadcasting of Network
Programs by Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October
4, 1994 and expiring on [ ** ] provided; however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to
the Federal Communications Commission relating to a transfer either of any
interest in Broadcaster or of Broadcaster's license for Affiliated Station. In
the event that CBS shall reasonably disapprove of the proposed transferee, CBS
shall have the right to terminate this Agreement effective as of the effective
date of any such transfer (except a transfer within the provisions of Section
73.3540(f) of the Federal Communications Commission's present Rules and
Regulations) by giving Broadcaster notice thereof, and of its reasons for
disapproving of the proposed transferee, within thirty days after the date on
which Broadcaster gives CBS notice of the making of such application. If CBS
does not so terminate this Agreement, Broadcaster shall, prior to the effective
date of any such transfer of any interest in Broadcaster or of Broadcaster's
license for Affiliated Station, and as a condition precedent to such transfer,
procure and deliver to CBS, in form reasonably satisfaction to CBS, the
agreement of the proposed transferee that, upon consummation of the transfer,
the transferee will unconditionally assume and perform all obligations of
Broadcaster under this agreement. Upon delivery of said agreement to CBS, in
form satisfactory to it, the provisions of this Agreement applicable to
Broadcaster shall, effective upon the date of such transfer, be applicable to
such transferee.
Broadcaster's obligations to procure the assumption of this Agreement
by any transferee of Affiliated Station as a condition precedent to such
transfer shall be deemed to be of the essence of this Agreement; further,
Broadcaster expressly recognizes that money damages will be inadequate to
compensate CBS for the breach of such obligation, and that CBS shall
accordingly be entitled to equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power,
Frequency or Hours of Operation of Affiliated Station.
** Confidential information has been omitted and filed separately with the SEC.
-5-
<PAGE> 6
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days'
notice thereof within thirty (30) days of the date on which CBS first learns of
such application.
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a
petition in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster
otherwise takes advantage of any insolvency law, or an involuntary petition in
bankruptcy if filed against Broadcaster and not dismissed within thirty (30)
days thereafter, or if a receiver or trustee of any of Broadcaster's property
is appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Each party, effective upon notice to the other, may, in addition to
its other rights, terminate this Agreement if any material representation,
warranty or agreement of the other party contained in this Agreement has been
breached.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated
Station unless such Network Program has first been offered by CBS to
Broadcaster for broadcasting over Affiliated Station and has been accepted by
Broadcaster in accordance with this Agreement. Except with the prior written
consent of CBS, Broadcaster shall neither sell any Network Program, in whole or
in part, or any time therein, for sponsorship, nor otherwise use Network
Programs except as specifically authorized in this Agreement. Affiliated
Station shall not broadcast any commercial announcement or announcements during
any interval, within a Network Program, which is designated by CBS to
Affiliated Station as being for the sole purpose of making a station
identification announcement. Broadcaster shall, with respect to each Network
Program broadcast over Affiliated Station, broadcast such Network Program in
its entirety (including but not limited to commercial announcements,
billboards, credits, public service announcements, promotional announcements
and network identification), without interruption, alteration, compression,
deletion or addition of any kind, from the beginning of the Network Program to
the final system cue at the conclusion of the Network Program. Nothing herein
shall be construed as preventing Broadcaster's deletion of (i) part of a
Network Program in order to broadcast an emergency
-6-
<PAGE> 7
announcement or news bulletin; (ii) a promotional announcement for a Network
Program not to be broadcast over Affiliated Station (provided that Affiliated
Station shall broadcast an alternative promotional announcement for CBS network
programming in place of the deleted promotional announcement); (iii) such
words, phrases or scenes as Broadcaster, in the reasonable exercise of its
judgment, determines it would not be in the public interest to broadcast over
Affiliated Station; provided, however, that Broadcaster shall not substitute
for any material deleted pursuant to this clause (iii) any commercial or
promotional announcement of any kind whatsoever; and provided further that
Broadcaster shall notify CBS of every such deletion within 72 hours thereof.
Broadcaster shall not, without CBS's prior written consent, authorize or permit
any Network Program, recording, or other material furnished by CBS to
Broadcaster or Affiliated Station hereunder to be recorded, duplicated,
rebroadcast, retransmitted or otherwise used for any purpose whatsoever other
than broadcasting by Affiliated Station as provided herein; except that
Broadcaster may assert a right to carriage of Affiliated Station's signal by a
cable system pursuant to the provisions of Section 4 of the Cable Consumer
Protection and Competition Act of 1992 ("the 1992 Cable Act") and may, to the
extent permitted by paragraph 4(b) hereof, grant consent to the retransmission
of such signal by a cable system or other multichannel video programming
distributor, as defined by said Act, pursuant to the provisions of Section 6
thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated
Station's signal by a cable system or other multichannel video programming
distributor pursuant to the provisions of Section 6 of the 1992 Cable Act
(hereafter "retransmission consent"), provided that one of the following
conditions applies at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market;
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case
shall retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's
signal is to be retransmitted by such service to television home outside of
Affiliated Station's television market other than "unserved household(s)," as
that term is defined in Section 119(d) of Title 17,
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<PAGE> 8
United States Code, as in effect on October 5, 1992. For purposes of this
paragraph, a station's "television market" shall be defined in the same manner
as set forth in Sections 76.55(e) and 76.59 of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network
Program, Broadcaster shall use Broadcaster-owned tape to record the Network
Program when transmitted by CBS only for a single broadcast by Affiliated
Station and shall erase the Program recorded on the tape within 24 hours of
broadcasting the Network Program and observe any limitations which CBS may
place on the exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted
hereunder by Broadcaster, nothing in this Agreement shall be construed to
prevent or hinder:
(i) Broadcaster from rejecting or refusing any such
Network Program which Broadcaster reasonably believes
to be unsatisfactory or unsuitable or contrary to the
public interest, or from substituting a program
which, in Broadcaster's opinion, is of greater local
or national importance; or
(ii) CBS from substituting one or more other Network
Programs, in which event CBS shall offer such
substituted program or programs to Broadcaster
pursuant to the provisions of Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or
cancellation by either party hereto, such party shall notify the other thereof
as soon as practicable by telex or by such computer-based communications system
as CBS may develop for notifications of this kind. Notice given to CBS shall be
addressed to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is directly or indirectly paid or promised to, or
charged or accepted by, CBS or any employee of CBS or any other person with
whom CBS deals in connection with the production or preparation of such Network
Program. As used in this Paragraph 6, the term "service or other valuable
consideration" shall not include any service or property furnished without
charge or at a nominal charge for use in, or in connection with, any Network
Program
-8-
<PAGE> 9
"unless it is so furnished in consideration for an identification in a
broadcast of any person, product, service, trademark, or brand name beyond an
identification which is reasonably related to the use of such service or
property on the broadcast," as such words are used in Section 317 of the
Communications Act of 1934 as amended. The provisions of this Paragraph 6
requiring the disclosure of information shall not apply in any case where,
because of a waiver granted by the Federal Communications Commission, an
announcement is not required to be made under said Section 317. The inclusion
in any such Network Program of an announcement required by said Section 317
shall constitute the disclosure to Broadcaster required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims, damages,
liabilities, costs and expenses arising out of the broadcasting, pursuant to
this Agreement, of Network Programs furnished by CBS to the extent that such
claims, damages, liabilities, costs and expenses are (i) based upon alleged
libel, slander, defamation, invasion of the right of privacy, or violation or
infringement of copyright or literary or dramatic rights; (ii) based upon the
broadcasting of Network programs as furnished by CBS, without any deletions by
Broadcaster; and (iii) not based upon any material added by Broadcaster to such
Network Programs (as to which deletions and added material Broadcaster shall,
to the like extent, indemnify CBS, all network advertisers, if any, on such
Network Program, and the advertising agencies of such advertisers).
Furthermore, each party will so indemnify the other only if such other party
gives the indemnifying party prompt notice of any claim or litigation to which
its indemnity applies; it being agreed that the indemnifying party shall have
the right to assume the defense of any or all claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully with the
indemnifying party in such defense and in the settlement of such claim or
litigation. Except as herein provided to the contrary, neither Broadcaster nor
CBS shall have any rights against the other party hereto for claims by third
persons or for the non-operation of facilities or the non-furnishing of Network
Programs for broadcasting if such non-operation or non-furnishing is due to
failure of equipment, action or claims by any third person, labor dispute or
any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS
regional news cooperatives (but as a separate obligation of this Affiliation
Agreement as well), Broadcaster shall make available, on request by CBS News,
coverage produced by Affiliated Station of news stories and breaking news
events of national and/or regional interest, to CBS News and to regional news
cooperatives operated by CBS News. Affiliated Station shall be compensated at
CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's
"Network Exclusivity Zone" shall mean the zone within thirty-five (35) miles of
the station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55
miles of said reference
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<PAGE> 10
points; provided, however, that in no case shall the "Network Exclusivity Zone"
include an area within the Designated Market Area ("DMA"), as most recently
determined by the A.C. Nielsen Company, of another CBS Television Network
Affiliate. A station's "reference points" for purposes of this paragraph shall
be as defined in Section 73.658(m) of the FCC rules, and shall be deemed to
include, with respect to a station in a hyphenated market, the reference points
of each named community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1)
day before and ending seven (7) days after the delivery of such Network Program
by CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more
than a one day delay as accepted by CBS; and provided further that nothing
herein shall be deemed to preclude CBS from granting to any other broadcast
television station licensed to any other community similar network
non-duplication rights within that station's network Exclusivity Zone, and
Broadcaster's aforesaid right of network non-duplication shall not apply with
respect to the transmission of the programs of another CBS affiliate (current
or future) by a "community unit," as that term is defined by the rules of the
FCC, located (wholly or partially) within the area in which Broadcaster's
Network Exclusivity Zone overlaps the Network Exclusivity Zone of that other
CBS affiliate.
(c) Broadcaster's network non-duplication rights under this
paragraph shall be subject to cancellation by CBS on six (6) months written
notice to Broadcaster. Any such cancellation by CBS shall not affect any of the
other rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns
to Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
(i) Broadcaster may not assign its rights in the
Descramblers to any party without CBS's written
approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease
and Broadcaster shall take appropriate steps to
assign the Descramblers to CBS.
(b) Broadcaster shall use Descramblers solely in connection with
the broadcast rights granted and specified in the Agreement.
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<PAGE> 11
(c) CBS makes no warranties whatsoever, either express or implied,
in respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all
installation and other related costs or charges in connection with the use and
installation of the Descramblers. Broadcaster shall at all times use and
maintain the Descramblers as instructed by CBS and the manufacturer and shall
use its best efforts to assure that the Descramblers are kept in good condition
and that no tampering with the Descramblers or other breach of security, as
defined in subparagraph (g) below, occurs. Broadcaster shall promptly notify
the CBS Satellite Management Center by telephone of any defect or failure in
the operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with
its failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement,
CBS will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or
non-performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation
of the terms and conditions of this Agreement, said use shall be a material
breach of this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any
breach in the security of the two Descramblers covered by this Agreement, such
breach of security shall be a material breach of this Agreement. Breach of
security shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
11. General.
(a) As of the beginning of the term hereof, this Agreement takes
the place of, and is substituted for, any and all television affiliation
agreements heretofore existing between Broadcaster and CBS concerning
Affiliated Station, subject only to the fulfillment of any obligations
thereunder relating to events occurring prior to the beginning of the term
hereof. This Agreement cannot be changed or terminated orally and no waiver by
either Broadcaster or CBS of any breach of any provision hereof shall be or be
deemed to be a waiver of any preceding or subsequent breach of the same or any
other provision of this Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement
are subject to all applicable federal, state and local law, rules and
regulations (including but not limited to the Communications Act of 1934 as
amended and the Rules and Regulations of the Federal Communications Commission)
and this
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<PAGE> 12
Agreement and all matters or issues collateral thereto shall be governed by the
law of the State of New York applicable to contracts performed entirely
therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or
hold itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall
be given in writing, by personal delivery, mail, telegram, telex system or
private wire at the respective addresses of Broadcaster and CBS set forth
above, unless either party at any time or times designates another address for
itself by notifying the other party thereof by certified mail, in which case
all notices to such party shall thereafter be given at its most recently so
designated address. Notice given by mail shall be deemed given on the date of
mailing thereof with postage prepaid. Notice given by telegram shall be deemed
given on delivery of such telegram to a telegraph office with charges therefor
prepaid or to be billed to the sender thereof. Notice given by private wire
shall be deemed given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation of this
Agreement.
(f) In the event that CBS enters into an affiliation agreement
with respect to any other station (including a CBS Owned television station)
which contains terms more favorable to such other station than those afforded
to Affiliated Station in this Agreement with respect to exclusivity to be
provided against the distribution and exhibition of Network Programs within
such other station's Designated Market Area (as defined by A.C. Nielsen
Company) by any cable television system, MMDS, SMATV, DBS, satellite
distribution system, video dialtone system, telephone company system or any
other non-broadcast distribution or exhibition system now known or hereafter
developed, then CBS shall promptly offer in writing to amend this Agreement to
conform to such more favorable terms. It is expressly understood that this
subparagraph shall have no application to terms in any other CBS affiliation
agreement dealing with matters other than the program exclusivity discussed in
the preceding sentence. It is further understood that, within a reasonable time
of the execution hereof, the CBS Television Network will enter an affiliation
agreement with each of the CBS Owned television stations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
KHOU-TV, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By: /s/ WARD L. HUEY, JR. By: /s/ [ILLEGIBLE]
-------------------------- ------------------------------
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<PAGE> 13
RIDER I
Subject to Section 73.658 of the FCC's rules, Broadcaster agrees that
Affiliated Station will (i) broadcast LATE SHOW WITH DAVID LETTERMAN in the
live time period offered by CBS effective January 2, 1995; (ii) broadcast LATE,
LATE SHOW WITH TOM SNYDER upon its premiere on January 9, 1995 on no more than
a half hour delay from the live time period in which the program is offered by
CBS; (iii) limit one-time-only preemptions of primetime Network programs to no
more than 25 hours per year; and (iv) maintain its clearance of other Network
programs at the level existing as of the date hereof.
RIDER II
It is expressly understood that such Network Rate of $ [ ** ] will
generate $ [ ** ] in annual net compensation at full live clearance of the
existing Network program schedule (which shall be understood to exclude twenty
five (25) hours of one-time-only primetime preemptions per year) and normal
full sellout of Network inventory.
** Confidential information has been omitted and filed separately with the SEC.
<PAGE> 1
EXHIBIT 10.1(4)
CBS TELEVISION NETWORK
A Division of CBS Inc.
AFFILIATION AGREEMENT
-------------
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York,
New York 10019 ("CBS"), and WWL-TV, INC., 1024 NORTH RAMPART STREET, NEW
ORLEANS, LOUISIANA 70116 ("Broadcaster"), licensed to operate television
station WWL-TV at NEW ORLEANS, LOUISIANA on channel number 4 ("Affiliated
Station"), hereby mutually covenant and agree, as of the 9TH day of DECEMBER,
1994, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows:
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station
those Network Programs which are to be broadcast on a network basis by any
television broadcast station licensed to operate in Affiliated Station's
community of license. (See Rider I.)
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement,
Broadcaster may accept such offer only by notifying CBS, by means of CBS's
computer-based communications system, of such acceptance within 72 hours
(exclusive of Saturdays, Sundays and holidays), or such longer period as CBS
may specify therein, after such offer; provided, however, that, if the first
broadcast referred to in such offer is scheduled to occur less than 72 hours
after the making of the offer, Broadcaster shall notify CBS of the acceptance
or rejection of such offer as promptly as possible and in any event prior to
the first broadcast time specified in such offer. Such acceptance shall
constitute Broadcaster's agreement that Affiliated Station will broadcast such
Network Program or Programs in accordance with the terms of this Agreement and
of such offer, and so long, as Affiliated Station so broadcasts such Network
Program or Programs, CBS will not, subject to its rights in the program
material, authorize the broadcast thereof on a network basis by any other
television broadcast station licensed to operate in Affiliated Station's
community of license; provided, however, that CBS shall have the right to
authorize any television broadcast station, wherever licensed to operate, to
broadcast any Network Program consisting of an address by the President of the
United States of America on a subject of public importance or consisting of
coverage of a matter of immediate national concern. If, as to any Network
Program offered hereunder, Broadcaster does not notify CBS as provided for in
this Paragraph l(b), Broadcaster shall have no rights with respect to such
Network Program, and CBS may offer such Network Program on the same or
different terms to any other television broadcast station or stations licensed
to operate in Affiliated
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<PAGE> 2
Station's community of license; provided, however, that, if any Network Program
offered hereunder is accepted, by Affiliated Station, upon any other terms or
conditions to which CBS agrees in writing, then the provisions of this
Agreement shall apply to the broadcast of such Network Program except to the
extent such provisions are expressly varied by the terms and conditions of such
acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to
it for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods
specified by CBS in its initial offer of a Network
Program to Broadcaster for the broadcast of such
Network Program over Affiliated Station; (ii)
"Affiliated Station's Network Rate" shall be
$ [ ** ] and is used herein solely for purposes of
computing payments by CBS to Broadcaster; (iii)
"Commercial Availability" means a period of time made
available by CBS during a Network Commercial Program
for one or more Network Commercial Announcements or
local cooperative commercial announcements; and (iv)
"Network Commercial Announcements" means a commercial
announcement broadcast over Affiliated Station during
a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not
include announcements consisting of billboards,
credits, public service announcements, promotional
announcements and announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
(ii) the percentage set forth below opposite such time
period (which, unless otherwise specified, is
expressed in Affiliated Station's then-current local
time); by
(iii) the fraction of an hour substantially occupied by
such program or portion thereof; by
(iv) the fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof
occupied by Network Commercial Announcements.
* Effective February 2, 1996 Affiliated Station's Network Rate will be
increased to $ [ ** ]. (See Rider II.)
** Confidential information has been omitted and filed separately with the SEC.
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<PAGE> 3
Table
<TABLE>
<S> <C>
Monday through Friday
6:00 a.m. - 9:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
9:00 a.m. - 11:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
11:00 a.m. - 3:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
3:00 p.m. - 5:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 7:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
7:00 p.m. - 10:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
Saturday
7:00 a.m. - 8:00 a.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
8:00 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 7:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
7:00 p.m. - 10:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
Sunday
10:30 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12%
5:00 p.m. - 6:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
6:00 p.m. - 10:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
10:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
</TABLE>
For each Network Program or portion thereof, except those specified in
Paragraph 2(c) hereof, which is broadcast by Affiliated Station during a time
period other than the Live Time Period therefor and the Live Time Period for
which is set forth in the table above, CBS shall pay Broadcaster as if
Affiliated Station had broadcast such program or portion thereof during such
Live Time Period, except that:
(i) if the percentage set forth above opposite the time
period during which Affiliated Station broadcast such
program or portion thereof is less than that set
forth opposite such Live Time Period, then CBS shall
pay Broadcaster on the basis of the time period
during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during
which Affiliated Station broadcast such program is
not set forth in the table above, then CBS shall pay
Broadcaster in accordance with Paragraph (c) hereof.
(c) Payment or Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than
those daypart percentages set forth in the table in Paragraph 2(b) hereinabove)
shall be used in computing payment to Affiliated Station:
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<PAGE> 4
<TABLE>
<S> <C>
Monday-Friday Daytime Game shows . . . . . . . . . . . . . . . . . 15%
Monday-Friday Continuing Dramas . . . . . . . . . . . . . . . . . 6%
Monday-Friday Late Night Daypart . . . . . . . . . . . . . . . . . 10.0% per telecast for live
clearance or 12.8% per telecast for
delayed clearance
Monday-Friday CBS EVENING NEWS . . . . . . . . . . . . . . . . . . 5%
CBS Sports programs . . . . . . . . . . . . . . . . . . . . . . . 0%
CBS SUNDAY MORNING and FACE THE NATION . . . . . . . . . . . . . . 8%
</TABLE>
Notwithstanding the payment obligations set forth in Paragraph 2(b)
above, CBS shall pay Broadcaster such amounts as specified in CBS's program
offer for Network Programs broadcast by Affiliated Station consisting of (i)
special event programs (including, but not limited to, such programs as awards
programs, mini-series, movie specials, entertainment specials, special-time-
period broadcasts of regularly-scheduled series, and news specials such as
political conventions, election coverage, presidential inaugurations and
related events), (ii) paid political programming, and (iii) programs for which
CBS specified a Live Time Period, or which Affiliated Station broadcast during
a time period, any portion of which is not set forth in the table above.
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there
shall be deducted, for each week of the term of this Agreement, a sum equal to
168% of Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with a
re-evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of
compensation payments to stations in markets of varying size, the size of any
general reduction of the Network Rate of CBS's affiliated stations pursuant to
this Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151+) Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced according until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the
end of each four-week or five-week accounting period of CBS for Network
Commercial Programs broadcast during such accounting period.
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<PAGE> 5
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such
reports as CBS may reasonably request concerning the broadcasting of Network
Programs by Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on October
4, 1994 and expiring on [ ** ] provided; however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph 1 hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to
the Federal Communications Commission relating to a transfer either of any
interest in Broadcaster or of Broadcaster's license for Affiliated Station. In
the event that CBS shall reasonably disapprove of the proposed transferee, CBS
shall have the right to terminate this Agreement effective as of the effective
date of any such transfer (except a transfer within the provisions of Section
73.3540(f) of the Federal Communications Commission's present Rules and
Regulations) by giving Broadcaster notice thereof, and of its reasons for
disapproving of the proposed transferee, within thirty days after the date on
which Broadcaster gives CBS notice of the making of such application. If CBS
does not so terminate this Agreement, Broadcaster shall, prior to the effective
date of any such transfer of any interest in Broadcaster or of Broadcaster's
license for Affiliated Station, and as a condition precedent to such transfer,
procure and deliver to CBS, in form reasonably satisfaction to CBS, the
agreement of the proposed transferee that, upon consummation of the transfer,
the transferee will unconditionally assume and perform all obligations of
Broadcaster under this agreement. Upon delivery of said agreement to CBS, in
form satisfactory to it, the provisions of this Agreement applicable to
Broadcaster shall, effective upon the date of such transfer, be applicable to
such transferee.
Broadcaster's obligations to procure the assumption of this Agreement
by any transferee of Affiliated Station as a condition precedent to such
transfer shall be deemed to be of the essence of this Agreement; further,
Broadcaster expressly recognizes that money damages will be inadequate to
compensate CBS for the breach of such obligation, and that CBS shall
accordingly be entitled to equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power,
Frequency or Hours of Operation of Affiliated Station.
** Confidential information has been omitted and filed separately with the SEC.
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<PAGE> 6
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster fails to notify CBS as required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days'
notice thereof within thirty (30) days of the date on which CBS first learns of
such application.
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a
petition in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster
otherwise takes advantage of any insolvency law, or an involuntary petition in
bankruptcy if filed against Broadcaster and not dismissed within thirty (30)
days thereafter, or if a receiver or trustee of any of Broadcaster's property
is appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Each party, effective upon notice to the other, may, in addition to
its other rights, terminate this Agreement if any material representation,
warranty or agreement of the other party contained in this Agreement has been
breached.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated
Station unless such Network Program has first been offered by CBS to
Broadcaster for broadcasting over Affiliated Station and has been accepted by
Broadcaster in accordance with this Agreement. Except with the prior written
consent of CBS, Broadcaster shall neither sell any Network Program, in whole or
in part, or any time therein, for sponsorship, nor otherwise use Network
Programs except as specifically authorized in this Agreement. Affiliated
Station shall not broadcast any commercial announcement or announcements during
any interval, within a Network Program, which is designated by CBS to
Affiliated Station as being for the sole purpose of making a station
identification announcement. Broadcaster shall, with respect to each Network
Program broadcast over Affiliated Station, broadcast such Network Program in
its entirety (including but not limited to commercial announcements,
billboards, credits, public service announcements, promotional announcements
and network identification), without interruption, alteration, compression,
deletion or addition of any kind, from the beginning of the Network Program to
the final system cue at the conclusion of the Network Program. Nothing herein
shall be construed as preventing Broadcaster's deletion of (i) part of a
Network Program in order to broadcast an emergency
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<PAGE> 7
announcement or news bulletin; (ii) a promotional announcement for a Network
Program not to be broadcast over Affiliated Station (provided that Affiliated
Station shall broadcast an alternative promotional announcement for CBS network
programming in place of the deleted promotional announcement); (iii) such
words, phrases or scenes as Broadcaster, in the reasonable exercise of its
judgment, determines it would not be in the public interest to broadcast over
Affiliated Station; provided, however, that Broadcaster shall not substitute
for any material deleted pursuant to this clause (iii) any commercial or
promotional announcement of any kind whatsoever; and provided further that
Broadcaster shall notify CBS of every such deletion within 72 hours thereof.
Broadcaster shall not, without CBS's prior written consent, authorize or permit
any Network Program, recording, or other material furnished by CBS to
Broadcaster or Affiliated Station hereunder to be recorded, duplicated,
rebroadcast, retransmitted or otherwise used for any purpose whatsoever other
than broadcasting by Affiliated Station as provided herein; except that
Broadcaster may assert a right to carriage of Affiliated Station's signal by a
cable system pursuant to the provisions of Section 4 of the Cable Consumer
Protection and Competition Act of 1992 ("the 1992 Cable Act") and may, to the
extent permitted by paragraph 4(b) hereof, grant consent to the retransmission
of such signal by a cable system or other multichannel video programming
distributor, as defined by said Act, pursuant to the provisions of Section 6
thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated
Station's signal by a cable system or other multichannel video programming
distributor pursuant to the provisions of Section 6 of the 1992 Cable Act
(hereafter "retransmission consent"), provided that one of the following
conditions applies at the time retransmission consent is granted:
(i) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market;
(ii) the majority of television homes served by the cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county or
community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case
shall retransmission consent be granted to a television receive-only satellite
service, or a direct broadcast satellite service, if Affiliated Station's
signal is to be retransmitted by such service to television homes outside of
Affiliated Station's television market other than "unserved household(s)," as
that term is defined in Section 119(d) of Title 17,
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<PAGE> 8
United States Code, as in effect on October 5, 1992. For purposes of this
paragraph, a station's "television market" shall be defined in the same manner
as set forth in Sections 76.55(e) and 76.59 of the FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network
Program, Broadcaster shall use Broadcaster-owned tape to record the Network
Program when transmitted by CBS only for a single broadcast by Affiliated
Station and shall erase the Program recorded on the tape within 24 hours of
broadcasting the Network Program and observe any limitations which CBS may
place on the exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted
hereunder by Broadcaster, nothing in this Agreement shall be construed to
prevent or hinder:
(i) Broadcaster from rejecting or refusing any such
Network Program which Broadcaster reasonably believes
to be unsatisfactory or unsuitable or contrary to the
public interest, or from substituting a program
which, in Broadcaster's opinion, is of greater local
or national importance; or
(ii) CBS from substituting one or more other Network
Programs, in which event CBS shall offer such
substituted program or programs to Broadcaster
pursuant to the provisions of Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or
cancellation by either party hereto, such party shall notify the other thereof
as soon as practicable by telex or by such computer-based communications system
as CBS may develop for notifications of this kind. Notice given to CBS shall be
addressed to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is directly or indirectly paid or promised to, or
charged or accepted by, CBS or any employee of CBS or any other person with
whom CBS deals in connection with the production or preparation of such Network
Program. As used in this Paragraph 6, the term "service or other valuable
consideration" shall not include any service or property furnished without
charge or at a nominal charge for use in, or in connection with, any Network
Program
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<PAGE> 9
"unless it is so furnished in consideration for an identification in a
broadcast of any person, product, service, trademark, or brand name beyond an
identification which is reasonably related to the use of such service or
property on the broadcast," as such words are used in Section 317 of the
Communications Act of 1934 as amended. The provisions of this Paragraph 6
requiring the disclosure of information shall not apply in any case where,
because of a waiver granted by the Federal Communications Commission, an
announcement is not required to be made under said Section 317. The inclusion
in any such Network Program of an announcement required by said Section 317
shall constitute the disclosure to Broadcaster required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims, damages,
liabilities, costs and expenses arising out of the broadcasting, pursuant to
this Agreement, of Network Programs furnished by CBS to the extent that such
claims, damages, liabilities, costs and expenses are (i) based upon alleged
libel, slander, defamation, invasion of the right of privacy, or violation or
infringement of copyright or literary or dramatic rights; (ii) based upon the
broadcasting of Network programs as furnished by CBS, without any deletions by
Broadcaster; and (iii) not based upon any material added by Broadcaster to such
Network Programs (as to which deletions and added material Broadcaster shall,
to the like extent, indemnify CBS, all network advertisers, if any, on such
Network Program, and the advertising agencies of such advertisers).
Furthermore, each party will so indemnify the other only if such other party
gives the indemnifying party prompt notice of any claim or litigation to which
its indemnity applies; it being agreed that the indemnifying party shall have
the right to assume the defense of any or all claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully with the
indemnifying party in such defense and in the settlement of such claim or
litigation. Except as herein provided to the contrary, neither Broadcaster nor
CBS shall have any rights against the other party hereto for claims by third
persons or for the non-operation of facilities or the non-furnishing of Network
Programs for broadcasting if such non-operation or non-furnishing is due to
failure of equipment, action or claims by any third person, labor dispute or
any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS
regional news cooperatives (but as a separate obligation of this Affiliation
Agreement as well), Broadcaster shall make available, on request by CBS News,
coverage produced by Affiliated Station of news stories and breaking news
events of national and/or regional interest, to CBS News and to regional news
cooperatives operated by CBS News. Affiliated Station shall be compensated at
CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's
"Network Exclusivity Zone" shall mean the zone within thirty-five (35) miles of
the station's reference points, or, in the case of a "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55
miles of said reference
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<PAGE> 10
points; provided, however, that in no case shall the "Network Exclusivity Zone"
include an area within the Designated Market Area ("DMA"), as most recently
determined by the A.C. Nielsen Company, of another CBS Television Network
Affiliate. A station's "reference points" for purposes of this paragraph shall
be as defined in Section 73.658(m) of the FCC rules, and shall be deemed to
include, with respect to a station in a hyphenated market, the reference points
of each named community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1)
day before and ending seven (7) days after the delivery of such Network Program
by CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more
than a one day delay as accepted by CBS; and provided further that nothing
herein shall be deemed to preclude CBS from granting to any other broadcast
television station licensed to any other community similar network
non-duplication rights within that station's network Exclusivity Zone, and
Broadcaster's aforesaid right of network non-duplication shall not apply with
respect to the transmission of the programs of another CBS affiliate (current
or future) by a "community unit," as that term is defined by the rules of the
FCC, located (wholly or partially) within the area in which Broadcaster's
Network Exclusivity Zone overlaps the Network Exclusivity Zone of that other
CBS affiliate.
(c) Broadcaster's network non-duplication rights under this
paragraph shall be subject to cancellation by CBS on six (6) months written
notice to Broadcaster. Any such cancellation by CBS shall not affect any of the
other rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns
to Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
(i) Broadcaster may not assign its rights in the
Descramblers to any party without CBS's written
approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease
and Broadcaster shall take appropriate steps to
assign the Descramblers to CBS.
(b) Broadcaster shall use Descramblers solely in connection with
the broadcast rights granted and specified in the Agreement.
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<PAGE> 11
(c) CBS makes no warranties whatsoever, either express or implied,
in respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all
installation and other related costs or charges in connection with the use and
installation of the Descramblers. Broadcaster shall at all times use and
maintain the Descramblers as instructed by CBS and the manufacturer and shall
use its best efforts to assure that the Descramblers are kept in good condition
and that no tampering with the Descramblers or other breach of security, as
defined in subparagraph (g) below, occurs. Broadcaster shall promptly notify
the CBS Satellite Management Center by telephone of any defect or failure in
the operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with
its failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement,
CBS will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or
non-performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation
of the terms and conditions of this Agreement, said use shall be a material
breach of this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any
breach in the security of the two Descramblers covered by this Agreement, such
breach of security shall be a material breach of this Agreement. Breach of
security shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
11. General.
(a) As of the beginning of the term hereof, this Agreement takes
the place of, and is substituted for, any and all television affiliation
agreements heretofore existing between Broadcaster and CBS concerning
Affiliated Station, subject only to the fulfillment of any obligations
thereunder relating to events occurring prior to the beginning of the term
hereof. This Agreement cannot be changed or terminated orally and no waiver by
either Broadcaster or CBS of any breach of any provision hereof shall be or be
deemed to be a waiver of any preceding or subsequent breach of the same or any
other provision of this Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement
are subject to all applicable federal, state and local law, rules and
regulations (including but not limited to the Communications Act of 1934 as
amended and the Rules and Regulations of the Federal Communications Commission)
and this
-11-
<PAGE> 12
Agreement and all matters or issues collateral thereto shall be governed by the
law of the State of New York applicable to contracts performed entirely
therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or
hold itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall
be given in writing, by personal delivery, mail, telegram, telex system or
private wire at the respective addresses of Broadcaster and CBS set forth
above, unless either party at any time or times designates another address for
itself by notifying the other party thereof by certified mail, in which case
all notices to such party shall thereafter be given at its most recently so
designated address. Notice given by mail shall be deemed given on the date of
mailing thereof with postage prepaid. Notice given by telegram shall be deemed
given on delivery of such telegram to a telegraph office with charges therefor
prepaid or to be billed to the sender thereof. Notice given by private wire
shall be deemed given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation of this
Agreement.
(f) In the event that CBS enters into an affiliation agreement
with respect to any other station (including a CBS Owned television station)
which contains terms more favorable to such other station than those afforded
to Affiliated Station in this Agreement with respect to exclusivity to be
provided against the distribution and exhibition of Network Programs within
such other station's Designated Market Area (as defined by A.C. Nielsen
Company) by any cable television system, MMDS, SMATV, DBS, satellite
distribution system, video dialtone system, telephone company system or any
other non-broadcast distribution or exhibition system now known or hereafter
developed, then CBS shall promptly offer in writing to amend this Agreement to
conform to such more favorable terms. It is expressly understood that this
subparagraph shall have no application to terms in any other CBS affiliation
agreement dealing with matters other than the program exclusivity discussed in
the preceding sentence. It is further understood that, within a reasonable time
of the execution hereof, the CBS Television Network will enter an affiliation
agreement with each of the CBS Owned television stations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WWL-TV, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By: /s/ WARD L. HUEY, JR. By: /s/ [ILLEGIBLE]
-------------------------- ------------------------------
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<PAGE> 13
RIDER I
Subject to Section 73.658 of the FCC's rules, Broadcaster agrees that
Affiliated Station will (i) broadcast LATE SHOW WITH DAVID LETTERMAN in the
live time period offered by CBS effective September, 1995; (ii) broadcast LATE,
LATE SHOW WITH TOM SNYDER upon its premiere on January 9, 1995 on no more than
an hour and a half delay from the live time period in which the program is
offered by CBS, and will broadcast SNYDER by September, 1996, or earlier should
the time period become available, on no more than a half hour delay from the
live time period in which the program is offered by CBS; (iii) limit
one-time-only preemptions of primetime Network programs to no more than 10
hours per year; and (iv) maintain its clearance of other Network programs at
the level existing as of the date hereof.
RIDER II
It is expressly understood that such Network Rate of $ [ ** ] will
generate $ [ ** ] in annual net compensation at full live clearance of the
existing Network program schedule (which shall be understood to exclude CBS
THIS MORNING, Monday - Friday, 7am - 9am, CNYT and ten (10) hours of
one-time-only primetime preemptions per year) and normal full sellout of
Network inventory.
** Confidential information has been omitted and filed separately with the SEC.
<PAGE> 1
Exhibit 10.3(9)
AMENDMENT NO. 7 TO
THE A. H. BELO CORPORATION
1986 LONG TERM INCENTIVE PLAN
WHEREAS, A. H. Belo Corporation (the "Company") has heretofore adopted THE
A. H. BELO CORPORATION 1986 LONG TERM INCENTIVE PLAN (the "1986 Plan"); and
WHEREAS, pursuant to the provisions of paragraph 18 of the 1986 Plan, the
Board of Directors of the Company desires herein to amend the 1986 Plan.
NOW, THEREFORE, the 1986 Plan is hereby amended as follows:
1. Paragraph 7(c) of the 1986 Plan is amended by adding the following
sentence at the end of such paragraph:
"Payment of the exercise price may also be made, in the discretion
of the Committee, by delivery (including by telecopy) to the Corporation or
its designated agent of an executed irrevocable option exercise form
together with irrevocable instructions to a broker-dealer to sell (or
margin) a sufficient portion of the shares of Common Stock and to deliver
the sale (or margin loan) proceeds directly to the Corporation to pay the
exercise price."
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
in its name and on its behalf by the officer thereunto duly authorized as of
the 25th day of October, 1995.
A. H. BELO CORPORATION
By: /s/Robert W. Decherd
------------------------------------
Chairman of the Board, President
and Chief Executive Officer
ATTEST:
/s/Michael J. McCarthy
- -------------------------------
Secretary
<PAGE> 1
Exhibit 10.3(10)
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
As Amended and Restated Effective October 1, 1989
<PAGE> 2
A. H. BELO CORPORATION
EMPLOYEE SAVINGS AND INVESTMENT PLAN
A. H. Belo Corporation, a Delaware corporation, amends and
completely restates the A. H. Belo Corporation Employee Savings and Investment
Plan effective October 1, 1989. The Plan is a profit sharing plan with a cash
or deferred arrangement intended to qualify under Code section 401(a) and to
meet the requirements of Code section 401(k). The Company has entered into
trust agreements with Fidelity Management Trust Company and Mellon Bank, N.A.
that provide for the investment and reinvestment of the assets of the Plan.
Words and phrases with initial capital letters used throughout
the Plan are defined in Article 1.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3 CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 5 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 6 DISTRIBUTIONS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 7 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 PROVISIONS REGARDING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9 ADMINISTRATION OF THE PLAN
AND TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 10 LIMITATIONS ON CONTRIBUTIONS AND
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 11 RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 12 TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 13 ADOPTION OF PLAN BY CONTROLLED
GROUP MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 14 AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 15 TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE 16 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
APPENDIX A PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
(ii)
<PAGE> 4
ARTICLE 1
DEFINITIONS
1.1 "Account" means the records, including subaccounts,
maintained by the Committee in the manner provided in Article 4 to determine
the interest of each Participant in the assets of the Plan and may refer to any
or all of the Participant's Deferral Contribution Account, Matching
Contribution Account and Transfer Account.
1.2 "Beneficiary" means the one or more persons or entities
entitled to receive distribution of a Participant's interest in the Plan in the
event of his death as provided in Article 7.
1.3 "Board of Directors" or "Board" means the Board of
Directors of the Company.
1.4 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.5 "Committee" or "Administrative Committee" means the
Committee appointed under Article 9.
1.6 "Company" means A. H. Belo Corporation, a Delaware
corporation.
1.7 "Company Stock" means the Series A Common Stock, par
value $1.67 per share, and the Series B Common Stock, par value $1.67 per
share, of the Company.
1.8 "Compensation" means the earnings paid to an Employee
by the Participating Employers which are subject to reporting on Internal
Revenue Service Form W-2, excluding, however, reimbursements for moving
expenses and any earnings paid to the Employee in a form other than cash, and
also excluding, from and after January 1, 1995, automobile allowances. In
addition, Compensation includes any contributions made by the Participating
Employers on behalf of an Employee pursuant to a deferral election under the
Plan or under any other employee benefit plan containing a cash or deferred
arrangement under Code section 401(k) and any amounts that would have been
received as cash but for an election to receive benefits under a cafeteria plan
meeting the requirements of Code section 125. The annual Compensation of an
Employee taken into account for any purpose will not exceed $200,000 for any
Plan Year ending before January 1, 1994, as adjusted in regulations prescribed
by the Secretary of the Treasury, and will not exceed $150,000 for any Plan
Year beginning after December 31, 1993, as adjusted in
<PAGE> 5
regulations prescribed by the Secretary of the Treasury. For purposes of
applying the $200,000 and $150,000 limits set forth in the preceding sentence,
if an Employee is a Highly Compensated Employee (as defined in Section 10.2(m))
who is either (i) a 5-percent owner, determined in accordance with Code section
414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the
10 most highly compensated Employees ranked on the basis of Compensation paid
by the Controlled Group during the year, such Highly Compensated Employee and
the members of his family (as hereafter defined) will be treated as a single
employee and the Compensation of each member of the family will be aggregated
with the Compensation of the Highly Compensated Employee. The limitation on
Compensation will be allocated among such Highly Compensated Employee and his
family members in proportion to each individual's Compensation. For purposes
of this Section, the term 'family' means an Employee's spouse and any lineal
descendants who are under age 19 at the end of the Plan Year in question.
1.9 "Controlled Group" means the Company and all other
corporations, trades and businesses, the employees of which, together with
employees of the Company, are required by the first sentence of subsection (b),
by subsection (c), by subsection (m) or by subsection (o) of Code section 414
to be treated as if they were employed by a single employer.
1.10 "Controlled Group Member" means each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group, but only during such period as it is or was such a member.
1.11 "Deferral Contribution" means the amount of a
Participant's Compensation that he elects to have contributed to the Plan by
the Participating Employers rather than paid to him directly in cash.
1.12 "Deferral Contribution Account" means the Account
established for each Participant, the balance of which is attributable to the
Participant's Deferral Contributions and earnings and losses of the Trust Fund
with respect to such contributions.
1.13 "Effective Date" means the first day of October, 1989.
1.14 "Employee" means any person who is: (i) employed by
any Controlled Group Member if their relationship is, for federal income tax
purposes, that of employer and employee, or (ii) "a leased employee" of a
Controlled Group Member within the meaning of Code section 414(n)(2) but only
for purposes of the requirements of Code section 414(n)(3).
-2-
<PAGE> 6
1.15 "Entry Date" means January 1, April 1, July 1 and
October 1 of each Plan Year.
1.16 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.17 "Hour of Service" means each hour credited in
accordance with the following rules:
(a) Credit for Services Performed. An Employee
will be credited with one Hour of Service for each hour for which he is paid,
or entitled to payment, by one or more Controlled Group Members for the
performance of duties.
(b) Credit for Periods in Which No Services Are
Performed. An Employee will be credited with one Hour of Service for each hour
for which he is paid, or entitled to payment, by one or more Controlled Group
Members on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated); except
that (i) no more than 501 Hours of Service will be credited under this
subsection (b) to an Employee on account of any single continuous period during
which he performs no duties (whether or not such period occurs in a single Plan
Year), (ii) an hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are
performed will not be credited to the Employee if the payment is made or due
under a plan maintained solely for the purpose of complying with applicable
workers' compensation or unemployment compensation or disability insurance
laws, and (iii) Hours of Service will not be credited for a payment which
solely reimburses an Employee for medical or medically related expenses
incurred by the Employee. For purposes of this subsection (b), an Employee
will be credited with Hours of Service on the basis of his regularly scheduled
working hours per week (or per day if he is paid on a daily basis) or, in the
case of an Employee without a regular work schedule, on the basis of 40 Hours
of Service per week (or 8 Hours of Service per day if he is paid on a daily
basis) for each week (or day) during the period of time during which no duties
are performed; except that an Employee will not be credited with a greater
number of Hours of Service for a period during which no duties are performed
than the number of hours for which he is regularly scheduled for the
performance of duties during the period or, in the case of an Employee without
a regular work schedule, on the basis of 40 Hours of Service per week (or 8
Hours of Service per day if he is paid on a daily basis).
(c) Credit for Back Pay. An Employee will be
credited with one Hour of Service for each hour for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to by
one or more Controlled Group Members;
-3-
<PAGE> 7
except that an hour will not be credited under both subsection (a) or (b), as
the case may be, and this subsection (c), and Hours of Service credited under
this subsection (c) with respect to periods described in subsection (b) will be
subject to the limitations and provisions under subsection (b).
(d) Credit for Certain Absences. If an Employee is
absent from work on or after the Effective Date for any period by reason of the
pregnancy of the Employee, by reason of the birth of a child of the Employee,
by reason of the placement of a child with the Employee, or for purposes of
caring for a child for a period beginning immediately following the birth or
placement of that child, the Employee will be credited with Hours of Service
(solely for the purpose of determining whether he has a One Year Break in
Service under the Plan) equal to (i) the number of Hours of Service which
otherwise would normally have been credited to him but for his absence, or (ii)
if the number of Hours of Service under clause (i) is not determinable, 8 Hours
of Service per normal workday of the absence, provided, however, that the total
number of Hours of Service credited to an Employee under this subsection (d) by
reason of any pregnancy, birth or placement will not exceed 501 Hours of
Service. Hours of Service will not be credited to an Employee under this
subsection (d) unless the Employee furnishes to the Committee such timely
information as the Committee may reasonably require to establish that the
Employee's absence from work is for a reason specified in this subsection (d)
and the number of days for which there was such an absence.
(e) Manner of Counting Hours. No hour will be
counted more than once or be counted as more than one Hour of Service even
though the Employee may receive more than straight-time pay for it. With
respect to Employees whose compensation is not determined on the basis of
certain amounts for each hour worked during a given period and for whom hours
are not required to be counted and recorded by any federal law (other than
ERISA), Hours of Service will be credited on the basis of 10 Hours of Service
daily, 45 Hours of Service weekly, 95 Hours of Service semi-monthly, or 190
Hours of Service monthly, if the Employee's compensation is determined on a
daily, weekly, semi-monthly or monthly basis, respectively, for each period in
which the Employee would be credited with at least one Hour of Service under
this section. Except as otherwise provided in subsection (d), Hours of Service
will be credited to eligibility and vesting computation periods in accordance
with the provisions of 29 C.F.R. Section 2530.200b-2, which provisions are
incorporated in this Plan by reference.
1.18 "Matching Contribution Account" means the Account
established for each Participant, the balance of which is attributable to
Participating Employer matching contributions
-4-
<PAGE> 8
made pursuant to Article 3, forfeitures and earnings and losses of the Trust
Fund with respect to such contributions and forfeitures.
1.19 [Reserved]
1.20 "One Year Break in Service" means a period of at least
12 consecutive months in which an Employee is absent from service. A One Year
Break in Service Year will begin on the Employee's termination date (as defined
in Section 1.31) and will end on the day on which the Employee again performs
an Hour of Service for a Controlled Group Member.
If an Employee who is absent from work with a
Controlled Group Member because of (i) the Employee's pregnancy, (ii) the birth
of the Employee's child, (iii) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (iv) caring for such
child immediately following such birth or placement, will be absent for such
reason beyond the first anniversary of the first date of his absence, his
period of absence, solely for purposes of preventing a One Year Break in
Service, will commence on the second anniversary of the first day of his
absence from work. The period of absence from work between the first and
second anniversaries of the first date of his absence from work will not be
taken into account in determining whether the Employee has completed a Year of
Service. The provisions of this paragraph will not apply to an Employee unless
the Employee furnishes to the Committee such timely information that the
Committee may reasonably require to establish (i) that the absence from work is
for one of the reasons specified in this paragraph and (ii) the number of days
for which there was such an absence.
Notwithstanding the foregoing, if an Employee is
classified as a part-time Employee in accordance with standard personnel
practices of his Participating Employer and is subject to the 1,000 Hour of
Service requirement of Section 1.31, the term 'One Year Break in Service' means
a 12 consecutive month computation period (determined under Section 1.31) in
which the Employee fails to complete more than 500 Hours of Service.
1.21 "Participant" means an Employee or former Employee who
has met the applicable eligibility requirements of Article 2 and who has not
yet received a distribution of the entire amount of his vested interest in the
Plan.
1.22 "Participating Employer" means each Controlled Group
Member set forth on Appendix A and any other Controlled Group Member or
organizational unit of the Company or a Controlled Group Member which is
designated as a Participating Employer under the Plan by the Board of
Directors.
-5-
<PAGE> 9
1.23 "Plan" means the employee savings and investment plan
set forth herein, as amended from time to time.
1.24 "Plan Year" means the period with respect to which the
records of the Plan are maintained, which will be the 12-month period beginning
on January 1 and ending on December 31.
1.25 "Qualified Plan" means an employee benefit plan that is
qualified under Code section 401(a).
1.26 "Transfer Account" means the Account established for
each Participant, the balance of which is attributable to the Participant's
rollover and transfer contributions made pursuant to Article 3 and earnings and
losses of the Trust Fund with respect to such contributions.
1.27 "Trust Agreement" means the agreement or agreements
executed by the Company and the Trustee which establishes a trust fund to
provide for the investment, reinvestment, administration and distribution of
contributions made under the Plan and the earnings thereon, as amended from
time to time.
1.28 "Trust Fund" means the assets of the Plan held by the
Trustee pursuant to the Trust Agreement.
1.29 "Trustee" means the one or more individuals or
organizations who have entered into the Trust Agreement as Trustee, and any
duly appointed successor.
1.30 "Valuation Date" means the date with respect to which
the Trustee determines the fair market value of the assets comprising the Trust
Fund or any portion thereof. The regular Valuation Date will be the last day
of each Plan Year. However, if the Committee determines that the fair market
value of any asset comprising the Trust Fund has changed substantially since
the previous Valuation Date, or if the Committee determines it to be in the
best interests of the Plan and the Participants to value any asset of the Trust
Fund at a time other than the regular Valuation Date, the Committee may fix, in
a uniform and nondiscriminatory manner, one or more interim Valuation Dates.
1.31 "Year of Service" means each period of 365 days
(determined by aggregating periods of service that are not consecutive)
beginning on the date an Employee is first credited with an Hour of Service (or
is again credited with an Hour of Service following his reemployment) and
ending on the earlier of (i) the date on which the Employee quits, retires, is
discharged or dies or (ii) the first anniversary of the date on which the
Employee is absent from service with a Controlled Group Member for any other
reason, such as vacation, holiday, sickness, disability, leave of absence or
layoff (the earlier of such dates
-6-
<PAGE> 10
is hereafter referred to as the Employee's "termination date"). An Employee's
period of service for purposes of determining a Year of Service will include
each period in which the Employee is absent from service for less than 12
months (measured from the Employee's termination date) and any periods during
which he is in the service of the armed forces of the United States and his
reemployment rights are guaranteed by law, provided he returns to employment
with a Controlled Group Member within the time such rights are guaranteed.
Notwithstanding the foregoing, if an Employee is
classified as a part-time Employee in accordance with standard personnel
practices of his Participating Employer and did not participate in the
Company's Employee Stock Purchase Plan immediately before the Effective Date,
the term 'Year of Service' means the completion of 1,000 Hours of Service
during the 12 consecutive months beginning on the date the Employee first
performs an Hour of Service, or during the 12 consecutive months beginning on
any anniversary of such date.
If a part-time Employee who is subject to the 1,000
Hour of Service requirement of this Section transfers to full-time status, his
service for the computation period in which the transfer occurs (but not for
prior computation periods) will be determined under the elapsed time method, or
if more favorable to the Employee, on the basis of his Hours of Service
completed as of the date of such transfer. If a full-time Employee transfers
to part-time status and becomes subject to the 1,000 Hour of Service
requirement of this Section, he will receive credit for service under the
elapsed time method through the date of the transfer, and his service during
the computation period in which the transfer occurs will be credited on the
basis of Hours of Service (with any fractional year prior to the date of
transfer converted to hours on the basis of 190 Hours of Service for each month
in which the Employee was credited with at least one Hour of Service).
In determining whether an Employee of WWL-TV, Inc., a
Delaware corporation ("WWL-TV"), has completed a Year of Service for purposes
of eligibility to participate under Section 2.1, each such Employee who became
an employee of WWL-TV on June 1, 1994, and who immediately prior to that date
was an employee of Rampart Operating Partnership, a partnership organized under
the laws of the State of Louisiana ("Rampart"), will receive credit for an Hour
of Service for each hour for which the Employee was paid or entitled to payment
by Rampart or any affiliate of Rampart determined in accordance with Section
1.17 and will receive credit for his period of employment with Rampart or any
affiliate of Rampart calculated in the same manner as if it had been employment
with a Controlled Group Member.
-7-
<PAGE> 11
In determining whether an Employee of Third Avenue
Television, Inc., a Delaware corporation ("Third Avenue"), has completed a Year
of Service for purposes of eligibility to participate under Section 2.1, each
such Employee who became an employee of Third Avenue on February 1, 1995, and
who immediately prior to that date was an employee of KIRO, Inc., a Washington
corporation ("KIRO"), will receive credit for an Hour of Service for each hour
for which the Employee was paid or entitled to payment by KIRO or any affiliate
of KIRO determined in accordance with Section 1.17 and will receive credit for
his period of employment with KIRO or any affiliate of KIRO calculated in the
same manner as if it had been employment with a Controlled Group Member.
In determining whether an Employee of Bryan-College
Station Eagle, Inc., a Delaware corporation ("Bryan-College Station"), has
completed a Year of Service for purposes of eligibility to participate under
Section 2.1, each such Employee who became an employee of Bryan-College Station
on December 26, 1995, and who immediately prior to that date was an employee of
Worrell Enterprises, Inc. ("Worrell") or Eagle Publishing Limited Partnership
("Eagle Publishing"), or any affiliate of either company, will receive credit
for an Hour of Service for each hour for which the Employee was paid or
entitled to payment by Worrell, Eagle Publishing or any affiliate of either
company determined in accordance with Section 1.17 and will receive credit for
his period of employment with Worrell, Eagle Publishing or any affiliate of
either company calculated in the same manner as if it had been employment with
a Controlled Group Member.
In determining whether an Employee of Owensboro
Messenger-Inquirer, Inc., a Delaware corporation ("Owensboro"), has completed a
Year of Service for purposes of eligibility to participate under Section 2.1,
each such Employee who became an employee of Owensboro on January 5, 1996, and
who immediately prior to that date was an employee of Owensboro Publishing
Company ("OPC"), will receive credit for an Hour of Service for each hour for
which the Employee was paid or entitled to payment by OPC or any affiliate of
OPC determined in accordance with Section 1.17 and will receive credit for his
period of employment with OPC or any affiliate of OPC calculated in the same
manner as if it had been employment with a Controlled Group Member.
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ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. Each Employee who had both
attained age 21 and completed a Year of Service before the Effective Date, or
who participated in the Company's Employee Stock Purchase Plan immediately
before the Effective Date, will be a Participant as of the first payroll period
beginning on or after the Effective Date, if he is then employed by a
Participating Employer. Each Employee who is not a Participant as of the
Effective Date will become a Participant as of the first payroll period
beginning on or after the first Entry Date following the date he has both
attained age 21 and completed a Year of Service, if he is then employed by a
Participating Employer. Notwithstanding the foregoing:
(i) Each Employee of WWL-TV, Inc. who completed a
Year of Service on or before May 31, 1994, will become a Participant on
June 1, 1994, if he is classified as a full-time Employee in accordance
with standard personnel practices of WWL-TV, Inc., and will become a
Participant on July 1, 1994, if he is classified as a part-time Employee
in accordance with such standard personnel practices.
(ii) Each Employee of Third Avenue Television, Inc.
who, on January 31, 1995, was making deferral contributions to the
section 401(k) plan of KIRO, Inc. will become a Participant on February
1, 1995. Each other Employee of Third Avenue Television, Inc. who on
February 1, 1995, had satisfied the age and service requirements of this
Section for eligibility to participate will become a Participant as of
the first payroll period beginning on or after April 1, 1995.
(iii) Each Employee of Bryan-College Station Eagle,
Inc. who on December 25, 1995, was making deferral contributions to the
section 401(k) plan of Worrell Enterprises, Inc. or Eagle Publishing
Limited Partnership will become a Participant on December 26, 1995.
Each other Employee of Bryan-College Station Eagle, Inc. who on December
26, 1995, had satisfied the age and service requirements of this Section
for eligibility to participate will become a Participant as of the first
payroll period beginning on or after April 1, 1996.
(iv) Each Employee of Owensboro Messenger-Inquirer,
Inc. who on January 4, 1996, was making deferral contributions to the
section 401(k) plan of Owensboro Publishing Company will become a
Participant on January 5,
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1996. Each other Employee of Owensboro Messenger-Inquirer, Inc. who on
January 5, 1996, had satisfied the age and service requirements of this
Section for eligibility to participate will become a Participant as of
the first payroll period beginning on or after April 1, 1996.
2.2 Exclusions from Participation.
(a) Ineligible Employees. An Employee who is
otherwise eligible to participate in the Plan will not become or continue as an
active Participant if (i) he is covered by a collective bargaining agreement
that does not expressly provide for participation in the Plan, provided that
the representative of the Employees with whom the collective bargaining
agreement is executed has had an opportunity to bargain concerning retirement
benefits for those Employees; (ii) he is represented by a bargaining
representative but is not covered by a collective bargaining agreement, unless
the Company and the bargaining representative agree in writing that the
Employee will be eligible to participate in the Plan; (iii) he is a nonresident
alien who receives no earned income (within the meaning of Code section
911(d)(2)) from a Participating Employer which constitutes income from sources
within the United States (within the meaning of Code section 861(a)(3)); (iv)
he is a leased employee required to be treated as an Employee under Code
section 414(n) or he is classified by a Participating Employer as an
independent contractor whose compensation for services is reported on a form
other than Form W-2 or any successor form for reporting wages paid to
employees; (v) he is employed by a Controlled Group Member or an organizational
unit thereof that has not been designated as a Participating Employer by the
Board; or (vi) he is then on an approved leave of absence without pay or in the
service of the armed forces of the United States.
(b) Exclusion after Participation. A Participant
who becomes ineligible under subsection (a) may not elect to have Deferral
Contributions made or continued to the Plan.
(c) Participation after Exclusion. An Employee or
Participant who is excluded from active participation will be eligible to
participate in the Plan on the first day he is no longer described in
subsection (a) and is credited with one or more Hours of Service by a
Participating Employer, provided that he has otherwise met the requirements of
Section 2.1. This subsection will apply to an Employee who returns from an
approved leave of absence or from military leave and who would otherwise be
treated as a new Employee under Section 2.3 only if he returns to employment
with a Controlled Group Member immediately following the expiration of the
leave of absence or, in the case of an Employee on military leave, during the
period in which reemployment rights are guaranteed by law.
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<PAGE> 14
2.3 Reemployment Provisions. All Hours of Service are
counted in determining eligibility to participate, except as otherwise provided
in this Section.
(a) Termination of Employment before Participation.
If an Employee terminates employment before becoming a Participant and is
reemployed by a Controlled Group Member before incurring a number of
consecutive One Year Breaks in Service at least equal to the greater of five or
his aggregate Years of Service, he will become a Participant on the later of
the Entry Date initially determined under Section 2.1 or the date he is
credited with one or more Hours of Service by a Participating Employer after
reemployment; but if he is reemployed by a Controlled Group Member after
incurring a number of consecutive One Year Breaks in Service at least equal to
the greater of five or his aggregate Years of Service, he will be treated as a
new Employee for purposes of the Plan and his Hours of Service completed before
his reemployment will be disregarded in determining when he will become a
Participant.
(b) Termination of Employment after Participation.
A Participant who terminates employment will again become an active Participant
immediately upon his reemployment by a Participating Employer.
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ARTICLE 3
CONTRIBUTIONS
3.1 Participant Deferral Contributions.
(a) Amount of Deferral Contributions. A
Participant may elect, in accordance with procedures established by the
Committee from time to time, to have Deferral Contributions made to the Plan by
the Participating Employers, provided the amount of a Participant's Deferral
Contributions for any Plan Year beginning before January 1, 1996, will not be
less than 2% nor more than (i) for payroll periods beginning before July 1,
1993, 10% of his Compensation for the Plan Year and (ii) for payroll periods
beginning on and after July 1, 1993, 15% of his Compensation for the Plan Year.
For any payroll period beginning on or after January 1, 1996, a Participant may
elect to have Deferral Contributions made to the Plan in any amount that does
not exceed 15% of his Compensation for the payroll period.
(b) Modification and Suspension of Deferral
Contributions. A Participant may increase or decrease the amount of his
Deferral Contributions during the Plan Year, provided that only one such
modification may be made during each calendar quarter of the Plan Year. A
Participant may suspend his Deferral Contributions at any time during the Plan
Year, and a suspension of his Deferral Contributions will not be considered a
modification for purposes of this subsection (b). A Participant who suspends
his Deferral Contributions may not again authorize Deferral Contributions to
the Plan until the first day of the calendar quarter following such suspension,
or such other time as the Committee prescribes. For Plan Years beginning on or
after January 1, 1996, if a Participant receives a distribution on account of
hardship pursuant to Section 6.3, such Participant's Deferral Contributions
will automatically be suspended for a 12-month period following the date on
which such Participant receives the hardship distribution. The Committee will
adopt from time to time procedures for administering the rules contained in
this subsection.
(c) Limitations on Deferral Contributions. The sum
of a Participant's Deferral Contributions and his elective deferrals (within
the meaning of Code section 402(g)(3)) under any other plans, contracts or
arrangements of any Controlled Group Member will not exceed $7,000 (as adjusted
for cost of living increases in the manner described in Code section 415(d))
for any taxable year of the Participant. A Participant's Deferral
Contributions will also be subject to the deferral percentage limitation set
forth in Section 10.6. In the event a Participant's Deferral Contributions and
other elective deferrals
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<PAGE> 16
(whether or not under a plan, contract or arrangement of a Controlled Group
Member) for any taxable year exceed the foregoing $7,000 limitation, the excess
allocated by the Participant to Deferral Contributions (adjusted for Trust Fund
earnings and losses in the manner described in Section 10.6(d)) may, in the
discretion of the Committee, be distributed to the Participant no later than
April 15 following the close of such taxable year. The amount of Deferral
Contributions distributed to a Participant for a Plan Year pursuant to this
Section will be reduced by any excess Deferral Contributions previously
distributed to him pursuant to Section 10.6(c) for the same Plan Year.
3.2 Participating Employer Matching Contributions.
(a) Amount of Matching Contributions.
(i) Prior to 1995. The Participating
Employers will pay to the Trustee as a matching contribution for each
Plan Year (A) for payroll periods beginning before July 1, 1993, an
amount equal to 30% of each Participant's Deferral Contributions, but
only to the extent that the Participant's Deferral Contributions do not
exceed 5% of the Participant's Compensation for the Plan Year and (B)
for payroll periods beginning on and after July 1, 1993, and prior to
January 1, 1995, an amount equal to 50% of each Participant's Deferral
Contributions, but only to the extent that the Participant's Deferral
Contributions do not exceed 6% of the Participant's Compensation for the
Plan Year, excluding in both cases Compensation earned before the
Participant was eligible to participate under Section 2.1; provided,
however, that the provisions of clause (B) will be effective with
respect to Participants who are covered by the Collective Bargaining
Agreement between The Dallas Morning News, Inc. and Dallas Typographical
Union, No. 173, at such time as the increase in matching contributions
is not prohibited by such Collective Bargaining Agreement or any
successor agreement. In addition, each Participating Employer may make
an additional matching contribution for any Plan Year if authorized by
its board of directors, but no Participating Employer will be required
to make an additional matching contribution for any Plan Year.
Participating Employer matching contributions may be made in cash or in
shares of Company Stock or both.
(ii) After 1994. Effective with the first
payroll period beginning on or after January 1, 1995, the Participating
Employers will pay to the Trustee as a matching contribution for each
payroll period an amount equal to 50% of each Participant's Deferral
Contributions, but only to the extent that the Participant's Deferral
Contributions do not
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<PAGE> 17
exceed 6% of the Participant's Compensation for the payroll period. In
addition, each Participating Employer may make an additional matching
contribution for any Plan Year if authorized by its board of directors,
but no Participating Employer will be required to make an additional
matching contribution for any Plan Year. Participating Employer
matching contributions may be made in cash or in shares of Company Stock
or both.
(b) Calculation of Matching Contributions. For
Plan Years beginning before January 1, 1995, Participating Employer matching
contributions initially will be calculated on the basis of Deferral
Contributions and Compensation for each payroll period within the Plan Year.
Except as otherwise set forth in Section 3.2(c), as of one or more dates within
each Plan Year beginning before January 1, 1995, the Participating Employers
will make an additional matching contribution for a Participant to the extent
necessary to cause the matching contributions for such Participant for the Plan
Year to be equal to the amount required by Section 3.2(a) calculated on the
basis of the Participant's Deferral Contributions and Compensation for the
entire Plan Year (excluding Compensation earned before the Participant was
eligible to participate under Section 2.1). For Plan Years beginning on and
after January 1, 1995, Participating Employer matching contributions will be
calculated solely on the basis of Deferral Contributions and Compensation for
each payroll period within the Plan Year.
(c) Calculation of Matching Contributions for the
1993 Plan Year. Notwithstanding the provisions of Section 3.2(b), as of one or
more dates within the 1993 Plan Year, the Participating Employers will make an
additional matching contribution for a Participant to the extent necessary to
cause the total matching contributions for such Participant for the Plan Year
to be equal to the sum of (i) 35% of the Participant's Deferral Contributions
for the Plan Year to the extent that such Deferral Contributions do not exceed
5% of the Participant's Compensation for the Plan Year, (ii) 15% of the
Participant's Deferral Contributions made with respect to payroll periods
beginning on and after July 1, 1993, to the extent that such Deferral
Contributions do not exceed 5% of the Participant's Compensation for the Plan
Year attributable to payroll periods beginning on and after July 1, 1993, and
(iii) 50% of the Participant's Deferral Contributions made with respect to
payroll periods beginning on and after July 1, 1993, to the extent that such
Deferral Contributions are more than 5% and less than 6% of the Participant's
Compensation for the Plan Year attributable to payroll periods beginning on and
after July 1, 1993. For purposes of this Section 3.2(c), Compensation does not
include any wages or other remuneration for services earned before the
Participant was eligible to participate under Section 2.1.
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<PAGE> 18
(d) Participants Ineligible for Matching
Contributions. Notwithstanding the foregoing provisions of this Section, (i)
no matching contributions will be made for any payroll period beginning on or
after April 1, 1994, with respect to any Employee who is employed by DFW
Suburban Newspapers, Inc. and (ii) no matching contributions will be made for
any payroll period beginning before January 1, 1995, with respect to any
Employee who is employed by WWL-TV, Inc.
(e) Limitation on Matching Contributions.
Participating Employer matching contributions will be subject to the
contribution percentage limitation set forth in Section 10.7.
3.3 [Reserved]
3.4 Time of Payment. Deferral Contributions and
Participating Employer matching contributions made with respect to payroll
periods will be paid to the Trustee as soon as practicable following the close
of each calendar month during the Plan Year. Additional matching contributions
(including the adjustments described in Section 3.2(b) and (c)) may be paid to
the Trustee on any date or dates selected by the Participating Employer, but in
no event later than the time prescribed by law (including extensions) for
filing the Participating Employer's federal income tax return for its tax year
ending with or within the Plan Year.
3.5 Investment of Contributions. Participating Employer
matching contributions will be invested by the Trustee pursuant to the Trust
Agreement solely in shares of Company Stock, provided, however, that from and
after January 1, 1994, a Participant who has attained age 55 may direct the
Trustee to transfer all or any portion of his Matching Contribution Account to
any other investment fund established under the Trust Agreement. The Deferral
Contributions allocated to a Participant's Deferral Contribution Account will
be invested by the Trustee in accordance with the Participant's directions in
investment funds established pursuant to the Trust Agreement. The Committee
from time to time will establish rules and procedures regarding Participant
investment directions, including without limitation rules and procedures with
respect to the manner in which such directions may be furnished, the frequency
with which such directions may be changed during the Plan Year and the minimum
portion of a Participant's Account that may be invested in any one investment
fund.
3.6 Rollover and Transfer Contributions. Unless directed
to do so by the Committee, the Trustee is not authorized to accept (i) any part
of the cash or other assets distributed to a Participant from a Qualified Plan
or from an individual retirement account or annuity described in Code section
408, or
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<PAGE> 19
(ii) a direct transfer of assets to the Plan on behalf of a Participant from
the trustee or other funding agent of a Qualified Plan. Any amounts
contributed to the Plan pursuant to this Section will be allocated to the
Participant's Transfer Account.
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ARTICLE 4
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
4.1 Establishment of Accounts. The Committee will
establish a Deferral Contribution Account and a Matching Contribution Account
for each Participant and may establish one or more subaccounts of a
Participant's Accounts, if the Committee determines that subaccounts are
necessary or desirable in administering the Plan.
4.2 Allocation of Contributions and Forfeitures. Each
Deferral Contribution made by a Participating Employer on behalf of a
Participant will be allocated by the Committee to the Participant's Deferral
Contribution Account. Prior to 1995, each Participating Employer matching
contribution made with respect to a Plan Year and all forfeitures arising
during that Plan Year will be allocated by the Committee to the Matching
Contribution Accounts of Participants employed by that Participating Employer
in the ratio that the Deferral Contributions made on behalf of each such
Participant for the Plan Year bear to the total Deferral Contributions made on
behalf of all such Participants for the Plan Year, taking into account for
purposes of this ratio only Deferral Contributions that do not exceed (i) for
payroll periods beginning before July 1, 1993, 5% of each Participant's
Compensation and (ii) for payroll periods beginning on and after July 1, 1993,
6% of each Participant's Compensation; provided, however, that the provisions
of clause (ii) will be effective with respect to Participants who are covered
by the Collective Bargaining Agreement between The Dallas Morning News, Inc.
and Dallas Typographical Union, No. 173, at such time as the increase in
matching contributions is not prohibited by such Collective Bargaining
Agreement or any successor agreement. Effective with the first payroll period
beginning on and after January 1, 1995, each Participating Employer matching
contribution made with respect to a payroll period and all forfeitures will be
allocated by the Committee to the Matching Contribution Accounts of
Participants employed by that Participating Employer in the ratio that the
Deferral Contributions made on behalf of each such Participant for each payroll
period in the Plan Year bear to the total Deferral Contributions made on behalf
of all such Participants for each such payroll period, taking into account for
purposes of this ratio only Deferral Contributions that do not exceed 6% of
each Participant's Compensation for the payroll period. Notwithstanding the
foregoing, no Participating Employer matching contributions will be allocated
to the Matching Contribution Account of any Participant who is ineligible for
matching contributions pursuant to Section 3.2(d), and any Deferral
Contributions made on behalf of such ineligible
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<PAGE> 21
Participant will be disregarded for purposes of allocating matching
contributions to other Participants.
4.3 Limitation on Allocations. Article 10 sets forth
certain rules under Code sections 401(k), 401(m) and 415 that limit the amount
of contributions and forfeitures that may be allocated to a Participant's
Accounts for a Plan Year.
4.4 Allocation of Trust Fund Income and Loss.
(a) Accounting Records. The Committee, through its
accounting records, will clearly segregate each Account and subaccount and will
maintain a separate and distinct record of all income and losses of the Trust
Fund attributable to each Account or subaccount. Income or loss of the Trust
Fund will include any unrealized increase or decrease in the fair market value
of the assets of the Trust Fund.
(b) Method of Allocation. The share of net income
or net loss of the Trust Fund to be credited to, or deducted from, each Account
will be the allocable portion of the net income or net loss of the Trust Fund
attributable to each Account determined by the Committee as of each Valuation
Date in a uniform and nondiscriminatory manner, based upon the ratio that each
Account balance as of the previous Valuation Date bears to all Account
balances after adjustment for withdrawals, distributions and other additions or
subtractions that may be appropriate. The share of net income or net loss to
be credited to, or deducted from, any subaccount will be an allocable portion
of the net income or net loss credited to or deducted from the Account under
which the subaccount is established.
4.5 Valuation of Trust Fund. The fair market value of the
total net assets comprising the Trust Fund will be determined by the Trustee as
of each Valuation Date.
4.6 No Guarantee. The Participating Employers, the
Committee and the Trustee do not guarantee the Participants or their
Beneficiaries against loss or depreciation or fluctuation of the value of the
assets of the Trust Fund.
4.7 Annual Statement of Accounts. The Committee will
furnish each Participant and each Beneficiary of a deceased Participant, at
least annually, a statement showing (i) the value of his Accounts at the end of
the Plan Year, (ii) the allocations to and distributions from his Accounts
during the Plan Year, and (iii) his vested and nonforfeitable interest in his
Accounts at the end of the Plan Year. No statement will be provided to a
Participant or Beneficiary after the Participant's entire vested and
nonforfeitable interest in his Accounts has been distributed.
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ARTICLE 5
VESTING
5.1 Determination of Vested Interest. Except as provided
in Section 5.2 or 10.6(e) (with respect to discriminatory Matching
Contributions), the interest of each Participant in his Deferral Contribution
Account and his Matching Contribution Account will be 100% vested and
nonforfeitable at all times.
5.2 Unclaimed Distribution. If the Committee cannot locate
a person entitled to receive a benefit under the Plan within a reasonable
period (as determined by the Committee in its discretion), the amount of the
benefit will be treated as a forfeiture during the Plan Year in which the
period ends. If, before final distributions are made from the Trust Fund
following termination of the Plan, a person who was entitled to a benefit which
has been forfeited under this Section makes a claim to the Committee or the
Trustee for his benefit, he will be entitled to receive, as soon as
administratively feasible, a benefit in an amount equal to the value of the
forfeited benefit on the date of forfeiture. This benefit will be reinstated
from Participating Employer contributions made to the Plan for this purpose.
5.3 Application of Forfeited Amounts. The amount of a
Participant's Accounts which is forfeited pursuant to Sections 5.2 or 10.6(e)
will be applied to reduce Participating Employer contributions pursuant to
Article 3.
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ARTICLE 6
DISTRIBUTIONS TO PARTICIPANTS
6.1 Basic Rules Governing Distributions.
(a) Timing of Distributions. Except as set forth
in Sections 6.2 and 6.3, distribution of a Participant's vested Account
Balances will be made as soon as practicable after the Valuation Date
coinciding with or immediately following the Participant's termination of
employment, or if earlier, the date on which the Participant becomes eligible
to receive benefits under the Social Security Act on account of total and
permanent disability. If a loan is outstanding from the Trust Fund to the
Participant on the date his vested Account balances become distributable, the
amount distributed to the Participant will be reduced by any security interest
in his Accounts held by the Plan by reason of the loan.
(b) Form of Distributions. Distributions will be
made in a single lump sum payment. Shares of Company Stock allocated to a
Participant's Accounts will be distributed in the form of whole shares plus
cash for any fractional share, unless the Participant elects to receive the
cash value of such shares.
(c) Participant's Consent to Certain Payments. If
the amount of a Participant's vested Account balances exceeds $3,500, the
Committee will not distribute the Participant's vested Account balances to him
prior to his attainment of age 62 unless he consents to the distribution. The
foregoing provision will not apply to any distributions required under Sections
10.6 and 10.7.
6.2 Withdrawals after Age 59-1/2. A Participant who has
not terminated employment may request a distribution from his Accounts if he
has reached age 59-1/2. A Participant who is a director, officer or principal
stockholder of the Company within the meaning of Section 16 of the Securities
Exchange Act of 1934 may exercise the foregoing withdrawal right only in
accordance with rules and procedures established from time to time by the
Committee. All other Participants may exercise their withdrawal rights at any
time or times during the Plan Year.
6.3 Hardship Distributions.
(a) General Rule. A Participant who has not
terminated employment may request a distribution from his Deferral Contribution
Account in the event of his hardship. A distribution will be on account of
hardship only if the distribution is necessary to satisfy an immediate and
heavy
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<PAGE> 24
financial need of the Participant, as defined below, and satisfies all other
requirements of this Section. For Plan Years beginning on or after January 1,
1996, pursuant to Section 3.1(b), a Participant's Deferral Contributions will
automatically be suspended for a 12-month period after the date on which such
Participant receives a distribution on account of hardship.
(b) Deemed Financial Need. For purposes of this
Section, a distribution is made on account of an immediate and heavy financial
need of the Participant only if the distribution is for (i) the payment of
medical expenses described in Code section 213(d) previously incurred by the
Participant, the Participant's spouse or any dependents of the Participant (as
defined in Code section 152) or necessary for such persons to obtain medical
care described in Code section 213(d); (ii) costs directly related to the
purchase of a principal residence for the Participant (excluding mortgage
payments); (iii) the payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant, his spouse,
children, or dependents (as defined in Code section 152); (iv) payments
necessary to prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant's principal
residence; or (v) the payment of funeral expenses of a family member.
(c) Reasonable Reliance Test. A distribution will
be considered necessary to satisfy an immediate and heavy financial need of the
Participant only if all three of the following requirements are satisfied: (i)
the distribution is not in excess of the amount required to relieve the
immediate and heavy financial need of the Participant (taking into account the
taxable nature of the distribution); (ii) the Participant represents in
writing, on forms provided by the Committee, that the need cannot be relieved
through reimbursement or compensation by insurance or otherwise, by reasonable
liquidation of the Participant's assets, to the extent such liquidation would
not itself cause an immediate and heavy financial need, by cessation of
Deferral Contributions under the Plan, or by distributions other than hardship
distributions or nontaxable (at the time of the loan) loans from the Plan and
any other plans maintained by any Controlled Group Member or any other entity
by which the Participant is employed, or by borrowing from commercial sources
on reasonable commercial terms; and (iii) the Committee determines that it can
reasonably rely on the Participant's written representation.
(d) Limitation for Loans. No distribution under
this Section will be made in an amount that is greater than the excess of the
Participant's vested interest in his Accounts over the aggregate amount of
outstanding loans, plus accrued interest, secured by the Participant's
Accounts.
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(e) Source of Hardship Distributions. The
cumulative amount distributed to a Participant on account of hardship will not
exceed the amount of his Deferral Contributions that have not been previously
withdrawn (but not the income allocable to his Deferral Contributions) and,
with respect to hardship distributions on and after June 1, 1994, the balance,
if any, of his Transfer Account.
6.4 Distribution Procedures. Distributions pursuant to
Sections 6.2 and 6.3 will be made as soon as practicable following the
Committee's approval of the Participant's written request for withdrawal and
will be made in the form described in Section 6.1(b). Distributions pursuant
to Section 6.2 will be made first from the Participant's Transfer Account, next
from the vested portion of his Matching Contribution Account, and last from
this Deferral Contribution Account. No distribution under this Section will be
made in an amount that is greater than the excess of the Participant's vested
interest in the Accounts from which the distributions are made over the
aggregate amount of outstanding loans, plus accrued interest, secured by such
Accounts. For purposes of determining the amount available for distribution, a
Participant's Accounts will be valued as of the Valuation Date immediately
preceding the date on which the Participant requests a distribution.
6.5 Loans to Participants.
(a) Effective Date. The provisions of this Section
will be effective as of a date determined by the Committee in its discretion
and communicated to Participants.
(b) General Provisions. A Participant may, subject
to the provisions of this Section, borrow from the vested interest in his
Accounts, provided, however, that no loan may be made from the portion of the
Trust Fund that is invested in Company Stock. All such loans will be subject
to the requirements of this Section and such other rules as the Committee may
from time to time prescribe, including without limitation any rules restricting
the purposes for which loans will be approved. The Committee will have
complete discretion as to approval of a loan hereunder and as to the terms
thereof, provided that its decisions will be made on a uniform and
nondiscriminatory basis and in accordance with this Section. If the Committee
approves a loan, the Committee will direct the Trustee to make the loan and
will advise the Participant and the Trustee of the terms and conditions of the
loan. Nothing in this Section will require the Committee to make loans
available to Participants.
(c) Terms and Conditions. Loans to Participants
will be made according to the following terms and conditions and
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such additional terms and conditions as the Committee may from time to time
establish: (i) no loan will be for a term of longer than five years; (ii) all
loans will become due and payable in full upon termination (by death or
otherwise) of the Participant's employment with the Controlled Group and upon
the occurrence of such other events as the Committee may from time to time
specify; (iii) all loans will bear a reasonable rate of interest as determined
by the Committee from time to time; (iv) all loans will be made only upon
receipt of adequate security (the security for a loan will be the Participant's
interest in the separate investment fund established under subsection (g) for
that loan) in an amount that does not exceed 50% of the Participant's vested
interest under the Plan); (v) payments of principal and interest will be made
through payroll deductions sufficient to provide for substantially level
amortization of principal and interest with payments not less frequently than
quarterly, which will be irrevocably authorized by the Participant in writing
on a form provided by the Committee at the time the loan is made; (vi) the
amount of any indebtedness (including accrued and unpaid interest) under any
loan will be deducted from a Participant's interest in the Trust Fund if and
only if such indebtedness or any installment thereof is not paid when due
(including amounts due by acceleration) unless the Committee determines that
there is adequate security for such loan other than the Participant's interest
in the Trust Fund; (vii) for Plan Years beginning before January 1, 1996, no
more than one outstanding loan will be permitted with respect to a Participant
at any time, except that a Participant may have a home loan and a loan which is
not a home loan outstanding at the same time; (viii) for Plan Years beginning
on or after January 1, 1996, no more than two outstanding loans will be
permitted with respect to a Participant at any time; (ix) for Plan Years
beginning on or after January 1, 1996, no new home loans will be permitted; and
(x) all loans will be evidenced by a note containing such additional terms and
conditions as the Committee will determine. Notwithstanding anything in the
foregoing to the contrary, no amount of any indebtedness will be deducted
pursuant to subsection (vi) above from a Participant's Deferral Contribution
Account prior to the time that such Account is otherwise distributable.
(d) Maximum Amount of Loans. The amount of any
loan made pursuant to this Section, when added to the outstanding balance of
all other loans to the Participant from all qualified employer plans (as
defined in Code section 72(p)(4)) of the Controlled Group, will not exceed the
lesser of (i) one-half of the nonforfeitable interest in his Accounts, or (ii)
$50,000 reduced by the excess, if any, of (A) the highest outstanding balance
of all other loans from qualified employer plans of the Controlled Group to the
Participant during the 1-year period ending on the date on which such loan was
made, over (B) the
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outstanding balance of all loans from qualified employer plans of the
Controlled Group to the Participant on the date on which such loan was made.
(e) Minimum Loan. The minimum loan permitted under
this Section is $1,000. If such minimum amount exceeds the limitations of
subsection (d), no loan will be made.
(f) Source of Loans. All loans will be made first
from a Participant's Transfer Account, next from his Matching Contribution
Account, and last from his Deferral Contribution Account.
(g) Investment of Loan Payments. All loans will be
treated as a separate investment fund of the borrowing Participant. All
payments with respect to a loan will be credited to the borrowing Participant's
Accounts and will be invested in the investment funds under the Trust Agreement
in accordance with the Participant's latest investment directions pursuant to
Section 3.5.
6.6 Reemployment of Participant. If a Participant who
terminated employment again becomes an Employee before receiving a distribution
of his Account balances, no distribution from the Trust Fund will be made while
he is an Employee, and amounts distributable to him on account of his prior
termination will be held in the Trust Fund until he is again entitled to a
distribution under the Plan.
6.7 Valuation of Accounts. A Participant's distributable
Account balances will be valued as of the Valuation Date immediately preceding
the date the Accounts are to be distributed, except that there will be added to
the value of his Accounts the fair market value of any amounts allocated to his
Accounts under Article 4 after that Valuation Date.
6.8 Direct Rollovers
(a) Distributions after 1992. Notwithstanding any
other provision of the Plan, for distributions made on or after January 1,
1993, a Distributee (as hereinafter defined) may elect, at any time and in the
manner prescribed by the Committee, to have any portion of an Eligible Rollover
Distribution (as hereinafter defined) paid directly to an Eligible Retirement
Plan (as hereinafter defined) specified by the Distributee.
(b) Eligible Rollover Distribution. An Eligible
Rollover Distribution is any distribution of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover Distribution
does not include (i) any distribution that is one of a series of substantially
equal
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periodic payments (not less frequently than annually) made for the life or life
expectancy of the Distributee or the joint lives or life expectancies of the
Distributee and the Distributee's designated beneficiary, or for a specified
period of ten years or more, (ii) any distribution to the extent such
distribution is required by Code section 401(a)(9), and (iii) the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(c) Eligible Retirement Plan. An Eligible Retirement
Plan is an individual retirement account described in Code section 408(a), an
individual retirement annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described in Code
section 401(a) that is a defined contribution plan within the meaning of Code
section 414(i), that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a Participant's
surviving Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(d) Distributee. A Distributee includes a
Participant, the Participant's Spouse, or a Participant's former spouse who is
an alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code.
6.9 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Participants.
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ARTICLE 7
DISTRIBUTIONS TO BENEFICIARIES
7.1 Designation of Beneficiary. Each Participant will have
the right to designate a Beneficiary or Beneficiaries to receive his vested
Account balances upon his death. The designation will be made on forms
prescribed by the Committee and will be effective upon receipt by the
Committee. A Participant will have the right to change or revoke any
designation by filing a new designation or notice of revocation with the
Committee, but the revised designation or revocation will be effective only
upon receipt by the Committee.
7.2 Consent of Spouse Required. A Participant who is
married may not designate a Beneficiary other than, or in addition to, his
spouse unless his spouse consents to the designation by means of a written
instrument that is signed by the spouse, contains an acknowledgment by the
spouse of the effect of the consent, and is witnessed by a member of the
Committee (other than the Participant) or by a notary public. The designation
will be effective only with respect to the consenting spouse, whose consent
will be irrevocable. A Beneficiary designation to which a spouse has consented
may not be changed by the Participant without spousal consent (other than to
designate the spouse as Beneficiary), unless the spouse's consent expressly
permits Beneficiary designations by the Participant without any further consent
of the spouse.
7.3 Failure to Designate Beneficiary. In the event a
Participant has not designated a Beneficiary, or in the event no Beneficiary
survives a Participant, the distribution of the Participant's vested Account
balances upon his death will be made (i) to the Participant's spouse, if
living, (ii) if his spouse is not then living, to his then living issue by
right of representation, (iii) if neither his spouse nor his issue are then
living, to his then living parents, and (iv) if none of the above are then
living, to his estate.
7.4 Distributions to Beneficiaries. Distribution of a
Participant's vested Account balances to the Participant's Beneficiary will be
made as soon as practicable after Participant's death. The Participant's
vested Account balances will be distributed to the Beneficiary in a single lump
sum payment and will be in the same form as provided for Participants in
Section 6.1(b). The Participant's Account balances will be valued as of the
Valuation Date coinciding with or immediately preceding the date the Accounts
are to be distributed to his Beneficiary, except that there will be added to
the value of the Participant's Accounts the fair market value of any amounts
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allocated to his Accounts under Article 4 after that Valuation Date. If a loan
is outstanding from the Trust Fund to the Participant on the date of his death,
the amount distributed to his Beneficiary will be reduced by any security
interest in the Participant's Accounts held by the Plan by reason of the loan.
7.5 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Beneficiaries.
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ARTICLE 8
PROVISIONS REGARDING COMPANY STOCK
8.1 Powers and Duties of the Committee.
(a) Committee as Named Fiduciary. Except as
otherwise provided in this Section, the Committee will be the named fiduciary
within the meaning of ERISA section 402(a)(2) for purposes of all shareholder
action authorized or permitted to be taken with respect to Company Stock held
in the Trust Fund. The powers and duties of the Committee as named fiduciary
for this purpose will include, without limitation, the powers and duties to
direct the Trustee with respect to the voting of all shares of Company Stock;
to direct the Trustee to accept or reject a tender offer for shares of Company
Stock; to direct the Trustee to sell shares of Company Stock under any other
circumstances to any person, including the Company, provided that any sale to
the Company or other "disqualified person" within the meaning of Code section
4975 or "party in interest" within the meaning of ERISA section 3(14) is made
at a price which is not less than adequate consideration as defined in ERISA
section 3(18) and no commission is charged with respect to the sale; and to
exercise any options, warrants or other rights in connection with shares of
Company Stock held in the Trust Fund. The Committee will also have the power,
in its discretion, to permit each Participant and Beneficiary to direct the
Trustee to take or to refrain from taking any action with respect to the shares
of Company Stock allocated to his Accounts that the Committee could have
directed the Trustee to take or refrain from taking. If the Committee permits
Participants and Beneficiaries to direct the Trustee in connection with any
matter relating to Company Stock held in the Trust Fund, each Participant and
Beneficiary who furnishes instructions to the Trustee will be a named fiduciary
within the meaning of ERISA section 402(a)(2) with respect to such matter, but
the Committee will retain the power and duty to direct the Trustee with respect
to shares of Company Stock allocated to the Accounts of Participants and
Beneficiaries who fail to furnish timely instructions to the Trustee and with
respect to any shares of Company Stock that have not been allocated to
Participants' Accounts. The Committee will adopt from time to time whatever
procedures it determines to be appropriate in order to exercise its powers and
duties under this subsection (a) and may retain advisors and consultants
(including, without limitation, legal counsel and financial advisors) who are
independent of the Company, the Board and the Trustee to the extent the
Committee determines such independent advice to be necessary or appropriate.
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(b) Delegation of Powers and Duties. The Committee
may, in its discretion, delegate any power or duty allocated to it pursuant to
subsection (a) above to another person or entity, who will act as an
independent fiduciary and will exercise such power or duty to the same extent
as it could have been exercised by the Committee. The persons or entities to
which such powers and duties may be delegated will include, without limitation,
the Board or any committee of the Board, the Trustee, any other person or
entity that meets the requirements of an investment manager under ERISA section
3(38), or any other person or entity that the Committee determines in good
faith has the requisite knowledge and experience concerning the matter with
respect to which the delegation is made. The Committee may also remove any
fiduciary to whom it has delegated any power or duty and exercise such power or
duty itself or appoint a successor fiduciary. For purposes of Sections 8.2 and
8.3, the term "Committee" will also mean any fiduciary to which the Committee
has delegated any power or duty pursuant to this subsection (b).
8.2 Voting Company Stock. Unless the Committee determines
otherwise pursuant to Section 8.1, voting rights with respect to shares of
Company Stock held in the Trust Fund will be exercised by Participants and
Beneficiaries and the procedures of this Section will apply. Before each
annual or special meeting of its shareholders, the Committee will cause to be
sent to each Participant and Beneficiary who has Company Stock allocated to his
Accounts on the record date of such meeting a copy of the proxy solicitation
material for the meeting, together with a form requesting confidential
instructions to the Trustee on how to vote the shares of Company Stock
allocated to his Accounts. Upon receipt of such instructions, the Trustee will
vote the shares allocated to such Participant's or Beneficiary's Accounts as
instructed. The Trustee will vote allocated shares of Company Stock for which
it does not receive timely instructions from Participants or Beneficiaries in
accordance with the Committee's instructions. A Participant's or Beneficiary's
right to instruct the Trustee with respect to voting shares of Company Stock
will not include rights concerning the exercise of any appraisal rights,
dissenters' rights or similar rights granted by applicable law to the
registered or beneficial holders of Company Stock. These matters will be
exercised by the Trustee in accordance with the Committee's instructions.
8.3 Tender Offer for Company Stock. Unless the Committee
determines otherwise pursuant to Section 8.1, the right to accept or reject a
tender offer for shares of Company Stock held in the Trust Fund will be
exercised by Participants and Beneficiaries and the procedures of this Section
will apply. In the event of a tender offer for shares of Company Stock subject
to Section 14(d)(1) of the Securities Exchange Act of 1934 or subject to Rule
13e-4 promulgated under that Act (as those
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provisions may from time to time be amended or replaced by successor provisions
of federal securities laws), the Committee will advise each Participant and
Beneficiary who has shares of Company Stock allocated to his Accounts in
writing of the terms of the tender offer as soon as practicable after its
commencement and will furnish each Participant and Beneficiary with a form by
which he may instruct the Trustee confidentially to tender shares allocated to
his Accounts. The Trustee will tender those shares it has been properly
instructed to tender, and will not tender those shares which it has been
properly instructed not to tender. The Committee will also advise Participants
and Beneficiaries that the Committee will furnish instructions to the Trustee
with respect to allocated shares for which no instructions are received from
Participants and Beneficiaries and will furnish such related documents as are
prepared by any person and provided to the shareholders of the Company pursuant
to the Securities Exchange Act of 1934. The Committee may also provide
Participants with such other material concerning the tender offer as the
Committee in its discretion determines to be appropriate. The number of shares
to which a Participant's instructions apply will be the total number of shares
allocated to his Accounts as of the latest date for which Participant
statements were prepared. The Committee will advise the Trustee of the
commencement date of any tender offer and, until receipt of that advice, the
Trustee will not be obligated to take any action under this Section. Funds
received in exchange for tendered stock will be credited to the Accounts of the
Participant or Beneficiary whose stock was tendered and will be used by the
Trustee to purchase Company Stock, if available on a national securities
exchange, commencing on the earlier of the following dates: (a) the trading
day following the first date on which the closing price of the Company Stock on
a national securities exchange on which the Company Stock is then traded is
within 20% of the closing price on the tenth trading day preceding the
commencement date of the tender offer or (b) the thirtieth trading day after
the expiration date of the tender offer, of which date the Committee will
advise the Trustee. In the interim, or if Company Stock is not available for
purchase, the Trustee will invest such funds in short term investments
permitted under the Trust Agreement.
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ARTICLE 9
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
9.1 Appointment of Committee Members. The Board will
appoint an Administrative Committee consisting of at least three or more
members, to hold office at the pleasure of the Board. Members of the Committee
are not required to be Employees or Participants. Any member may resign by
giving notice, in writing, filed with the Board.
9.2 Officers and Employees of the Committee. The Committee
will choose from its members a Chairman and a Secretary. The Secretary will
keep a record of the Committee's proceedings and all dates, records and
documents pertaining to the Committee's administration of the Plan. The
Committee may employ and suitably compensate such persons or organizations to
render advice with respect to the duties of the Committee under the Plan as the
Committee determines to be necessary or desirable.
9.3 Action of the Committee. Action of the Committee may
be taken with or without a meeting of Committee members, provided that action
will be taken only upon the vote or other affirmative expression of a majority
of the Committee's members qualified to vote with respect to such action. The
Chairman or the Secretary of the Committee may execute any certificate or other
written direction on behalf of the Committee. In the event the Committee
members qualified to vote on any question are unable to determine such question
by a majority vote or other affirmative expression of a majority of the
Committee members qualified to vote on such question, such question will be
determined by the Board. A member of the Committee who is a Participant may
not vote on any question relating specifically to himself unless he is the sole
member of the Committee.
9.4 Expenses and Compensation. The expenses of
administering the Plan, including without limitation the expenses of the
Committee properly incurred in the performance of its duties under the Plan,
will be paid from the Trust Fund, and all such expenses paid by the
Participating Employers on behalf of the Plan will be reimbursed from the Trust
Fund unless the Participating Employers in their discretion elect not to submit
such expenses for reimbursement. Notwithstanding the foregoing, the members of
the Committee will not be compensated by the Plan for their services as
Committee members.
9.5 General Powers and Duties of the Committee. The
Committee will have the full power and responsibility to administer the Plan
and the Trust Agreement and to construe and
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apply their provisions. For purposes of ERISA, the Committee will be the named
fiduciary with respect to the operation and administration of the Plan and the
Trust Agreement. In addition, the Committee will have the powers and duties
granted by the terms of the Trust Agreement. The Committee, and all other
persons with discretionary control respecting the operation, administration,
control, and/or management of the Plan, the Trust Agreement, and/or the Trust
Fund, will perform their duties under the Plan and the Trust Agreement solely
in the interests of Participants and their Beneficiaries.
9.6 Specific Powers and Duties of the Committee. The
Committee will administer the Plan and the Trust Agreement and will have the
authority and discretion to (i) resolve all questions relating to the
eligibility of Employees to become Participants; (ii) determine the amount of
benefits payable to Participants or their Beneficiaries, and determine the time
and manner in which such benefits are to be paid; (iii) authorize and direct
all disbursements by the Trustee from the Trust Fund; (iv) engage any
administrative, legal, accounting, clerical, or other services it deems
appropriate in administering the Plan or the Trust Agreement; (v) construe and
interpret the Plan and the Trust Agreement, supply omissions from, correct
deficiencies in, and resolve ambiguities in the language of the Plan and the
Trust Agreement, and adopt rules for the administration of the Plan and the
Trust Agreement which are not inconsistent with the terms of such documents;
(vi) compile and maintain all records it determines to be necessary,
appropriate or convenient in connection with the administration of benefit
payments; (vii) determine the disposition of assets in the Trust Fund in the
event the Plan is terminated; (viii) review the performance of the Trustee with
respect to the Trustee's administrative duties, responsibilities and
obligations under the Plan and the Trust Agreement, report to the Board
regarding such administrative performance of the Trustee, and recommend to the
Board, if necessary, the removal of the Trustee and the appointment of a
successor Trustee; and (ix) resolve all questions of fact relating to any
matter for which it has administrative responsibility.
9.7 Allocation of Fiduciary Responsibility. The Committee
from time to time may allocate to one or more of its members and may delegate
to any other persons or organizations any of its rights, powers, duties and
responsibilities with respect to the operation and administration of the Plan
and the Trust Agreement that are permitted to be delegated under ERISA. Any
such allocation or delegation will be made in writing, will be reviewed
periodically by the Committee, and will be terminable upon such notice as the
Committee in its discretion deems reasonable and proper under the
circumstances. Whenever a person or organization has the power and authority
under the Plan or the
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Trust Agreement to delegate discretionary authority respecting the
administration of the Plan or the Trust Fund to another person or organization,
the delegating party's responsibility with respect to such delegation is
limited to the selection of the person to whom authority is delegated and the
periodic review of such person's performance and compliance with applicable law
and regulations. Any breach of fiduciary responsibility by the person to whom
authority has been delegated which is not proximately caused by the delegating
party's failure to properly select or supervise, and in which breach the
delegating party does not otherwise participate, will not be considered a
breach by the delegating party.
9.8 Information to be Submitted to the Committee. To
enable the Committee to perform its functions, the Participating Employers will
supply full and timely information to the Committee on all matters relating to
Employees and Participants as the Committee may require and will maintain such
other records required by the Committee to determine the benefits due to
Participants or their Beneficiaries under the Plan.
9.9 Notices, Statements and Reports. The Company will be
the "administrator" of the Plan as defined in ERISA section 3(16)(A) for
purposes of the reporting and disclosure requirements imposed by ERISA and the
Code. The Committee will assist the Company, as requested, in complying with
such reporting and disclosure requirements.
9.10 Claims Procedure.
(a) Filing Claim for Benefits. If a Participant or
Beneficiary does not receive the benefits which he believes he is entitled to
receive under the Plan, he may file a claim for benefits with the Committee.
All claims will be made in writing and will be signed by the claimant. If the
claimant does not furnish sufficient information to determine the validity of
the claim, the Committee will indicate to the claimant any additional
information which is required.
(b) Notification by the Committee. Each claim will
be approved or disapproved by the Committee within 90 days following the
receipt of the information necessary to process the claim. In the event the
Committee denies a claim for benefits in whole or in part, the Committee will
notify the claimant in writing of the denial of the claim. Such notice by the
Committee will also set forth, in a manner calculated to be understood by the
claimant, the specific reason for such denial, the specific Plan provisions on
which the denial is based, a description of any additional material or
information necessary to perfect the claim with an explanation of why such
material or information is necessary, and an explanation of the Plan's claim
review
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procedure as set forth in subsection (c). If no action is taken by the
Committee on a claim within 90 days, the claim will be deemed to be denied for
purposes of the review procedure.
(c) Review Procedure. A claimant may appeal a
denial of his claim by requesting a review of the decision by the Committee or
a person designated by the Committee, which person will be a named fiduciary
under ERISA section 402(a)(2) for purposes of this Section. An appeal must be
submitted in writing within six months after the denial and must (i) request a
review of the claim for benefits under the Plan, (ii) set forth all of the
grounds upon which the claimant's request for review is based and any facts in
support thereof, and (iii) set forth any issues or comments which the claimant
deems pertinent to the appeal. The Committee or the named fiduciary designated
by the Committee will make a full and fair review of each appeal and any
written materials submitted in connection with the appeal. The Committee or
the named fiduciary designated by the Committee will act upon each appeal
within 60 days after receipt thereof unless special circumstances require an
extension of the time for processing, in which case a decision will be rendered
as soon as possible but not later than 120 days after the appeal is received.
The claimant will be given the opportunity to review pertinent documents or
materials upon submission of a written request to the Committee or named
fiduciary, provided the Committee or named fiduciary finds the requested
documents or materials are pertinent to the appeal. On the basis of its
review, the Committee or named fiduciary will make an independent determination
of the claimant's eligibility for benefits under the Plan. The decision of the
Committee or named fiduciary on any claim for benefits will be final and
conclusive upon all parties thereto. In the event the Committee or named
fiduciary denies an appeal in whole or in part, it will give written notice of
the decision to the claimant, which notice will set forth in a manner
calculated to be understood by the claimant the specific reasons for such
denial and which will make specific reference to the pertinent Plan provisions
on which the decision was based.
9.11 Service of Process. The Committee may from time to
time designate an agent of the Plan for the service of legal process. The
Committee will cause such agent to be identified in materials it distributes or
causes to be distributed when such identification is required under applicable
law. In the absence of such a designation, the Company will be the agent of
the Plan for the service of legal process.
9.12 Correction of Participants' Accounts. If an error or
omission is discovered in the Accounts of a Participant, or in the amount
distributed to a Participant, the Committee will make such equitable
adjustments in the records of the Plan as may be necessary or appropriate to
correct such error or omission as of
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the Plan Year in which such error or omission is discovered. Further, a
Participating Employer may, in its discretion, make a special contribution to
the Plan which will be allocated by the Committee only to the Account of one or
more Participants to correct such error or omission.
9.13 Payment to Minors or Other Persons Under Legal
Disability. If any benefit becomes payable to a minor, payment of such benefit
will be made only to the guardian of the person or the estate of the minor,
provided the guardian acknowledges in writing, in a form acceptable to the
Committee, receipt of the payment on behalf of the minor. If any benefit
becomes payable to any other person under a legal disability, payment of such
benefit will be made only to the conservator or the guardian of the estate of
such person appointed by a court of competent jurisdiction. Any payment made
in accordance with the provisions of this Section on behalf of a minor or other
person under a legal disability will fully discharge the Plan's obligation to
such person.
9.14 Uniform Application of Rules and Policies. The
Committee in exercising its discretion granted under any of the provisions of
the Plan or the Trust Agreement will do so only in accordance with rules and
policies established by it which will be uniformly applicable to all
Participants and Beneficiaries.
9.15 Funding Policy. The Plan is to be funded through
Participating Employer contributions and earnings on such contributions; and
benefits will be paid to Participants and Beneficiaries as provided in the
Plan.
9.16 The Trust Fund. The Trust Fund will be held by the
Trustee for the exclusive benefit of Participants and Beneficiaries. The
assets held in the Trust Fund will be invested and reinvested in accordance
with the terms of the Trust Agreement, which is hereby incorporated into and
made a part of the Plan. All benefits will be paid solely out of the Trust
Fund, and no Participating Employer will be otherwise liable for benefits
payable under the Plan.
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ARTICLE 10
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS
10.1 Priority over Other Contribution and Allocation
Provisions. The provisions set forth in this Article will supersede any
conflicting provisions of Articles 3 and 4.
10.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Annual Addition" means the sum of the
following amounts with respect to all Qualified Plans and Welfare Benefit Funds
maintained by the Controlled Group Members:
(i) the amount of Controlled Group Member
contributions with respect to the Limitation Year allocated to the
Participant's account;
(ii) the amount of any forfeitures for the
Limitation Year allocated to the Participant's account;
(iii) the amount, if any, carried forward
pursuant to Section 10.4 or a similar provision in another Qualified Plan and
allocated to the Participant's account;
(iv) the amount of a Participant's voluntary
nondeductible contributions for the Limitation Year, provided, however, that
the Annual Addition for any Limitation Year beginning before January 1, 1987
will not be recomputed to treat all of the Participant's nondeductible
voluntary contributions as part of the Annual Addition;
(v) the amount allocated after March 31,
1984 to an individual medical benefit account (as defined in Code section
415(l)(2)) which is part of a Defined Benefit Plan or an annuity plan; and
(vi) the amount derived from contributions
paid or accrued after December 31, 1985 in taxable years ending after such date
that are attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code section 419A(d)(3))
under a Welfare Benefit Fund. A Participant's Annual Addition will not include
any nonvested amounts restored to his account following his reemployment
before incurring five consecutive One Year Breaks in Service, and a corrective
allocation pursuant to Section 9.12 will be
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considered an Annual Addition for the Limitation Year to which it relates.
(b) "Average Contribution Percentage" means the
average of the Contribution Percentages of each Participant in a group of
Participants.
(c) "Average Deferral Percentage" means the average
of the Deferral Percentages of each Participant in a group of Participants.
(d) "Contribution Percentage" means the ratio
(expressed as a percentage) determined by dividing the Matching Contributions
made to the Plan on behalf of a Participant who is eligible to receive an
allocation of Matching Contributions for a Plan Year (but only to the extent
such Matching Contributions are not taken into account in determining the
Participant's Deferral Percentage for the Plan Year) by the Participant's
Compensation for the Plan Year. A Participant is eligible to receive an
allocation of Matching Contributions for purposes of determining his
Contribution Percentage even though no Matching Contributions are made to the
Plan on his behalf because of the suspension of his Deferral Contributions
under the terms of the Plan, because of an election not to participate, or
because of the limitations contained in Sections 10.3 through 10.5 of the Plan.
(e) "Deferral Percentage" means the ratio
(expressed as a percentage) determined by dividing the Deferral Contributions
made to the Plan on behalf of a Participant who is eligible to make Deferral
Contributions for all or any portion of a Plan Year by the Participant's
Compensation for the Plan Year. In addition, if the Matching Contributions to
the Plan for any Plan Year satisfy the requirements of Code section
401(k)(2)(B) and (C), a Participant's Deferral Percentage will be determined by
aggregating the Deferral Contributions and the Matching Contributions made to
the Plan on his behalf for such Plan Year, unless such aggregation is
prohibited in regulations prescribed by the Secretary of the Treasury. A
Participant is eligible to make Deferral Contributions for purposes of
determining his Deferral Percentage even though he does not make Deferral
Contributions because of the suspension of his Deferral Contributions under the
terms of the Plan, because of an election not to participate, or because of the
limitations contained in Sections 10.3 through 10.5 of the Plan. A Deferral
Contribution will be taken into account for a Plan Year only if (i) the
allocation of such contribution is not contingent on participation in the Plan
or the performance of services after the Plan Year, (ii) such contribution is
paid to the Trustee within 12 months after the end of the Plan Year, and (iii)
such contribution relates to Compensation that either would have been received
by the Participant in the Plan Year, or that is
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attributable to services performed during the Plan Year and that would have
been received within two and one-half months after the Plan Year, but for the
election to defer.
(f) "Defined Benefit Dollar Limitation" means for
any Limitation Year, $90,000 or such amount as determined by the Commissioner
of Internal Revenue under Code section 415(d)(1) as of the January 1 falling
within such Limitation Year.
(g) "Defined Benefit Fraction" means a fraction,
the numerator of which is the Projected Annual Benefit of a Participant under
all Defined Benefit Plans maintained by a Controlled Group Member determined as
of the close of the Limitation Year and the denominator of which is the lesser
of (i) 140% of the Participant's average Includable Compensation that may be
taken into account for the Limitation Year under Code section 415(b)(1)(B), or
(ii) 125% of the Defined Benefit Dollar Limitation, determined as of the close
of the Limitation Year. If the Participant was a participant in a Defined
Benefit Plan maintained by a Controlled Group Member in existence on July 1,
1982, or on May 6, 1986, the denominator of the Defined Benefit Fraction will
not be less than 125% of the greater of the Participant's accrued Projected
Annual Benefit under such plan as of the end of the last Limitation Year
beginning before January 1, 1983, or his accrued Projected Annual Benefit of
the end of the last Limitation Year beginning January 1, 1987. The preceding
sentence applies only if the Defined Benefit Plan satisfied the requirements of
Code section 415 as in effect at the end of such Limitation Year.
(h) "Defined Benefit Plan" means a Qualified Plan
other than a Defined Contribution Plan.
(i) "Defined Contribution Dollar Limitation" means
for any Limitation Year, $30,000 or, if greater, 25% of the Defined Benefit
Dollar Limitation for the same Limitation Year. If a short Limitation Year is
created because of a Plan amendment changing the Limitation Year to a different
12-consecutive month period, the Defined Contribution Dollar Limitation for the
short Limitation Year will not exceed the amount determined in the preceding
sentences multiplied by a fraction, the numerator of which is the number of
months in the short Limitation Year and the denominator of which is 12.
(j) "Defined Contribution Fraction" means a
fraction, the numerator of which is the sum of the Annual Additions allocated
to the Participant's accounts for the applicable Limitation Year and each prior
Limitation Year, and the denominator of which is the sum of the lesser of the
following products for each Limitation Year in which the Participant was an
Employee (regardless of whether a Defined
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Contribution Plan was in existence for such Limitation Year) (i) the Defined
Contribution Dollar Limitation (determined for this purpose without regard to
the provisions of Code section 415(c)(6)) effective for the Limitation Year
multiplied by 125%, or (ii) 35% of the Participant's Includable Compensation
for such Limitation Year.
(k) "Defined Contribution Plan" means a Qualified
Plan described in Code section 414(i).
(l) "Family Member" means, with respect to an
Employee, the Employee's spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
(m) "Highly Compensated Employee" means any
Employee who performs services for a Controlled Group Member during the
determination year (as hereinafter defined) and who during the look-back year
(as hereinafter defined): (i) received Compensation from a Controlled Group
Member in excess of $75,000 (as adjusted pursuant to Code section 415(d)); (ii)
received Compensation from a Controlled Group Member in excess of $50,000 (as
adjusted pursuant to Code section 415(d)) and was a member of the top-paid
group (as hereafter defined) for such year; or (iii) was an officer of a
Controlled Group Member and received Compensation during such year that is
greater than 50% of the dollar limitation in effect under Code section
415(b)(1)(A) (but limited to no more than 50 Employees or, if lesser, the
greater of three Employees or 10% of the Employees). The term Highly
Compensated Employee also includes: (i) an Employee who is both described in
the preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the 100 Employees who received
the most Compensation from the Controlled Group during the determination year;
and (ii) an Employee who is a 5-percent owner at any time during the look-back
year or determination year. If no officer has satisfied the Compensation
requirement of (ii) above during either a determination year or look-back year,
the officer with the highest Compensation for such year will be treated as a
Highly Compensated Employee. For purposes of this subsection, the
determination year is the Plan Year, and the look-back year is the
twelve-month period immediately preceding the determination year. A Highly
Compensated Employee also includes any Employee who separated from service (or
was deemed to have separated) prior to the determination year, performs no
services for a Controlled Group Member during the determination year, and was a
Highly Compensated Employee for either the separation year or any determination
year ending on or after the Employee's 55th birthday. The term "top-paid
group" means that group of Employees consisting of the top 20% of such
Employees ranked on the basis of Compensation received during the Plan Year.
For purposes of this subsection, Compensation will include Deferral
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Contributions under the Plan or any other 401(k) arrangement and any amounts
that would have been received as cash but for an election to receive benefits
under a Code section 125 cafeteria plan. All determinations under this
definition will be made in accordance with Code section 414(q) and the Treasury
Regulations thereunder.
(n) "Includable Compensation" means an Employee's
total wages from the Controlled Group as determined for purposes of Internal
Revenue Service Form W-2, excluding, however: (i) moving expense
reimbursements that are deductible by the Employee under Code section 217, (ii)
contributions of Controlled Group Members to a simplified employee pension plan
to the extent such contributions are deductible by the Employee and
contributions of Controlled Group Members to any other plan of deferred
compensation that are not includable in the Employee's gross income, (iii)
distributions to the Employee from any plan of deferred compensation other than
an unfunded, nonqualified plan of deferred compensation, (iv) amounts realized
from the exercise of a nonqualified stock option, (v) amounts realized under
Code section 83 with respect to restricted property that becomes freely
transferable or is no longer subject to a substantial risk of forfeiture, (vi)
amounts realized from the disposition of stock acquired under a qualified stock
option within the meaning of Code section 422, and (vii) any other amounts that
receive special tax benefits within the meaning of section 1.415-2(d)(2) of the
Treasury Regulations. The annual Includable Compensation of an Employee taken
into account for any purpose for any Plan Year will not exceed $200,000 for any
Plan Year ending before January 1, 1994, as adjusted in regulations prescribed
by the Secretary of the Treasury, and will not exceed $150,000 for any Plan
Year beginning after December 31, 1993, as adjusted in regulations prescribed
by the Secretary of the Treasury. For purposes of applying the $200,000 and
$150,000 limits set forth in the preceding sentence, if an Employee is a Highly
Compensated Employee who is either (i) a 5-percent owner, determined in
accordance with Code section 414(q) and the Treasury Regulations promulgated
thereunder or (ii) one of the 10 most highly compensated Employees ranked on
the basis of Compensation paid by the Controlled Group during the year, such
Highly Compensated Employee and the members of his family (as hereafter
defined) will be treated as a single employee and the Compensation of each
member of the family will be aggregated with the Compensation of the Highly
Compensated Employee. The limitation on Compensation will be allocated among
such Highly Compensated Employee and his family members in proportion to each
individual's Compensation. For purposes of this Section 10.2(u), the term
"family" means an Employee's spouse and any lineal descendants who are under
age 19 at the end of the Plan Year in question.
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(o) "Limitation Year" means the
12-consecutive-month period used by a Qualified Plan for purposes of computing
the limitations on benefits and annual additions under Code section 415. The
Limitation Year for this Plan is the Plan Year.
(p) "Maximum Annual Addition" means with respect to
a Participant for any Limitation Year an amount equal to the lesser of (i) the
Defined Contribution Dollar Limitation or (ii) 25% of the Participant's
Includable Compensation.
(q) "Nonhighly Compensated Employee" means an
Employee who is neither a Highly Compensated Employee nor a Family Member of a
Highly Compensated Employee.
(r) "Projected Annual Benefit" means the annual
benefit (as defined in Code section 415(b)(2)) to which a Participant would be
entitled under the terms of a Defined Benefit Plan maintained by a Controlled
Group Member, assuming that the Participant will continue employment until his
normal retirement age under the Defined Benefit Plan (or current age, if later)
and that the Participant's Includable Compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the
Defined Benefit Plan will remain constant for all future Limitation Years.
(s) "Matching Contribution" means the Participating
Employer matching contribution made to the Plan on behalf of a Participant
pursuant to Article 3.
(t) "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust,
corporation or other organization not exempt from federal income tax, or to the
extent provided in Treasury Regulations, any account held for an employer by
any person, which is part of a plan of an employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code sections 83(h), 404 (determined without regard to section 404(b)(2))
or 404A applies, or to which an election under Code section 463 applies.
(u) "Compensation" means the wages as defined in
Code section 3401(a) for purposes of income tax withholding at the source (but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or services performed)
that are paid to a Participant by the Participating Employers. In addition,
Compensation includes any contributions made by the Participating Employers on
behalf of an Employee pursuant to a deferral election under the Plan or under
any other employee benefit plan containing a cash or deferred arrangement under
Code section
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401(k) and any amounts that would have been received as cash but for an
election to receive benefits under a cafeteria plan meeting the requirements of
Code section 125. The annual Compensation of an Employee taken into account
for any purpose will not exceed $200,000 for any Plan Year ending before
January 1, 1994, as adjusted in regulations prescribed by the Secretary of the
Treasury, and will not exceed $150,000 for any Plan Year beginning after
December 31, 1993, as adjusted in regulations prescribed by the Secretary of
the Treasury. For purposes of applying the $200,000 and $150,000 limits set
forth in the preceding sentence, if an Employee is a Highly Compensated
Employee who is either (i) a 5-percent owner, determined in accordance with
Code section 414(q) and the Treasury Regulations promulgated thereunder or (ii)
one of the 10 most highly compensated Employees ranked on the basis of
Compensation paid by the Controlled Group during the year, such Highly
Compensated Employee and the members of his family (as hereafter defined) will
be treated as a single employee and the Compensation of each member of the
family will be aggregated with the Compensation of the Highly Compensated
Employee. The limitation on Compensation will be allocated among such Highly
Compensated Employee and his family members in proportion to each individual's
Compensation. For purposes of this Section 10.2(u), the term "family" means
an Employee's spouse and any lineal descendants who are under age 19 at the end
of the Plan Year in question.
10.3 General Allocation Limitation. The Annual Addition of
a Participant for any Limitation Year will not exceed the Maximum Annual
Addition. If, except for the application of this section, the Annual Addition
of a Participant for any Limitation Year would exceed the Maximum Annual
Addition, the excess Annual Addition attributable to this Plan will not be
allocated to the Participant's Account for the Plan Year included in such
Limitation Year, but will be subject to the provisions of Section 10.4. The
limitations contained in this Article will apply on an aggregate basis to all
Defined Contribution Plans and all Defined Benefit Plans (whether or not any of
such plans have terminated) established by the Controlled Group Members.
10.4 Excess Allocations.
(a) Participants Covered by One Defined
Contribution Plan. If the Participant is not covered under another Defined
Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group
Member during the Limitation Year and the amount allocated or otherwise
allocable to his Account would exceed the Maximum Annual Addition, the
Participant's Deferral Contributions will be returned to the Participant
(together with earnings, if any, attributable to the returned Deferral
Contributions) to the extent necessary to reduce the excess Annual Addition.
If an excess Annual Addition
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remains after the return of such Deferral Contributions plus earnings, the
Participating Employer contributions and forfeitures which would continue to
cause the Participant's Annual Addition to exceed the Maximum Annual Addition
will be successively allocated in the manner described in Section 4.2 among the
Accounts of eligible Participants whose Annual Additions do not exceed the
Maximum Annual Addition. If, after such allocations have been made, there
remain Participating Employer contributions or forfeitures which cannot be
allocated without causing the Annual Addition of a Participant to exceed the
Maximum Annual Addition, the forfeitures which cause the Annual Addition to
exceed the Maximum Annual Addition and the Participating Employer contributions
which result from a reasonable error in estimating the Participant's Includable
Compensation or from any other limited facts and circumstances which the
Commissioner of Internal Revenue finds justifiable under section 1.415-6(b)(6)
of the Treasury Regulations and which cause the Participant's Annual Addition
to exceed the Maximum Annual Addition will be held in a suspense account in the
Trust Fund to be carried forward and used in subsequent Limitation Years to
reduce Participating Employer contributions to the Plan. If a suspense account
is in existence at any time during a Limitation Year, all amounts in the
suspense account must be allocated before any contributions which would
constitute Annual Additions will be made to the Plan for that Limitation Year.
Such suspense account will not participate in the allocation of the net income
or net loss of the Trust Fund.
(b) Participants Covered by Two or More Defined
Contribution Plans. If, in addition to this Plan, the Participant is covered
under another Defined Contribution Plan or a Welfare Benefit Fund maintained by
a Controlled Group Member during the Limitation Year, the following provisions
will apply. The Annual Addition which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed the
Maximum Annual Addition reduced by the Annual Addition credited to a
Participant's accounts under the other Defined Contribution Plans and Welfare
Benefit Funds for the same Limitation Year. If the Annual Addition with
respect to the Participant under the other Defined Contribution Plans and
Welfare Benefit Funds maintained by a Controlled Group Member is less than the
Maximum Annual Addition and the Participating Employer contribution that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would cause the Annual Addition for the Limitation Year to exceed the
Maximum Annual Addition, the amount to be contributed or allocated to the
Participant's Account under this Plan will be reduced so that the Annual
Addition under all such Defined Contribution Plans and Welfare Benefit Funds
for the Limitation Year will equal the Maximum Annual Addition. If the
aggregate Annual Addition with respect to the Participant under such other
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Defined Contribution Plans and Welfare Benefit Funds is equal to or greater
than the Maximum Annual Addition, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year. An excess
Annual Addition will be reduced in the manner described in subsection (c).
(c) Reduction of Excess Allocations. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Annual Addition for the Limitation Year will be determined on the basis of the
Participant's Includable Compensation for the Limitation Year. If a
Participant's Annual Addition under this Plan and the other Defined
Contribution Plans and Welfare Benefit Funds maintained by Controlled Group
Members would result in the Annual Addition exceeding the Maximum Annual
Addition for the Limitation Year, the excess amount will be deemed to consist
of the Annual Addition last allocated. In making this determination, the
Annual Addition attributable to a Welfare Benefit Fund will be deemed to have
been allocated first regardless of the actual date of allocation. If an excess
amount was allocated to a Participant on an allocation date of this Plan that
coincides with an allocation date of another plan, the excess amount attributed
to this Plan will be the product of (i) the total excess amount allocated as of
such date and (ii) the ratio of the Annual Addition allocated to the
Participant for the Limitation Year as of such date under this Plan to the
total Annual Addition allocated to the Participant for the Limitation Year as
of such date under this and all the other Defined Contribution Plans. Any
excess amount attributed to this Plan will be disposed of in the manner
described in subsection (a).
10.5 Aggregate Benefit Limitation. If a Controlled Group
Member maintains, or at any time maintained, one or more Defined Benefit Plans
covering any Participant in this Plan, the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction for any Limitation Year will equal no
more than one (1.0). The provisions of the Defined Benefit Plans will govern
the order of reduction of Annual Additions or benefit accruals necessary to
meet this limitation. If the provisions of the Defined Benefit Plans are
silent, the current Annual Addition under this Plan will be reduced first, and
then the rate of accrual under the Defined Benefit Plans will be reduced, if
necessary to meet this limitation. If the Defined Contribution Plans taken
into account in determining the Participant's Annual Addition under this
Article satisfied the requirements of Code section 415 as in effect for all
Limitation Years beginning before January 1, 1987, an amount will be subtracted
from the numerator of the Defined Contribution Fraction (not exceeding such
numerator) as prescribed by the Secretary of the Treasury so that the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction does not
exceed 1.0. For purposes of this
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Section, a Participant's voluntary nondeductible contributions to a Defined
Benefit Plan will be treated as being part of a separate Defined Contribution
Plan.
10.6 Limitation on Deferral Contributions.
(a) Average Deferral Percentage Test.
Notwithstanding any other provision of the Plan, the Average Deferral
Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Deferral Percentage
for Participants who are Nonhighly Compensated Employees multiplied by 1.25; or
(ii) the lesser of (A) the Average Deferral Percentage for Participants who are
Nonhighly Compensated Employees plus two percentage points or (B) the Average
Deferral Percentage for Participants who are Nonhighly Compensated Employees
multiplied by 2.0. The multiple use of the alternative test in clause (ii) of
this subsection will be restricted as provided in regulations prescribed by the
Secretary of the Treasury.
(b) Suspension of Deferral Contributions. If at
any time during a Plan Year the Committee determines, on the basis of estimates
made from information then available, that the limitation described in
subsection (a) above will not be met for the Plan Year, the Committee in its
discretion may reduce or suspend the Deferral Contributions of one or more
Participants who are Highly Compensated Employees to the extent necessary (i)
to enable the Plan to meet such limitation or (ii) to reduce the amount of
excess Deferral Contributions that would otherwise be distributed pursuant to
subsection (c) below.
(c) Reduction of Excess Deferral Contributions.
If, for any Plan Year, the Average Deferral Percentage for Participants who are
Highly Compensated Employees exceeds the limitation described in subsection (a)
above, the Deferral Percentage for such Participants will be reduced (in the
order of Deferral Percentages, beginning with the highest of such percentages
as provided below) until the limitation in subsection (a) is satisfied. The
highest Deferral Percentage will be reduced first until the limitation in
subsection (a) is satisfied or the percentage equals the next highest
percentage, and the process will be repeated until such limitation is
satisfied. In order to reduce a Participant's Deferral Percentage, the
Participant's excess Deferral Contributions will be distributed to him. All
distributions under this subsection will be increased by Trust Fund earnings
and decreased by Trust Fund losses for the Plan Year and for the period between
the end of the Plan Year and the date of distribution and will be made within
two and one-half months following the close of the Plan Year, if practicable,
but in no event later than the last day of the immediately following Plan Year.
The amount of excess
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Deferral Contributions distributed pursuant to this Section with respect to a
Participant for the Plan Year will be reduced by any Deferral Contributions
previously distributed to the Participant for the same Plan Year pursuant to
Section 3.1(c). The excess Deferral Contributions of Participants who are
subject to the family aggregation rules of Section 10.8(d) will be allocated
among the family members in proportion to the Deferral Contributions of the
family members.
(d) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Deferral Contributions that are distributed pursuant
to subsection (c) above will be determined by multiplying the Trust Fund
earnings or losses for the Plan Year allocable to the Participant's Deferral
Contribution Account by a fraction, the numerator of which is the amount of
Deferral Contributions to be distributed to the Participant and the denominator
of which is the balance of the Participant's Deferral Contribution Account on
the last day of the Plan Year, reduced by the earnings and increased by the
losses allocable to such Account for the Plan Year. The earnings and losses of
the Trust Fund allocable to the Participant's Deferral Contributions that are
distributed pursuant to subsection (c) for the period between the end of the
Plan Year and the date of such distribution will be determined in accordance
with regulations prescribed by the Secretary of the Treasury interpreting Code
section 401(k).
(e) Discriminatory Matching Contributions. If the
allocation of Matching Contributions to a Participant's Matching Contribution
Account results in a discriminatory matching contribution (as determined under
Code sections 401(a)(4) or 401(m) and the regulations thereunder) for such
Participant because the Matching Contribution relates to a Deferral
Contribution that exceeds the limitations described in Section 3.1(c) or this
Section 10.6, or because of any other reason, and such discriminatory matching
contribution cannot be distributed as an excess Matching Contribution pursuant
to Section 10.7, such discriminatory matching contribution, or the portion
thereof that results in prohibited discrimination, will be forfeited
notwithstanding any other provision of the Plan to the contrary.
10.7 Limitation on Matching Contributions.
(a) Average Contribution Percentage Test.
Notwithstanding any other provision of the Plan, the Average Contribution
Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Contribution
Percentage for Participants who are Nonhighly Compensated Employees multiplied
by 1.25; or (ii) the lesser of (A) the Average Contribution Percentage Test for
Participants who are Nonhighly Compensated Employees plus two
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percentage points or (B) the Average Contribution Percentage for Participants
who are Nonhighly Compensated Employees multiplied by 2.0. The multiple use of
the alternative test contained in clause (ii) of this subsection will be
restricted as provided in regulations prescribed by the Secretary of the
Treasury.
(b) Reduction of Excess Matching Contributions.
If, for any Plan Year, the Average Contribution Percentage for Participants who
are Highly Compensated Employees exceeds the limitation described in subsection
(a) above, the Contribution Percentage for each such Participant will be
reduced (in the order of Contribution Percentages, beginning with the highest
of such percentages as provided below) until the limitation in subsection (a)
is satisfied. The highest Contribution Percentage will be reduced first until
the limitation in subsection (a) is satisfied or the percentage equals the next
highest percentage, and the process will be repeated if necessary until such
limitation is satisfied. In order to reduce a Participant's Contribution
Percentage, the Participant's excess Matching Contributions (increased by Trust
Fund earnings and decreased by Trust Fund losses for the Plan Year and for the
period between the end of the Plan Year and the date of distribution) will be
distributed to the Participant within two and one-half months following the
close of the Plan Year, if practicable, but in no event later than the last day
of the immediately following Plan Year. The excess Matching Contributions of
Participants who are subject to the family aggregation rules of Section 10.8(d)
will be allocated among the family members in proportion to the Matching
Contributions made on behalf of the family members.
(c) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Matching Contributions that are forfeited pursuant
to Section 10.6 or distributed pursuant to subsection (b) above will be
determined by multiplying the Trust Fund earnings or losses for the Plan Year
allocable to the Participant's Matching Contribution Account by a fraction, the
numerator of which is the amount of Matching Contributions to be distributed or
forfeited and the denominator of which is the balance of the Participant's
Matching Contribution Account on the last day of the Plan Year, reduced by the
earnings and increased by the losses allocable to such Account for the Plan
Year. The earnings and losses of the Trust Fund allocable to a Participant's
Matching Contributions that are forfeited pursuant to Section 10.6 or
distributed pursuant to subsection (b) above for the period between the end of
the Plan Year and the date of such distribution or forfeiture will be
determined in accordance with regulations prescribed by the Secretary of the
Treasury interpreting Code sections 401(k) and 401(m).
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10.8 Aggregation Rules.
(a) Code Section 415. For purposes of the
allocation limitations under Code section 415 set forth in this Article, (i)
all Defined Benefit Plans ever maintained by a Controlled Group Member will be
treated as one Defined Benefit Plan, and all Defined Contribution Plans ever
maintained by a Controlled Group Member will be treated as one Defined
Contribution Plan, and (ii) Controlled Group Members will be determined in
accordance with the 50% control rule of Code section 415(h).
(b) Code Section 401(k). For purposes of the
limitation on Deferral Contributions set forth in this Article, the Average
Deferral Percentage for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have deferral contributions allocated
to his account under two or more plans or arrangements described in Code
section 401(k) that are maintained by the Company or any Controlled Group
Member will be determined as if all such deferral contributions were made under
a single arrangement (unless such plans or arrangements may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
(c) Code Section 401(m). The Contribution
Percentage of a Participant who is a Highly Compensated Employee for a Plan
Year and who is eligible to make voluntary Employee contributions or receive
deferral contributions or matching employer contributions allocated to his
account under two or more Defined Contribution Plans maintained by the Company
or a Controlled Group Member will be determined as if all such contributions
were made to a single plan (unless such plans may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
(d) Family Members. For purposes of determining
the Contribution Percentage or the Deferral Percentage of a Participant who is
both a Highly Compensated Employee and either (i) a 5-percent owner, determined
in accordance with Code section 414(q) and the Treasury Regulations promulgated
thereunder or (ii) one of the 10 most highly compensated Employees ranked on
the basis of Compensation paid by the Controlled Group during the year,
determined in accordance with Code section 414(q) and the Treasury Regulations
promulgated thereunder, the Matching Contributions, Deferral Contributions, and
Compensation of such
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Participant will include the Matching Contributions, Deferral Contributions
and Compensation of Family Members, and Family Members will be disregarded in
determining the Contribution Percentage or the Deferral Percentage of
Participants who are not such Highly Compensated Employees.
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ARTICLE 11
RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES
11.1 Priority over Other Distribution Provisions. The
provisions set forth in this Article will supersede any conflicting provisions
of Article 6 or Article 7.
11.2 General Restrictions.
(a) Distributions Prior to a Separation from
Service. Except for distributions permitted under Article 6 with respect to
Participants who attain age 59-1/2 or suffer a hardship, a Participant's
interest in the Plan will not be distributed before the Participant's
separation from service, disability or death unless: (i) the Plan is
terminated without the establishment or maintenance by the Participating
Employers of another defined contribution plan (other than an employee stock
ownership plan as defined in Code section 4975(e)(7)); (ii) a Participating
Employer that is a corporation sells all or substantially all of the assets
used by the Participating Employer in a trade or business to a person other
than a Controlled Group Member and the Participant becomes an employee of the
acquiring employer; or (iii) a Participating Employer that is a corporation
disposes of its interest in a subsidiary to a person other than an Controlled
Group Member but only if the Participant continues employment with the
subsidiary. An event will not be treated as described in clause (ii) or (iii)
above unless the Participating Employer continues to maintain the Plan after
the disposition.
(b) Lump Sum Distribution Required. An event
described in subparagraph (a) that would otherwise permit distribution of a
Participant's interest in the Plan will not be treated as described in
subparagraph (a) unless the Participant receives a lump sum distribution by
reason of the event. A lump sum distribution for this purpose will be a
distribution described in Code section 402(d)(4), without regard to clauses
(i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B), or
subparagraph (F) thereof.
11.3 Restrictions on Commencement of Distributions. The
provisions of this Section will apply to restrict the Committee's ability to
delay the commencement of distributions. Unless a Participant elects otherwise
in writing, distribution of the Participant's vested interest in his Account
will begin no later than the 60th day after the close of the Plan Year in which
occurs the latest of (i) the date on which the Participant attains age 62, (ii)
the tenth anniversary of the Plan Year in
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which the Participant began participation in the Plan, or (iii) the
Participant's termination of employment.
11.4 Restrictions on Delay of Distributions. The following
provisions will apply to limit a Participant's ability to delay the
distribution of benefits.
(a) General Rule. Distribution of a Participant's
entire vested and nonforfeitable interest will be made or commence not later
than April 1 following the calendar year in which he attains age 70-1/2. On or
before December 31 of such calendar year and of each succeeding calendar year,
distribution of the entire amount of any additional balances in the
Participant's Accounts (determined as of the preceding Valuation Date) will be
made in a lump sum.
(b) Rule for Certain Participants Who Attained Age
70-1/2 Before 1988. Notwithstanding subsection (a), if a Participant attained
age 70-1/2 before January 1, 1988 and was not a 5-percent owner (as such term
is defined in Code Section 416(i)) at any time during the five-plan-year period
ending in the calendar year in which he attained age 70-1/2, then distribution
of his entire vested and nonforfeitable interest will be made or commence not
later than April 1 following the earlier of (i) the calendar year in which his
employment with the Controlled Group terminates or (ii) the calendar year in
which he becomes a 5-percent owner.
(c) Rule for Participants Who Attained Age 70-1/2
in 1988. If a Participant attained age 70-1/2 during 1988 and had not
terminated employment with the Controlled Group as of January 1, 1989,
distribution of his entire vested and nonforfeitable interest will be made or
commence not later than April 1, 1990.
11.5 Limitation to Assure Benefits Payable to Beneficiaries
are Incidental. In the event that any payments under the Plan are to be made
to someone other than the Participant or jointly to the Participant and his
spouse or other payee, such payments must conform to the "incidental benefit"
rules of Code section 401(a)(9)(G) and Treasury Regulation section
1.401(a)(9)-2.
11.6 Restrictions in the Event of Death. Upon the death of
a Participant, the following distribution provisions will apply to limit the
Beneficiary's ability to delay distributions. If the Participant dies after
distribution of his benefit has begun, the remaining portion of his benefit
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death; but if he dies before
distribution of his benefit commences, his entire
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benefit will be distributed no later than five years after his death, unless an
individual who is a designated Beneficiary elects to receive distributions in
substantially equal installments over the Beneficiary's life or life expectancy
beginning no later than one year after the Participant's death. If the
designated Beneficiary is the Participant's surviving spouse, the date
distributions are required to begin will not be earlier than the date on which
the Participant would have attained age 70-1/2, and, if the spouse dies before
payments begin, subsequent distributions will be made as if the spouse had been
the Participant. Any amount paid to a child of the Participant will be treated
as if it had been paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of majority.
11.7 Compliance with Regulations. Distributions under the
Plan to Participants or Beneficiaries will be made in accordance with Treasury
Regulations issued under Code section 401(a)(9).
11.8 Delayed Payments. If the amount of a distribution
required to begin on a date determined under the applicable provisions of the
Plan cannot be ascertained by such date, or if it is not possible to make such
payment on such date because the Committee has been unable to locate a
Participant or Beneficiary after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than 60 days after the earliest
date on which the amount of such payment can be ascertained or the date on
which the Participant or Beneficiary is located (whichever is applicable).
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ARTICLE 12
TOP-HEAVY PROVISIONS
12.1 Priority over Other Plan Provisions. If the Plan is or
becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article will
supersede any conflicting provisions of the Plan. However, the provisions of
this Article will not operate to increase the rights or benefits of
Participants under the Plan except to the extent required by Code section 416
and other provisions of law applicable to Top-Heavy Plans.
12.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Defined Benefit Dollar Limitation" means the
limitation described in Section 10.2(f).
(b) "Defined Benefit Plan" means the Qualified Plan
described in Section 10.2(h).
(c) "Defined Contribution Dollar Limitation" means
the limitation described in Section 10.2(i).
(d) "Defined Contribution Plan" means the Qualified
Plan described in Section 10.2(k).
(e) "Determination Date" means for the first Plan
Year of the Plan the last day of the Plan Year and for any subsequent Plan Year
the last day of the preceding Plan Year.
(f) "Determination Period" means the Plan Year
containing the Determination Date and the four preceding Plan Years.
(g) "Includable Compensation" means the
compensation described in Section 10.2(n).
(h) "Key Employee" means any Employee or former
Employee (and the Beneficiary of a deceased Employee) who at any time during
the Determination Period was (i) an officer of a Controlled Group Member, if
such individual's Includable Compensation (modified as described below) exceeds
50% of the Defined Benefit Dollar Limitation, (ii) an owner (or considered an
owner under Code section 318) of one of the ten largest interests in a
Controlled Group Member, if such individual's Includable Compensation exceeds
the Defined Contribution Dollar Limitation, (iii) a 5% owner of a Controlled
Group Member, or (iv) a 1% owner of a Controlled Group Member who has annual
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Includable Compensation of more than $150,000. The determination of who is a
Key Employee will be made in accordance with Code section 416(i). For purposes
of this subsection, Includable Compensation will include the amount of any
salary reduction contributions pursuant to a cash or deferred arrangement
meeting the requirements of Code section 401(k) or a cafeteria plan meeting the
requirements of Code section 125.
(i) "Minimum Allocation" means the allocation
described in the first sentence of Section 12.3(a).
(j) "Permissive Aggregation Group" means the
Required Aggregation Group of Qualified Plans plus any other Qualified Plan or
Qualified Plans of a Controlled Group Member which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code sections 401(a)(4) and 410 (including simplified employee pension
plans).
(k) "Present Value" means present value based only
on the interest and mortality rates specified in a Defined Benefit Plan.
(l) "Required Aggregation Group" means the group of
plans consisting of (i) each Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member in which at least one Key Employee
participates, and (ii) any other Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code sections 401(a)(4) or 410.
(m) "Top-Heavy Plan" means the Plan for any Plan
Year in which any of the following conditions exists: (i) if the Top-Heavy
Ratio for the Plan exceeds 60% and the Plan is not a part of any Required
Aggregation Group or Permissive Aggregation Group of Qualified Plans; (ii) if
the Plan is a part of a Required Aggregation Group but not part of a Permissive
Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60%; or (iii) if the Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of Qualified Plans
and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(n) "Top-Heavy Ratio" means a fraction, the
numerator of which is the sum of the Present Value of accrued benefits and the
account balances (as required by Code section 416)) of all Key Employees with
respect to such Qualified Plans as of the Determination Date (including any
part of any accrued benefit or account balance distributed during the five-year
period ending on the Determination Date), and the denominator of which is the
sum of the Present Value of the accrued benefits and
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<PAGE> 58
the account balances (including any part of any accrued benefit or account
balance distributed in the five-year period ending on the Determination Date)
of all Employees with respect to such Qualified Plans as of the Determination
Date. The value of account balances and the Present Value of accrued benefits
will be determined as of the most recent Top-Heavy Valuation Date that falls
within or ends with the 12-month period ending on the Determination Date,
except as provided in Code section 416 for the first and second Plan Years of a
Defined Benefit Plan. The account balances and accrued benefits of a
participant who is not a Key Employee but who was a Key Employee in a prior
year will be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, transfers and contributions unpaid as
of the Determination Date are taken into account will be made in accordance
with Code section 416. Employee contributions described in Code section
219(e)(2) will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year. The accrued benefit of any Employee
other than a Key Employee will be determined under the method, if any, that
uniformly applies for accrual purposes under all Qualified Plans maintained by
all Controlled Group Members and included in a Required Aggregation Group or a
Permissive Aggregation Group or, if there is no such method, as if the benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code section 411(b)(1)(C). Notwithstanding the
foregoing, the account balances and accrued benefits of any Employee who has
not performed services for an employer maintaining any of the aggregated plans
during the five-year period ending on the Determination Date will not be taken
into account for purposes of this subsection.
(o) "Top-Heavy Valuation Date" means the last day
of each Plan Year.
12.3 Minimum Allocation.
(a) Calculation of Minimum Allocation. For any
Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is not a
Key Employee will receive an allocation of Participating Employer
contributions and forfeitures of not less than the lesser of 3% of his
Includable Compensation for such Plan Year or the percentage of Includable
Compensation that equals the largest percentage of Participating Employer
contributions (including Deferral Contributions) and forfeitures allocated to a
Key Employee. The Minimum Allocation is determined without regard to any
Social Security contribution. Deferral Contributions made on behalf of
Participants who are not Key Employees will not be treated as Participating
Employer
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<PAGE> 59
contributions for purposes of the Minimum Allocation. Matching Contributions
that are allocated to Participants who are not Key Employees and that are taken
into account in determining a Participant's Deferral Percentage or Contribution
Percentage will not be treated as Participating Employer contributions for such
Plan Year for purposes of the Minimum Allocation. The Minimum Allocation
applies even though under other Plan provisions the Participant would not
otherwise be entitled to receive an allocation, or would have received a lesser
allocation for the Plan Year because (i) the non-Key Employee fails to make
mandatory contributions to the Plan, (ii) the non-Key Employee's Includable
Compensation is less than a stated amount, or (iii) the non-Key Employee fails
to complete 1,000 Hours of Service in the Plan Year.
(b) Limitation on Minimum Allocation. No Minimum
Allocation will be provided pursuant to subsection (a) to a Participant who is
not employed by a Controlled Group Member on the last day of the Plan Year.
(c) Minimum Allocation When Participant is Covered
by Another Qualified Plan. If a Controlled Group Member maintains one or more
other Defined Contribution Plans covering Employees who are Participants in
this Plan, the Minimum Allocation will be provided under this Plan, unless such
other Defined Contribution Plans make explicit reference to this Plan and
provide that the Minimum Allocation will not be provided under this Plan, in
which case the provisions of subsection (a) will not apply to any Participant
covered under such other Defined Contribution Plans. If a Controlled Group
Member maintains one or more Defined Benefit Plans covering Employees who are
Participants in this Plan, and such Defined Benefit Plans provide that
Employees who are participants therein will accrue the minimum benefit
applicable to top-heavy Defined Benefit Plans notwithstanding their
participation in this Plan, then the provisions of subsection (a) will not
apply to any Participant covered under such Defined Benefit Plans. If a
Controlled Group Member maintains one or more Defined Benefit Plans covering
Employees who are Participants in this Plan, and the provisions of the
preceding sentence do not apply, then each Participant who is not a Key
Employee and who is covered by such Defined Benefit Plans will receive a
Minimum Allocation determined by applying the provisions of subsection (a) with
the substitution of "5%" in each place that "3%" occurs therein.
(d) Nonforfeitability. The Participant's Minimum
Allocation, to the extent required to be nonforfeitable under Code section
416(b) and the special vesting schedule provided in this Article, may not be
forfeited under Code section 411(a)(3)(B) (relating to suspension of benefits
on reemployment)
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or 411(a)(3)(D) (relating to withdrawal of mandatory contributions).
12.4 Modification of Aggregate Benefit Limit.
(a) Modification. Subject to the provisions of
subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the
aggregate benefit limit described in Article 10 will be modified by
substituting "100%" for "125%" in Sections 10.2(g) and (j).
(b) Exception. The modification of the aggregate
benefit limit described in subsection (a) will not be required if the Top-Heavy
Ratio does not exceed 90% and one of the following conditions is met: (i)
Employees who are not Key Employees do not participate in both a Defined
Benefit Plan and a Defined Contribution Plan which are in the Required
Aggregation Group, and the Minimum Allocation requirements of Section 12.3(a)
are met when such requirements are applied with the substitution of "4%" for
"3%"; (ii) the Minimum Allocation requirements of Section 12.3(c) are met when
such requirements are applied with the substitution of "7 1/2%" for "5%"; or
(iii) Employees who are not Key Employees have an accrued benefit of not less
than 3% of their average Includable Compensation for the five consecutive Plan
Years in which they had the highest Includable Compensation multiplied by their
Years of Service in which the Plan is a Top-Heavy Plan (not to exceed a total
such benefit of 30%), expressed as a life annuity commencing at the
Participant's normal retirement age in a Defined Benefit Plan which is in the
Required Aggregation Group.
12.5 Minimum Vesting.
(a) Required Vesting. For any Plan Year in which
this Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in
subsection (b) will automatically apply to the Plan to the extent it provides
a higher vested percentage than the regular vesting schedule set forth in
Article 5. The minimum vesting schedule applies to all Account balances
including amounts attributable to Plan Years before the effective date of Code
section 416 and amounts attributable to Plan Years before the Plan became a
Top-Heavy Plan. Further, no reduction in vested Account balances may occur in
the event the Plan's status as a Top-Heavy Plan changes for any Plan Year, and
any change in the effective vesting schedule from the schedule set forth in
subsection (b) to the regular schedule set forth in Article 5 will be treated
as an amendment subject to Section 14.1(iii). However, this subsection does
not apply to the Account balances of any Employee who does not have an Hour of
Service after the Plan has initially become a Top-Heavy Plan, and such
Employee's
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Account balances will be determined without regard to this Section.
(b) Minimum Vesting Schedule.
<TABLE>
<CAPTION>
Percentage Vested
Years of Service and Nonforfeitable
---------------- ------------------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
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<PAGE> 62
ARTICLE 13
ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS
13.1 Adoption Procedure. Any Controlled Group Member may
become a Participating Employer under the Plan provided that (i) the Board
approves the adoption of the Plan by the Controlled Group Member and designates
the Controlled Group Member as a Participating Employer; (ii) the Controlled
Group Member adopts the Plan and Trust Agreement together with all amendments
then in effect by appropriate resolutions of the board of directors of the
Controlled Group Member; and (iii) the Controlled Group Member by appropriate
resolutions of its board of directors agrees to be bound by any other terms and
conditions which may be required by the Board, provided that such terms and
conditions are not inconsistent with the purposes of the Plan.
13.2 Effect of Adoption by Controlled Group Member. A
Controlled Group Member that adopts the Plan pursuant to this Article will be
deemed to be a Participating Employer for all purposes hereunder, unless
otherwise specified in the resolutions of the Board designating the Controlled
Group Member as a Participating Employer. In addition, the Board may provide,
in its discretion and by appropriate resolutions, that the Employees of the
Controlled Group Member will receive credit for their employment with the
Controlled Group Member prior to the date it became a Controlled Group Member
for purposes of determining either or both the eligibility of such Employees to
participate in the Plan and the vested and nonforfeitable interest of such
Employees in their Account balances provided that such credit will be applied
in a uniform and nondiscriminatory manner with respect to all such Employees.
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ARTICLE 14
AMENDMENT OF THE PLAN
14.1 Right to Amend the Plan.
(a) In General. The Company reserves to the
Compensation Committee of the Board of Directors the right to amend the Plan at
any time and from time to time to the extent it may deem advisable or
appropriate, provided that (i) no amendment will increase the duties or
liabilities of the Trustee without its written consent; (ii) no amendment will
cause a reversion of Plan assets to the Participating Employers not otherwise
permitted under the Plan; (iii) no amendment will have the effect of reducing
the percentage of the vested and nonforfeitable interest of any Participant in
his Account nor will the vesting provisions of the Plan be amended unless each
Participant with at least three Years of Service (including Years of Service
disregarded pursuant to the reemployment provisions (if any) of Article 5) is
permitted to elect to continue to have the prior vesting provisions apply to
him, within 60 days after the latest of the date on which the amendment is
adopted, the date on which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment; and (iv) no amendment
will be effective to the extent that it has the effect of decreasing a
Participant's Account balance or eliminating an optional form of distribution
as it applies to an existing Account balance.
(b) Authority of the Board. The Company also
reserves to the Board of Directors the right to amend the Plan at any time and
from time to time to the extent it may deem advisable or appropriate, subject
to the limitations on amendments set forth in subsection (a).
14.2 Amendment Procedure. Any amendment to the Plan will be
made only pursuant to action of the Board or of the Compensation Committee of
the Board. A certified copy of the resolutions adopting any amendment and a
copy of the executed amendment will be delivered to the Trustee, the Committee
and the Company. Upon such action by the Board or the Compensation Committee
of the Board, the Plan will be deemed amended as of the date specified as the
effective date by such action or in the instrument of amendment. The effective
date of any amendment may be before, on or after the date of such action,
except as otherwise set forth in Section 14.1.
14.3 Effect on Participating Employers. Unless an amendment
expressly provides otherwise, all Participating Employers will be bound by any
amendment to the Plan.
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ARTICLE 15
TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS
15.1 Continuance of Plan. The Participating Employers
expect to continue the Plan indefinitely, but they do not assume an individual
or collective contractual obligation to do so, and the right is reserved to the
Company, by action of the Board, to terminate the Plan or to completely
discontinue contributions thereto at any time. In addition, subject to
remaining provisions of this Article, any Participating Employer at any time
may discontinue its participation in the Plan with respect to its Employees.
15.2 Complete Vesting. If the Plan is terminated, or if
there is a complete discontinuance of contributions to the Plan by the
Participating Employers, the amounts allocated or to be allocated to the
Accounts of all affected Participants will become 100% vested and
nonforfeitable without regard to their Years of Service. For purposes of this
Section, a Participant who has terminated employment and is not again an
Employee at the time the Plan is terminated or there is a complete
discontinuance of Participating Employer contributions will not be an affected
Participant entitled to full vesting if the Participant had no vested interest
in his Account balance attributable to Participating Employer contributions at
his termination of employment. In the event of a partial termination of the
Plan, the amounts allocable to the Accounts of those Participants who cease to
participate on account of the facts and circumstances which result in the
partial termination will become 100% vested and nonforfeitable without regard
to their Years of Service.
15.3 Disposition of the Trust Fund. If the Plan is
terminated, or if there is a complete discontinuance of contributions to the
Plan, the Committee will instruct the Trustee either (i) to continue to
administer the Plan and pay benefits in accordance with the Plan until the
Trust Fund has been depleted, or (ii) to distribute the assets remaining in the
Trust Fund, unless distribution is prohibited by Section 11.2. If the Trust
Fund is to be distributed, the Committee will make, after deducting estimated
expenses for termination of the Trust Fund and distribution of its assets, the
allocations required under the Plan as though the date of completion of the
Trust Fund termination were a Valuation Date. The Trustee will distribute to
each Participant the amount credited to his Account as of the date of
completion of the Trust Fund termination.
15.4 Withdrawal by A Participating Employer. A
Participating Employer may withdraw from participation in the
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Plan or completely discontinue contributions to the Plan only with the approval
of the Board. If any Participating Employer withdraws from the Plan or
completely discontinues contributions to the Plan, a copy of the resolutions of
the board of directors of the Participating Employer adopting such action,
certified by the secretary of such board of directors and reflecting approval
by the Board, will be delivered to the Committee as soon as it is
administratively feasible to do so, and the Committee will communicate such
action to the Trustee and to the Employees of the Participating Employer.
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ARTICLE 16
MISCELLANEOUS
16.1 Reversion Prohibited.
(a) General Rule. Except as provided in
subsections (b), (c) and (d), it will be impossible for any part of the Trust
Fund either (i) to be used for or diverted to purposes other than those which
are for the exclusive benefit of Participants and their Beneficiaries (except
for the payment of taxes and administrative expenses), or (ii) to revert to a
Controlled Group Member.
(b) Disallowed Contributions. Each contribution of
the Participating Employers under the Plan is expressly conditioned upon the
deductibility of the contribution under Code section 404. If all or part of a
Participating Employer's contribution is disallowed as a deduction under Code
section 404, such disallowed amount (reduced by any Trust Fund losses
attributable thereto) may be returned by the Trustee to the Participating
Employer with respect to which the deduction was disallowed (upon the direction
of the Committee) within one year after the disallowance.
(c) Mistaken Contributions. If a contribution is
made by a Participating Employer by reason of a mistake of fact, then so much
of the contribution as was made as a result of the mistake (reduced by any
Trust Fund losses attributable thereto) may be returned by the Trustee to the
Participating Employer (upon direction of the Committee) within one year after
the mistaken contribution was made.
(d) Failure to Qualify. In the event the Internal
Revenue Service determines that the Plan and the Trust Agreement, as amended by
amendments acceptable to the Company, initially fail to constitute a qualified
plan and establish a tax-exempt trust under the Code, then notwithstanding any
other provisions of the Plan or the Trust Agreement, the contributions made by
the Participating Employers prior to the date of such determination will be
returned to the Participating Employers within one year after such
determination and the Plan and Trust Agreement will terminate, but only if the
application for determination was made within the time prescribed by law for
filing the Company's income tax return for the taxable year in which the Plan
and the Trust Agreement were adopted, or such later date as the Secretary of
the Treasury may prescribe.
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<PAGE> 67
16.2 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under ERISA,
the Participating Employers will obtain, pay for and keep current a bond or
bonds with respect to each Committee member and each Employee who receives,
handles, disburses, or otherwise exercises custody or control of, any of the
assets of the Plan.
(b) Insurance. The Participating Employers, in
their discretion, may obtain, pay for and keep current a policy or policies of
insurance, insuring the Committee members, the members of the board of
directors of each Participating Employer and other Employees to whom any
fiduciary responsibility with respect to the administration of the Plan has
been delegated against any and all costs, expenses and liabilities (including
attorneys' fees) incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their duties, responsibilities
and obligations under the Plan and any applicable law.
(c) Indemnity. If the Participating Employers do
not obtain, pay for and keep current the type of insurance policy or policies
referred to in subsection (b), or if such insurance is provided but any of the
parties referred to in subsection (b) incur any costs or expenses which are not
covered under such policies, then the Participating Employers will indemnify
and hold harmless, to the extent permitted by law, such parties against any and
all costs, expenses and liabilities (including attorneys' fees) incurred by
such parties in performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within what was
reasonably believed to have been the best interests of the Plan and its
Participants.
16.3 Merger, Consolidation or Transfer of Assets. There
will be no merger or consolidation of all or any part of the Plan with, or
transfer of the assets or liabilities of all or any part of the Plan to, any
other Qualified Plan unless each Participant who remains a Participant
hereunder and each Participant who becomes a participant in the other Qualified
Plan would receive a benefit immediately after the merger, consolidation or
transfer (determined as if the other Qualified Plan and the Plan were then
terminated) which is equal to or greater than the benefit they would have been
entitled to receive under the Plan immediately before the merger, consolidation
or transfer if the Plan had then terminated.
16.4 Spendthrift Clause. The rights of any Participant or
Beneficiary to and in any benefits under the Plan will not be subject to
assignment or alienation, and no Participant or Beneficiary will have the power
to assign, transfer or dispose of
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such rights, nor will any such rights to benefits be subject to attachment,
execution, garnishment, sequestration, the laws of bankruptcy or any other
legal or equitable process. This Section will not apply to a "qualified
domestic relations order". A "qualified domestic relations order" means a
judgment, decree or order made pursuant to a state domestic relations law which
satisfies the requirements of Code section 414(p). Payment to an alternate
payee pursuant to a qualified domestic relations order will be made in an
immediate lump sum payment, if the order so provides.
16.5 Rights of Participants. Participation in the Plan will
not give any Participant the right to be retained in the employ of a Controlled
Group Member or any right or interest in the Plan or the Trust Fund except as
expressly provided herein.
16.6 Gender, Tense and Headings. Whenever any words are
used herein in the masculine gender, they will be construed as though they were
also used in the feminine gender in all cases where they would so apply.
Whenever any words used herein are in the singular form, they will be construed
as though they were also used in the plural form in all cases where they would
so apply. Headings of Articles, Sections and subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
16.7 GOVERNING LAW. THE PLAN WILL BE CONSTRUED AND GOVERNED
IN ALL RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT
NOT PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, INCLUDING WITHOUT LIMITATION, THE TEXAS STATUTE OF LIMITATIONS, BUT
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.
Executed at Dallas, Texas, this 2 day of February, 1996.
A. H. BELO CORPORATION
By /s/ [ILLEGIBLE]
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APPENDIX A
PARTICIPATING EMPLOYERS
A. H. Belo Corporation
Belo Production, Inc.
(as of April 1, 1994)
Bryan-College Station Eagle, Inc.
(as of December 26, 1995)
Dallas-Ft. Worth Suburban Newspapers, Inc.
(through March 31, 1994)
The Dallas Morning News Company
DFW Printing Company, Inc.
(as of April 1, 1994)
DFW Suburban Newspapers, Inc.
(for the period beginning on April 1, 1994
and ending on December 31, 1994)
Great Western Broadcasting Corporation
Gulf Television Corporation
KOTV, Inc.
Owensboro Messenger-Inquirer, Inc.
(as of January 5, 1996)
Third Avenue Television, Inc.
(as of February 1, 1995)
WFAA Television, Inc.
WVEC Television, Inc.
WWL-TV, Inc.
(as of June 1, 1994)
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<PAGE> 1
Exhibit 10.3(11)
THE G. B. DEALEY RETIREMENT PENSION PLAN
(As Amended and Restated Generally Effective January 1, 1989)
<PAGE> 2
THE G. B. DEALEY RETIREMENT PENSION PLAN
A. H. Belo Corporation, a Delaware corporation, amends and completely
restates The G. B. Dealey Retirement Pension Plan generally effective as of
January 1, 1989. The Plan is a defined benefit pension plan intended to
qualify under Code section 401(a), and the trust previously established
pursuant to the Plan is an employees' trust intended to constitute a tax-exempt
organization under Code section 501(a).
Except as otherwise specifically provided in the Plan, the provisions
of the Plan as amended and restated herein will apply to each Employee who
completes an Hour of Service after December 31, 1988; provided, however, that
an Employee's benefit which is protected from being decreased or eliminated in
any respect under Code section 411(d)(6), and the Employee's vested interest in
such benefit, will not be less under the terms of the Plan set forth below than
under the terms of the Plan as in effect on December 31, 1988.
Words and phrases with initial capital letters used throughout the
Plan are defined in Article 1.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3 CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4 RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 FORMS OF RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 6 DEATH BENEFITS FOR SPOUSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 7 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8 ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9 LIMITATIONS ON BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 10 RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 11 TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 12 ADOPTION OF THE PLAN BY CONTROLLED GROUP MEMBERS . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 13 AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 14 TERMINATION AND PARTIAL TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 15 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
APPENDIX A PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B BENEFIT FORMULAS IN EFFECT
ON DECEMBER 31, 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C DEATH BENEFITS FOR PARTICIPANTS
BEFORE JANUARY 1, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
(ii)
<PAGE> 4
ARTICLE 1
DEFINITIONS
1.1 "Accrued Benefit" means a Participant's Normal Retirement
Benefit which he has earned as of any date using the greater of the
Participant's years of Credited Service or the years of Credited Service the
Participant would earn if he remained an Employee until attaining age 65,
multiplied by a fraction (not to exceed 1.0) the numerator of which is the
Participant's total years of Credited Service and the denominator of which is
the years of Credited Service the Participant would have earned if he remained
an Employee until age 65.
1.2 "Actuarial Equivalent" or "Actuarially Equivalent" means a
form of benefit under which the aggregate payments expected to be received
under one form of benefit are equal in value to the aggregate payments expected
to be received under a different form of benefit using the interest rate and
mortality factors set forth below.
(a) Interest rate. The interest rate used for purposes
of computing optional forms of benefit payments (other than a single sum
payment) and for purposes of computing any adjustments for benefits commencing
on a date other than a Participant's Normal Retirement Date when such
adjustment is not otherwise provided for in the Plan will be the Pension
Benefit Guaranty Corporation immediate annuity rate in effect on the first day
of the Plan Year in which the Participant terminates employment.
(b) Mortality. The mortality assumption used for
purposes of computing optional forms of benefit payments, and for purposes of
computing any adjustments for benefits commencing on a date other than a
Participant's Normal Retirement Date when such adjustment is not otherwise
provided for in the Plan, will be a unisex rate that is 50% male, 50% female,
taken from the 1971 Group Annuity Mortality Table, Projected by Scale D to
1975.
Notwithstanding the foregoing, in calculating the present
value of a Participant's benefit for purposes of the immediate distribution of
a small benefit under Section 5.1(e), actuarial equivalence will be determined
by using the Applicable Interest Rate and, for distributions made pursuant to
Section 5.1(e) after December 31, 1995, the applicable mortality table as
prescribed by the Secretary of the Treasury under Code section 417(e)(3).
The foregoing actuarial assumptions may be changed from time
to time by amendment to the Plan. No Participant or
<PAGE> 5
Beneficiary will be deemed to have any right, vested or nonvested, to have his
benefit computed under previously adopted actuarial assumptions, except to the
extent required by Code section 411(d)(6) to prevent the reduction of a
Participant's Accrued Benefit.
1.3 "Applicable Interest Rate" means for distributions made prior
to January 1, 1996, the interest rate or rates that would be used by the
Pension Benefit Guaranty Corporation, as of the first day of the Plan Year in
which a distribution is made, for purposes of determining the lump sum present
value of the Participant's benefit under the Plan if the Plan had terminated on
the first day of such Plan Year with insufficient assets to provide benefits
guaranteed by the Pension Benefit Guaranty Corporation on that date. For
distributions made pursuant to Section 5.1(e) after December 31, 1995, the
Applicable Interest Rate is the annual rate of interest on 30-year Treasury
securities for the month of November preceding the Plan Year in which a
distribution is made.
1.4 "Beneficiary" means the one or more persons or entities
entitled to receive distribution of a benefit (if any) that becomes payable
under the Plan in the event of a Participant's death. If a Participant has not
designated a Beneficiary or is not survived by a designated Beneficiary, any
death benefit under the Plan will be payable to his surviving spouse, if any,
otherwise equally among his surviving children, if any, and if the Participant
is not survived by a spouse or children, to his then living parents, and if
none of the above are then living, to his estate.
1.5 "Benefit Commencement Date" means the date upon which payment
of a Participant's benefit commences.
1.6 "Board of Directors" or "Board" means the Board of Directors
of the Company.
1.7 "Break in Service Year" means a Period of Absence of at least
twelve consecutive months. A Break in Service Year will commence on the first
day of an Employee's Period of Absence and will end on the day on which the
Employee again performs an Hour of Service for a Controlled Group Member.
If any Employee who is absent from work with a Controlled
Group Member because of (i) the Employee's pregnancy, (ii) the birth of the
Employee's child, (iii) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (iv) caring for such
child immediately following such birth or placement, will be absent for such
reason beyond the first anniversary of the first date of absence, his Period of
Absence, solely for purposes of preventing a Break in
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<PAGE> 6
Service Year, will commence on the second anniversary of the first day of
absence from work. The period of absence from work between the first and
second anniversaries of the first date of absence from work will not be counted
as a Period of Absence or a period of Credited Service. The provisions of this
paragraph will not apply to an Employee unless the Employee furnishes to the
Committee such timely information that the Committee may reasonably require to
establish (i) that the absence from work is for one of the reasons specified in
this paragraph and (ii) the number of days for which there was such an absence.
1.8 "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
1.9 "Committee" or "Administrative Committee" means the committee
appointed under Article 8.
1.10 "Company" means A. H. Belo Corporation, a Delaware
corporation. The term "Company" will also include any successor employer, if
the successor employer expressly agrees in writing as of the effective date of
succession to continue the Plan and become a party to the Trust Agreement.
1.11 "Compensation" means the wages as defined in Code section
3401(a) for purposes of income tax withholding at the source (but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or services performed) that are
paid to an Employee by the Participating Employers, reduced by all of the
following items: reimbursements or other expense allowances, fringe benefits
(cash and noncash), moving expenses, deferred compensation and welfare
benefits. In addition, the Compensation paid to an Employee who is a "highly
compensated employee" as defined in Code section 414(q) and the Treasury
Regulations thereunder will be further reduced by the following items: amounts
includible in the Employee's income by reason of the grant or exercise of a
stock option, amounts includible in the Employee's income under Code section 83
with respect to restricted stock and any other amounts includible in the
Employee's income by reason of an award (other than an annual bonus award)
under the Company's 1986 Long Term Incentive Plan, the 1995 Executive
Compensation Plan or any successor executive compensation plan, as such plans
may be amended and in effect from time to time. Compensation includes, for all
Employees, any contributions made by the Participating Employers on behalf of
an Employee pursuant to a deferral election under an employee benefit plan
containing a cash or deferred arrangement under Code section 401(k) or any
amounts that would have been received as cash but for an election to receive
benefits under a cafeteria plan meeting the requirements of Code section 125.
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<PAGE> 7
For purposes of determining benefit accruals for any Plan Year
beginning after December 31, 1988, and ending before January 1, 1994, the
Compensation of an Employee will not exceed $200,000, and for purposes of
determining benefit accruals for any Plan Year beginning after December 31,
1993, the Compensation of any Employee will not exceed $150,000, as both such
dollar limits are adjusted by the Secretary of the Treasury. If an Employee's
Compensation is determined with respect to a period of time that contains fewer
than 12 calendar months, then the annual compensation limit is an amount equal
to the annual compensation limit for the calendar year in which the
compensation period begins multiplied by the ratio obtained by dividing the
number of full months in the period by 12.
In determining the Compensation of an Employee for purposes of
the adjusted $200,000 limitation or $150,000 limitation, as applicable, the
rules of Code section 414(q)(6) will apply, except in applying such rules, the
term "family" will include only the Spouse of an Employee and any lineal
descendants of the Employee who have not attained age 19 before the close of
the year. If, as a result of the application of such rules, the adjusted
$200,000 limitation or $150,000 limitation, as applicable, is exceeded, then
(except for purposes of determining the portion of Compensation up to the
integration level), the limitation will be prorated among the affected
individuals in proportion to each such individual's Compensation as determined
under this Section prior to the application of this limitation.
If Compensation for any prior Plan Year is taken into account
in determining an Employee's benefits for the current Plan Year, the
Compensation for such prior Plan Year is subject to the applicable annual
compensation limit in effect for that prior Plan Year. For this purpose, for
years beginning before January 1, 1994, the applicable annual compensation
limit is $200,000. In addition, if Compensation for any Plan Year beginning
prior to January 1, 1994, is used to determine benefit accruals in a Plan Year
beginning on or after January 1, 1994, the annual compensation limit for that
prior Plan Year will be $150,000, as adjusted for that prior Plan Year by the
Secretary of the Treasury.
Notwithstanding the foregoing provisions of this Section, the
application of the $150,000 limitation on Compensation for Plan years after
1993 will not cause a Participant's Accrued Benefit to be less than his Accrued
Benefit at December 31, 1993, frozen in accordance with section 1.401(a)(4)-13
of the regulations, plus his Accrued Benefit determined solely with respect to
his years of Credited Service after 1993.
-4-
<PAGE> 8
1.12 "Controlled Group" means the Company and all other
corporations, trades and businesses, the employees of which, together with
employees of the Company, are required by the first sentence of subsection (b),
by subsection (c), by subsection (m) or by subsection (o) of Code section 414
to be treated as if they were employed by a single employer.
1.13 "Controlled Group Member" means each corporation or
unincorporated trade or business that is or was a member of a Controlled Group,
but only during such period as it is or was such a member.
1.14 "Covered Compensation" means the average (without indexing) of
the Taxable Wage Bases in effect for each calendar year during the 35-year
period ending with the last day of the calendar year in which a Participant
attains (or will attain) Social Security Retirement Age (as defined in Section
9.2(m)). No increase in Covered Compensation will decrease a Participant's
accrued benefit under the Plan. In determining a Participant's Covered
Compensation for a Plan Year, the Taxable Wage Base in effect for the current
Plan Year and any subsequent Plan Year will be assumed to be the same as the
Taxable Wage Base in effect as of the beginning of the Plan Year for which the
determination is being made.
A Participant's Covered Compensation for a Plan Year before
the 35-year period ending with the last day of the calendar year in which the
Participant attains Social Security Retirement Age is the Taxable Wage Base in
effect as of the beginning of the Plan Year. A Participant's Covered
Compensation for a Plan Year after such 35-year period is the Participant's
Covered Compensation for the Plan Year during which the Participant attained
Social Security Retirement Age.
1.15 "Credited Service" means the period of time beginning on the
date an Employee is first credited with an Hour of Service (or is again
credited with an Hour of Service following his reemployment) and ending on the
Employee's Termination Date. An Employee's Credited Service will also include
each Period of Absence of less than 12 months and any periods during which he
is in the service of the armed forces of the United States and his reemployment
rights are guaranteed by law, provided he returns to employment with a
Controlled Group Member within the time such rights are guaranteed. A "year of
Credited Service" means each period of 365 days in an Employee's period of
Credited Service, determined by aggregating periods of Credited Service that
are not consecutive. If an Employee's aggregate Credited Service exceeds his
whole years of Credited Service, he will receive credit for a fractional year
of Credited Service determined by dividing the number of days of Credited
Service that exceed his whole years of Credited Service by 365.
Notwithstanding the
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<PAGE> 9
foregoing, for purposes of determining the amount of an Employee's Accrued
Benefit under Article 4, Credited Service earned by an Employee while employed
by a Controlled Group Member that is not a Participating Employer will not be
taken into account, and Credited Service during any period prior to January 1,
1982, during which the Employee was eligible to participate in the Plan but
elected not to participate will be disregarded.
In determining the Credited Service of an Employee who became
an employee of WWL-TV, Inc., a Delaware corporation, on June 1, 1994, and who
immediately prior to that date was an employee of Rampart Operating
Partnership, a partnership organized under the laws of the State of Louisiana
("Rampart"), such Employee will receive credit for his period of employment
with Rampart or any affiliate of Rampart, calculated in the same manner as if
it had been employment with a Controlled Group Member, for purposes of
eligibility to participate in the Plan under Section 2.1 but not for purposes
of determining the amount of his retirement benefit or his vested interest in
his retirement benefit or for any other purpose of the Plan.
In determining the Credited Service of an Employee who became
an employee of Third Avenue Television, Inc., a Delaware corporation, on
February 1, 1995, and who immediately prior to that date was an employee of
KIRO, Inc., a Washington corporation ("KIRO"), such Employee will receive
credit for his period of employment with KIRO or any affiliate of KIRO,
calculated in the same manner as if it had been employment with a Controlled
Group Member, for purposes of eligibility to participate in the Plan under
Section 2.1 and for purposes of his vested interest in his retirement benefit
under Article 7 of the Plan, but not for purposes of determining the amount of
his retirement benefit or for any other purpose of the Plan.
In determining the Credited Service of an Employee who became
an employee of Owensboro Messenger- Inquirer, Inc., a Delaware corporation, on
January 5, 1996, and who immediately prior to that date was an employee of
Owensboro Publishing Company ("OPC"), such Employee will receive credit for his
period of employment with OPC or any affiliate of OPC, calculated in the same
manner as if it had been employment with a Controlled Group Member, for
purposes of eligibility to participate in the Plan under Section 2.1 and for
purposes of his vested interest in his retirement benefit under Article 7 of
the Plan, but not for purposes of determining the amount of his retirement
benefit or for any other purpose of the Plan.
1.16 "Disability" or "Disabled" means disability for purposes of an
Employee's eligibility to receive disability benefits under the Company's
long-term disability plan. An
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<PAGE> 10
Employee who for any reason is not eligible to receive disability benefits
under the Company's long-term disability plan will not be Disabled for purposes
of the Plan.
1.17 "Early Retirement Age" means the earlier of (i) the date on
which a Participant has attained age 55 and has completed at least (A) for
Participants who terminate employment before January 1, 1989, and who do not
complete an Hour of Service thereafter, ten years of Credited Service and (B)
for all other Participants, five years of Credited Service and (ii) the date on
which a Participant has attained age 62.
1.18 "Effective Date" means January 1, 1989.
1.19 "Employee" means any person who (i) is employed by a
Controlled Group Member if the relationship between a Controlled Group Member
and such person would, for federal income tax purposes, constitute the legal
relationship of employer and employee, or (ii) is a "leased employee" of a
Controlled Group Member within the meaning of Code section 414(n)(2) but only
for purposes of the requirements of Code section 414(n)(3).
1.20 "Enrolled Actuary" means the enrolled actuary as defined by
Section 103(a)(4)(A) of ERISA, engaged by the Committee or the Company as the
Plan's enrolled actuary.
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.22 "Final Monthly Compensation" means the average monthly
Compensation paid to a Participant (i) during the five consecutive calendar
years of employment occurring within the Participant's last ten years of
employment with a Controlled Group Member that produces the highest average
monthly Compensation or (ii) during all of his calendar years of employment, if
the Participant has less than five calendar years of employment. In
determining a Participant's Final Monthly Compensation, (a) the calendar year
in which the Participant terminates employment will be disregarded unless his
termination of employment occurs on December 31 of the calendar year or unless
such calendar year is the only year of employment, (b) calendar years in which
no Compensation was paid to the Participant for services performed as an
Employee in those years will be disregarded, and calendar years occurring
before and after such years of no Compensation will be considered as
consecutive calendar years and (c) if a Participant receives Compensation in
any calendar year for services performed as an Employee for less than 12 full
months, his Compensation for such year will be his annualized Compensation
determined by dividing his Compensation for such year by the number of full and
partial
-7-
<PAGE> 11
months of service during such year and multiplying the result by 12.
1.23 "Hour of Service" means each hour credited in accordance with
the following rules:
(a) Credit for Services Performed. An Employee will be
credited with one Hour of Service for each hour for which he is paid, or
entitled to payment, by one or more Controlled Group Members for the
performance of duties.
(b) Credit for Periods in Which No Services Are
Performed. An Employee will be credited with one Hour of Service for each hour
for which he is paid, or entitled to payment, by one or more Controlled Group
Members on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated); except
that (i) no more than 501 Hours of Service will be credited under this
subsection (b) to an Employee on account of any single continuous period during
which he performs no duties (whether or not such period occurs in a single Plan
Year), (ii) an hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are
performed will not be credited to the Employee if the payment is made or due
under a plan maintained solely for the purpose of complying with applicable
workers' compensation or unemployment compensation or disability insurance
laws, and (iii) Hours of Service will not be credited for a payment which
solely reimburses an Employee for medical or medically related expenses
incurred by the Employee. For purposes of this subsection (b), an Employee
will be credited with Hours of Service on the basis of his regularly scheduled
working hours per week (or per day if he is paid on a daily basis) or, in the
case of an Employee without a regular work schedule, on the basis of 40 Hours
of Service per week (or 8 Hours of Service per day if he is paid on a daily
basis) for each week (or day) during the period of time during which no duties
are performed; except that an Employee will not be credited with a greater
number of Hours of Service for a period during which no duties are performed
than the number of hours for which he is regularly scheduled for the
performance of duties during the period or, in the case of an Employee without
a regular work schedule, on the basis of 40 Hours of Service per week (or 8
Hours of Service per day if he is paid on a daily basis).
(c) Credit for Back Pay. An Employee will be credited
with one Hour of Service for each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by one or more
Controlled Group Members; except that an hour will not be credited under both
subsection (a) or (b), as the case may be, and this subsection (c), and Hours
of Service credited under this subsection (c) with respect to periods
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<PAGE> 12
described in subsection (b) will be subject to the limitations and provisions
under subsection (b).
(d) Credit for Certain Absences. If an Employee is
absent from work on or after the Effective Date for any period by reason of the
pregnancy of the Employee, by reason of the birth of a child of the Employee,
by reason of the placement of a child with the Employee, or for purposes of
caring for a child for a period beginning immediately following the birth or
placement of that child, the Employee will be credited with Hours of Service
(solely for the purpose of determining whether he has a One Year Break in
Service under the Plan) equal to (i) the number of Hours of Service which
otherwise would normally have been credited to him but for his absence, or (ii)
if the number of Hours of Service under clause (i) is not determinable, 8 Hours
of Service per normal workday of the absence, provided, however, that the total
number of Hours of Service credited to an Employee under this subsection (d) by
reason of any pregnancy, birth or placement will not exceed 501 Hours of
Service. Hours of Service will not be credited to an Employee under this
subsection (d) unless the Employee furnishes to the Committee such timely
information as the Committee may reasonably require to establish that the
Employee's absence from work is for a reason specified in this subsection (d)
and the number of days for which there was such an absence.
(e) Manner of Counting Hours. No hour will be counted
more than once or be counted as more than one Hour of Service even though the
Employee may receive more than straight-time pay for it. With respect to
Employees whose compensation is not determined on the basis of certain amounts
for each hour worked during a given period and for whom hours are not required
to be counted and recorded by any federal law (other than ERISA), Hours of
Service will be credited on the basis of 10 Hours of Service daily, 45 Hours of
Service weekly, 95 Hours of Service semi-monthly, or 190 Hours of Service
monthly, if the Employee's compensation is determined on a daily, weekly,
semi-monthly or monthly basis, respectively, for each period in which the
Employee would be credited with at least one Hour of Service under this
section. Except as otherwise provided in subsection (d), Hours of Service will
be credited to Eligibility Computation Periods and Plan Years in accordance
with the provisions of 29 C.F.R. Section 2530.200b-2, which provisions are
incorporated in this Plan by reference.
1.24 "Normal Retirement Benefit" means the retirement benefit
payable as of the Normal Retirement Date to a Participant who terminates
employment at age 65, determined in accordance with Section 4.1.
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<PAGE> 13
1.25 "Normal Retirement Date" means the first day of the month
coincident with or immediately following a Participant's attainment of age 65.
1.26 "Participant" means an Employee or former Employee who has met
the applicable participation requirements of Article 2 and who has not yet
received a distribution of the entire amount of his vested benefit under the
Plan.
1.27 "Participating Employer" means each Controlled Group Member
set forth on Appendix A and any other Controlled Group Member or organizational
unit of the Company or a Controlled Group Member which is designated as a
Participating Employer under the Plan by the Board of Directors.
1.28 "Period of Absence" means the period of time beginning on an
Employee's Termination Date and ending on the date he again performs an Hour of
Service.
1.29 "Plan" means the defined benefit pension plan set forth
herein, as amended from time to time.
1.30 "Plan Year" means the period with respect to which the records
of the Plan are maintained, which is the 12-month period beginning on January 1
and ending on December 31, and includes such periods prior to the Effective
Date.
1.31 "Qualified Joint and Survivor Annuity" means a monthly annuity
for the life of a Participant and, after his death, a monthly survivor annuity
for the life of the Participant's Spouse which will be equal to 50% of the
amount of the monthly annuity payable during the joint lives of the Participant
and his Spouse, which will be the Actuarial Equivalent of the normal form of
benefit provided to an unmarried Participant.
1.32 "Qualified Plan" means an employee benefit plan that is
qualified under Code section 401(a).
1.33 "Qualified Preretirement Survivor Annuity" means (a) with
respect to married Participant who dies before January 1, 1995, a monthly
annuity for the life of the deceased Participant's surviving Spouse that is
equal to the Actuarial Equivalent of the Participant's Accrued Benefit
determined as of the date of his death and (b) with respect to a married
Participant who dies on or after January 1, 1995, a monthly annuity for the
life of the deceased Participant's surviving Spouse in the amount described in
Section 6.2.
1.34 "Spouse" means the individual to whom a Participant was
legally married on the earlier of his Benefit Commencement Date or the date of
his death.
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<PAGE> 14
1.35 "Super Highly Compensated Employee" means an Employee
described in Code section 414(q)(1)(A) or (B).
1.36 "Taxable Wage Base" means the contribution and benefit base in
effect under section 230 of the Social Security Act at the beginning of the
Plan Year.
1.37 "Termination Date" means the earlier of the date on which an
Employee quits, retires, is discharged or dies, or the first anniversary of the
date on which the Employee is absent from service with a Controlled Group
Member for any other reason, such as vacation, holiday, sickness, disability,
leave of absence or layoff. The phrases "terminates employment", "terminated
employment" and "termination of employment" when used with respect to an
Employee will refer to an event that causes the date on which the event occurs
to constitute the Employee's Termination Date.
1.38 "Trust Agreement" means the agreement or agreements executed
by the Company and the Trustee which establish a trust fund to provide for the
investment, reinvestment, administration and distribution of contributions made
under the Plan and the earnings thereon, as amended from time to time.
1.39 "Trust Fund" means the assets of the Plan held by the Trustee
pursuant to the Trust Agreement.
1.40 "Trustee" means the one or more individuals or organizations
who have entered into the Trust Agreement as Trustee(s), and any duly appointed
successor.
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ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. Each Employee who was a
Participant on December 31, 1988, will continue to participate in the Plan on
the Effective Date. Each Employee who was not a Participant as of the
Effective Date will become a Participant on the January 1 or July 1 next
following the date on which he has both attained age 21 and completed a year of
Credited Service, if he is then employed by a Participating Employer.
Notwithstanding the foregoing:
(i) Each Employee of WWL-TV, Inc. who completed a year of
Credited Service on or before May 31, 1994, will become a Participant
on June 1, 1994.
(ii) Each Employee of Third Avenue Television, Inc. who
completed a year of Credited Service on or before January 31, 1995,
will become a Participant on February 1, 1995.
(iii) Each Employee of Owensboro Messenger-Inquirer, Inc.
who completed a year of Credited Service on or before January 4, 1996,
will become a Participant on January 5, 1996.
2.2 Exclusions from Participation.
(a) Ineligible Employees. An Employee who is otherwise
eligible to participate in the Plan will not become or continue as an active
Participant if (i) except as otherwise provided in this subsection (a), he is
covered by a collective bargaining agreement that does not expressly provide
for participation in the Plan, provided that the representative of the
Employees with whom the collective bargaining agreement is executed has had an
opportunity to bargain concerning retirement benefits for those Employees; (ii)
he is a nonresident alien who receives no earned income (within the meaning of
Code section 911(d)(2)) from a Participating Employer which constitutes income
from sources within the United States (within the meaning of Code section
861(a)(3)); (iii) he is a leased employee required to be treated as an Employee
under Code section 414(n) or he is classified by a Participating Employer as an
independent contractor whose compensation for services is reported on a form
other than Form W-2 or any successor form for reporting wages paid to
employees; (iv) he is employed by a Controlled Group Member or an
organizational unit thereof that has not been designated as a Participating
Employer by the Board; (v) he is then on an approved leave of absence without
pay or in
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<PAGE> 16
the service of the armed forces of the United States; or (vi) he is employed by
DFW Suburban Newspapers, Inc. The exclusion provided in clause (i) of this
subsection (a) will not apply to an Employee of The Dallas Morning News Company
who is or becomes a member of the bargaining unit represented by the Dallas
Typographical Union, Local No. 103, or to an Employee of WFAA Television, Inc.
who is or becomes a member of the bargaining unit represented by the
International Brotherhood of Electrical Workers.
(b) Exclusion after Participation. A Participant who
becomes ineligible under subsection (a) will continue to earn Credited Service
for purposes of determining his vested interest in his Accrued Benefit, but
during the period of ineligibility the Participant's Credited Service and
Compensation will not be taken into account for purposes of determining the
amount of his Accrued Benefit unless the Participant is in the service of the
armed forces of the United States and returns to employment with a Controlled
Group Member within the time his reemployment rights are guaranteed by law.
(c) Participation after Exclusion. An Employee or
Participant who is excluded from active participation will be eligible to
participate in the Plan on the first day he is no longer described in
subsection (a) and is credited with one or more Hours of Service by a
Participating Employer, provided that he has otherwise met the requirements of
Section 2.1. This subsection will apply to an Employee who returns from an
approved leave of absence or from military leave and who would otherwise be
treated as a new Employee under Section 2.3 only if he returns to employment
with a Controlled Group Member immediately following the expiration of the
leave of absence or, in the case of an Employee on military leave, during the
period in which reemployment rights are guaranteed by law.
2.3 Reemployment Provisions. All Credited Service is taken into
account in determining eligibility to participate, except as otherwise provided
in this Section.
(a) Termination of Employment before Participation. If
an Employee terminates employment before becoming a Participant and is
reemployed by a Controlled Group Member before incurring five consecutive Break
in Service Years, he will become a Participant on the later of the date
initially determined under Section 2.1, or the date he is credited with one or
more Hours of Service by a Participating Employer after reemployment; but if he
is reemployed by a Controlled Group Member after incurring five consecutive
Break in Service Years, he will be treated as a new Employee for purposes of
the Plan and his Credited Service completed before his reemployment will be
disregarded in determining when he will become a Participant.
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<PAGE> 17
(b) Termination of Employment after Participation. A
Participant who has a vested and nonforfeitable right to all or a portion of
his Accrued Benefit at the time of his termination of employment will again
become an active Participant immediately upon his reemployment by a
Participating Employer. If any other Participant terminates employment and is
reemployed by a Controlled Group Member before incurring a number of
consecutive Break in Service Years equal to the greater of five or his years of
Credited Service, he will again become an active Participant on the date he is
credited with one or more Hours of Service by a Participating Employer; but if
he is reemployed by a Controlled Group Member after incurring a number of
consecutive Break in Service Years equal to the greater of five or his years of
Credited Service, he will be treated as a new Employee and his Credited Service
completed before his reemployment will be disregarded for purposes of
determining when he will again become a Participant.
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<PAGE> 18
ARTICLE 3
CONTRIBUTIONS
3.1 Employer Contributions. Each Participating Employer will pay
to the Trustee as a contribution for a Plan Year the amount, if any, determined
by the Enrolled Actuary to be necessary to provide the benefits under Article 4
and, if applicable, Article 11, subject, however, to the Company's right to
amend or terminate the Plan.
3.2 Time of Payment. The contributions for a Plan Year to be made
by each Participating Employer pursuant to this Article 3 will be paid to the
Trustee not later than the date permitted under Code section 412 and
regulations thereunder for purposes of determining credits to the funding
standard account for such Plan Year, unless a waiver of the minimum funding
standard for such Plan Year has been obtained by the Participating Employers
from the Internal Revenue Service.
3.3 Participant Contributions Prohibited. A Participant may not
make contributions to the Plan.
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<PAGE> 19
ARTICLE 4
RETIREMENT BENEFITS
4.1 Normal Retirement Benefit.
(a) General Rule. A Participant who terminates
employment at age 65 will receive a monthly retirement benefit beginning on his
Normal Retirement Date in an amount equal to (i) 1.1% of his Final Monthly
Compensation multiplied by his years of Credited Service and (ii) 0.35% of his
Final Monthly Compensation in excess of his Covered Compensation multiplied by
his years of Credited Service up to 35 such years, plus, if he is a Participant
to whom the provisions of Section B.4 of Appendix B apply, a monthly benefit
equal to the benefit described in Section B.4(a)(v) of Appendix B.
(b) Minimum Retirement Benefit. The retirement benefit
payable to a Participant will not be less than his accrued benefit under the
Plan as of his Benefit Protection Date (as hereinafter defined), determined
under the terms of the Plan in effect on December 31, 1988 (including early
payment factors and other actuarial assumptions) as though the Participant had
terminated employment on his Benefit Protection Date. For purposes of this
Section, "Benefit Protection Date" means (i) December 31, 1988 if the
Participant is a Super Highly Compensated Employee during the 1989 Plan Year,
(ii) December 31, 1989 if the Participant is a Super Highly Compensated
Employee during the 1990 Plan Year but was not a Super Highly Compensated
Employee during the 1989 Plan Year, (iii) December 31, 1990 if the Participant
is a Super Highly Compensated Employee during the 1991 Plan Year but was not a
Super Highly Compensated Employee during the 1989 or the 1990 Plan Year, and
(iv) April 30, 1991, if the Participant is not a Super Highly Compensated
Employee during any of the 1989, 1990 and 1991 Plan Years.
(c) Prior Benefit Formula. The normal retirement benefit
formula in effect under the Plan on December 31, 1988, for purposes of
determining a Participant's minimum retirement benefit under subsection (b)
above is set forth on Appendix B to the Plan.
4.2 Early Retirement Benefit. A Participant who terminates
employment for any reason other than death or total and permanent disability at
or after his Early Retirement Age and before age 65 will be entitled to receive
a monthly retirement benefit beginning on his Normal Retirement Date in an
amount equal to his Accrued Benefit determined as of the date he terminated
employment. If the Participant elects to receive his early
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<PAGE> 20
retirement benefit as of the first day of any month before his Normal
Retirement Date, his Accrued Benefit will be reduced by 1/180th for each of the
first 60 months and by 1/360th for each of the next 60 months by which his
Benefit Commencement Date is earlier than his Normal Retirement Date; provided,
however, that the 60-month period to which the 1/180th factor applies will be
reduced, and the 60-month period to which the 1/360th factor applies will be
increased, by the number of months by which the Participant's Social Security
Retirement Age (as defined in Section 9.2(m)) exceeds age 65.
4.3 Late Retirement Benefit. A Participant who remains or again
becomes an Employee after attaining age 65 will receive a monthly retirement
benefit beginning on the first day of the month immediately following his
termination of employment. The amount of the Participant's late retirement
benefit will be determined under the benefit formula set forth in Section 4.1
by taking into account the Participant's Compensation and years of Credited
Service after age 65 and will be reduced (but not below zero) to the extent
permitted under Code section 411(b)(1)(H) and the regulations thereunder by the
Actuarial Equivalent of any in-service distributions made to the Participant
under the Plan after age 65 and by the amount of any adjustments made under the
Plan as in effect on December 31, 1987, to the Participant's retirement benefit
attributable to the delay in the payment of benefits after attainment of age 65
and prior to January 1, 1989. In no event, however, will the Participant's
late retirement benefit be less than his Accrued Benefit determined at age 65.
For purposes of this Section, a Participant who attains age 65 will be
considered to have terminated employment on the first day of any month he is
not employed in Section 203(a)(3)(B) service within the meaning of the
Department of Labor regulations (29 C.F.R. Section 2530.203-3(c)).
4.4 Deferred Vested Benefit. A Participant who has a vested
interest in his Accrued Benefit and who terminates employment before attaining
age 55 for any reason other than death or total and permanent disability will
be entitled to receive a monthly retirement benefit beginning on his Normal
Retirement Date in an amount equal to his Accrued Benefit determined as of the
date he terminated employment. If the Participant elects to begin receiving
his retirement benefit as of the first day of any month after attaining age 55
and before his Normal Retirement Date, his Accrued Benefit will be reduced by
the factors set forth in Section 4.2 for each month that his Benefit
Commencement Date is earlier than his Normal Retirement Date.
Appendix B contains special provisions relating to the payment
of deferred vested benefits for certain Participants.
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<PAGE> 21
4.5 Disability Benefit. A Participant who has a Disability prior
to attaining age 65 and prior to his termination of employment will continue to
accrue a benefit during the period of his Disability only if (i) he returns to
regular employment with a Participating Employer immediately following the
termination of his Disability or (ii) he has attained Early Retirement Age at
the time his Disability terminates and he elects to retire and immediately
begin receiving retirement benefits under the Plan. For purposes of
determining the amount of the benefit accrued during Disability, the
Participant's Compensation will be deemed to be his annualized rate of
Compensation as of the date of his Disability, and the Participant will earn
Credited Service during the period in which he receives Disability benefits.
A Participant who becomes totally and permanently disabled (as
hereinafter defined) before attaining age 65 and before his termination of
employment and who is not eligible for benefits under the Company's long-term
disability plan will be fully vested in his Accrued Benefit without regard to
his years of Credited Service and will be entitled to receive a monthly benefit
beginning on the first day of the month immediately following the date of his
disability in an amount equal to his Accrued Benefit determined as of such
date. The amount of such disability benefit will not be actuarially reduced to
reflect the fact that it is being paid prior to the Participant's Normal
Retirement Date. A Participant will be totally and permanently disabled for
purposes of this paragraph only if he is eligible to receive disability
benefits under the Social Security Act. A Participant who is eligible to
receive a monthly benefit under this paragraph will continue to receive such
benefit only if he submits evidence to the Committee, in such form and at such
times as the Committee may reasonably request, that he continues to qualify for
disability benefits under the Social Security Act.
4.6 Reemployment Provisions.
(a) Determination of Credited Service. If a Participant
terminates employment and again becomes an Employee, his years of Credited
Service completed before his reemployment will be taken into account for
purposes of determining the amount of his Accrued Benefit only to the extent
such years of Credited Service are included under Section 7.3 in determining
his vested and nonforfeitable interest in his Accrued Benefit after he again
becomes an Employee.
(b) Adjustment to Accrued Benefit. If a Participant
receives a benefit payment after terminating employment and again becomes an
Employee, the amount of his Accrued Benefit that becomes payable upon his
subsequent termination of employment will be reduced by the Actuarial
Equivalent of the payments previously made to him.
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<PAGE> 22
4.7 Benefits Payable Following a Change in Control.
(a) Increase in Benefits. Upon a Change in Control (as
defined in subsection (b) below), provided the Board has not adopted a
resolution prior thereto causing this Section to become inoperative, (i) the
Accrued Benefits of all Participants who are Employees on the date a Change in
Control occurs will be fully vested and nonforfeitable and (ii) the excess (if
any) (hereinafter, the "Excess") of Plan assets over the present value of
accrued benefits (as determined in accordance with ERISA section 4044) will be
applied to provide such Participants with an additional vested benefit
equivalent to the benefit such Participants would have received under the
regulations of the Pension Benefit Guaranty Corporation providing for the
allocation of residual assets of plans that do not provide for a reversion (29
C.F.R. Section 2618.32(a)), with the provisions of such regulations applied
solely to Participants who are Employees on the date a Change in Control
occurs, if the Plan had terminated on the date of Change in Control, so that,
immediately after such increase, the Excess over the present value of vested
accrued benefits is zero. If, however, the allocation method provided under
this subsection (a) is not acceptable to the Internal Revenue Service or the
Pension Benefit Guaranty Corporation, the Excess will be allocated on a pro
rata basis according to the product of the Final Monthly Compensation of each
Participant multiplied by the Participant's years of Credited Service; and if
that method of allocation is still not acceptable to the Internal Revenue
Service or the Pension Benefit Guaranty Corporation, the Excess will be
allocated on any reasonable basis acceptable to the Internal Revenue Service
and the Pension Benefit Guaranty Corporation.
(b) Change in Control Defined. For purposes of this
Section, the term "Change in Control" means the first to occur of the events
described in (i) through (iv) below, unless the Board has adopted a resolution
prior to or promptly following the occurrence of any such event stipulating,
conditionally, temporarily or otherwise, that any such event will not result in
a change in control of the Company:
(i) the commencement of, or first public announcement of
the intention of any person or group (within the meaning of Section
3(b) of and Rule 13d-5(b) promulgated under the Securities Exchange Act
of 1934, as amended, respectively) to commence, a tender offer or
exchange offer (other than an offer by the Company or any Subsidiary)
for all, or any part of, the common stock of the Company (including, if
issued and outstanding, Series A common stock and Series B common
stock, hereinafter referred to as "Common Stock");
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<PAGE> 23
(ii) the public announcement by the Company or by any
group (as defined in clause (i) above), entity or person (other than
the Company, any Subsidiary (as hereinafter defined), or any savings,
pension or other benefit plan for the benefit of employees of the
Company or any Subsidiary) that such group, entity or person through a
transaction or series of transactions has acquired, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of
more than 30% of the total number of shares of Common Stock;
(iii) the approval by the Company's shareholders (or, if
such approval is not required, the consummation) of a merger in which
the Company does not survive as an independent publicly owned
corporation, a consolidation, or a sale, exchange, or other
disposition of all or substantially all the Company's assets; or
(iv) a change in the composition of the Board during any
period of two consecutive years such that individuals who at the
beginning of such period were members of the Board cease for any
reason to constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders, of each
new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period.
For purposes of the foregoing definition, the term "Subsidiary" means any
corporation, partnership, joint venture or other entity in which at the time
the Company owns or controls, directly or indirectly, not less than 50% of the
total combined voting power or equity interests represented by all classes of
stock issued by such corporation, partnership, joint venture or other entity.
4.8 Special Benefit Provisions. Appendix B sets forth special
provisions affecting the calculation of benefits for certain Participants.
4.9 Early Retirement Benefit for Certain Employees of WFAA
Television, Inc.
(a) Eligibility. The provisions of this Section will
apply only to each Participant who (i) is an Employee of WFAA Television, Inc.
on November 15, 1991, (ii) will have attained at least age 55 and will have
completed at least five years of Credited Service as of December 31, 1991,
(iii) elects in writing during the period beginning on November 15, 1991, and
ending on December 31, 1991, on a form and in the manner prescribed by the
Committee to receive the early retirement benefit described in
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<PAGE> 24
subsection (b) below and (iv) retires from employment with WFAA Television,
Inc. on or before December 31, 1991, and does not again become employed by any
other Controlled Group Member. A Participant who satisfies the foregoing
eligibility requirements is referred to in this Section as a "Qualified
Participant."
(b) Early Retirement Benefit. The retirement benefit of
a Qualified Participant will be determined pursuant to the provisions of
Sections 4.1 and 4.2, subject, however, to the following modifications: (i)
the Qualified Participant will be credited with five additional years of
Credited Service for purposes of the normal retirement benefit formula; (ii)
the Qualified Participant will be credited with five additional years of age
for purposes of determining his Covered Compensation under the normal
retirement benefit formula; (iii) the Qualified Participant's Final Monthly
Compensation will be equal to the greater of the Final Monthly Compensation
determined under Section 1.22 or the Final Monthly Compensation that would
result from including in clause (i) of Section 1.22 the Compensation the
Qualified Participant would have earned for the five calendar years after 1991
if his Compensation for such years were equal to his Compensation for 1991
compounded annually at the rate of 5%; and (iv) the early retirement reduction
factors under Section 4.2 will be applied by adding five additional years to
the Qualified Participant's age.
4.10 Postretirement Cost-of-Living Adjustments. The monthly
retirement benefit payable to each Participant who retired under the Plan at or
after age 55 and prior to January 1, 1989, and the monthly retirement benefit
(if any) payable to the Beneficiary of a Participant who retired at or after age
55 and prior to January 1, 1989, and who died before March 1, 1992, will be
increased by a one-time cost-of-living adjustment determined with reference to
the Participant's date of retirement in accordance with the table set forth
below. The cost-of-living adjustment will be paid beginning with the monthly
retirement benefit payable during March, 1992.
[TABLE APPEARS ON FOLLOWING PAGE]
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<PAGE> 25
<TABLE>
Date of Retirement Amount of Adjustment
- ------------------ --------------------
<S> <C>
Before January 1, 1981 12%
On or after January 1, 1981 8%
and before January 1, 1986
On or after January 1, 1986 4%
and before January 1, 1989
</TABLE>
If a retired Participant who qualifies for the cost-of-living adjustment under
this Section dies on or after March 1, 1992, any survivor benefit payable with
respect to such Participant will be based on the Participant's benefit as
increased by the cost-of-living adjustment.
4.11 Direct Rollovers.
(a) Distributions after 1992. Notwithstanding any other
provision of the Plan, for distributions made on or after January 1, 1993 a
Distributee (as hereinafter defined) may elect, at any time and in the manner
prescribed by the Committee, to have any portion of an Eligible Rollover
Distribution (as hereinafter defined) paid directly to an Eligible Retirement
Plan (as hereinafter defined) specified by the Distributee.
(b) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include (i) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life or life
expectancy of the Distributee or the joint lives or life expectancies of the
Distributee and the Distributee's designated beneficiary, or for a specified
period of ten years or more, (ii) any distribution to the extent such
distribution is required by Code section 401(a)(9), and (iii) the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(c) Eligible Retirement Plan. An Eligible Retirement
Plan is an individual retirement account described in Code section 408(a), an
individual retirement annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a Qualified Plan that is a Defined
Contribution Plan, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to a
Participant's surviving Spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
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<PAGE> 26
(d) Distributee. A Distributee includes a Participant,
the Participant's Spouse, or a Participant's former spouse who is an alternate
payee under a qualified domestic relations order, as defined in Code section
414(p).
4.12 Limitation on Benefits. Article 9 sets forth certain rules
under Code section 415 that limit the amount of a Participant's retirement
benefits under the Plan.
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<PAGE> 27
ARTICLE 5
FORMS OF RETIREMENT BENEFITS
5.1 Forms of Retirement Benefit.
(a) Unmarried Participant. The normal form of payment of
retirement benefits for a Participant who is not married on his Benefit
Commencement Date will be a ten-year certain and continuous annuity, consisting
of equal monthly payments during the Participant's lifetime beginning on his
Benefit Commencement Date, and if the Participant dies before he has received
120 monthly payments, monthly payments in the same amount will be continued to
his Beneficiary until the Participant and his Beneficiary have received a total
of 120 monthly payments. In the event that an unmarried Participant has a
former spouse who pursuant to Section 5.2(b) is treated as a Spouse or
surviving Spouse, the Participant will be deemed to be a married Participant
hereunder to the extent required by Section 5.2(b).
(b) Married Participant. The normal form of payment of
benefits for a Participant who is married on his Benefit Commencement Date will
be a Qualified Joint and Survivor Annuity, unless an optional form of benefit
is elected pursuant to a Qualified Election described in Section 5.2(a).
(c) Election of Optional Form. Subject to Section 5.2, a
Participant may elect in writing, on a form provided by the Committee, to have
his monthly retirement benefit paid in one of the optional forms. An election
will be effective only if the Participant is alive on his Benefit Commencement
Date. The period for making the election will be for at least 30 days
following the furnishing of all applicable information to the Participant by
the Committee and will end not earlier than 90 days before the Participant's
Benefit Commencement Date.
(d) Optional Forms of Retirement Benefit. The optional
forms of retirement benefit under the Plan, each of which will be the Actuarial
Equivalent of the ten-year certain and continuous annuity described in
subsection (a) above, will be (i) a straight-life annuity, consisting of equal
monthly payments beginning on a Participant's Benefit Commencement Date and
ending with the monthly payment due immediately prior to his death; (ii) a
contingent annuitant annuity, consisting of equal monthly payments beginning on
the Participant's Benefit Commencement Date and, following his death, continued
monthly payments to his Beneficiary in an amount equal to not less than 50% nor
more than 100% (as the Participant will elect) of the monthly benefit payments
made to the Participant, provided, however, that if the Beneficiary dies after
the Benefit Commencement Date, the amount
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<PAGE> 28
of monthly benefit payments to the Participant will not be increased and will
cease with the monthly benefit payment due immediately prior to his death; and
(iii) for a married Participant, a ten-year certain and continuous annuity,
described in subsection (a).
(e) Exception for Small Benefits. If the present value
of a Participant's vested Accrued Benefit does not exceed $3,500 and payment of
benefits has not commenced, the Committee will distribute the benefit as an
immediate single-sum payment notwithstanding any other provision of the Plan.
For purposes of determining whether the present value of a Participant's vested
Accrued Benefit exceeds $3,500, the present value of such benefit will be
calculated by using the Applicable Interest Rate and, for distributions made
pursuant to this subsection after December 31, 1995, the applicable mortality
table as prescribed by the Secretary of the Treasury under Code Section
417(e)(3). (Section 15.4 contains special rules for single-sum payments to
alternate payees under a qualified domestic relations order.)
5.2 Special Annuity Provisions.
(a) Qualified Election. For purposes of Section 5.1(b),
"Qualified Election" means a waiver of a Qualified Joint and Survivor Annuity
which meets the requirements of this subsection. The waiver must be in writing
and must be consented to by the Participant's Spouse. The Spouse's consent to
a waiver must be witnessed by a notary public. If, however, the Participant
establishes to the satisfaction of the Committee that such written consent may
not be obtained because there is no Spouse or the Spouse cannot be located, the
Participant's waiver will be deemed a Qualified Election. Any consent required
under the Plan will be valid only with respect to the Spouse who signs the
consent, or in the event of a deemed Qualified Election, the designated Spouse.
A revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the Participant's Benefit Commencement Date.
However, a Participant whose Spouse has consented to a Qualified Election may
not change the optional form of benefits or elect an optional form following
his revocation of the Qualified Election without spousal consent unless the
Qualified Election expressly permits the Participant to elect optional forms of
benefit without any further consent of the Spouse. Notwithstanding the
foregoing or any other provision of the Plan to the contrary, a Participant may
elect to receive his retirement benefit in the form of a contingent annuitant
annuity under Section 5.1(c) without the consent of his Spouse, provided his
Spouse is designated as the Beneficiary under such optional form of benefit.
(b) Certain Spouses. A former spouse will be treated as
the Spouse or surviving Spouse of a Participant to the extent
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<PAGE> 29
provided under a qualified domestic relations order as described in Code
section 414(p).
(c) Information Requirements. In the case of a
Participant whose normal form of benefit is a Qualified Joint and Survivor
Annuity, the Committee will provide the Participant within a reasonable period
prior to the commencement of benefits a written explanation of (i) the terms
and conditions of a Qualified Joint and Survivor Annuity, (ii) the
Participant's right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit, (iii) the rights of a
Participant's Spouse, and (iv) the right to make, and the effect of, a
revocation of a previous election to waive the Qualified Joint and Survivor
Annuity.
5.3 Information Regarding Beneficiaries. A Participant entitled
to receive benefits in the form of a Qualified Joint and Survivor Annuity or
any other option providing benefits or contingent benefits to his Spouse or
other Beneficiary will certify to the Committee such information as it may
reasonably request respecting his Spouse or Beneficiary, including (but not
limited to) information as to name, address, age, sex, and date of marriage.
The Committee will be entitled to rely upon any certification of a
Participant's marital status and will not be obligated to make inquiry into the
legal effect of any actual or purported marriage, marital dissolution, or
common-law relationship.
5.4 Consent to Certain Distributions. Notwithstanding any other
provision of the Plan, if the present value of a Participant's vested accrued
benefit exceeds $3,500, the Committee will not permit benefit payments to be
made to him before he attains age 65 unless the Participant and his Spouse
consent (in the manner described in Section 5.2(a)) to the commencement of such
payments or the Participant consents to such payments and payments are made in
the normal form of payment under Section 5.1.
5.5 Suspension of Benefits.
(a) General Rule. If a Participant who is receiving
periodic retirement benefits from the Plan again becomes an Employee of a
Participating Employer, his retirement benefits will be suspended for each
calendar month during which the Employee is employed in Section 203(a)(3)(B)
Service (as hereinafter defined). In addition, if a Participant's Normal
Retirement Date occurs in a Plan Year beginning after December 31, 1988, and
the Participant remains an Employee of a Participating Employer after his
Normal Retirement Date, his retirement benefits will also be suspended for each
calendar
-26-
<PAGE> 30
month during which he is employed in Section 203(a)(3)(B) Service.
(b) Resumption of Payment. If benefit payments have been
suspended, payments will resume no later than the first day of the third
calendar month after the calendar month in which the Employee ceases to be
employed in Section 203(a)(3)(B) Service. The initial payment upon resumption
will include the payment scheduled to occur in the calendar month when payments
resume and any amounts withheld during the period between the cessation of
Section 203(a)(3)(B) Service and the resumption of payments.
(c) Notification. No payment will be withheld by the
Plan pursuant to this Section unless the Committee notifies the Employee by
personal delivery or first class mail during the first calendar month or
payroll period in which the Plan withholds payments that his benefits are
suspended. Such notification will contain a description of the specific
reasons why benefit payments are being suspended, a description of the Plan
provision relating to the suspension of payments, a copy of such provisions,
and a statement to the effect that applicable Department of Labor Regulations
may be found in section 2530.203-3 of the Code of Federal Regulations. In
addition, the notice will inform the Employee of the Plan's procedures for
affording a review of the suspension benefits. Requests for such reviews may
be considered in accordance with the claims procedure set forth in Section
8.10.
(d) Top-Heavy Plan Minimum Benefit. This Section does
not apply to the Minimum Benefit to which the Participant is entitled under the
top-heavy provisions of Article 11.
(e) Section 203(a)(3)(B) Service. The definition of
"Section 203(a)(3)(B) Service" is set forth in the Department of Labor
Regulations (29 C.F.R. Section 2530.203-3(c)(1)).
5.6 Restrictions on Distributions. Article 10 sets forth certain
rules under various provisions of the Code relating to restrictions on
distributions to Participants.
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ARTICLE 6
DEATH BENEFITS FOR SPOUSES
6.1 Application of Article. This Article applies with respect to
a Participant (including without limitation a Participant who terminated
employment before January 1, 1995) who dies after December 31, 1994. The death
benefits payable with respect to a Participant who dies before January 1, 1995,
are set forth on Appendix C.
6.2 Death Benefit. The Spouse of a Participant who has a vested
interest in his Accrued Benefit and dies prior to his Benefit Commencement Date
will receive a Qualified Preretirement Survivor Annuity in an amount determined
under this Section. Payments to the Spouse that begin before the Participant's
Normal Retirement Date will be actuarially adjusted in the manner set forth in
Section 6.3. The death benefit, if any, payable to the Spouse of a Participant
who dies after his Benefit Commencement Date will be determined under the form
of benefit elected by the Participant with the consent of the Spouse, if
required under Section 5.2.
(a) Death After Age 55. If a Participant dies after
attaining age 55, the payments to his Spouse under the Qualified Preretirement
Survivor Annuity will be equal to the greater of (i) the payments the Spouse
would have received under the Qualified Joint and Survivor Annuity if the
Participant had terminated employment with an immediate Qualified Joint and
Survivor Annuity on the day before his death or (ii) if the Participant either
(A) had attained age 55 while an Employee on or before December 31, 1994, or
(B) had terminated employment before January 1, 1995, but had attained age 55
at the time of his termination of employment, payments that are the Actuarial
Equivalent of the Participant's Accrued Benefit determined as of December 31,
1994, or the date of his termination of employment, whichever is earlier.
(b) Death On or Before Age 55. If a Participant dies on
or before attaining age 55, the payments to his Spouse under the Qualified
Preretirement Survivor Annuity will be equal to the payments the Spouse would
have received if the Participant (i) had terminated employment on the date of
his death (if he was an Employee on the date of his death); (ii) had survived
to age 55; (iii) had received at age 55 an immediate Qualified Joint and
Survivor Annuity in the amount elected by the Participant prior to his death;
and (iv) had died on the day after attaining age 55.
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(c) Death after Divorce. If a married Participant
becomes divorced, he will be treated as having waived the Qualified
Preretirement Survivor Annuity with respect to his former spouse, and his
former spouse will not be entitled to any death benefit under the Plan except
to the extent provided in a qualified domestic relations order described in
Code section 414(p).
6.3 Commencement of Benefit. The surviving Spouse may elect to
begin receiving payments on the first day of any month following the month in
which the Participant died. If the surviving Spouse elects to begin receiving
payments as of any date that precedes the Participant's Normal Retirement Date,
the monthly amount of the Qualified Preretirement Survivor Annuity will be
reduced by applying the early retirement factors set forth in Section 4.2 for
any benefit commencement date that begins on or after the first day of the
month following the month in which the Participant would have attained age 55.
If the surviving Spouse elects to begin receiving payments as of any date that
is earlier than the first day of the month following the month in which the
Participant would have attained age 55, the monthly amount of the Qualified
Preretirement Survivor Annuity will be further reduced to be the Actuarial
Equivalent of the benefit payable to the surviving Spouse as of the first day
of the month following the month in which the Participant would have attained
age 55.
6.4 Form of Benefit. The normal form of death benefit under this
Article will be a monthly annuity for the life of the Spouse. If, however, the
Actuarially Equivalent present value of the monthly death benefit does not
exceed $3,500, then the Committee will distribute the death benefit to the
Spouse in the form of an immediate lump sum payment that is the Actuarial
Equivalent of the death benefit.
6.5 Certain Spouses. A former spouse will be treated as the
current Spouse or the surviving Spouse of a Participant to the extent provided
under a qualified domestic relations order as described in Code section 414(p).
If, however, the qualified domestic relations order provides for a portion of
the Participant's retirement benefit (either through separate accounts or a
percentage of the benefit) to be distributed to the former spouse, the
Participant will not be deemed to be a married Participant for purposes of this
Article with respect to the portion of the benefit awarded to his former
spouse.
6.6 Cost of Coverage. The Participant's benefit under the Plan
will not be reduced by the cost of providing the death benefits for his Spouse
described in this Article.
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ARTICLE 7
VESTING
7.1 Determination of Vested Interest.
(a) Years of Credited Service. The interest of each
Participant in his Accrued Benefit will become 100% vested and nonforfeitable
upon his completion of five years of Credited Service. Prior to becoming 100%
vested, a Participant will have no vested interest in his Accrued Benefit.
(b) Accelerated Vesting. A Participant's interest in his
Accrued Benefit will become 100% vested and nonforfeitable without regard to
his years of Credited Service (i) on his attainment of Early Retirement Age
while he is an Employee, (ii) on his death prior to January 1, 1995, while he
is an Employee, or (iii) in the event of a Change in Control (as defined in
Section 4.7(b)) while he is an Employee.
(c) Full Vesting for Certain Participants. A
Participant's interest in his Accrued Benefit as of March 31, 1994, will become
100% vested and nonforfeitable without regard to his years of Credited Service
if he is employed by DFW Suburban Newspapers, Inc. on such date. In addition,
any Participant who terminated employment with DFW Suburban Newspapers, Inc.,
or who was classified as a newspaper employee and terminated employment with
Dallas-Ft. Worth Suburban Newspapers, Inc., on or after January 1, 1994, and
before March 31, 1994, will have a 100% vested and nonforfeitable interest in
his Accrued Benefit as of the date of his termination without regard to his
years of Credited Service.
7.2 Unclaimed Distribution. If the Committee cannot locate a
person entitled to receive a benefit under the Plan within a reasonable period
(as determined by the Committee in its discretion), the amount of the benefit
will be treated as a forfeiture during the Plan Year in which the period ends.
If, before final distributions are made from the Trust Fund following
termination of the Plan, a person who was entitled to a benefit which has been
forfeited under this Section makes a claim to the Committee or the Trustee for
his benefit, the amount of his benefit that was previously forfeited will be
restored and paid to him in accordance with the terms of the Plan.
7.3 Reemployment Provisions. If a Participant who has a vested
and nonforfeitable interest in his Accrued Benefit terminates employment and
again becomes an Employee, his years of Credited Service completed before his
reemployment will be included in determining his vested and nonforfeitable
interest
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after he again becomes an Employee. If any other Employee or Participant
terminates employment and again becomes an Employee before incurring a number
of consecutive Break in Service Years equal to the greater of five or his years
of Credited Service, his years of Credited Service completed before his
reemployment will be included in determining his vested and nonforfeitable
interest after he again becomes an Employee; but if he is reemployed after
incurring a number of consecutive Break in Service Years equal to the greater
of five or his years of Credited Service, his years of Credited Service
completed before his reemployment will be disregarded for purposes of
determining his vested and nonforfeitable interest after he again becomes an
Employee.
7.4 Application of Forfeited Benefits. The amount of a
Participant's benefit that is forfeited pursuant to this Article will not be
applied to increase the benefits of Participants at any time but will be
applied to reduce Participating Employer contributions to the Plan.
7.5 Special Provisions Applicable to Certain Participants.
Appendix B contains special vesting provisions applicable to certain
Participants.
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ARTICLE 8
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
8.1 Appointment of Committee Members. The Board will appoint an
Administrative Committee consisting of at least three or more members, to hold
office at the pleasure of the Board. Members of the Committee are not required
to be Employees or Participants. Any member may resign by giving notice, in
writing, filed with the Board.
8.2 Officers and Employees of the Committee. The Committee will
choose from its members a Chairman and a Secretary. The Secretary will keep a
record of the Committee's proceedings and all dates, records and documents
pertaining to the Committee's administration of the Plan. The Committee may
employ and suitably compensate such persons or organizations to render advice
with respect to the duties of the Committee under the Plan as the Committee
determines to be necessary or desirable.
8.3 Action of the Committee. Action of the Committee may be taken
with or without a meeting of Committee members, provided that action will be
taken only upon the vote or other affirmative expression of a majority of the
Committee's members qualified to vote with respect to such action. The
Chairman or the Secretary of the Committee may execute any certificate or other
written direction on behalf of the Committee. In the event the Committee
members qualified to vote on any question are unable to determine such question
by a majority vote or other affirmative expression of a majority of the
Committee members qualified to vote on such question, such question will be
determined by the Board. A member of the Committee who is a Participant may
not vote on any question relating specifically to himself unless he is the sole
member of the Committee.
8.4 Expenses and Compensation. The expenses of the Committee
properly incurred in the performance of its duties under the Plan will be paid
from the Trust Fund, unless the Participating Employers in their discretion pay
such expenses. The members of the Committee will not be compensated for their
services as Committee members.
8.5 General Powers and Duties of the Committee. The Committee
will have the full power and responsibility to administer the Plan and the
Trust Agreement and to construe and apply their provisions. For purposes of
ERISA, the Committee will be the named fiduciary with respect to the operation
and administration of the Plan and the Trust Agreement. In addition, the
Committee will have the powers and duties granted by the terms of the Trust
Agreement. The Committee, and all other
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persons with discretionary control respecting the operation, administration,
control, and/or management of the Plan, the Trust Agreement, and/or the Trust
Fund, will perform their duties under the Plan and the Trust Agreement solely
in the interests of Participants and their Beneficiaries.
8.6 Specific Powers and Duties of the Committee. The Committee
will administer the Plan and the Trust Agreement and will have the authority
and discretion to (i) resolve all questions relating to the eligibility of
Employees to become Participants; (ii) determine the amount of benefits payable
to Participants or their Beneficiaries, and determine the time and manner in
which such benefits are to be paid; (iii) authorize and direct all
disbursements by the Trustee from the Trust Fund; (iv) engage any
administrative, legal, accounting, clerical, or other services it deems
appropriate in administering the Plan or the Trust Agreement; (v) construe and
interpret the Plan and the Trust Agreement, supply omissions from, correct
deficiencies in, and resolve ambiguities in the language of the Plan and the
Trust Agreement, and adopt rules for the administration of the Plan and the
Trust Agreement which are not inconsistent with the terms of such documents;
(vi) compile and maintain all records it determines to be necessary,
appropriate or convenient in connection with the administration of benefit
payments; (vii) determine the disposition of assets in the Trust Fund in the
event the Plan is terminated; (viii) review the performance of the Trustee with
respect to the Trustee's administrative duties, responsibilities and
obligations under the Plan and the Trust Agreement, report to the Board
regarding such administrative performance of the Trustee, and recommend to the
Board, if necessary, the removal of the Trustee and the appointment of a
successor Trustee; and (ix) resolve all questions of fact relating to any
matter for which it has administrative responsibility.
8.7 Allocation of Fiduciary Responsibility. The Committee from
time to time may allocate to one or more of its members and may delegate to any
other persons or organizations any of its rights, powers, duties and
responsibilities with respect to the operation and administration of the Plan
and the Trust Agreement that are permitted to be delegated under ERISA. Any
such allocation or delegation will be made in writing, will be reviewed
periodically by the Committee, and will be terminable upon such notice as the
Committee in its discretion deems reasonable and proper under the
circumstances. Whenever a person or organization has the power and authority
under the Plan or the Trust Agreement to delegate discretionary authority
respecting the administration of the Plan or the Trust Fund to another person
or organization, the delegating party's responsibility with respect to such
delegation is limited to the selection of the person to whom authority is
delegated and the periodic review
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of such person's performance and compliance with applicable law and
regulations. Any breach of fiduciary responsibility by the person to whom
authority has been delegated which is not proximately caused by the delegating
party's failure to properly select or supervise, and in which breach the
delegating party does not otherwise participate, will not be considered a
breach by the delegating party.
8.8 Information to be Submitted to the Committee. To enable the
Committee to perform its functions, the Participating Employers will supply
full and timely information to the Committee on all matters relating to
Employees and Participants as the Committee may require and will maintain such
other records required by the Committee to determine the benefits due to
Participants or their Beneficiaries under the Plan.
8.9 Notices, Statements and Reports. The Company will be the
"administrator" of the Plan as defined in ERISA section 3(16)(A) for purposes
of the reporting and disclosure requirements imposed by ERISA and the Code.
The Committee will assist the Company, as requested, in complying with such
reporting and disclosure requirements.
8.10 Claims Procedure.
(a) Filing Claim for Benefits. If a Participant or
Beneficiary does not receive the benefits which he believes he is entitled to
receive under the Plan, he may file a claim for benefits with the Committee.
All claims will be made in writing and will be signed by the claimant. If the
claimant does not furnish sufficient information to determine the validity of
the claim, the Committee will indicate to the claimant any additional
information which is required.
(b) Notification by the Committee. Each claim will be
approved or disapproved by the Committee within 90 days following the receipt
of the information necessary to process the claim. In the event the Committee
denies a claim for benefits in whole or in part, the Committee will notify the
claimant in writing of the denial of the claim. Such notice by the Committee
will also set forth, in a manner calculated to be understood by the claimant,
the specific reason for such denial, the specific Plan provisions on which the
denial is based, a description of any additional material or information
necessary to perfect the claim with an explanation of why such material or
information is necessary, and an explanation of the Plan's claim review
procedure as set forth in subsection (c). If no action is taken by the
Committee on a claim within 90 days, the claim will be deemed to be denied for
purposes of the review procedure.
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(c) Review Procedure. A claimant may appeal a denial of
his claim by requesting a review of the decision by the Committee or a person
designated by the Committee, which person will be a named fiduciary under ERISA
section 402(a)(2) for purposes of this Section. An appeal must be submitted in
writing within six months after the denial and must (i) request a review of the
claim for benefits under the Plan, (ii) set forth all of the grounds upon which
the claimant's request for review is based and any facts in support thereof,
and (iii) set forth any issues or comments which the claimant deems pertinent
to the appeal. The Committee or the named fiduciary designated by the
Committee will make a full and fair review of each appeal and any written
materials submitted in connection with the appeal. The Committee or the named
fiduciary designated by the Committee will act upon each appeal within 60 days
after receipt thereof unless special circumstances require an extension of the
time for processing, in which case a decision will be rendered as soon as
possible but not later than 120 days after the appeal is received. The
claimant will be given the opportunity to review pertinent documents or
materials upon submission of a written request to the Committee or named
fiduciary, provided the Committee or named fiduciary finds the requested
documents or materials are pertinent to the appeal. On the basis of its
review, the Committee or named fiduciary will make an independent determination
of the claimant's eligibility for benefits under the Plan. The decision of the
Committee or named fiduciary on any claim for benefits will be final and
conclusive upon all parties thereto. In the event the Committee or named
fiduciary denies an appeal in whole or in part, it will give written notice of
the decision to the claimant, which notice will set forth in a manner
calculated to be understood by the claimant the specific reasons for such
denial and which will make specific reference to the pertinent Plan provisions
on which the decision was based.
8.11 Service of Process. The Committee may from time to time
designate an agent of the Plan for the service of legal process. The Committee
will cause such agent to be identified in materials it distributes or causes to
be distributed when such identification is required under applicable law. In
the absence of such a designation, the Company will be the agent of the Plan
for the service of legal process.
8.12 Review of Benefit Statement. If a Participant or Beneficiary
believes a statement he receives regarding his interest in the Plan is
incorrect, such Participant or Beneficiary may submit a written request for
correction or verification of such statement to the Committee, and the
Committee will respond in writing to such request in the same manner as a claim
for benefits.
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8.13 Payment to Minors or Other Persons Under Legal Disability. If
any benefit becomes payable to a minor, payment of such benefit will be made
only to the guardian of the person or the estate of the minor, provided the
guardian acknowledges in writing, in a form acceptable to the Committee,
receipt of the payment on behalf of the minor. If any benefit becomes payable
to any other person under a legal disability, payment of such benefit will be
made only to the conservator or the guardian of the estate of such person
appointed by a court of competent jurisdiction. Any payment made in accordance
with the provisions of this Section on behalf of a minor or other person under
a legal disability will fully discharge the Plan's obligation to such person.
8.14 Uniform Application of Rules and Policies. The Committee in
exercising its discretion granted under any of the provisions of the Plan or
the Trust Agreement will do so only in accordance with rules and policies
established by it which will be uniformly applicable to all Participants and
Beneficiaries.
8.15 Funding Policy. The Plan is to be funded through
Participating Employer contributions and earnings on such contributions; and
benefits will be paid to Participants and Beneficiaries as provided in the
Plan. The Investment Committee appointed by the Board pursuant to the Trust
Agreement will determine from time to time investment policies that are
consistent with the objectives of the Plan; provided, however, that if the
Board has not appointed an Investment Committee or if any committee appointed
by the Board is no longer acting as the Investment Committee under the Trust
Agreement, such investment policies will be determined by the Committee.
8.16 The Trust Fund. The Trust Fund will be held by the Trustee
for the exclusive benefit of Participants and Beneficiaries. The assets held
in the Trust Fund will be invested and reinvested in accordance with the terms
of the Trust Agreement, which is hereby incorporated into and made a part of
the Plan. All benefits will be paid solely out of the Trust Fund, and no
Participating Employer will be otherwise liable for benefits payable under the
Plan.
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ARTICLE 9
LIMITATIONS ON BENEFITS
9.1 Priority Over Other Provisions. The provisions set forth in
this Article will supersede any conflicting provisions of Articles 4, 5, 6,
Appendix B and Appendix C.
9.2 Definitions Used in this Article. The following words and
phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Annual Addition" means, with respect to a
Participant in a Limitation Year, the sum of the following amounts with respect
to all Qualified Plans and Welfare Benefit Funds maintained by a Controlled
Group Member:
(i) The amount of any employer-provided
contribution with respect to the Limitation Year which is allocated to the
Participant's account;
(ii) The amount of any forfeitures for the
Limitation Year allocated to the Participant's account;
(iii) The amount of a Participant's voluntary
nondeductible contributions for the Limitation Year, provided that the Annual
Addition for any Limitation Year beginning before January 1, 1987 will not be
recomputed to treat all voluntary nondeductible contributions as an Annual
Addition;
(iv) The amount allocated, after March 31, 1984,
to an individual medical account as defined in Code section 415(l)(1), which is
part of a Defined Benefit Plan maintained by a Controlled Group Member; and
(v) The amount derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code section 419A(d)(3)), under a
Welfare Benefit Fund maintained by a Controlled Group Member.
(b) "Annual Benefit" means a benefit which is payable
annually in the form of a straight life annuity with no ancillary benefits and
which otherwise satisfies the requirements of Code section 415(b)(2) and the
regulations thereunder.
(c) "Defined Benefit Dollar Limitation" means for any
Plan Year $90,000, adjusted for years beginning after December 31, 1987, to the
amount determined by the Commissioner
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of Internal Revenue, pursuant to the authority of Code section 415(d)(1)(A) and
regulations thereunder, which is made effective as of the first day of the Plan
Year.
(d) "Defined Benefit Fraction" means a fraction, the
numerator of which is the Projected Annual Benefit of a Participant under all
Defined Benefit Plans maintained by a Controlled Group Member determined as of
the close of the Limitation Year and the denominator of which is the lesser of
(i) 140% of the Participant's average Includable Compensation that may be taken
into account for the Limitation Year under Code section 415(b)(1)(B), or (ii)
125% of the Defined Benefit Dollar Limitation, determined as of the close of
the Limitation Year. If the Participant was a participant in a Defined Benefit
Plan maintained by a Controlled Group Member in existence on July 1, 1982, or
on May 6, 1986, the denominator of the Defined Benefit Fraction will not be
less than 125% of the greater of the Participant's accrued Projected Annual
Benefit under such plan as of the end of the last Limitation Year beginning
before January 1, 1983, or his accrued Projected Annual Benefit of the end of
the last Limitation Year beginning January 1, 1987. The preceding sentence
applies only if the Defined Benefit Plan satisfied the requirements of Code
section 415 as in effect at the end of such Limitation Year.
(e) "Defined Benefit Plan" means a Qualified Plan other
than a Defined Contribution Plan.
(f) "Defined Contribution Dollar Limitation" means, for
any Limitation Year, $30,000 or, if greater, 25% of the Defined Benefit Dollar
Limitation in effect for the Limitation Year. If a short Limitation Year is
created because of a Plan amendment changing the Limitation Year to a different
12-consecutive month period, the Defined Contribution Dollar Limitation for the
short Limitation Year will not exceed the amount determined in the preceding
sentence multiplied by a fraction, the numerator of which is the number of
months in the short Limitation Year, and the denominator of which is 12.
(g) "Defined Contribution Fraction" means a fraction, the
numerator of which is the sum of the Annual Additions to the Employee's Defined
Contribution Plan accounts for the applicable Limitation Year and each prior
Limitation Year, and the denominator of which is the sum of the lesser of the
following products for each Limitation Year in which the Employee was an
Employee (regardless of whether a Defined Contribution Plan was in existence
for such Plan Year): (i) the Defined Contribution Dollar Limitation effective
for the Limitation Year, multiplied by 125%, or (ii) 35% of the Participant's
Includable Compensation for such Limitation Year.
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(h) "Defined Contribution Plan" means a Qualified Plan
which provides individual participant accounts for employer contributions,
forfeitures and gains or losses thereon, in accordance with Code section
414(i).
(i) "High Three Years" means with respect to a
Participant the three consecutive Plan Years of his employment with a
Controlled Group Member (or, if he does not have three consecutive Plan Years
of such employment, his greatest actual number of consecutive Plan Years of
such employment) during which he had the greatest aggregate Includable
Compensation.
(j) "Includable Compensation" means an Employee's total
wages from Participating Employers or other Controlled Group Members as
determined for purposes of Internal Revenue Service Form W-2, excluding,
however: (i) moving expense reimbursements that are deductible by the Employee
under Code section 217, (ii) Controlled Group Member contributions to a
simplified employee pension plan to the extent such contributions are
deductible by the Employee and Controlled Group Member contributions to any
other plan of deferred compensation that, before the application of Section
9.3, are not includable in the Employee's gross income, (iii) distributions to
the Employee from any plan of deferred compensation other than an unfunded,
nonqualified plan of deferred compensation, (iv) amounts realized from the
exercise of a nonqualified stock option, (v) amounts realized under Code
section 83 with respect to restricted property that becomes freely transferable
or is no longer subject to a substantial risk of forfeiture, (vi) amounts
realized from the disposition of stock acquired under a qualified stock option
within the meaning of Code section 422, and (vii) any other amounts which
receive special tax benefits within the meaning of section 1.415-2(d)(2) of the
Treasury Regulations. The Includable Compensation of an Employee for any Plan
Year beginning after December 31, 1988, and ending before January 1, 1994, the
Compensation of an Employee will not exceed $200,000, and for any Plan Year
beginning after December 31, 1993, the Includable Compensation of any Employee
will not exceed $150,000, as both such dollar limits are adjusted by the
Secretary of the Treasury. If an Employee's Compensation is determined with
respect to a period of time that contains fewer than 12 calendar months, then
the annual compensation limit is an amount equal to the annual compensation
limit for the calendar year in which the compensation period begins multiplied
by the ratio obtained by dividing the number of full months in the period by
12. In determining the Includable Compensation of an Employee for purposes of
the adjusted $200,000 limitation or $150,000 limitation, as applicable, the
rules of Code section 414(q)(6) will apply, except in applying such rules, the
term "family" will include only the Spouse of an Employee and any lineal
descendants of the Employee who have not attained age 19 before the close of
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the year. If, as a result of the application of such rules, the adjusted
$200,000 limitation or $150,000 limitation, as applicable, is exceeded, then
(except for purposes of determining the portion of Includable Compensation up
to the integration level), the limitation will be prorated among the affected
individuals in proportion to each such individual's Compensation as determined
under this Section prior to the application of this limitation.
(k) "Limitation Year" means the 12-consecutive month
period used by a Qualified Plan for purposes of computing the limitations on
benefits and annual additions under Code section 415. The Limitation Year for
this Plan is the Plan Year. If the Limitation Year is amended to a different
12-consecutive month period, the new Limitation Year will begin on a date
within the Limitation Year in which the amendment is made.
(l) "Projected Annual Benefit" means the Participant's
projected annual benefit under a Defined Benefit Plan maintained by a
Controlled Group Member determined in accordance with Code section 415(e) and
the regulations thereunder.
(m) "Social Security Retirement Age" means the age used
as the retirement age under section 216(1) of the Social Security Act, except
that such section will be applied without regard to the age increase factor and
as if the early retirement age under section 216(1) of such Act were 62.
(n) "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust,
corporation or other organization not exempt from federal income tax, or to the
extent provided in Treasury Regulations, any account held for an employer by
any person, which is part of a plan of any employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code sections 83(h), 404 (determined without regard to section 404(b)(2))
or 404A applies, or to which an election under Code section 463 applies.
9.3 Code Section 415 Limitations.
(a) General Limitation. Except as otherwise provided in
this Section, a Participant's Accrued Benefit, when expressed as an Annual
Benefit, will not at any time during a Limitation Year exceed the lesser of (i)
the Defined Benefit Dollar Limitation applicable to that Plan Year, or (ii)
100% of the Participant's average annual Includable Compensation for his High
Three Years. If a Participant's Accrued Benefit in any Limitation Year would
produce an Annual Benefit in excess of this limitation, the rate of accrual
will be reduced so that the Annual Benefit will equal the maximum permitted
amount. If the
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Participant is, or has ever been, covered under more than one Defined Benefit
Plan maintained by a Controlled Group Member, the sum of the Participant's
Annual Benefits from all such Defined Benefit Plans may not exceed the
limitation provided in this subsection, and the rate of accrual under this Plan
will be reduced, if necessary, to meet this limitation.
(b) Adjustment for Benefit Commencement Date before
Social Security Retirement Age. If a Participant's Benefit Commencement Date
is prior to the date on which he attains Social Security Retirement Age, the
Defined Benefit Dollar Limitation will, with respect to that Participant, be
decreased so that it is the actuarial equivalent of an annual benefit of
$90,000 (adjusted in the manner described in Code section 415(d)(1)(A))
commencing at Social Security Retirement Age. For Plan Years beginning before
January 1, 1995, the adjustment provided for in the preceding sentence will be
made in a manner prescribed by the Secretary of the Treasury that is consistent
with the reduction under the Social Security Act of old-age insurance benefits
commencing before normal retirement age, provided that the interest rate
assumption will not be less than the greater of 5% or the Applicable Interest
Rate in effect for such Year. For Plan Years beginning on or after January 1,
1995, the adjustment in the Defined Benefit Dollar Limitation provided for in
this subsection will be (i) if the Participant's Social Security Retirement Age
is 65 and benefits commence on or after age 62, 5/9 of 1% for each month by
which benefits commence before the month in which the Participant attains age
65; and (ii) if the Participant's Social Security Retirement Age is greater
than 65 and benefits commence on or after age 62, 5/9 of 1% for each of the
first 36 months and 5/12 of 1% for each of the additional months by which
benefits commence before the month of the Participant's Social Security
Retirement Age. If benefits commence before age 62, the Defined Benefit Dollar
Limitation will be further reduced to be the actuarial equivalent of the
limitation for benefits commencing at age 62 (as determined in the preceding
sentence), with the limitation at age 62 reduced for each month by which
benefits commence before the month in which the Participant attains age 62.
For purposes of the preceding sentence and except as provided in subsection
(f), the reduced Defined Benefit Dollar Limitation will be the lesser of (A)
the equivalent amount determined by using the factors, if any, for early
retirement benefits as set forth in Section 4.2 or (B) the equivalent amount
determined by using an interest rate equal to 5% and the applicable mortality
table as prescribed by the Secretary of the Treasury under Code section
415(b)(2)(E). For purposes of the adjustments described in this subsection, no
adjustments under Code section 415(d)(1) will be taken into account prior to
the year for which such adjustment first takes effect.
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<PAGE> 45
(c) Adjustment for Benefit Commencement Date after Social
Security Retirement Age. If a Participant's Benefit Commencement Date is after
the date on which he attains Social Security Retirement Age, the Defined
Benefit Dollar Limitation will, with respect to that Participant, be increased
so that it is the actuarial equivalent of an annual benefit of $90,000
(adjusted in the manner described in Code section 415(d)(1)(A)) commencing at
Social Security Retirement Age. For Plan Years beginning before January 1,
1995, the interest rate assumption used to determine the increased Defined
Benefit Dollar Limitation described in the preceding sentence will not be
greater than the lesser of 5% or the Applicable Interest Rate in effect for
such Year. For Plan Years beginning on or after January 1, 1995, for purposes
of this subsection, the increased Defined Benefit Dollar Limitation will be the
lesser of (i) the equivalent amount determined by using the factors, if any,
for determining late retirement benefits as set forth in Section 4.3 or (ii)
the equivalent amount determined by using an interest rate equal to 5% and the
applicable mortality table as prescribed by the Secretary of the Treasury under
Code section 415(b)(2)(E). For purposes of the adjustments described in this
subsection, no adjustments under Code section 415(d)(1) will be taken into
account prior to the year for which such adjustment first takes effect.
(d) Adjustment for Less Than Ten Years of Participation.
If a Participant has less than ten years of participation in the Plan, the
Defined Benefit Dollar Limitation applicable to the Participant's Accrued
Benefit will be adjusted by multiplying such limitation by a fraction, the
numerator of which is the number of the Participant's years of participation
(or portion thereof), and the denominator of which is ten. For purposes of
this subsection, the term "year of participation" will have such meaning as is
set forth in regulations published by the Secretary of the Treasury under Code
section 415(b).
(e) Expression of Accrued Benefit as an Annual Benefit.
If a Participant's Accrued Benefit is payable in any form other than an Annual
Benefit, the limitation set forth in subsection (a) will be applied by
adjusting the actual form of that Participant's benefit distribution to an
Annual Benefit, commencing at the same Benefit Commencement Date as the actual
form of his benefit distribution, which is the Actuarial Equivalent of such
actual form. For Plan Years beginning before January 1, 1995, the interest
rate assumption used to make the adjustment provided for in the preceding
sentence will not be less than the greater of 5% or the Applicable Interest
Rate in effect for such Year. For Plan Years beginning on or after January 1,
1995, for purposes of this subsection and except as provided in subsection (f),
the adjusted Annual Benefit will be equal to the greater of the (i) the
Actuarial Equivalent of the
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actual form or (ii) the equivalent Annual Benefit determined by using an
interest rate equal to 5% and the mortality table as prescribed by the
Secretary of the Treasury under Code section 415(b)(2)(E). In making the
foregoing adjustment, the following values will not be taken into account: (i)
the value of a Qualified Joint and Survivor Annuity, (ii) the value of
ancillary benefits that are not directly related to retirement benefits
(including, but not limited to, preretirement disability and death benefits and
post-retirement medical benefits), and (iii) the value of benefits provided by
the Plan which reflect post-retirement cost of living increases to the extent
that such increases are in accordance with Code section 415(d) and Treasury
Regulation section 1.415-5. For purposes of the adjustments described in this
subsection, no adjustments under Code section 415(d)(1) will be taken into
account prior to the year for which such adjustment first takes effect.
(f) Adjustment for Benefits Subject to Code Section
417(e)(3). For Plan Years beginning on or after January 1, 1996, for purposes
of adjusting the benefit or limitation under subsections (b) and (e) of any
form of benefit subject to Code section 417(e)(3), the annual rate of interest
on 30-year Treasury securities for the month of November preceding the Plan
Year that contains the Benefit Commencement Date will be substituted for the 5%
interest rate in such subsections.
(g) Permissible Minimum Benefit. Notwithstanding the
provisions of subsection (a), but subject to the provisions of subsection (h),
a Participant's Accrued Benefit will be deemed not to exceed the limitations of
this Section if (i) the benefits actually paid to him under this Plan and all
other Defined Benefit Plans maintained by a Controlled Group Member do not
exceed $10,000 in any Plan Year, regardless of the Benefit Commencement Date or
the form in which such benefits are paid, and (ii) he has not at any time
participated in a Defined Contribution Plan maintained by a Controlled Group
Member. For purposes of clause (ii), a Participant will not be deemed to be
participating in a separate Defined Contribution Plan maintained by a
Controlled Group Member solely by reason of his making Participant
contributions to the Plan.
(h) Reduction For Less Than Ten Years of Service. If a
Participant has less than ten years of service at his Benefit Commencement
Date, the limitation set forth in subsection (a) with respect to a
Participant's average Includable Compensation for his High Three Years and the
limitation set forth in subsection (g) will be reduced by multiplying such
limitations by a fraction, the numerator of which is his years of service (or
portion thereof), and the denominator of which is ten.
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<PAGE> 47
(i) Transition Rules for Prior Participation. In the
case of an individual who was a participant in one or more Defined Benefit
Plans maintained by a Controlled Group Member before July 1, 1982, the
application of the limitations of this Section will not cause the maximum
permissible benefit for such individual under all such Defined Benefit Plans to
be less than the individual's accrued benefit under all such Defined Benefit
Plans as of the end of the Limitation Year beginning in 1982 determined without
regard to any amendments to such Plans adopted after July 1, 1982, including
optional benefit forms. The preceding sentence applies only if all such
Defined Benefit Plans met the requirements of Code section 415, as in effect on
July 1, 1982, for all Limitation Years beginning before January 1, 1983.
In the case of an individual who was a participant in one or
more Defined Benefit Plans maintained by a Controlled Group Member before May
6, 1986, the application of the limitations of this Section will not cause the
maximum permissible benefit for such individual under all such Defined Benefit
Plans to be less than the individual's accrued benefit under all such Defined
Benefit Plans as of the end of the Limitation Year beginning in 1986 determined
without regard to any amendments to such Plans adopted after May 5, 1986,
including optional benefit forms. The preceding sentence applies only if all
such Defined Benefit Plans met the requirements of Code section 415, as in
effect on May 6, 1986, for all Limitation Years beginning before January 1,
1987.
In the case of an individual who was a participant in one or
more Defined Benefit Plans maintained by a Controlled Group Member before
January 1, 1995, the application of the limitations of this Section will not
cause the maximum permissible benefit for such individual under all such
Defined Benefit Plans to be less than the individual's accrued benefit under
all such Defined Benefit Plans as of December 31, 1994, determined without
regard to any amendments to such Plans adopted after December 31, 1994,
including optional benefit forms.
(j) Aggregate Benefit Limitation. If a Controlled Group
Member maintains, or at any time maintained, one or more Defined Contribution
Plans (or, after December 31, 1985, a Welfare Benefit Fund) covering any
Participant in this Plan, the sum of the Defined Benefit Fraction and the
Defined Contribution Fraction for any Limitation Year will equal no more than
one (1.0). A Participant's Projected Annual Benefit will be reduced, if
necessary, without any further action on the part of the Participating
Employers , the Board of Directors or the Committee, to meet this limitation.
If the Participant was a participant in one or more Defined
Contribution Plans maintained by a Controlled Group
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<PAGE> 48
Member which were in existence on July 1, 1982, the numerator of the Defined
Contribution Fraction will be adjusted if the sum of this fraction and the
Defined Benefit Fraction would otherwise exceed 1.0 under the terms of this
Plan. Under the adjustment, an amount equal to the product of (i) the excess
of the sum of the fractions over 1.0, times (ii) the denominator of this
fraction, will be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1983. This
adjustment will also be made if at the end of the last Limitation Year
beginning before January 1, 1984, the sum of the fractions exceeds 1.0 because
of benefit accruals or annual additions that were made before the limitations
of this Section became effective to any Qualified Plans of a Controlled Group
Member in existence on July 1, 1982.
If the Participant was a participant in one or more Defined
Contribution Plans that satisfied the requirements of Code section 415 as of
the last Limitation Year beginning before January 1, 1987, an amount will be
subtracted from the numerator of the Defined Contribution Fraction (not
exceeding such numerator) as prescribed by the Secretary of the Treasury so
that the sum of the Defined Benefit Fraction and the Defined Contribution
Fraction does not exceed 1.0 for such Limitation Year.
For purposes of this subsection, a master or prototype plan is
a Qualified Plan the form of which is the subject of a favorable opinion letter
from the Internal Revenue Service.
(k) Aggregation of Plans. For purposes of this Section,
all Defined Benefit Plans ever maintained by a Controlled Group Member will be
treated as one Defined Benefit Plan, and all Defined Contribution Plans ever
maintained by a Controlled Group Member will be treated as one Defined
Contribution Plan (whether or not any such Qualified Plan was terminated).
(l) Limitation on Certain Adjustments. In no event will
the adjustments of subsections (d) and (h) reduce the limitations provided
under Code sections 415(b)(1) and 415(b)(4) to an amount less than one-tenth of
the applicable limitations as determined without such adjustments.
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ARTICLE 10
RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES
10.1 Priority over Other Distribution Provisions. The provisions
set forth in this Article will supersede any conflicting provisions of Article
5, Article 6 and Appendix C.
10.2 Restrictions on Commencement of Distributions. The provisions
of this Section will apply to restrict the Committee's ability to delay the
commencement of distributions. Unless a Participant elects otherwise in
writing, distribution of the Participant's vested interest in his Account will
begin no later than the 60th day after the close of the Plan Year in which
occurs the latest of (i) the date on which the Participant attains age 65, (ii)
the tenth anniversary of the Plan Year in which the Participant began
participation in the Plan, or (iii) the Participant's termination of
employment.
10.3 Restrictions on Delay of Distributions. The following
provisions will apply to limit a Participant's ability to delay the
distribution of benefits. Distribution of a Participant's entire vested and
nonforfeitable interest will be made or commence not later than April 1
following (i) the calendar year in which he attains age 70-1/2, or (ii) in
which his employment with the Controlled Group terminates, if later, except
that a distribution to a Participant who is a 5-percent owner (as such term is
defined in Code section 416(i)(1)(B)(i)) at any time during the five-plan-year
period ending in the calendar year in which he attains age 70-1/2, will be made
pursuant to clause (i), or (iii) in which he becomes a 5-percent owner, if he
becomes a 5-percent owner during any Plan Year subsequent to that which ended
in the calendar year in which he attained age 70-1/2 and his employment with
the Controlled Group has not yet terminated. Clauses (ii) and (iii) of the
preceding sentence will only apply to employees who attain age 70-1/2 before
January 1, 1988.
10.4 Restrictions on Period of Distributions. Unless the form of
distribution is a single sum payment, distributions will be made in
nonincreasing dollar payments each year over one of the following periods: (i)
the life of the Participant, (ii) the joint lives of the Participant and his
Beneficiary, (iii) a period certain not exceeding the life expectancy of the
Participant, (iv) a period certain not exceeding the joint life expectancy of
the Participant and his Beneficiary, or (v) a combination of the foregoing.
10.5 Minimum Amounts to be Distributed. If the Participant's
entire interest in the Plan is to be distributed in
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<PAGE> 50
a form other than a single lump sum payment, then the amount to be distributed
each year must be at least an amount equal to the quotient obtained by dividing
the Participant's entire interest by the life expectancy of the Participant or
joint and last survivor expectancy of the Participant and designated
Beneficiary. Life expectancy and joint and last survivor expectancy will be
computed by the use of the return multiples contained in section 1.72-9 of the
Treasury Regulations. For purposes of this computation, the life expectancy of
the Participant (and the Participant's Spouse, if the Spouse is the designated
Beneficiary) may be recalculated no more frequently than annually. The life
expectancy of a Beneficiary other than a Spouse may not be recalculated. If
the Participant's Spouse is not the designated Beneficiary, then the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
Participant.
10.6 Restrictions in the Event of Death. Upon the death of a
Participant, the following distribution provisions will apply to limit the
Beneficiary's ability to delay distributions. If the Participant dies after
distribution of his benefit has begun, the remaining portion of his benefit
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death; but if he dies before
distribution of his benefit commences, his entire benefit will be distributed
no later than five years after his death, unless an individual who is a
designated Beneficiary elects to receive distributions in substantially equal
installments over the Beneficiary's life or life expectancy beginning no later
than one year after the Participant's death or unless the Participant made an
election to the contrary prior to January 1, 1984, under section 242(b)(2) of
the Tax Equity and Fiscal Responsibility Act of 1982. If the designated
Beneficiary is the Participant's surviving Spouse, the date distributions are
required to begin will not be earlier than the date on which the Participant
would have attained age 70-1/2, and, if the Spouse dies before payments begin,
subsequent distributions will be made as if the Spouse had been the
Participant. Any amount paid to a child of the Participant will be treated as
if it had been paid to the surviving Spouse if the amount becomes payable to
the surviving Spouse when the child reaches the age of majority.
10.7 Compliance with Regulations. Distributions under the Plan to
Participants or Beneficiaries will be made in accordance with Treasury
Regulations issued under Code section 401(a)(9).
10.8 Delayed Payments. If the amount of a distribution required to
begin on a date determined under the applicable provisions of the Plan cannot
be ascertained by such date, or if it is not possible to make such payment on
such date because the
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<PAGE> 51
Committee has been unable to locate a Participant or Beneficiary after making
reasonable efforts to do so, a payment retroactive to such date may be made no
later than 60 days after the earliest date on which the amount of such payment
can be ascertained or the date on which the Participant or Beneficiary is
located (whichever is applicable).
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ARTICLE 11
TOP-HEAVY PROVISIONS
11.1 Priority over Other Plan Provisions. If the Plan is or
becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article will
supersede any conflicting provisions of the Plan. However, the provisions of
this Article will not operate to increase the rights or benefits of
Participants under the Plan except to the extent required by Code section 416
and other provisions of law applicable to Top-Heavy Plans.
11.2 Definitions Used in this Article. The following words and
phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Defined Benefit Dollar Limitation" means the
limitation described in Section 9.2(c).
(b) "Defined Benefit Plan" means the Qualified Plan
described in Section 9.2(e).
(c) "Defined Contribution Dollar Limitation" means the
limitation described in Section 9.2(f).
(d) "Defined Contribution Plan" means the Qualified Plan
described in Section 9.2(h).
(e) "Determination Date" means for the first Plan Year of
the Plan the last day of the Plan Year and for any subsequent Plan Year the
last day of the preceding Plan Year.
(f) "Determination Period" means the Plan Year containing
the Determination Date and the four preceding Plan Years.
(g) "Includable Compensation" means the compensation
described in Section 9.2(j).
(h) "Key Employee" means any Employee or former Employee
(and the Beneficiary of a deceased Employee) who at any time during the
Determination Period was (i) an officer of a Controlled Group Member, if such
individual's Includable Compensation (modified as described below) exceeds 50%
of the Defined Benefit Dollar Limitation, (ii) an owner (or considered an owner
under Code section 318) of one of the ten largest interests in a Controlled
Group Member, if such individual's Includable Compensation exceeds the Defined
Contribution Dollar Limitation, (iii) a 5-percent owner of a Controlled Group
Member, or (iv) a 1-percent owner of a Controlled Group Member who has
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annual Includable Compensation of more than $150,000. The determination of who
is a Key Employee will be made in accordance with Code section 416(i) and the
Treasury Regulations thereunder. For purposes of this subsection only,
Includable Compensation will include salary reduction contributions pursuant to
a cash or deferred arrangement under Code section 401(k) or a cafeteria plan
meeting the requirements of Code section 125.
(i) "Minimum Benefit" means the benefit described in the
first sentence of Section 11.4(a).
(j) "Permissive Aggregation Group" means the Required
Aggregation Group of Qualified Plans plus any other Qualified Plan or Qualified
Plans of a Controlled Group Member which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the requirements of Code
sections 401(a)(4) and 410 (including simplified employee pension plans).
(k) "Present Value" means present value based only on the
interest and mortality rates specified in a Defined Benefit Plan.
(l) "Required Aggregation Group" means the group of plans
consisting of (i) each Qualified Plan (including simplified employee pension
plans) of a Controlled Group Member in which at least one Key Employee
participates, and (ii) any other Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code sections 401(a)(4) or 410.
(m) "Top-Heavy Plan" means the Plan for any Plan Year in
which any of the following conditions exists: (i) if the Top-Heavy Ratio for
the Plan exceeds 60% and the Plan is not a part of any Required Aggregation
Group or Permissive Aggregation Group of Qualified Plans; (ii) if the Plan is a
part of a Required Aggregation Group but not part of a Permissive Aggregation
Group of Qualified Plans and the Top-Heavy Ratio for the Required Aggregation
Group exceeds 60%; or (iii) if the Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of Qualified Plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
(n) "Top-Heavy Ratio" means a fraction, the numerator of
which is the sum of the Present Value of accrued benefits and the account
balances (as required by Code section 416)) of all Key Employees with respect
to such Qualified Plans as of the Determination Date (including any part of any
accrued benefit or account balance distributed during the five-year period
ending on the Determination Date), and the denominator of which is the sum of
the Present Value of the accrued benefits and the account balances (including
any part of any accrued benefit or account
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<PAGE> 54
balance distributed in the five-year period ending on the Determination Date)
of all Employees with respect to such Qualified Plans as of the Determination
Date. The value of account balances and the Present Value of accrued benefits
will be determined as of the most recent Top-Heavy Valuation Date that falls
within or ends with the 12-month period ending on the Determination Date,
except as provided in Code section 416 for the first and second Plan Years of a
Defined Benefit Plan. The account balances and accrued benefits of a
participant who is not a Key Employee but who was a Key Employee in a prior
year will be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, transfers and contributions unpaid as
of the Determination Date are taken into account will be made in accordance
with Code section 416. Employee contributions described in Code section
219(e)(2) will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the Determination Dates
that fall within the same calendar year. The accrued benefit of any Employee
other than a Key Employee will be determined under the method, if any, that
uniformly applies for accrual purposes under all Qualified Plans maintained by
all Controlled Group Members and included in a Required Aggregation Group or a
Permissive Aggregation Group or, if there is no such method, as if the benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code section 411(b)(1)(C). Notwithstanding the
foregoing, the account balances and accrued benefits of any Employee who has
not performed services for an employer maintaining any of the aggregated plans
during the five-year period ending on the Determination Date will not be taken
into account for purposes of this subsection.
(o) "Top-Heavy Valuation Date" means the last day of each
Plan Year.
11.3 Compensation Taken Into Account. For any Plan Year in which
the Plan is a Top-Heavy Plan, the amount of each Participant's Includable
Compensation taken into account for purposes of determining allocations under
the Plan will not exceed the first $200,000 (or such larger amount as may be
prescribed by the Secretary of the Treasury or his delegate) of such
Participant's Includable Compensation for such Plan Year.
11.4 Minimum Benefit.
(a) Calculation of Minimum Benefit. Notwithstanding any
other provision in this Plan, for any Plan Year in which this Plan is a
Top-Heavy Plan, the Accrued Benefit of each Participant who is not a Key
Employee provided solely by Participating Employer contributions and expressed
as a life annuity commencing
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<PAGE> 55
at age 65 will be not less than 2% of his average compensation multiplied by
years of service credited during Plan Years that the Plan is a Top-Heavy Plan,
not in excess of ten such years (the "Minimum Benefit"). Average compensation
for this purpose will be the Participant's average Includable Compensation for
the five consecutive years of service (or all years of service, if less than
five) for which the Participant had the highest Includable Compensation
excluding Includable Compensation after the close of the last Plan Year in
which the Plan is a Top-Heavy Plan. The Minimum Benefit is determined without
regard to any Social Security contribution. The Minimum Benefit applies even
though under other Plan provisions the Participant would not otherwise be
entitled to receive a benefit, or would have received a lesser benefit for the
Plan Year because (i) the non-Key Employee fails to make mandatory
contributions to the Plan, (ii) the non-Key Employee's Compensation is less
than a stated amount, (iii) the non-Key Employee is not employed on the last
day of the Plan Year, or (iv) the Plan is integrated with Social Security. All
accruals of employer-derived benefits, whether or not attributable to Plan
Years in which the Plan is a Top-Heavy Plan, may be used in computing whether
the Minimum Benefit requirement is satisfied.
(b) Minimum Benefit or Allocation in Other Plan(s). If a
Controlled Group Member maintains one or more Defined Contribution Plans
covering Employees who are Participants in this Plan, the minimum benefit or
allocation requirement applicable to Top-Heavy Plans will be met in this Plan.
(c) Form of Benefit. If the form of benefit provided
under the Plan is other than a single life annuity, the Participant must
receive a benefit that is the Actuarial Equivalent of the Minimum Benefit. If
the benefit commences at a date other than at age 65, the Participant must
receive at least an amount that is the Actuarial Equivalent of the Minimum
Benefit commencing at age 65.
(d) Nonforfeitability. The Participant's Minimum
Benefit, to the extent required to be nonforfeitable under Code section 416(b)
and the special vesting schedule provided in this Article, may not be
forfeited under Code sections 411(a)(3)(B) (relating to suspension of benefits
on reemployment) or 411(a)(3)(D) (relating to withdrawal of mandatory
contributions).
11.5 Modification of Aggregate Benefit Limit.
(a) Modification. Subject to the provisions of
subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the
aggregate benefit limit described in Article 9 will be modified by substituting
"100%" for "125%" in Sections 9.1(d) and (g).
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<PAGE> 56
(b) Exception. The modification of the aggregate benefit
limit described in subsection (a) will not be required if the Top-Heavy Ratio
does not exceed 90% and Employees who are not Key Employees accrue a benefit
for such Plan Year of not less than 3% of their average Includable Compensation
for the five consecutive Plan Years in which they had the highest Includable
Compensation (not to exceed a total such benefit of 30%), expressed as a life
annuity commencing at age 65.
11.6 Minimum Vesting.
(a) Required Vesting. For any Plan Year in which this
Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in subsection
(b) will automatically apply to the Plan to the extent it provides a higher
vested percentage than the regular vesting schedule set forth in Article 7.
The minimum vesting schedule applies to a Participant's entire Accrued Benefit
including benefits accrued in Plan Years before the effective date of Code
section 416 and in Plan Years before the Plan became a Top-Heavy Plan.
Further, no reduction in vested Accrued Benefits may occur in the event the
Plan's status as a Top-Heavy Plan changes for any Plan Year, and any change in
the effective vesting schedule from the schedule set forth in subsection (b) to
the regular schedule set forth in Article 7 will be treated as an amendment
subject to Section 13.1(iii). However, this subsection does not apply to the
Accrued Benefit of any Employee who does not have an Hour of Service after the
Plan has initially become a Top-Heavy Plan, and such Employee's Accrued Benefit
will be determined without regard to this Section.
(b) Minimum Vesting Schedule.
<TABLE>
<CAPTION>
Percentage Vested
Years of Service and Nonforfeitable
- ---------------- ------------------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
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ARTICLE 12
ADOPTION OF THE PLAN BY CONTROLLED GROUP MEMBERS
12.1 Adoption Procedure. Any Controlled Group Member may become a
Participating Employer under the Plan provided that (i) the Board approves the
adoption of the Plan by the Controlled Group Member and designates the
Controlled Group Member as a Participating Employer; (ii) the Controlled Group
Member adopts the Plan and Trust Agreement together with all amendments then in
effect by appropriate resolutions of the board of directors of the Controlled
Group Member; and (iii) the Controlled Group Member by appropriate resolutions
of its board of directors agrees to be bound by any other terms and conditions
which may be required by the Board, provided that such terms and conditions are
not inconsistent with the purposes of the Plan.
12.2 Effect of Adoption by Controlled Group Member. A Controlled
Group Member that adopts the Plan pursuant to this Article will be deemed to be
a Participating Employer for all purposes hereunder, unless otherwise specified
in the resolutions of the Board designating the Controlled Group Member as a
Participating Employer. In addition, the Board may provide, in its discretion
and by appropriate resolutions, that the Employees of the Controlled Group
Member will receive credit for their employment with the Controlled Group
Member prior to the date it became a Controlled Group Member for purposes of
determining either or both the eligibility of such Employees to participate in
the Plan, the determination of their Accrued Benefits and the vested and
nonforfeitable interest of such Employees in their Accrued Benefit provided
that such credit will be applied in a uniform and nondiscriminatory manner with
respect to all such Employees.
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ARTICLE 13
AMENDMENT OF THE PLAN
13.1 Right to Amend the Plan.
(a) In General. The Company reserves to the Compensation
Committee of the Board of Directors the right to amend the Plan at any time and
from time to time to the extent it may deem advisable or appropriate, provided
that (i) no amendment will increase the duties or liabilities of the Trustee
without its written consent; (ii) no amendment will cause a reversion of Plan
assets to the Participating Employers not otherwise permitted under the Plan;
(iii) no amendment will have the effect of reducing the percentage of the
vested and nonforfeitable interest of any Participant in his Account nor will
the vesting provisions of the Plan be amended unless each Participant with at
least three years of Credited Service (including years of Credited Service
disregarded pursuant to the reemployment provisions (if any) of Article 4) is
permitted to elect to continue to have the prior vesting provisions apply to
him, within 60 days after the latest of the date on which the amendment is
adopted, the date on which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment; and (iv) no amendment
(including a change in the actuarial assumptions used for determining actuarial
equivalence) will be effective to the extent that it has the effect of
decreasing a Participant's Accrued Benefit (except to the extent permitted by
law) or of eliminating or reducing an early retirement benefit or a
retirement-type subsidy or eliminating an optional form of benefit.
(b) Authority of the Board. The Company also reserves to
the Board of Directors the right to amend the Plan at any time and from time to
time to the extent it may deem advisable or appropriate, subject to the
limitations on amendments set forth in subsection (a).
13.2 Amendment Procedure. Any amendment to the Plan will be made
only pursuant to action of the Board or of the Compensation Committee of the
Board. A certified copy of the resolutions adopting any amendment and a copy
of the executed amendment will be delivered to the Trustee, the Committee and
the Company. Upon such action by the Board or the Compensation Committee of
the Board, the Plan will be deemed amended as of the date specified as the
effective date by such action or in the instrument of amendment. The effective
date of any amendment may be before, on or after the date of such action,
except as otherwise set forth in Section 14.1.
-55-
<PAGE> 59
13.3 Effect on Participating Employers. Unless an amendment
expressly provides otherwise, all Participating Employers will be bound by any
amendment adopted pursuant to this Article 13.
-56-
<PAGE> 60
ARTICLE 14
TERMINATION AND PARTIAL TERMINATION
14.1 Continuance of Plan. The Participating Employers expect to
continue this Plan indefinitely, but they do not assume an individual or
collective contractual obligation to do so, and the right is reserved to the
Company, by action of the Board to terminate the Plan. In addition, subject to
the remaining provisions of this Article, any Participating Employer at any
time may discontinue its participation in the Plan with respect to its
Employees.
14.2 Complete Vesting. If the Plan is terminated, the Accrued
Benefits of all affected Participants at the time of such termination will
become 100% vested and nonforfeitable to the extent funded as of such date
without regard to their years of Credited Service. For purposes of this
Section, a Participant who has terminated employment and is not again an
Employee at the time the Plan is terminated will not be an affected Participant
entitled to full vesting if the Participant had no vested interest in the Plan
attributable to Participating Employer contributions at the time he terminated
employment. In the event of a partial termination of the Plan, the Accrued
Benefits of those Participants who cease to participate on account of the facts
and circumstances which result in the partial termination will become 100%
vested and nonforfeitable to the extent funded as of such date without regard
to their years of Credited Service.
14.3 Allocation of Assets. In the event of the termination or
partial termination of the Plan, the Trust Fund will be allocated among the
Participants and Beneficiaries in the following order (except that in the event
of a partial termination, such allocation will be with respect to the portion
of the Trust Fund as to which such partial termination has occurred): (i)
first, in the case of the benefit of a Participant or Beneficiary who was
receiving payments as of the beginning of the three-year period ending on the
date of the termination or partial termination of the Plan, to each such
benefit, based on the provisions of the Plan (as in effect during the five-year
period ending on such date) under which such benefit would be the least, and in
the case of a Participant's or Beneficiary's benefit (other than a benefit
described above) which would have been paid as of the beginning of such
three-year period if the Participant had retired prior to the beginning of such
three-year period and if his benefits had commenced (in the normal form of
payment) as of the beginning of such period, to each such benefit based on the
provisions of the Plan (as in effect during the five-year period ending on such
date) under
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<PAGE> 61
which such benefit would be the least; (ii) second, to all other benefits under
the Plan subject to guarantee by the Pension Benefit Guaranty Corporation;
(iii) third, to all other nonforfeitable benefits under the Plan not subject to
guarantee by the Pension Benefit Guaranty Corporation; and (iv) fourth, to all
other benefits under the Plan.
14.4 Withdrawal by Participating Employer. A Participating
Employer may withdraw from participation in the Plan only with the approval of
the Board. If any Participating Employer withdraws from the Plan, a copy of
resolutions of the board of directors of the Participating Employer adopting
such action, certified by the secretary of such board of directors and
reflecting approval by the Board, will be delivered to the Committee as soon as
it is administratively feasible to do so, and the Committee will communicate
such action to the Trustee and to the Employees of the Participating Employer.
14.5 Prevention of Discrimination on Early Termination.
(a) Limitation Concerning Highly Compensated Employees.
In the event that (i) the value of the Accrued Benefit of a Participant who is a
Highly Compensated Employee or a Highly Compensated Former Employee (as such
terms are hereinafter defined) equals or exceeds 1% of the value of all Accrued
Benefits under the Plan on the date payment of such Participant's benefits is to
commence, and (ii) after payment of such Participant's Accrued Benefit the value
of Plan assets is less than 110% of the value of the Plan's current liabilities
as defined in Code section 412(l)(7), such Participant's Accrued Benefit will be
paid in a form that produces annual payments not in excess of the payments that
would be made under a single life annuity that is the Actuarial Equivalent of
such Participant's normal form of Retirement Pension. For purposes of this
Section, the term "Highly Compensated Employee" has the meaning set forth in
Code section 414(q), and the term "Highly Compensated Former Employee" has the
meaning set forth in Code section 414(q)(9).
(b) Benefits on Plan Termination. In the event the Plan
is terminated, benefits will be paid in a manner that does not violate the
nondiscrimination requirements of Code section 401(a)(4) and the applicable
regulations.
14.6 Residual Assets. Except as otherwise provided herein, no part
of the Trust Fund will be recoverable by the Participating Employers from the
Trust Fund or from any Participant, Beneficiary, Spouse or other person, or be
used for or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries and Spouses, except that any portion of
the Trust Fund which remains after the satisfaction of all liabilities to such
Participants, Beneficiaries, and Spouses
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<PAGE> 62
determined under the provisions of Sections 14.3 and 14.5 will, upon
termination of the Plan, be distributed to the Participating Employers as
directed by the Board.
-59-
<PAGE> 63
ARTICLE 15
MISCELLANEOUS
15.1 Reversion Prohibited.
(a) General Rule. Except as otherwise provided in this
Section, it will be impossible for any part of the Trust Fund either (i) to be
used for or diverted to purposes other than those which are for the exclusive
benefit of Participants and their Beneficiaries (except for the payment of
taxes and administrative expenses), or (ii) to revert to a Controlled Group
Member.
(b) Disallowed Contributions. Each contribution of the
Participating Employers under the Plan is expressly conditioned upon the
deductibility of the contribution under Code section 404. If all or part of a
Participating Employer's contribution is disallowed as a deduction under Code
section 404, such disallowed amount (reduced by any Trust Fund losses
attributable thereto) may be returned by the Trustee to the Participating
Employer with respect to which the deduction was disallowed (upon the direction
of the Committee) within one year after the disallowance.
(c) Mistaken Contributions. If a contribution is made by
a Participating Employer by reason of a mistake of fact, then so much of the
contribution as was made as a result of the mistake (reduced by any Trust Fund
losses attributable thereto) may be returned by the Trustee to the
Participating Employer (upon direction of the Committee) within one year after
the mistaken contribution was made.
15.2 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under ERISA, the
Participating Employers will obtain, pay for and keep current a bond or bonds
with respect to each Committee member and each Employee who receives, handles,
disburses, or otherwise exercises custody or control of, any of the assets of
the Plan.
(b) Insurance. The Participating Employers, in their
discretion, may obtain, pay for and keep current a policy or policies of
insurance, insuring the Committee members, the members of the board of
directors of each Participating Employer and other Employees to whom any
fiduciary responsibility with respect to the administration of the Plan has
been delegated against any and all costs, expenses and liabilities (including
attorneys' fees) incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their
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<PAGE> 64
duties, responsibilities and obligations under the Plan and any applicable law.
(c) Indemnity. If the Participating Employers do not
obtain, pay for and keep current the type of insurance policy or policies
referred to in subsection (b), or if such insurance is provided but any of the
parties referred to in subsection (b) incur any costs or expenses which are not
covered under such policies, then the Participating Employers will indemnify
and hold harmless, to the extent permitted by law, such parties against any and
all costs, expenses and liabilities (including attorneys' fees) incurred by
such parties in performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within what was
reasonably believed to have been the best interests of the Plan and its
Participants.
15.3 Merger, Consolidation or Transfer of Assets. There will be no
merger or consolidation of all or any part of the Plan with, or transfer of the
assets or liabilities of all or any part of the Plan to, any other Qualified
Plan unless each Participant who remains a Participant hereunder and each
Participant who becomes a participant in the other Qualified Plan would receive
a benefit immediately after the merger, consolidation or transfer (determined
as if the other Qualified Plan and the Plan were then terminated) which is
equal to or greater than the benefit they would have been entitled to receive
under the Plan immediately before the merger, consolidation or transfer if the
Plan had then terminated.
15.4 Spendthrift Clause. The rights of any Participant or
Beneficiary to and in any benefits under the Plan will not be subject to
assignment or alienation, and no Participant or Beneficiary will have the power
to assign, transfer or dispose of such rights, nor will any such rights to
benefits be subject to attachment, execution, garnishment, sequestration, the
laws of bankruptcy or any other legal or equitable process. This Section will
not apply to a "qualified domestic relations order". A "qualified domestic
relations order" means a judgment, decree or order made pursuant to a state
domestic relations law which satisfies the requirements of Code section 414(p).
Notwithstanding the foregoing, if the terms of the qualified domestic relations
order permit, the amounts payable to the alternate payee under such order will
be paid at such time or times specified in the order before the earliest
retirement date specified in section 414(p)(4)(B) of the Code and will be paid
in the form of a lump sum without regard to any restriction on lump sum
payments contained in the Plan.
15.5 Rights of Participants. Participation in the Plan will not
give any Participant the right to be retained in the employ
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<PAGE> 65
of a Controlled Group Member or any right or interest in the Plan or the Trust
Fund except as expressly provided herein.
15.6 Gender, Tense and Headings. Whenever any words are used
herein in the masculine gender, they will be construed as though they were also
used in the feminine gender in all cases where they would so apply. Whenever
any words used herein are in the singular form, they will be construed as
though they were also used in the plural form in all cases where they would so
apply. Headings of Articles, Sections and subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
15.7 GOVERNING LAW. THE PLAN WILL BE CONSTRUED AND GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT NOT
PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, INCLUDING WITHOUT LIMITATION THE TEXAS STATUTE OF LIMITATIONS, BUT
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES OF SUCH STATE.
Executed this 2 day of February, 1996.
A. H. BELO CORPORATION
By /s/ MICHAEL J. McCARTHY
----------------------------------
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<PAGE> 66
APPENDIX A
PARTICIPATING EMPLOYERS
A. H. Belo Corporation
Belo Production, Inc.
(As of April 1, 1994)
Dallas-Ft. Worth Suburban Newspapers, Inc.
(Through March 31, 1994)
The Dallas Morning News Company
DFW Printing Company, Inc.
(As of April 1, 1994)
Great Western Broadcasting Corporation
Gulf Television Corporation
KOTV, Inc.
Owensboro Messenger-Inquirer, Inc.
(as of January 5, 1996)
Third Avenue Television, Inc.
(as of February 1, 1995)
WFAA Television, Inc.
WVEC Television, Inc.
WWL-TV, Inc.
A-1
<PAGE> 67
APPENDIX B
BENEFIT FORMULAS IN EFFECT
ON DECEMBER 31, 1988
PART I - Normal Retirement Benefit Formula
A Participant's minimum retirement benefit under Section
4.1(b) of the Plan will be determined under the formula set forth below,
determined as if the Participant terminated employment on his Benefit Protection
Date (as defined in Section 4.1(b)).
A Participant who terminates employment at age 65 will
receive a monthly retirement benefit beginning on his Normal Retirement Date in
an amount equal to the difference between (i) 1.75% of the Participant's Final
Monthly Compensation multiplied by his years of Credited Service and (ii) 1.50%
of his Primary Social Security Benefit (as hereinafter defined) multiplied by
his years of Credited Service up to 40 such years; provided, however, that a
Participant who was an Employee on January 1, 1978, and who was an active
Participant in the Plan on December 31, 1977, will receive a minimum monthly
benefit beginning on his Normal Retirement Date equal to 1% of his Final Monthly
Compensation multiplied by his years of Credited Service.
As used in this Appendix, the term "Primary Social Security
Benefit" means the amount of monthly benefits which an Employee would be
entitled to receive as his "primary insurance amount" determined on the
assumption that (i) he has made or will make appropriate application for such
benefits, (ii) no event occurs to delay or forfeit any part of such benefits,
and (iii) if he terminates employment before age 65, he will continue to receive
until age 65 remuneration (which would be treated as taxable wages for purposes
of the Social Security Act) at the same rate as at the time of his termination
of employment. In the case of an Employee who, from the later of January 1,
1951 or the date on which he attained 22 years of age, was continuously employed
by one or more Controlled Group Members, his Primary Social Security Benefit
will be computed as if, prior to the date of his termination of employment, he
received no wages other than those paid by the Controlled Group Members. As
used in this paragraph, the term "primary insurance amount" will have the same
meaning as under the Social Security Act as amended and in effect on an
Employee's termination of employment.
B-1
<PAGE> 68
PART II - Special Provisions Affecting Certain Participants
B.1 Priority Over Other Provisions. Except as otherwise provided
in Section 4.1(a) of the Plan, the provisions of Sections B.2 through B.8 will
apply solely to determine the accrued benefit of certain Participants as of
their Benefit Protection Date (as defined in Section 4.1(b) of the Plan) and
will supersede any conflicting provisions of Articles 4, 5, and 8 of the Plan
as in effect on December 31, 1988.
The provisions of Sections B.2 through B.8 apply to any
Employee who (i) immediately prior to January 30, 1984, was employed by a D&B
Affiliate (as defined below), (ii) effective January 30, 1984, became employed
by a Controlled Group Member that was a Participating Employer on such date,
and (iii) prior to March 30, 1984, did not return to employment with The Dun &
Bradstreet Corporation or any of its affiliates.
The remaining Sections of this Appendix apply to certain
former Employees who ceased to be active Participants as a result of the sale
or other disposition of a business by a Controlled Group Member.
B.2 Definitions Used in this Appendix. The following words and
phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Accrued Social Security Benefit" means the amount of
monthly benefit which an Employee would be entitled to receive as his primary
insurance amount at age 65 under the Social Security Act in effect at the
earlier of the Employee's Normal Retirement Date or termination of employment
assuming (i) that he has made or will make appropriate application for such
benefits, (ii) that no event occurs to delay or forfeit any part of such
benefit, (iii) that wages cease upon the earlier of Normal Retirement Date or
termination of employment, and (iv) that the Employee had no wages prior to his
date of employment with The Dun & Bradstreet Corporation, or prior to the later
of his date of employment with a D&B Affiliate and either April 1, 1980, in the
case of employment with WVEC Television, Inc., or January 1, 1972, in the case
of employment with any other D&B Affiliate.
(b) "Average Final Compensation" means the average of the
Employee's monthly Compensation (excluding, however, amounts received prior to
January 1, 1984, as severance pay, payments dependent upon any contingency
after the period of Credited Service and any other special remuneration)
during the five consecutive calendar years in the last ten calendar years of
his Credited Service (or during the total number of calendar years of Credited
Service if fewer than five) producing the highest average monthly Compensation.
For purposes of determining an
B-2
<PAGE> 69
Employee's Compensation for periods prior to January 30, 1984, (i) service with
a nonparticipating affiliated company under the D&B Plan will be deemed
Credited Service and (ii) in the event an Employee completed at least 1,000 but
less than 1,800 hours of service in any prior calendar year, his earnings will
be annualized for such prior year. Compensation for periods after December 31,
1983, will be determined under Section 1.11 of the Plan in effect on December
31, 1988.
(c) "Belo Factor" means the factor determined in
accordance with the table set forth in Part III of this Appendix.
(d) "Belo Service" means an Employee's total Credited
Service taken into account for purposes of determining his Accrued Benefit less
his D&B Service. An Employee's total Credited Service for this purpose will be
determined by aggregating (i) his years of Credited Service under the D&B Plan
as of December 30, 1983, (ii) for the period January 1, 1984, through December
31, 1984, the greater of his Credited Service under the D&B Plan through
January 30, 1984, and his Credited Service determined under Section 1.15 of the
Plan during such entire period, provided that no Credited Service will be
granted for the period January 1, 1984 to January 30, 1984, unless the Employee
was a participant in the D&B Plan, and (iii) his Credited Service determined
under Section 1.15 of the Plan beginning on January 1, 1985. Notwithstanding
the foregoing, an Employee's Credited Service under (i) above will not include
any period of service prior to April 1, 1980, with respect to an Employee who
immediately prior to January 30, 1984, was employed by WVEC Television, Inc.,
or prior to January 1, 1972, with respect to any other Employee.
(e) "D&B Affiliate" means the following Delaware
corporations: (i) Great Western Broadcasting Corporation, (ii) Gulf Television
Corporation, (iii) KOTV, Inc. and (iv) WVEC Television, Inc.
(f) "D&B Factor" means the factor determined in
accordance with the applicable table set forth in Part I of this Appendix.
(g) "D&B Plan" means the Master Retirement Plan of The
Dun & Bradstreet Corporation as in effect immediately prior to January 30,
1984.
(h) "D&B Service" means the years of service credited to
an Employee under the D&B Plan as of January 30, 1984, for benefit accrual
purposes.
(i) "Final Monthly Compensation" means the amount
determined under Section 1.22, subject to the following
B-3
<PAGE> 70
adjustments: (i) Compensation received during the period prior to January 1,
1984, will exclude severance pay, payments dependent upon any contingency after
the period of Credited Service and any other special remuneration; and (ii) if
during any calendar year prior to January 1, 1984, an Employee completed at
least 1,000 but less than 1,800 hours of service, Compensation for such
calendar year will be annualized.
B.3 Vesting Credit. An Employee's Credited Service for purposes
of determining his vested interest in his Accrued Benefit under Article 7 of
the Plan will be determined by aggregating (i) his years of service for vesting
purposes under the D&B Plan as of December 31, 1983, (ii) for the period from
January 1, 1984, through December 31, 1984, the greater of his service for
vesting purposes under the D&B Plan through January 30, 1984, and his Credited
Service determined under Section 1.15 of the Plan during such entire period and
(iii) his Credited Service determined under Section 1.15 of the Plan for the
period beginning on January 1, 1985.
B.4 Normal Retirement Benefit. An Employee's Normal Retirement
Benefit will be equal to the sum of the benefits described in subsections (a)
and (b) below.
(a) D&B Benefit. The benefit under this subsection will
be (i) 1.7% of the Employee's Average Final Compensation multiplied by his
years of D&B Service, but in no event more than 25 such years, plus (ii) 1.0%
of his Average Final Compensation multiplied by his years of D&B Service in
excess of 25 years, minus (iii) 1.7% of his Accrued Social Security Benefit
multiplied by his years of D&B Service, but in no event more than 25 years,
minus (iv) 0.5% of his Accrued Social Security Benefit multiplied by his years
of D&B Service in excess of 25 years, plus (v) any prior benefits maintained or
frozen for the Employee under the D&B Plan; provided, however, that the total
offset in clauses (iii) and (iv) will not exceed 50% of his Primary Social
Security Benefit.
(b) Belo Benefit. The benefit under this subsection will
be (i) 1.75% of the Employee's Final Monthly Compensation multiplied by his
years of Belo Service, minus the lesser of (ii) 1.5% of his Primary Social
Security Benefit multiplied by the years of Belo Service he would have accrued
if he had remained an Employee to his Normal Retirement Date not in excess of
40 such years, multiplied by a fraction, the numerator of which is his years of
Belo Service and the denominator of which is the years of Belo Service he would
have accrued if he had remained an Employee to his Normal Retirement Date, or
(iii) 60% of his Primary Social Security Benefit multiplied by a fraction, the
numerator of which is the sum of his years of D&B Service and his years of Belo
Service and the denominator of which is his
B-4
<PAGE> 71
years of Credited Service determined as if he had remained an Employee to his
Normal Retirement Date, less 1.7% of his Accrued Social Security Benefit
multiplied by his years of D&B Service not in excess of 25 such years, less
0.5% of his Accrued Social Security Benefit multiplied by his years of D&B
Service in excess of 25 years, but with no more than 15 years of such
additional D&B Service to be taken into account.
(c) Minimum D&B Benefit. In no event will the benefit
determined under subsection (a) be less than the sum of (i) any prior benefits
maintained or frozen for the Employee under the D&B Plan and (ii) $100.00
multiplied by his years of D&B Service and divided by 12.
(d) Limitation on D&B Benefit. An Employee will not be
entitled to any benefit computed under subsection (a) if he is entitled to
receive from the D&B Plan benefits accrued for periods of employment prior to
January 30, 1984.
B.5 Early Retirement Benefit. The monthly retirement benefit for
an Employee who had attained age 55 and completed at least ten years of service
for vesting purposes under the D&B Plan as of January 30, 1984, and who elects
to receive his retirement benefit before his Normal Retirement Date will be the
sum of the benefits described in subsections (a) and (b) below.
(a) D&B Benefit. The early retirement benefit under this
subsection will be the greater of the benefit described in Section B.4(a)
multiplied by the D&B Factor or the benefit described in Section B.4(c)
multiplied by the D&B Factor. The early retirement benefit under this
subsection will be subject to the same limitation described in Section B.4(d).
(b) Belo Benefit. The early retirement benefit under
this subsection will be the benefit described in Section B.4(b)(i) multiplied
by the Belo Factor minus the lesser of the offset described in Section
B.4(b)(ii) multiplied by the Belo Factor or the offset described in Section
B.4(b)(iii) multiplied by the D&B Factor.
B.6 Late Retirement Benefit. If an Employee had attained age 65
on or before January 30, 1984, his late retirement benefit determined under
Section 4.3 will be determined by taking into account the actuarial present
value of the Employee's retirement benefit determined under Section B.4(a) at
January 30, 1984, (calculated by using the interest and mortality assumptions
used under the Plan for purposes of determining actuarial equivalence) and the
interest credited to such benefit under the Plan as in effect on December 31,
1987 for periods before January 1, 1988.
B-5
<PAGE> 72
B.7 Death Benefits. For purposes of the death benefit payable
under Section C.1 of Appendix C to an Employee who had attained age 55 and had
completed at least ten years of service for vesting purposes under the D&B Plan
as of January 30, 1984, Actuarial Equivalence will be determined by applying
the factors set forth in Part III of this Appendix.
B.8 Reemployment Provisions. If an Employee terminated employment
and was rehired prior to January 30, 1984, and as a result of such termination
his prior service was disregarded under the D&B Plan, such prior service will
be reinstated if the Employee either completes five consecutive years of
Credited Service following his reemployment or remains an Employee until he
attains age 65.
B.9 Former Employees at KFDM-TV. The Accrued Benefit (determined
under the terms of the Plan in effect on December 31, 1987) of each Employee of
Belo Broadcasting Corporation who was employed at KFDM-TV at Beaumont, Texas,
on January 4, 1984, and who was an active Participant in the Plan on that date
is 100% vested and nonforfeitable.
B.10 Former Employees at KRQX (AM) and KZEW (FM). The Accrued
Benefit (determined under the terms of the Plan in effect on December 31, 1987)
of each Employee of Dallas Radio, Inc. who was employed at KRQX (AM) or KZEW
(FM) on December 31, 1986, and who was an active Participant in the Plan on
that date is 100% vested and nonforfeitable.
B.11 Former Employees at KOA (AM) and KOAQ (FM). The Accrued
Benefit (determined under the terms of the Plan in effect on December 31, 1987)
of each Employee of Belo Radio, Inc. who was employed at KOA (AM) or KOAQ (FM)
on August 12, 1987, and who was an active Participant in the Plan on that date
is 100% vested and nonforfeitable.
Part III - ACTUARIAL FACTORS FOR DETERMINING
CERTAIN EARLY RETIREMENT BENEFITS
The following tables set forth factors for determining early
retirement benefits under Section B.5.
D&B FACTOR
The D&B Factor will be determined in accordance with Table 1 if an
Employee had attained age 55 and completed at least ten, but less than 35 years
of service for purposes of vesting under the D&B Plan as of January 30, 1984,
and in accordance with Table 2 if he had attained age 55 and completed at least
35 years
B-6
<PAGE> 73
of service for purposes of vesting under the D&B Plan as of January 30, 1984.
If an Employee's Benefit Commencement Date is not a whole number of years prior
to his Normal Retirement Date, an interpolated percentage under the applicable
table will be used.
TABLE 1
<TABLE>
<CAPTION>
Years Prior to Percentage of
Normal Retirement Date Accrued Benefit
---------------------- ---------------
<S> <C>
0 100.0%
1 97.0%
2 94.0%
3 91.0%
4 88.0%
5 85.0%
6 80.5%
7 74.5%
8 67.0%
9 58.0%
10 47.5%
</TABLE>
TABLE 2
<TABLE>
<CAPTION>
Years Prior to Percentage of
Normal Retirement Date Accrued Benefit
---------------------- ---------------
<S> <C>
5 or less 100.0%
6 94.7%
7 87.6%
8 78.8%
9 68.2%
10 55.9%
</TABLE>
BELO FACTOR
The Belo Factor will be determined in accordance with the following table.
If an Employee's Benefit Commencement Date is not a whole number of years prior
to his Normal Retirement Date, an interpolated percentage will be used.
[TABLE APPEARS ON FOLLOWING PAGE]
B-7
<PAGE> 74
<TABLE>
<CAPTION>
Years Prior to Percentage of
Normal Retirement Date Accrued Benefit
---------------------- ---------------
<S> <C>
0 100.0%
1 93.3%
2 86.6%
3 80.0%
4 73.3%
5 66.7%
6 63.3%
7 60.0%
8 56.6%
9 53.3%
10 50.0%
</TABLE>
B-8
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APPENDIX C
DEATH BENEFITS FOR PARTICIPANTS
BEFORE JANUARY 1, 1995
C.1 Death Benefits. The death benefits provided in this Appendix
apply with respect to a Participant who dies before January 1, 1995.
(a) Death Benefits Payable before Termination of
Employment. The Beneficiary of a Participant who dies while an Employee and
prior to his Benefit Commencement Date will receive a death benefit in the
amount of the Participant's Accrued Benefit (whether or not vested) determined
as of the date of his death.
(b) Death Benefits Payable after Termination of
Employment. The Beneficiary of a Participant who has a vested interest in his
Accrued Benefit and who dies after terminating employment and prior to his
Benefit Commencement Date will receive a death benefit in the amount of the
Participant's Accrued Benefit determined as of the date of his death.
C.2 Form of Death Benefit.
(a) Surviving Spouse. If the Participant's Beneficiary
is his surviving spouse, the death benefit will be paid in the form of a
Qualified Preretirement Survivor Annuity, subject, however, to the exception
for small benefits set forth in Section 5.1(e) of the Plan.
(b) Other Beneficiaries. If the Participant's
Beneficiary is a person other than his surviving spouse, the death benefit will
be paid in the form of a ten-year certain and continuous annuity as described
in Section 5.1(c), subject, however, to the exception for small benefits set
forth in Section 5.1(e) of the Plan.
C.3 Commencement of Death Benefit. Subject to the exception for
small benefits set forth in Section 5.1(e), the Beneficiary will begin to
receive payments as of the Participant's Normal Retirement Date unless the
Beneficiary elects to receive payments as of the first day of any preceding
month following the Participant's death. All death benefit payments will be
made or will begin as soon as administratively feasible and will be equal to
the Actuarially Equivalent present value of the Participant's Accrued Benefit
determined as of the date of his death.
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C.4 Designation of Beneficiary. The Beneficiary of a Participant
who is married on the date of his death will be the Participant's spouse unless
the Participant has designated a different Beneficiary pursuant to a Qualified
Designation described in Section C.5. A Participant will designate a
Beneficiary in writing and will submit his written designation to the
Committee. If a Participant has not designated a Beneficiary or is not
survived by a designated Beneficiary, the death benefit under the Plan will be
payable, to his surviving spouse, if any, otherwise equally among his surviving
children, if any, and if the Participant is not survived by a spouse or
children, to his then living parents, and if none of the above are then living,
in an Actuarially Equivalent lump sum payment to his estate.
C.5 Qualified Designation. For purposes of Section C.4, a
"Qualified Designation" means a Participant's designation of any Beneficiary
other than his spouse which meets the requirements of this Section. Such
designation must be in writing and will be effective only if it is made on or
after the first day of the Plan Year in which the Participant attains age 35
and it is consented to by the Participant's spouse. The spouse's consent will
be witnessed by a notary public and will acknowledge the effect on the spouse
of the Participant's election of another Beneficiary. Notwithstanding this
consent requirement, if the Participant establishes to the satisfaction of a
Plan representative that such written consent may not be obtained because there
is no spouse or the spouse cannot be located, a Beneficiary designation will be
deemed to be a Qualified Designation. Any consent necessary under this
provision will be valid only with respect to the spouse who signs the consent,
or in the event of a deemed Qualified Designation, the designated spouse. A
revocation of a prior beneficiary designation under this Section may be made by
a Participant without the consent of the spouse at any time before the
commencement of benefits. However, a Participant whose spouse has consented to
a Qualified Designation may not change the Beneficiary or designate a
Beneficiary other than his spouse following his revocation of a Qualified
Designation without spousal consent unless the Qualified Designation expressly
permits the Participant to change Beneficiaries without any further consent of
the spouse.
C.6 Certain Spouses. A former spouse will be treated as the
spouse or surviving spouse of a Participant to the extent provided under a
qualified domestic relations order as described in Code section 414(p).
C.7 Minimum Death Benefit. The value of a death benefit payable
to a Beneficiary under Section C.1 will not be less than the value of the death
benefit that would have been paid had the Participant died on December 31,
1976, computed on the basis of the factors and assumptions which were used to
value the Plan's
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liabilities on December 31, 1976. In addition, the value of a death benefit
payable under Section C.1 will not be less than the value of the same death
benefit that would have been paid had the Participant died on December 31,
1982, computed on the basis of the actuarial assumptions which were used under
the Plan on December 31, 1982.
C.8 Cost of Coverage. The Participant's benefit under the Plan
will not be reduced by the cost of providing the death benefits described in
this Appendix.
C.9 Death Benefits Payable After Benefit Commencement Date. If a
Participant dies after his Benefit Commencement Date, the death benefit, if
any, payable to his Beneficiary will be determined by the form of the
Participant's retirement benefit under Article 5 of the Plan.
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EXHIBIT 10.3(15)
A. H. BELO CORPORATION
EXECUTIVE COMPENSATION PLAN
The Company's Executive Compensation Plan ("ECP") is designed to
provide a competitive level of current compensation to Belo's most valued
executives, managers and professionals, as well as to afford an opportunity for
significant capital accumulation via long-term awards. In order to be
effective, any such plan must be well understood by its participants. This
description is directed toward achieving that understanding. Anyone having
questions about this material or about any other aspect of the Plan is
encouraged to discuss them fully with his or her direct superior.
The purpose of the ECP is:
o To establish a competitive compensation Plan to attract, retain
and motivate top people in the jobs that most directly affect the
success of the Company.
o To encourage coordinated and sustained effort toward enhancing
the Company's performance, and maximizing the Company's value to
its shareholders.
Those eligible to participate in the Executive Compensation Plan are
the officers of the Company and of each of its subsidiaries, and other key
management or professional employees whose actions and decisions directly
influence the success of the Company in a substantial way.
Officers of the Company and its subsidiaries automatically participate
in the Plan, while other individuals are recommended for participation by both
the officer to whom they report and the Chief Executive Officer, subject to the
approval of the Compensation Committee of the Board of Directors. These
recommendations are reaffirmed annually.
The Company's Executive Compensation Plan has the following features:
o A competitive base salary adjusted as circumstances warrant.
o An annual bonus opportunity.
o A long term award of stock options.
The following describes each of these features in detail.
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Base Salary
The Company strives to pay base compensation at the seventy-fifth
percentile of an annual survey of 25 to 30 media companies deemed to share
Belo's financial and qualitative standards.
All salary adjustments for ECP participants are normally effective
January 1, with appropriate prorations for participants promoted, hired or
transferred into their positions during the year.
Annual Bonus Opportunity
Each participant in the Executive Compensation Plan has an opportunity
to earn an annual bonus based upon corporate, group (publishing or
broadcasting) or operating unit financial results measured against established
minimum, target and maximum performance levels. In the case of ECP
participants who are sales managers at television broadcast stations, bonuses
are based on sales revenue targets for the applicable operating unit.
As part of the compensation planning cycle, each participant is
assigned a target bonus opportunity expressed as a percent of base salary.
This target bonus percentage is also based on the seventy-fifth percentile as
determined from the annual compensation survey.
At the end of the year, financial results are tallied, with target
achievement representing 100% credit, and maximum representing 175% credit, but
performance in excess of minimum will be credited pro rata between 0% and 100%.
No bonuses will be paid if minimum financial performance or less is attained.
Attachment 1 shows an example of how bonuses are calculated as a
result of achieving organizational objectives.
Long-Term Awards
As with the annual bonus opportunity, each participant in the
Executive Compensation Plan is assigned a long-term incentive factor expressed
as a percent of base salary. This long-term incentive factor is derived from
the Company's survey of competitive compensation practices. Again, the Company
strives to pay long-term incentives at the seventy-fifth percentile of that
survey.
In awarding stock options to participants, an attempt is made to
quantify the value of these awards. The total expected value of those
long-term awards is equal to the participant's long-term incentive factor times
base salary.
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Stock options are awarded with an option price equal to the closing
price of the Company's stock on the date of the awards, and they become
exercisable as follows:
40% one year after the award date;
30% two years after the award date; and
30% three years after the award date.
The options remain exercisable until ten years after the award date.
Conclusion
The foregoing summary is intended to cover the basic features of the
Company's Executive Compensation Plan. Again, the success of the Plan depends
on each participant's understanding it. Participants are therefore encouraged
to discuss any questions or concerns about the Plan in detail with their direct
superior or with a member of the Management Committee.
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EXHIBIT 10.3(16)
EXHIBIT A
A. H. BELO CORPORATION
1995 EXECUTIVE COMPENSATION PLAN
A. H. Belo Corporation, a Delaware corporation (the "Company"), hereby
establishes the A. H. Belo Corporation 1995 Executive Compensation Plan (the
"Plan"), effective as of January 1, 1995, subject to shareholder approval.
1. Purpose. The purpose of the Plan is to attract and retain the best
available talent and encourage the highest level of performance by directors,
executive officers and selected employees, and to provide them incentives to put
forth maximum efforts for the success of the Company's business, in order to
serve the best interests of the Company and its shareholders.
2. Definitions. The following terms, when used in the Plan with initial
capital letters, will have the following meanings:
(a) "Appreciation Right" means a right granted pursuant to Paragraph
7.
(b) "Award" means an Executive Compensation Plan Bonus, an
Appreciation Right, a Stock Option, a Performance Unit or a grant or sale
of Restricted Stock.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means the first to occur of the events
described in (i) through (iv) below, unless the Board has adopted a
resolution prior to or promptly following the occurrence of any such event
stipulating, conditionally, temporarily or otherwise, that any such event
will not result in a change in control of the Company:
(i) the commencement of, or first public announcement of the
intention of any person or group (within the meaning of Section 3(b) of
and Rule 13d-5(b) promulgated under the Securities Exchange Act of 1934,
as amended, respectively) to commence, a tender offer or exchange offer
(other than an offer by the Company or any Subsidiary) for all, or any
part of, the Common Stock;
(ii) the public announcement by the Company or by any group (as
defined in clause (i) above), entity or person (other than the Company,
any Subsidiary, or any savings, pension or other benefit plan for the
benefit of employees of the Company or any Subsidiary) which, through a
transaction or series of transactions has acquired, directly or
indirectly, beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of
more than 30% of the total number of shares of Common Stock that such
group, entity or person has become such a beneficial owner;
(iii) the approval by the Company's shareholders (or, if such
approval is not required, the consummation) of a merger in which the
Company does not survive as an independent publicly owned corporation, a
consolidation, or a sale, exchange, or other disposition of all or
substantially all the Company's assets; or
(iv) a change in the composition of the Board during any period of
two consecutive years such that individuals who at the beginning of such
period were members of the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for
election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.
(e) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
(f) "Committee" means the Compensation Committee of the Board and, to
the extent the administration of the Plan has been assumed by the Board
pursuant to Paragraph 15, the Board.
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(g) "Common Stock" means the Series A Common Stock, par value $1.67
per share, and the Series B Common Stock, par value $1.67 per share, of the
Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 12.
Shares of Common Stock issued or transferred pursuant to the Plan will be
shares of Series A Common Stock or Series B Common Stock, as determined by
the Committee in its discretion. Notwithstanding the foregoing, the
Committee will not authorize the issuance or transfer of Series B Common
Stock if the Committee determines that such issuance or transfer would
cause the Series A Common Stock to be excluded from trading in the
principal market in which the Common Stock is then traded.
(h) "Date of Grant" means (i) with respect to Participants, the date
specified by the Committee on which a grant of Stock Options, Appreciation
Rights or Performance Units or a grant or sale of Restricted Stock will
become effective (which date will not be earlier than the date on which the
Committee takes action with respect thereto) and (ii) with respect to
Directors, the date of the applicable annual meeting of shareholders of the
Company as specified in Paragraph 6.
(i) "Director" means a member of the Board who is not a regular
full-time employee of the Company or any Subsidiary.
(j) "Executive Compensation Plan Bonus" means the right to receive an
annual incentive compensation payment made pursuant to and subject to the
conditions set forth in Paragraph 10.
(k) "Grant Price" means the price per share of Common Stock at which
an Appreciation Right not granted in tandem with a Stock Option is granted.
(l) "Management Objectives" means the objectives, if any, established
by the Committee for a Performance Period that are to be achieved with
respect to an Award granted to a Participant under the Plan. Management
Objectives may be described in terms of Company-wide objectives or in terms
of objectives that are related to performance of the division, Subsidiary,
department or function within the Company or a Subsidiary in which the
Participant receiving the Award is employed or on which the Participant's
efforts have the most influence. The Management Objectives established by
the Committee for any Performance Period under the Plan will consist of one
or more of the following:
(i) earnings per share and/or growth in earnings per share in
relation to target objectives;
(ii) cash flow and/or growth in cash flow in relation to target
objectives;
(iii) net income and/or growth in net income in relation to target
objectives, excluding the effect of extraordinary items;
(iv) total shareholder return (measured as the total of the
appreciation of and dividends declared on the Common Stock) in relation
to target objectives;
(v) return on invested capital in relation to target objectives;
(vi) return on shareholder equity in relation to target objectives;
and
(vii) return on assets in relation to target objectives.
Management Objectives may be established in absolute terms or relative to
the performance of a specified group of other companies. The Committee may
adjust Management Objectives and any minimum acceptable level of
achievement with respect to any Management Objectives if, in the sole
judgment of the Committee, events or transactions have occurred after the
establishment of the Management Objectives (including without limitation
any change in accounting standards by the Financial Accounting Standards
Board) which are unrelated to performance and result in a distortion of the
Management Objectives or such minimum acceptable level of achievement.
(m) "Market Value per Share" means, at any date, the closing sale
price of the Common Stock on that date (or, if there are no sales on that
date, the last preceding date on which there was a sale) in the principal
market in which the Common Stock is traded.
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(n) "Option Price" means the purchase price per share payable on
exercise of a Stock Option.
(o) "Participant" means a person who is selected by the Committee to
receive benefits under the Plan and who is at that time an executive
officer or other key employee of the Company or any Subsidiary. Except for
Stock Options granted to Directors pursuant to Paragraph 6, a Director will
not receive benefits under the Plan.
(p) "Performance Period" means, with respect to an Award, a period of
time established by the Committee within which the Management Objectives
relating to such Award are to be measured. The Performance Period for an
Executive Compensation Plan Bonus will be a period of 12 months. The
Performance Period for all other Awards will be a period of not less than
three years.
(q) "Performance Unit" means a unit equivalent to $100 (or such other
value as the Committee determines) granted pursuant to Paragraph 9.
(r) "Restricted Stock" means shares of Common Stock granted or sold
pursuant to Paragraph 8 as to which neither the ownership restrictions nor
the restrictions on transfer referred to therein has expired.
(s) "Rule 16b-3" means Rule 16b-3 under the Section 16 of the
Securities Exchange Act of 1934, as amended, as such Rule is in effect from
time to time.
(t) "Spread" means the excess of the Market Value per Share on the
date an Appreciation Right is exercised over (i) the Option Price provided
for in the related Stock Option or (ii) if there is no tandem Stock Option,
the Grant Price provided for in the Appreciation Right, multiplied by the
number of shares of Common Stock in respect of which the Appreciation Right
is exercised.
(u) "Stock Option" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 5 or Paragraph 6.
(v) "Subsidiary" means any corporation, partnership, joint venture or
other entity in which the Company owns or controls, directly or indirectly,
not less than 50% of the total combined voting power or equity interests
represented by all classes of stock issued by such corporation,
partnership, joint venture or other entity.
3. Shares Available Under Plan. Subject to adjustment as provided in
Paragraph 12, the shares of Common Stock which may be issued or transferred and
covered by outstanding Awards granted under the Plan will not exceed in the
aggregate 2,000,000 shares. Such shares may be shares of original issuance or
treasury shares or a combination of the foregoing. Upon exercise of any
Appreciation Rights that are paid in shares of Common Stock, there will be
deemed to have been delivered under the Plan for purposes of this Paragraph 3
only the number of shares of Common Stock paid to the Participant, and the
balance (if any) of the shares of Common Stock covered by the Appreciation
Rights or the related Stock Options will remain available for issuance under the
Plan. Upon exercise of any Appreciation Rights that are paid in cash, the total
number of shares of Common Stock covered by the Appreciation Rights or the
related Stock Options will remain available for issuance under the Plan. Subject
to the provisions of the preceding sentences, any shares of Common Stock which
are subject to Stock Options or Appreciation Rights or are granted or sold as
Restricted Stock that are terminated, unexercised, forfeited or surrendered or
which expire for any reason will again be available for issuance under the Plan.
4. Limitations on Awards. Subject to adjustment as provided in Paragraph
12, awards under the Plan will be subject to the following limitations:
(a) Of the aggregate 2,000,000 shares reserved for issuance under the
Plan, no more than 600,000 shares of Common Stock will be issued or
transferred as Restricted Stock.
(b) No more than 2,000,000 shares of Common Stock reserved for
issuance under the Plan will be issued under Stock Options.
(c) The maximum aggregate number of shares of Common Stock that may be
subject to Stock Options, Appreciation Rights and Restricted Stock granted
to a Participant during any calendar year will
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not exceed 100,000 shares. The foregoing limitation will apply to the grant
of Appreciation Rights whether the Spread on exercise is paid in cash or in
shares of Common Stock.
(d) The maximum aggregate cash value of payments to any Participant
for any Performance Period pursuant to an award of Performance Units will
not exceed $3,000,000.
(e) The payment of an Executive Compensation Plan Bonus to any
Participant will not exceed 100% of the Participant's regular base salary
as of the first day of the Performance Period for which the Executive
Compensation Plan Bonus is granted, or if less, $1,000,000.
5. Stock Options for Participants. The Committee may from time to time
authorize grants to any Participant of options to purchase shares of Common
Stock upon such terms and conditions as it may determine in accordance with the
following provisions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Participant for at least six
months (or, with the consent of the Committee, for less than six months)
having an aggregate Market Value per Share at the date of exercise equal to
the aggregate Option Price, (iii) with the consent of the Committee, by
authorizing the Company to withhold a number of shares of Common Stock
otherwise issuable to the Participant having an aggregate Market Value per
Share on the date of exercise equal to the aggregate Option Price or (iv)
by a combination of such methods of payment; provided, however, that the
payment methods described in clauses (ii) and (iii) will not be available
at any time that the Company is prohibited from purchasing or acquiring
such shares of Common Stock. Any grant may provide for deferred payment of
the Option Price from the proceeds of sale through a broker of some or all
of the shares to which such exercise relates.
(d) Successive grants may be made to the same Participant whether or
not any Stock Options previously granted to such Participant remain
unexercised.
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary
and/or the Management Objectives to be achieved before the Stock Options or
installments thereof will become exercisable, and any grant may provide for
the earlier exercise of the Stock Options in the event of a Change in
Control or other similar transaction or event.
(f) Stock Options granted under this Paragraph 5 may be (i) options
which are intended to qualify under particular provisions of the Code, (ii)
options which are not intended to so qualify or (iii) combinations of the
foregoing.
(g) No Stock Option will be exercisable more than ten years from the
Date of Grant.
(h) Each grant of Stock Options will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to the
Participant and containing such terms and provisions, consistent with the
Plan, as the Committee may approve.
6. Stock Options for Directors. Each individual who first becomes a
Director on or after the date of the 1995 annual meeting of shareholders of the
Company will be granted an option to purchase 10,000 shares of Common Stock on
the date of election to the Board. Each Director will also be granted an
additional option to purchase 2,500 shares of Common Stock on the date of each
annual meeting of shareholders following the annual meeting of the individual's
initial election to the Board, provided that such individual continues to be a
Director at the close of business of each such annual meeting. If a Director is
granted an option to purchase shares of Common Stock under the Company's 1986
Long Term Incentive Plan upon initial election to the Board or on the date of an
annual meeting of shareholders, the option to be granted pursuant to this
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Paragraph 6 for the same event will be reduced by the number of shares of Common
Stock covered by the option granted pursuant to the 1986 Long Term Incentive
Compensation Plan. For purposes of this Paragraph 6, the date of an annual
meeting of shareholders of the Company is the date on which the meeting is
convened or, if later, the date of the last adjournment thereof. Each Stock
Option granted to a Director will contain the following terms and conditions:
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify the Option Price, which will be 100% of
the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash or by check acceptable to the Company, (ii) by the transfer to the
Company of shares of Common Stock owned by the Director for at least six
months having an aggregate Market Value per Share at the date of exercise
equal to the aggregate Option Price, (iii) by authorizing the Company to
withhold a number of shares of Common Stock otherwise issuable to the
Director having an aggregate Market Value per Share on the date of exercise
equal to the aggregate Option Price or (iv) by a combination of such
methods of payment; provided, however, that the payment methods described
in clauses (ii) and (iii) will not be available at any time that the
Company is prohibited from purchasing or acquiring such shares of Common
Stock. Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a broker of some or all of the shares to which
such exercise relates.
(d) Each grant will specify that the Stock Option may not be exercised
until the first anniversary of the Date of Grant and will be fully
exercisable thereafter, without regard to whether the Director continues to
be a member of the Board on such first anniversary, until the Stock Option
expires by its terms.
(e) Each grant of Stock Options will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to the Director
and containing such terms and provisions, consistent with the Plan, as the
Committee may approve.
7. Appreciation Rights. The Committee may also from time to time authorize
grants to any Participant of Appreciation Rights upon such terms and conditions
as it may determine in accordance with this Paragraph 7. Appreciation Rights may
be granted in tandem with Stock Options or separate and apart from a grant of
Stock Options. An Appreciation Right will be a right of the Participant to
receive from the Company upon exercise an amount which will be determined by the
Committee at the Date of Grant and will be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. An Appreciation Right
granted in tandem with a Stock Option may be exercised only by surrender of the
related Stock Option. Each grant of an Appreciation Right may utilize any or all
of the authorizations, and will be subject to all of the limitations, contained
in the following provisions:
(a) Each grant will state whether it is made in tandem with Stock
Options and, if not made in tandem with any Stock Options, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Stock Options will specify the
Option Price and each grant not made in tandem with Stock Options will
specify the Grant Price, which in either case will not be less than 100% of
the Market Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash, (ii) shares of
Common Stock having an aggregate Market Value per Share equal to the
percentage of the Spread to be paid to the Participant or (iii) any
combination thereof, as determined by the Committee in its sole discretion
at the time of payment.
(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum amount specified by the
Committee at the Date of Grant (valuing shares of Common Stock for this
purpose at their Market Value per Share at the date of exercise).
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(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary
and/or Management Objectives to be achieved before the Appreciation Rights
or installments thereof will become exercisable, and will provide that no
Appreciation Right may be exercised except at a time when the Spread is
positive and, with respect to any grant made in tandem with Stock Options,
when the related Stock Option is also exercisable. Any grant may provide
for the earlier exercise of the Appreciation Rights in the event of a
Change in Control or other similar transaction or event.
(f) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive Officer
(or another officer designated by the Committee) and delivered to and
accepted by the Participant receiving the grant, which agreement will
describe such Appreciation Right, identify any Stock Option granted in
tandem with such Appreciation Right, state that such Appreciation Right is
subject to all the terms and conditions of the Plan and contain such other
terms and provisions, consistent with the Plan, as the Committee may
approve.
8. Restricted Stock. The Committee may also from time to time authorize
grants or sales to any Participant of Restricted Stock upon such terms and
conditions as it may determine in accordance with the following provisions:
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of
the performance of services, entitling such Participant to voting and other
ownership rights, but subject to the restrictions hereinafter referred to.
Each grant or sale may limit the Participant's dividend rights during the
period in which the shares of Restricted Stock are subject to any such
restrictions.
(b) Each grant or sale will specify the Management Objectives, if any,
that are to be achieved in order for the ownership restrictions to lapse.
(c) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is
less than the Market Value per Share at the Date of Grant.
(d) Each such grant or sale will provide that the shares of Restricted
Stock covered by such grant or sale will be subject, for a period to be
determined by the Committee at the Date of Grant, to one or more
restrictions, including, without limitation, a restriction that constitutes
a "substantial risk of forfeiture" within the meaning of Section 83 of the
Code and the regulations of the Internal Revenue Service thereunder, and
any grant or sale may provide for the earlier termination of any such
restrictions in the event of a Change in Control or other similar
transaction or event.
(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the transferability
of the Restricted Stock will be prohibited or restricted in a manner and to
the extent prescribed by the Committee at the Date of Grant (which
restrictions may include, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to
continuing restrictions in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by the Chief Executive Officer
(or another officer designated by the Committee) and delivered to and
accepted by the Participant and containing such terms and provisions,
consistent with the Plan, as the Committee may approve.
9. Performance Units. The Committee may also from time to time authorize
grants to any Participant of Performance Units, which will become payable upon
achievement of specified Management Objectives, upon such terms and conditions
as it may determine in accordance with the following provisions:
(a) Each grant will specify the number of Performance Units to which
it pertains.
(b) Each grant will specify the Management Objectives that are to be
achieved.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an
A-6
<PAGE> 7
aggregate Market Value per Share equal to the aggregate value of the
Performance Units which have become payable or (iii) any combination
thereof, as determined by the Committee in its sole discretion at the time
of payment.
(d) Each grant of a Performance Unit will be evidenced by an agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Committee) and delivered to and accepted
by the Participant and containing such terms and provisions, consistent
with the Plan, as the Committee may approve, including provisions relating
to a Change in Control or other similar transaction or event.
10. Executive Compensation Plan Bonuses. The Committee may from time to
time authorize payment of annual incentive compensation in the form of an
Executive Compensation Plan Bonus to a Participant, which will become payable
upon achievement of specified Management Objectives. Executive Compensation Plan
Bonuses will be payable upon such terms and conditions as the Committee may
determine in accordance with the following provisions:
(a) The Committee will specify the Management Objectives that are to
be achieved by the Participant in order for the Participant to receive
payment of the Executive Compensation Plan Bonus.
(b) The Committee will specify the time and manner of payment of an
Executive Compensation Plan Bonus which becomes payable, which payment may
be made in (i) cash, (ii) shares of Common Stock having an aggregate Market
Value per Share equal to the aggregate value of the Executive Compensation
Plan Bonus which has become payable or (iii) any combination thereof, as
determined by the Committee in its sole discretion at the time of payment.
(c) As soon as practicable after the beginning of a Performance
Period, the Committee will notify each Participant of the terms of the
Executive Compensation Plan Bonus program for that Performance Period,
which notification will state that such Executive Compensation Plan Bonus
is subject to all the terms and conditions of the Plan, and contain such
other terms and provisions, consistent with the Plan, as the Committee may
approve.
11. Transferability. Except as otherwise provided in the agreement
evidencing a Participant's Award, (i) no Stock Option, Appreciation Right,
Performance Unit that has not become payable or Executive Compensation Plan
Bonus that has not become payable will be transferable by the Participant other
than by will or the laws of descent and distribution and (ii) no Stock Option or
Appreciation Right granted to the Participant will be exercisable during the
Participant's lifetime by any person other than the Participant, the
Participant's guardian or legal representative. Stock Options granted to
Directors under Paragraph 6 will not be transferable other than by will or the
laws of descent and distribution.
12. Adjustments. The Committee may make or provide for such adjustments in
the maximum number of shares specified in Paragraphs 3 and 4, in the numbers of
shares of Common Stock covered by outstanding Stock Options and Appreciation
Rights granted hereunder, in the Option Price or Grant Price applicable to any
such Stock Options and Appreciation Rights, and/or in the kind of shares covered
thereby (including shares of another issuer), as the Committee in its sole
discretion, exercised in good faith, may determine is equitably required to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
merger, consolidation, spin-off, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
13. Fractional Shares. The Company will not be required to issue any
fractional share of Common Stock pursuant to the Plan. The Committee may provide
for the elimination of fractions or for the settlement of fractions in cash.
14. Withholding Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under
A-7
<PAGE> 8
the Plan, or is requested by a Participant to withhold additional amounts with
respect to such taxes, and the amounts available to the Company for such
withholding are insufficient, it will be a condition to the receipt of such
payment or the realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company for payment of the balance
of such taxes required or requested to be withheld. In addition, if permitted by
the Committee, a Participant may elect to have any withholding obligation of the
Company satisfied with shares of Common Stock that would otherwise be
transferred to the Participant in payment of the Participant's Award.
15. Administration of the Plan.
(a) Unless the administration of the Plan has been expressly assumed by the
Board pursuant to a resolution of the Board, the Plan (other than the provisions
of Paragraph 6) will be administered by the Committee, which at all times will
consist of nonemployee directors appointed by the Board, each of whom will be a
"disinterested person" within the meaning of Rule 16b-3. A majority of the
Committee will constitute a quorum, and the action of the members of the
Committee present at any meeting at which a quorum is present, or acts
unanimously approved in writing, will be the acts of the Committee.
(b) Except as set forth in Paragraphs 15(c) and (d), the Committee has the
full authority and discretion to administer the Plan and to take any action that
is necessary or advisable in connection with the administration of the Plan,
including without limitation the authority and discretion to interpret and
construe any provision of the Plan or of any agreement, notification or document
evidencing the grant of an Award. The interpretation and construction by the
Committee of any such provision and any determination by the Committee pursuant
to any provision of the Plan or of any such agreement, notification or document
will be final and conclusive. No member of the Committee will be liable for any
such action or determination made in good faith.
(c) If a Participant's employment terminates before the end of a
Performance Period or before a Stock Option or Appreciation Right is fully
exercisable, and the Participant's termination of employment is by reason of
death, disability or retirement at or after age 65, each Stock Option or
Appreciation Right held by the Participant will be fully exercisable by the
Participant or his personal representative for a period of one year following
such termination of employment, or if earlier, until the Stock Option or
Appreciation Right expires by its terms, and any shares of Restricted Stock
previously issued to the Participant as to which ownership or transfer
restrictions have not lapsed will be delivered to the Participant or his
personal representative free of such restrictions. If a Participant's employment
terminates before the end of a Performance Period or before a Stock Option or
Appreciation Right is fully exercisable for any reason other than death,
disability or retirement at or after age 65, the Committee will have the sole
discretion to determine, under the circumstances, the extent to which a Stock
Option or Appreciation Right held by the Participant may be exercised following
such termination of employment and the extent to which any Restricted Stock as
to which ownership or transfer restrictions that relate solely to the
Participant's continued employment (but not to the attainment of one or more
Management Objectives) have not lapsed will be delivered to the Participant free
of such restrictions.
(d) Notwithstanding the foregoing provisions, the Board has the full
authority and discretion to administer the provisions of Paragraph 6 and to take
any action that is necessary or advisable in connection with the administration
of the provisions of Paragraph 6, including without limitation the authority and
discretion to interpret and construe any provision of Paragraph 6 or of any
agreement, notification or document evidencing the grant of a Stock Option
pursuant to Paragraph 6, provided any such action taken by the Board will not
cause the provisions of Paragraph 6 to fail to satisfy the requirements of Rule
16b-3 or to cause the Committee members to cease to be disinterested
administrators for purposes of Rule 16b-3. The interpretation and construction
by the Board of any such provision and any determination by the Board pursuant
to any provision of Paragraph 6 or of any such agreement, notification or
document will be final and conclusive. No member of the Board will be liable for
any such action or determination made in good faith.
A-8
<PAGE> 9
16. Amendments, Etc.
(a) The Plan may be amended from time to time by the Committee or the Board
but may not be amended without further approval by the shareholders of the
Company if such amendment would result in the Plan no longer satisfying the
requirements of Rule 16b-3. Notwithstanding the foregoing, the provisions of
Paragraph 6 that designate Directors eligible to receive Stock Options and
specify the amount, Option Price and timing of Stock Option awards may be
amended only by the Board and may be amended not more than once every six months
except to comply with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations thereunder.
(b) The Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant's employment or other service
at any time.
(c) If the Committee determines, with the advice of legal counsel, that any
provision of the Plan would prevent the payment of any Award intended to qualify
as performance-based compensation within the meaning of Section 162(m) of the
Code from so qualifying, such Plan provisions will be invalid and cease to have
any effect without affecting the validity or effectiveness of any other
provisions of the Plan.
A-9
<PAGE> 1
Exhibit 10.3(17)
A. H. BELO CORPORATION
EMPLOYEE THRIFT PLAN
Effective January 1, 1995
<PAGE> 2
A. H. BELO CORPORATION
EMPLOYEE THRIFT PLAN
A. H. Belo Corporation, a Delaware corporation, establishes
the A. H. Belo Corporation Employee Thrift Plan effective January 1, 1995. The
Plan is a profit sharing plan with a cash or deferred arrangement intended to
qualify under Code section 401(a) and to meet the requirements of Code section
401(k). The Company has entered into trust agreements with Fidelity Management
Trust Company and Mellon Bank, N.A. that provide for the investment and
reinvestment of the assets of the Plan.
Words and phrases with initial capital letters used throughout
the Plan are defined in Article 1.
(i)
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 6 DISTRIBUTIONS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 7 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8 PROVISIONS REGARDING COMPANY STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9 ADMINISTRATION OF THE PLAN AND
TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 10 LIMITATIONS ON CONTRIBUTIONS AND
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 11 RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 12 TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 13 ADOPTION OF PLAN BY CONTROLLED
GROUP MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 14 AMENDMENT OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 15 TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 16 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
APPENDIX A PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
(ii)
<PAGE> 4
ARTICLE 1
DEFINITIONS
1.1 "Account" means the records, including subaccounts,
maintained by the Committee in the manner provided in Article 4 to determine
the interest of each Participant in the assets of the Plan and may refer to any
or all of the Participant's Deferral Contribution Account, Matching
Contribution Account and Transfer Account.
1.2 "Beneficiary" means the one or more persons or
entities entitled to receive distribution of a Participant's interest in the
Plan in the event of his death as provided in Article 7.
1.3 "Board of Directors" or "Board" means the Board of
Directors of the Company.
1.4 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.5 "Committee" or "Administrative Committee" means the
Committee appointed under Article 9.
1.6 "Company" means A. H. Belo Corporation, a Delaware
corporation.
1.7 "Company Stock" means the Series A Common Stock, par
value $1.67 per share, of the Company.
1.8 "Compensation" means the earnings paid to an Employee
by the Participating Employers which are subject to reporting on Internal
Revenue Service Form W-2, excluding, however, reimbursements for moving
expenses, automobile allowances and any earnings paid to the Employee in a form
other than cash. In addition, Compensation includes any contributions made by
the Participating Employers on behalf of an Employee pursuant to a deferral
election under the Plan or under any other employee benefit plan containing a
cash or deferred arrangement under Code section 401(k) and any amounts that
would have been received as cash but for an election to receive benefits under
a cafeteria plan meeting the requirements of Code section 125. The annual
Compensation of an Employee taken into account for any purpose will not exceed
$150,000 for any Plan Year, as adjusted in regulations prescribed by the
Secretary of the Treasury. For purposes of applying the $150,000 limit set
forth in the
<PAGE> 5
preceding sentence, if an Employee is a Highly Compensated Employee (as defined
in Section 10.2(m)) who is either (i) a 5-percent owner, determined in
accordance with Code section 414(q) and the Treasury Regulations promulgated
thereunder or (ii) one of the 10 most highly compensated Employees ranked on
the basis of Compensation paid by the Controlled Group during the year, such
Highly Compensated Employee and the members of his family (as hereafter
defined) will be treated as a single employee and the Compensation of each
member of the family will be aggregated with the Compensation of the Highly
Compensated Employee. The limitation on Compensation will be allocated among
such Highly Compensated Employee and his family members in proportion to each
individual's Compensation. For purposes of this Section, the term 'family'
means an Employee's spouse and any lineal descendants who are under age 19 at
the end of the Plan Year in question.
1.9 "Controlled Group" means the Company and all other
corporations, trades and businesses, the employees of which, together with
employees of the Company, are required by the first sentence of subsection (b),
by subsection (c), by subsection (m) or by subsection (o) of Code section 414
to be treated as if they were employed by a single employer.
1.10 "Controlled Group Member" means each corporation or
unincorporated trade or business that is or was a member of the Controlled
Group, but only during such period as it is or was such a member.
1.11 "Deferral Contribution" means the amount of a
Participant's Compensation that he elects to have contributed to the Plan by
the Participating Employers rather than paid to him directly in cash.
1.12 "Deferral Contribution Account" means the Account
established for each Participant, the balance of which is attributable to the
Participant's Deferral Contributions and earnings and losses of the Trust Fund
with respect to such contributions.
1.13 "Effective Date" means the January 1, 1995.
1.14 "Employee" means any person who is: (i) employed by
any Controlled Group Member if their relationship is, for federal income tax
purposes, that of employer and employee, or (ii) "a leased employee" of a
Controlled Group Member within the
-2-
<PAGE> 6
meaning of Code section 414(n)(2) but only for purposes of the requirements of
Code section 414(n)(3).
1.15 "Entry Date" means January 1, April 1, July 1 and
October 1 of each Plan Year.
1.16 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
1.17 "Hour of Service" means each hour credited in
accordance with the following rules:
(a) Credit for Services Performed. An Employee
will be credited with one Hour of Service for each hour for which he is paid,
or entitled to payment, by one or more Controlled Group Members for the
performance of duties.
(b) Credit for Periods in Which No Services Are
Performed. An Employee will be credited with one Hour of Service for each hour
for which he is paid, or entitled to payment, by one or more Controlled Group
Members on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated); except
that (i) no more than 501 Hours of Service will be credited under this
subsection (b) to an Employee on account of any single continuous period during
which he performs no duties (whether or not such period occurs in a single Plan
Year), (ii) an hour for which an Employee is directly or indirectly paid, or
entitled to payment, on account of a period during which no duties are
performed will not be credited to the Employee if the payment is made or due
under a plan maintained solely for the purpose of complying with applicable
workers' compensation or unemployment compensation or disability insurance
laws, and (iii) Hours of Service will not be credited for a payment which
solely reimburses an Employee for medical or medically related expenses
incurred by the Employee. For purposes of this subsection (b), an Employee
will be credited with Hours of Service on the basis of his regularly scheduled
working hours per week (or per day if he is paid on a daily basis) or, in the
case of an Employee without a regular work schedule, on the basis of 40 Hours
of Service per week (or 8 Hours of Service per day if he is paid on a daily
basis) for each week (or day) during the period of time during which no duties
are performed; except that an Employee will not be credited with a greater
number of Hours of Service for a period during which no duties are performed
than the number of hours for which he is regularly scheduled for the
performance of duties during the period or, in the case of an Employee without
a regular work
-3-
<PAGE> 7
schedule, on the basis of 40 Hours of Service per week (or 8 Hours of Service
per day if he is paid on a daily basis).
(c) Credit for Back Pay. An Employee will be
credited with one Hour of Service for each hour for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to by
one or more Controlled Group Members; except that an hour will not be credited
under both subsection (a) or (b), as the case may be, and this subsection (c),
and Hours of Service credited under this subsection (c) with respect to periods
described in subsection (b) will be subject to the limitations and provisions
under subsection (b).
(d) Credit for Certain Absences. If an Employee
is absent from work on or after the Effective Date for any period by reason of
the pregnancy of the Employee, by reason of the birth of a child of the
Employee, by reason of the placement of a child with the Employee, or for
purposes of caring for a child for a period beginning immediately following the
birth or placement of that child, the Employee will be credited with Hours of
Service (solely for the purpose of determining whether he has a One Year Break
in Service under the Plan) equal to (i) the number of Hours of Service which
otherwise would normally have been credited to him but for his absence, or (ii)
if the number of Hours of Service under clause (i) is not determinable, 8 Hours
of Service per normal workday of the absence, provided, however, that the total
number of Hours of Service credited to an Employee under this subsection (d) by
reason of any pregnancy, birth or placement will not exceed 501 Hours of
Service. Hours of Service will not be credited to an Employee under this
subsection (d) unless the Employee furnishes to the Committee such timely
information as the Committee may reasonably require to establish that the
Employee's absence from work is for a reason specified in this subsection (d)
and the number of days for which there was such an absence.
(e) Manner of Counting Hours. No hour will be
counted more than once or be counted as more than one Hour of Service even
though the Employee may receive more than straight-time pay for it. With
respect to Employees whose compensation is not determined on the basis of
certain amounts for each hour worked during a given period and for whom hours
are not required to be counted and recorded by any federal law (other than
ERISA), Hours of Service will be credited on the basis of 10 Hours of Service
daily, 45 Hours of Service weekly, 95 Hours of Service semi-monthly, or 190
Hours of Service monthly, if the Employee's compensation is determined on a
daily, weekly,
-4-
<PAGE> 8
semi-monthly or monthly basis, respectively, for each period in which the
Employee would be credited with at least one Hour of Service under this
section. Except as otherwise provided in subsection (d), Hours of Service will
be credited to eligibility and vesting computation periods in accordance with
the provisions of 29 C.F.R. Section 2530.200b-2, which provisions are
incorporated in this Plan by reference.
1.18 "Matching Contribution Account" means the Account
established for each Participant, the balance of which is attributable to
Participating Employer matching contributions, if any, made pursuant to Article
3, forfeitures and earnings and losses of the Trust Fund with respect to such
contributions and forfeitures.
1.19 [Reserved]
1.20 "One Year Break in Service" means a period of at
least 12 consecutive months in which an Employee is absent from service. A One
Year Break in Service Year will begin on the Employee's termination date (as
defined in Section 1.30) and will end on the day on which the Employee again
performs an Hour of Service for a Controlled Group Member.
If an Employee who is absent from work with a
Controlled Group Member because of (i) the Employee's pregnancy, (ii) the birth
of the Employee's child, (iii) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (iv) caring for such
child immediately following such birth or placement, will be absent for such
reason beyond the first anniversary of the first date of his absence, his
period of absence, solely for purposes of preventing a One Year Break in
Service, will commence on the second anniversary of the first day of his
absence from work. The period of absence from work between the first and
second anniversaries of the first date of his absence from work will not be
taken into account in determining whether the Employee has completed a Year of
Service. The provisions of this paragraph will not apply to an Employee unless
the Employee furnishes to the Committee such timely information that the
Committee may reasonably require to establish (i) that the absence from work is
for one of the reasons specified in this paragraph and (ii) the number of days
for which there was such an absence.
Notwithstanding the foregoing, if an Employee is
classified as a part-time Employee in accordance with standard personnel
practices of his Participating Employer and is subject
-5-
<PAGE> 9
to the 1,000 Hour of Service requirement of Section 1.30, the term 'One Year
Break in Service' means a 12 consecutive month computation period (determined
under Section 1.30) in which the Employee fails to complete more than 500 Hours
of Service.
1.21 "Participant" means an Employee or former Employee
who has met the applicable eligibility requirements of Article 2 and who has
not yet received a distribution of the entire amount of his vested interest in
the Plan.
1.22 "Participating Employer" means each Controlled Group
Member set forth on Appendix A and any other Controlled Group Member or
organizational unit of the Company or a Controlled Group Member which is
designated as a Participating Employer under the Plan by the Board of
Directors.
1.23 "Plan" means the employee thrift plan set forth
herein, as amended from time to time.
1.24 "Plan Year" means the period with respect to which
the records of the Plan are maintained, which will be the 12-month period
beginning on January 1 and ending on December 31.
1.25 "Qualified Plan" means an employee benefit plan that
is qualified under Code section 401(a).
1.26 "Trust Agreement" means the agreement or agreements
executed by the Company and the Trustee which establishes a trust fund to
provide for the investment, reinvestment, administration and distribution of
contributions made under the Plan and the earnings thereon, as amended from
time to time.
1.27 "Trust Fund" means the assets of the Plan held by the
Trustee pursuant to the Trust Agreement.
1.28 "Trustee" means the one or more individuals or
organizations who have entered into the Trust Agreement as Trustee, and any
duly appointed successor.
1.29 "Valuation Date" means the date with respect to which
the Trustee determines the fair market value of the assets comprising the Trust
Fund or any portion thereof. The regular Valuation Date will be the last day
of each Plan Year. However, if the Committee determines that the fair market
value of any asset comprising the Trust Fund has changed substantially since
the previous Valuation Date, or if the Committee determines it to be in the
best interests of the Plan and the Participants to
-6-
<PAGE> 10
value any asset of the Trust Fund at a time other than the regular Valuation
Date, the Committee may fix, in a uniform and nondiscriminatory manner, one or
more interim Valuation Dates.
1.30 "Year of Service" means each period of 365 days
(determined by aggregating periods of service that are not consecutive)
beginning on the date an Employee is first credited with an Hour of Service (or
is again credited with an Hour of Service following his reemployment) and
ending on the earlier of (i) the date on which the Employee quits, retires, is
discharged or dies or (ii) the first anniversary of the date on which the
Employee is absent from service with a Controlled Group Member for any other
reason, such as vacation, holiday, sickness, disability, leave of absence or
layoff (the earlier of such dates is hereafter referred to as the Employee's
"termination date"). An Employee's period of service for purposes of
determining a Year of Service will include each period in which the Employee is
absent from service for less than 12 months (measured from the Employee's
termination date) and any periods during which he is in the service of the
armed forces of the United States and his reemployment rights are guaranteed by
law, provided he returns to employment with a Controlled Group Member within
the time such rights are guaranteed.
Notwithstanding the foregoing, if an Employee is
classified as a part-time Employee in accordance with standard personnel
practices of his Participating Employer and did not participate in the
Company's Employee Stock Purchase Plan immediately before the Effective Date,
the term 'Year of Service' means the completion of 1,000 Hours of Service
during the 12 consecutive months beginning on the date the Employee first
performs an Hour of Service, or during the 12 consecutive months beginning on
any anniversary of such date.
If a part-time Employee who is subject to the 1,000
Hour of Service requirement of this Section transfers to full-time status, his
service for the computation period in which the transfer occurs (but not for
prior computation periods) will be determined under the elapsed time method, or
if more favorable to the Employee, on the basis of his Hours of Service
completed as of the date of such transfer. If a full-time Employee transfers
to part-time status and becomes subject to the 1,000 Hour of Service
requirement of this Section, he will receive credit for service under the
elapsed time method through the date of the transfer, and his service during
the computation period in which the transfer occurs will be credited on the
basis of Hours of Service (with any fractional year prior to the date of
-7-
<PAGE> 11
transfer converted to hours on the basis of 190 Hours of Service for each month
in which the Employee was credited with at least one Hour of Service).
-8-
<PAGE> 12
ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. Each Employee who had
both attained age 21 and completed a Year of Service before the Effective Date,
or who was eligible to participate in the Company's Employee Savings and
Investment Plan immediately before the Effective Date, will be a Participant as
of the first payroll period beginning on or after the Effective Date, if he is
then employed by a Participating Employer. Each Employee who is not a
Participant as of the Effective Date will become a Participant as of the first
payroll period beginning on or after the first Entry Date following the date he
has both attained age 21 and completed a Year of Service, if he is then
employed by a Participating Employer.
2.2 Exclusions from Participation.
(a) Ineligible Employees. An Employee who is
otherwise eligible to participate in the Plan will not become or continue as an
active Participant if (i) he is covered by a collective bargaining agreement
that does not expressly provide for participation in the Plan, provided that
the representative of the Employees with whom the collective bargaining
agreement is executed has had an opportunity to bargain concerning retirement
benefits for those Employees; (ii) he is represented by a bargaining
representative but is not covered by a collective bargaining agreement, unless
the Company and the bargaining representative agree in writing that the
Employee will be eligible to participate in the Plan; (iii) he is a nonresident
alien who receives no earned income (within the meaning of Code section
911(d)(2)) from a Participating Employer which constitutes income from sources
within the United States (within the meaning of Code section 861(a)(3)); (iv)
he is a leased employee required to be treated as an Employee under Code
section 414(n) or he is classified by a Participating Employer as an
independent contractor whose compensation for services is reported on a form
other than Form W-2 or any successor form for reporting wages paid to
employees; (v) he is employed by a Controlled Group Member or an organizational
unit thereof that has not been designated as a Participating Employer by the
Board; or (vi) he is then on an approved leave of absence without pay or in the
service of the armed forces of the United States.
(b) Exclusion after Participation. A Participant
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who becomes ineligible under subsection (a) may not elect to have Deferral
Contributions made or continued to the Plan.
(c) Participation after Exclusion. An Employee
or Participant who is excluded from active participation will be eligible to
participate in the Plan on the first day he is no longer described in
subsection (a) and is credited with one or more Hours of Service by a
Participating Employer, provided that he has otherwise met the requirements of
Section 2.1. This subsection will apply to an Employee who returns from an
approved leave of absence or from military leave and who would otherwise be
treated as a new Employee under Section 2.3 only if he returns to employment
with a Controlled Group Member immediately following the expiration of the
leave of absence or, in the case of an Employee on military leave, during the
period in which reemployment rights are guaranteed by law.
2.3 Reemployment Provisions. All Hours of Service are
counted in determining eligibility to participate, except as otherwise provided
in this Section.
(a) Termination of Employment before
Participation. If an Employee terminates employment before becoming a
Participant and is reemployed by a Controlled Group Member before incurring a
number of consecutive One Year Breaks in Service at least equal to the greater
of five or his aggregate Years of Service, he will become a Participant on the
later of the Entry Date initially determined under Section 2.1 or the date he
is credited with one or more Hours of Service by a Participating Employer after
reemployment; but if he is reemployed by a Controlled Group Member after
incurring a number of consecutive One Year Breaks in Service at least equal to
the greater of five or his aggregate Years of Service, he will be treated as a
new Employee for purposes of the Plan and his Hours of Service completed before
his reemployment will be disregarded in determining when he will become a
Participant.
(b) Termination of Employment after
Participation. A Participant who terminates employment will again become an
active Participant immediately upon his reemployment by a Participating
Employer.
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ARTICLE 3
CONTRIBUTIONS
3.1 Participant Deferral Contributions.
(a) Amount of Deferral Contributions. A
Participant may elect, in accordance with procedures established by the
Committee from time to time, to have Deferral Contributions made to the Plan by
the Participating Employers, provided the amount of a Participant's Deferral
Contributions for any payroll period will not be less than 2% nor more than 15%
of his Compensation for the payroll period.
(b) Modification and Suspension of Deferral
Contributions. A Participant may increase or decrease the amount of his
Deferral Contributions during the Plan Year, provided that only one such
modification may be made during each calendar quarter of the Plan Year. A
Participant may suspend his Deferral Contributions at any time during the Plan
Year, and a suspension of his Deferral Contributions will not be considered a
modification for purposes of this subsection (b). A Participant who suspends
his Deferral Contributions may not again authorize Deferral Contributions to
the Plan until the first day of the calendar quarter following such suspension,
or such other time as the Committee prescribes. The Committee will adopt from
time to time procedures for administering the rules contained in this
subsection.
(c) Limitations on Deferral Contributions. The
sum of a Participant's Deferral Contributions and his elective deferrals
(within the meaning of Code section 402(g)(3)) under any other plans, contracts
or arrangements of any Controlled Group Member will not exceed $7,000 (as
adjusted for cost of living increases in the manner described in Code section
415(d)) for any taxable year of the Participant. A Participant's Deferral
Contributions will also be subject to the deferral percentage limitation set
forth in Section 10.6. In the event a Participant's Deferral Contributions and
other elective deferrals (whether or not under a plan, contract or arrangement
of a Controlled Group Member) for any taxable year exceed the foregoing $7,000
limitation, the excess allocated by the Participant to Deferral Contributions
(adjusted for Trust Fund earnings and losses in the manner described in Section
10.6(d)) may, in the discretion of the Committee, be distributed to the
Participant no later than April 15 following the close of such
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taxable year. The amount of Deferral Contributions distributed to a
Participant for a Plan Year pursuant to this Section will be reduced by any
excess Deferral Contributions previously distributed to him pursuant to Section
10.6(c) for the same Plan Year.
3.2 Participating Employer Matching Contributions.
(a) Amount of Matching Contributions. Each
Participating Employer may, but is not required to, make such matching
contributions to the Plan as determined in its sole discretion consistent with
any applicable law, and such contributions will be allocated as single, uniform
percentage of the Deferral Contributions of all Participants employed by the
Participating Employer as provided in the resolutions authorizing such
contributions.
(b) Limitation on Matching Contributions.
Participating Employer matching contributions will be subject to the
contribution percentage limitation set forth in Section 10.7.
3.3 Time of Payment. Deferral Contributions will be paid
to the Trustee as soon as practicable following the close of each calendar
month during the Plan Year. Matching contributions may be paid to the Trustee
on any date or dates selected by the Participating Employer, but in no event
later than the time prescribed by law (including extensions) for filing the
Participating Employer's federal income tax return for its tax year ending with
or within the Plan Year.
3.4 Investment of Contributions. Participating Employer
matching contributions will be invested by the Trustee pursuant to the Trust
Agreement solely in shares of Company Stock, provided, however, that from and
after January 1, 1994, a Participant who has attained age 55 may direct the
Trustee to transfer all or any portion of his Matching Contribution Account to
any other investment fund established under the Trust Agreement. The Deferral
Contributions allocated to a Participant's Deferral Contribution Account will
be invested by the Trustee in accordance with the Participant's directions in
investment funds established pursuant to the Trust Agreement. The Committee
from time to time will establish rules and procedures regarding Participant
investment directions, including without limitation rules and procedures with
respect to the manner in which such directions may be furnished, the frequency
with which such directions may be changed during the Plan Year
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and the minimum portion of a Participant's Account that may be invested in any
one investment fund.
3.5 Rollover and Transfer Contributions. Unless directed
to do so by the Committee, the Trustee is not authorized to accept (i) any part
of the cash or other assets distributed to a Participant from a Qualified Plan
or from an individual retirement account or annuity described in Code section
408, or (ii) a direct transfer of assets to the Plan on behalf of a Participant
from the trustee or other funding agent of a Qualified Plan. Any amounts
contributed to the Plan pursuant to this Section will be allocated to the
Participant's Transfer Account.
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ARTICLE 4
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
4.1 Establishment of Accounts. The Committee will
establish a Deferral Contribution Account and a Matching Contribution Account
for each Participant and may establish one or more subaccounts of a
Participant's Accounts, if the Committee determines that subaccounts are
necessary or desirable in administering the Plan.
4.2 Allocation of Contributions and Forfeitures. Each
Deferral Contribution made by a Participating Employer on behalf of a
Participant will be allocated by the Committee to the Participant's Deferral
Contribution Account. Each Participating Employer matching contribution (if
any) made with respect to a Plan Year and all forfeitures arising during that
Plan Year will be allocated by the Committee to the Matching Contribution
Accounts of Participants employed by that Participating Employer in the ratio
that the Deferral Contributions made on behalf of each such Participant bear to
the total Deferral Contributions made on behalf of all such Participants, as
provided in resolutions authorizing the Participating Employer matching
contribution.
4.3 Limitation on Allocations. Article 10 sets forth
certain rules under Code sections 401(k), 401(m) and 415 that limit the amount
of contributions and forfeitures that may be allocated to a Participant's
Accounts for a Plan Year.
4.4 Allocation of Trust Fund Income and Loss.
(a) Accounting Records. The Committee, through
its accounting records, will clearly segregate each Account and subaccount and
will maintain a separate and distinct record of all income and losses of the
Trust Fund attributable to each Account or subaccount. Income or loss of the
Trust Fund will include any unrealized increase or decrease in the fair market
value of the assets of the Trust Fund.
(b) Method of Allocation. The share of net
income or net loss of the Trust Fund to be credited to, or deducted from, each
Account will be the allocable portion of the net income or net loss of the
Trust Fund attributable to each Account determined by the Committee as of each
Valuation Date in a uniform and nondiscriminatory manner, based upon the ratio
that
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each Account balance as of the previous Valuation Date bears to all Account
balances after adjustment for withdrawals, distributions and other additions or
subtractions that may be appropriate. The share of net income or net loss to
be credited to, or deducted from, any subaccount will be an allocable portion
of the net income or net loss credited to or deducted from the Account under
which the subaccount is established.
4.5 Valuation of Trust Fund. The fair market value of
the total net assets comprising the Trust Fund will be determined by the
Trustee as of each Valuation Date.
4.6 No Guarantee. The Participating Employers, the
Committee and the Trustee do not guarantee the Participants or their
Beneficiaries against loss or depreciation or fluctuation of the value of the
assets of the Trust Fund.
4.7 Annual Statement of Accounts. The Committee will
furnish each Participant and each Beneficiary of a deceased Participant, at
least annually, a statement showing (i) the value of his Accounts at the end of
the Plan Year, (ii) the allocations to and distributions from his Accounts
during the Plan Year, and (iii) his vested and nonforfeitable interest in his
Accounts at the end of the Plan Year. No statement will be provided to a
Participant or Beneficiary after the Participant's entire vested and
nonforfeitable interest in his Accounts has been distributed.
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ARTICLE 5
VESTING
5.1 Determination of Vested Interest. Except as provided
in Section 5.2, the interest of each Participant in his Deferral Contribution
Account and his Matching Contribution Account will be 100% vested and
nonforfeitable at all times.
5.2 Unclaimed Distribution. If the Committee cannot locate
a person entitled to receive a benefit under the Plan within a reasonable
period (as determined by the Committee in its discretion), the amount of the
benefit will be treated as a forfeiture during the Plan Year in which the
period ends. If, before final distributions are made from the Trust Fund
following termination of the Plan, a person who was entitled to a benefit which
has been forfeited under this Section makes a claim to the Committee or the
Trustee for his benefit, he will be entitled to receive, as soon as
administratively feasible, a benefit in an amount equal to the value of the
forfeited benefit on the date of forfeiture. This benefit will be reinstated
from Participating Employer contributions made to the Plan for this purpose.
5.3 Application of Forfeited Amounts. The amount of a
Participant's Accounts which is forfeited pursuant to Section 5.2 will be
applied to reduce Participating Employer contributions pursuant to Article 3.
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ARTICLE 6
DISTRIBUTIONS TO PARTICIPANTS
6.1 Basic Rules Governing Distributions.
(a) Timing of Distributions. Except as set forth
in Sections 6.2 and 6.3, distribution of a Participant's vested Account
Balances will be made as soon as practicable after the Valuation Date
coinciding with or immediately following the Participant's termination of
employment, or if earlier, the date on which the Participant becomes eligible
to receive benefits under the Social Security Act on account of total and
permanent disability. If a loan is outstanding from the Trust Fund to the
Participant on the date his vested Account balances become distributable, the
amount distributed to the Participant will be reduced by any security interest
in his Accounts held by the Plan by reason of the loan.
(b) Form of Distributions. Distributions will be
made in a single lump sum payment. Shares of Company Stock allocated to a
Participant's Accounts will be distributed in the form of whole shares plus
cash for any fractional share, unless the Participant elects to receive the
cash value of such shares.
(c) Participant's Consent to Certain Payments. If
the amount of a Participant's vested Account balances exceeds $3,500, the
Committee will not distribute the Participant's vested Account balances to him
prior to his attainment of age 62 unless he consents to the distribution. The
foregoing provision will not apply to any distributions required under Sections
10.6 and 10.7.
6.2 Withdrawals after Age 59-1/2. A Participant who has
not terminated employment may request a distribution from his Accounts if he
has reached age 59-1/2. A Participant who is a director, officer or principal
stockholder of the Company within the meaning of Section 16 of the Securities
Exchange Act of 1934 may exercise the foregoing withdrawal right only in
accordance with rules and procedures established from time to time by the
Committee. All other Participants may exercise their withdrawal rights at any
time or times during the Plan Year.
6.3 Hardship Distributions.
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(a) General Rule. A Participant who has not
terminated employment may request a distribution from his Deferral Contribution
Account in the event of his hardship. A distribution will be on account of
hardship only if the distribution is necessary to satisfy an immediate and
heavy financial need of the Participant, as defined below, and satisfies all
other requirements of this Section.
(b) Deemed Financial Need. For purposes of this
Section, a distribution is made on account of an immediate and heavy financial
need of the Participant only if the distribution is for (i) the payment of
medical expenses described in Code section 213(d) previously incurred by the
Participant, the Participant's spouse or any dependents of the Participant (as
defined in Code section 152) or necessary for such persons to obtain medical
care described in Code section 213(d); (ii) costs directly related to the
purchase of a principal residence for the Participant (excluding mortgage
payments); (iii) the payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant, his spouse,
children, or dependents (as defined in Code section 152); (iv) payments
necessary to prevent the eviction of the Participant from his principal
residence or foreclosure on the mortgage of the Participant's principal
residence; or (v) the payment of funeral expenses of a family member.
(c) Reasonable Reliance Test. A distribution will
be considered necessary to satisfy an immediate and heavy financial need of the
Participant only if all three of the following requirements are satisfied: (i)
the distribution is not in excess of the amount required to relieve the
immediate and heavy financial need of the Participant (taking into account the
taxable nature of the distribution); (ii) the Participant represents in
writing, on forms provided by the Committee, that the need cannot be relieved
through reimbursement or compensation by insurance or otherwise, by reasonable
liquidation of the Participant's assets, to the extent such liquidation would
not itself cause an immediate and heavy financial need, by cessation of
Deferral Contributions under the Plan, or by distributions other than hardship
distributions or nontaxable (at the time of the loan) loans from the Plan and
any other plans maintained by any Controlled Group Member or any other entity
by which the Participant is employed, or by borrowing from commercial sources
on reasonable commercial terms; and (iii) the Committee determines that it can
reasonably rely on the Participant's written representation.
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(d) Limitation for Loans. No distribution under
this Section will be made in an amount that is greater than the excess of the
Participant's vested interest in his Accounts over the aggregate amount of
outstanding loans, plus accrued interest, secured by the Participant's
Accounts.
(e) Source of Hardship Distributions. The
cumulative amount distributed to a Participant on account of hardship will not
exceed the amount of his Deferral Contributions that have not been previously
withdrawn (but not the income allocable to his Deferral Contributions) and,
with respect to hardship distributions on and after June 1, 1994, the balance,
if any, of his Transfer Account.
6.4 Distribution Procedures. Distributions pursuant to
Sections 6.2 and 6.3 will be made as soon as practicable following the
Committee's approval of the Participant's written request for withdrawal and
will be made in the form described in Section 6.1(b). Distributions pursuant
to Section 6.2 will be made first from the Participant's Transfer Account, next
from the vested portion of his Matching Contribution Account, and last from
this Deferral Contribution Account. No distribution under this Section will be
made in an amount that is greater than the excess of the Participant's vested
interest in the Accounts from which the distributions are made over the
aggregate amount of outstanding loans, plus accrued interest, secured by such
Accounts. For purposes of determining the amount available for distribution, a
Participant's Accounts will be valued as of the Valuation Date immediately
preceding the date on which the Participant requests a distribution.
6.5 Loans to Participants.
(a) Effective Date. The provisions of this Section
will be effective as of a date determined by the Committee in its discretion
and communicated to Participants.
(b) General Provisions. A Participant may, subject
to the provisions of this Section, borrow from the vested interest in his
Accounts, provided, however, that no loan may be made from the portion of the
Trust Fund that is invested in Company Stock. All such loans will be subject
to the requirements of this Section and such other rules as the Committee may
from time to time prescribe, including without limitation any rules restricting
the purposes for which loans will be approved. The Committee will have
complete discretion as to approval of a loan hereunder and as to the terms
thereof,
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provided that its decisions will be made on a uniform and nondiscriminatory
basis and in accordance with this Section. If the Committee approves a loan,
the Committee will direct the Trustee to make the loan and will advise the
Participant and the Trustee of the terms and conditions of the loan. Nothing
in this Section will require the Committee to make loans available to
Participants.
(c) Terms and Conditions. Loans to Participants
will be made according to the following terms and conditions and such
additional terms and conditions as the Committee may from time to time
establish: (i) no loan will be for a term of longer than five years; (ii) all
loans will become due and payable in full upon termination (by death or
otherwise) of the Participant's employment with the Controlled Group and upon
the occurrence of such other events as the Committee may from time to time
specify; (iii) all loans will bear a reasonable rate of interest as determined
by the Committee from time to time; (iv) all loans will be made only upon
receipt of adequate security (the security for a loan will be the Participant's
interest in the separate investment fund established under subsection (g) for
that loan) in an amount that does not exceed 50% of the Participant's vested
interest under the Plan); (v) payments of principal and interest will be made
through payroll deductions sufficient to provide for substantially level
amortization of principal and interest with payments not less frequently than
quarterly, which will be irrevocably authorized by the Participant in writing
on a form provided by the Committee at the time the loan is made; (vi) the
amount of any indebtedness (including accrued and unpaid interest) under any
loan will be deducted from a Participant's interest in the Trust Fund if and
only if such indebtedness or any installment thereof is not paid when due
(including amounts due by acceleration) unless the Committee determines that
there is adequate security for such loan other than the Participant's interest
in the Trust Fund; (vii) no more than one outstanding loan will be permitted
with respect to a Participant at any time, except that a Participant may have a
home loan and a loan which is not a home loan outstanding at the same time; and
(viii) all loans will be evidenced by a note containing such additional terms
and conditions as the Committee will determine.
(d) Maximum Amount of Loans. The amount of any
loan made pursuant to this Section, when added to the outstanding balance of
all other loans to the Participant from all qualified employer plans (as
defined in Code section 72(p)(4)) of the Controlled Group, will not exceed the
lesser of (i) one-half of
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the nonforfeitable interest in his Accounts, or (ii) $50,000 reduced by the
excess, if any, of (A) the highest outstanding balance of all other loans from
qualified employer plans of the Controlled Group to the Participant during the
1-year period ending on the date on which such loan was made, over (B) the
outstanding balance of all loans from qualified employer plans of the
Controlled Group to the Participant on the date on which such loan was made.
(e) Minimum Loan. The minimum loan permitted under
this Section is $1,000. If such minimum amount exceeds the limitations of
subsection (d), no loan will be made.
(f) Source of Loans. All loans will be made first
from a Participant's Transfer Account, next from his Matching Contribution
Account, and last from his Deferral Contribution Account.
(g) Investment of Loan Payments. All loans will be
treated as a separate investment fund of the borrowing Participant. All
payments with respect to a loan will be credited to the borrowing Participant's
Accounts and will be invested in the investment funds under the Trust Agreement
in accordance with the Participant's latest investment directions pursuant to
Section 3.5.
6.6 Reemployment of Participant. If a Participant who
terminated employment again becomes an Employee before receiving a distribution
of his Account balances, no distribution from the Trust Fund will be made while
he is an Employee, and amounts distributable to him on account of his prior
termination will be held in the Trust Fund until he is again entitled to a
distribution under the Plan.
6.7 Valuation of Accounts. A Participant's distributable
Account balances will be valued as of the Valuation Date immediately preceding
the date the Accounts are to be distributed, except that there will be added to
the value of his Accounts the fair market value of any amounts allocated to his
Accounts under Article 4 after that Valuation Date.
6.8 Direct Rollovers
(a) Distributions after 1992. Notwithstanding any
other provision of the Plan, for distributions made on or after January 1,
1993, a Distributee (as hereinafter defined) may elect, at any time and in the
manner prescribed by the Committee,
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to have any portion of an Eligible Rollover Distribution (as hereinafter
defined) paid directly to an Eligible Retirement Plan (as hereinafter defined)
specified by the Distributee.
(b) Eligible Rollover Distribution. An Eligible
Rollover Distribution is any distribution of all or any portion of the balance
to the credit of the Distributee, except that an Eligible Rollover Distribution
does not include (i) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
or life expectancy of the Distributee or the joint lives or life expectancies
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more, (ii) any distribution to the extent such
distribution is required by Code section 401(a)(9), and (iii) the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(c) Eligible Retirement Plan. An Eligible Retirement
Plan is an individual retirement account described in Code section 408(a), an
individual retirement annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described in Code
section 401(a) that is a defined contribution plan within the meaning of Code
section 414(i), that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a Participant's
surviving Spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
(d) Distributee. A Distributee includes a
Participant, the Participant's Spouse, or a Participant's former spouse who is
an alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code.
6.9 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Participants.
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ARTICLE 7
DISTRIBUTIONS TO BENEFICIARIES
7.1 Designation of Beneficiary. Each Participant will have
the right to designate a Beneficiary or Beneficiaries to receive his vested
Account balances upon his death. The designation will be made on forms
prescribed by the Committee and will be effective upon receipt by the
Committee. A Participant will have the right to change or revoke any
designation by filing a new designation or notice of revocation with the
Committee, but the revised designation or revocation will be effective only
upon receipt by the Committee.
7.2 Consent of Spouse Required. A Participant who is
married may not designate a Beneficiary other than, or in addition to, his
spouse unless his spouse consents to the designation by means of a written
instrument that is signed by the spouse, contains an acknowledgment by the
spouse of the effect of the consent, and is witnessed by a member of the
Committee (other than the Participant) or by a notary public. The designation
will be effective only with respect to the consenting spouse, whose consent
will be irrevocable. A Beneficiary designation to which a spouse has consented
may not be changed by the Participant without spousal consent (other than to
designate the spouse as Beneficiary), unless the spouse's consent expressly
permits Beneficiary designations by the Participant without any further consent
of the spouse.
7.3 Failure to Designate Beneficiary. In the event a
Participant has not designated a Beneficiary, or in the event no Beneficiary
survives a Participant, the distribution of the Participant's vested Account
balances upon his death will be made (i) to the Participant's spouse, if
living, (ii) if his spouse is not then living, to his then living issue by
right of representation, (iii) if neither his spouse nor his issue are then
living, to his then living parents, and (iv) if none of the above are then
living, to his estate.
7.4 Distributions to Beneficiaries. Distribution of a
Participant's vested Account balances to the Participant's Beneficiary will be
made as soon as practicable after Participant's death. The Participant's
vested Account balances will be distributed to the Beneficiary in a single lump
sum payment and will be in the same form as provided for Participants in
Section 6.1(b). The Participant's Account balances will be
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valued as of the Valuation Date coinciding with or immediately preceding the
date the Accounts are to be distributed to his Beneficiary, except that there
will be added to the value of the Participant's Accounts the fair market value
of any amounts allocated to his Accounts under Article 4 after that Valuation
Date. If a loan is outstanding from the Trust Fund to the Participant on the
date of his death, the amount distributed to his Beneficiary will be reduced by
any security interest in the Participant's Accounts held by the Plan by reason
of the loan.
7.5 Restrictions on Distributions. Article 11 sets forth
certain rules under various provisions of the Code relating to restrictions on
distributions to Beneficiaries.
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ARTICLE 8
PROVISIONS REGARDING COMPANY STOCK
8.1 Powers and Duties of the Committee.
(a) Committee as Named Fiduciary. Except as
otherwise provided in this Section, the Committee will be the named fiduciary
within the meaning of ERISA section 402(a)(2) for purposes of all shareholder
action authorized or permitted to be taken with respect to Company Stock held
in the Trust Fund. The powers and duties of the Committee as named fiduciary
for this purpose will include, without limitation, the powers and duties to
direct the Trustee with respect to the voting of all shares of Company Stock;
to direct the Trustee to accept or reject a tender offer for shares of Company
Stock; to direct the Trustee to sell shares of Company Stock under any other
circumstances to any person, including the Company, provided that any sale to
the Company or other "disqualified person" within the meaning of Code section
4975 or "party in interest" within the meaning of ERISA section 3(14) is made
at a price which is not less than adequate consideration as defined in ERISA
section 3(18) and no commission is charged with respect to the sale; and to
exercise any options, warrants or other rights in connection with shares of
Company Stock held in the Trust Fund. The Committee will also have the power,
in its discretion, to permit each Participant and Beneficiary to direct the
Trustee to take or to refrain from taking any action with respect to the shares
of Company Stock allocated to his Accounts that the Committee could have
directed the Trustee to take or refrain from taking. If the Committee permits
Participants and Beneficiaries to direct the Trustee in connection with any
matter relating to Company Stock held in the Trust Fund, each Participant and
Beneficiary who furnishes instructions to the Trustee will be a named fiduciary
within the meaning of ERISA section 402(a)(2) with respect to such matter, but
the Committee will retain the power and duty to direct the Trustee with respect
to shares of Company Stock allocated to the Accounts of Participants and
Beneficiaries who fail to furnish timely instructions to the Trustee and with
respect to any shares of Company Stock that have not been allocated to
Participants' Accounts. The Committee will adopt from time to time whatever
procedures it determines to be appropriate in order to exercise its powers and
duties under this subsection (a) and may retain advisors and consultants
(including, without limitation, legal counsel and financial advisors) who are
independent of the Company, the Board and the Trustee to the extent the
Committee
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determines such independent advice to be necessary or appropriate.
(b) Delegation of Powers and Duties. The Committee
may, in its discretion, delegate any power or duty allocated to it pursuant to
subsection (a) above to another person or entity, who will act as an
independent fiduciary and will exercise such power or duty to the same extent
as it could have been exercised by the Committee. The persons or entities to
which such powers and duties may be delegated will include, without limitation,
the Board or any committee of the Board, the Trustee, any other person or
entity that meets the requirements of an investment manager under ERISA section
3(38), or any other person or entity that the Committee determines in good
faith has the requisite knowledge and experience concerning the matter with
respect to which the delegation is made. The Committee may also remove any
fiduciary to whom it has delegated any power or duty and exercise such power or
duty itself or appoint a successor fiduciary. For purposes of Sections 8.2 and
8.3, the term "Committee" will also mean any fiduciary to which the Committee
has delegated any power or duty pursuant to this subsection (b).
8.2 Voting Company Stock. Unless the Committee determines
otherwise pursuant to Section 8.1, voting rights with respect to shares of
Company Stock held in the Trust Fund will be exercised by Participants and
Beneficiaries and the procedures of this Section will apply. Before each
annual or special meeting of its shareholders, the Committee will cause to be
sent to each Participant and Beneficiary who has Company Stock allocated to his
Accounts on the record date of such meeting a copy of the proxy solicitation
material for the meeting, together with a form requesting confidential
instructions to the Trustee on how to vote the shares of Company Stock
allocated to his Accounts. Upon receipt of such instructions, the Trustee will
vote the shares allocated to such Participant's or Beneficiary's Accounts as
instructed. The Trustee will vote allocated shares of Company Stock for which
it does not receive timely instructions from Participants or Beneficiaries in
accordance with the Committee's instructions. A Participant's or Beneficiary's
right to instruct the Trustee with respect to voting shares of Company Stock
will not include rights concerning the exercise of any appraisal rights,
dissenters' rights or similar rights granted by applicable law to the
registered or beneficial holders of Company Stock. These matters will be
exercised by the Trustee in accordance with the Committee's instructions.
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8.3 Tender Offer for Company Stock. Unless the Committee
determines otherwise pursuant to Section 8.1, the right to accept or reject a
tender offer for shares of Company Stock held in the Trust Fund will be
exercised by Participants and Beneficiaries and the procedures of this Section
will apply. In the event of a tender offer for shares of Company Stock subject
to Section 14(d)(1) of the Securities Exchange Act of 1934 or subject to Rule
13e-4 promulgated under that Act (as those provisions may from time to time be
amended or replaced by successor provisions of federal securities laws), the
Committee will advise each Participant and Beneficiary who has shares of
Company Stock allocated to his Accounts in writing of the terms of the tender
offer as soon as practicable after its commencement and will furnish each
Participant and Beneficiary with a form by which he may instruct the Trustee
confidentially to tender shares allocated to his Accounts. The Trustee will
tender those shares it has been properly instructed to tender, and will not
tender those shares which it has been properly instructed not to tender. The
Committee will also advise Participants and Beneficiaries that the Committee
will furnish instructions to the Trustee with respect to allocated shares for
which no instructions are received from Participants and Beneficiaries and will
furnish such related documents as are prepared by any person and provided to
the shareholders of the Company pursuant to the Securities Exchange Act of
1934. The Committee may also provide Participants with such other material
concerning the tender offer as the Committee in its discretion determines to be
appropriate. The number of shares to which a Participant's instructions apply
will be the total number of shares allocated to his Accounts as of the latest
date for which Participant statements were prepared. The Committee will advise
the Trustee of the commencement date of any tender offer and, until receipt of
that advice, the Trustee will not be obligated to take any action under this
Section. Funds received in exchange for tendered stock will be credited to the
Accounts of the Participant or Beneficiary whose stock was tendered and will be
used by the Trustee to purchase Company Stock, if available on a national
securities exchange, commencing on the earlier of the following dates: (a) the
trading day following the first date on which the closing price of the Company
Stock on a national securities exchange on which the Company Stock is then
traded is within 20% of the closing price on the tenth trading day preceding
the commencement date of the tender offer or (b) the thirtieth trading day
after the expiration date of the tender offer, of which date the Committee will
advise the Trustee. In the interim, or if Company Stock is not available for
purchase, the
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Trustee will invest such funds in short term investments permitted under the
Trust Agreement.
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ARTICLE 9
ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT
9.1 Appointment of Committee Members. The Board will
appoint an Administrative Committee consisting of at least three or more
members, to hold office at the pleasure of the Board. Members of the Committee
are not required to be Employees or Participants. Any member may resign by
giving notice, in writing, filed with the Board.
9.2 Officers and Employees of the Committee. The Committee
will choose from its members a Chairman and a Secretary. The Secretary will
keep a record of the Committee's proceedings and all dates, records and
documents pertaining to the Committee's administration of the Plan. The
Committee may employ and suitably compensate such persons or organizations to
render advice with respect to the duties of the Committee under the Plan as the
Committee determines to be necessary or desirable.
9.3 Action of the Committee. Action of the Committee may
be taken with or without a meeting of Committee members, provided that action
will be taken only upon the vote or other affirmative expression of a majority
of the Committee's members qualified to vote with respect to such action. The
Chairman or the Secretary of the Committee may execute any certificate or other
written direction on behalf of the Committee. In the event the Committee
members qualified to vote on any question are unable to determine such question
by a majority vote or other affirmative expression of a majority of the
Committee members qualified to vote on such question, such question will be
determined by the Board. A member of the Committee who is a Participant may
not vote on any question relating specifically to himself unless he is the sole
member of the Committee.
9.4 Expenses and Compensation. The expenses of
administering the Plan, including without limitation the expenses of the
Committee properly incurred in the performance of its duties under the Plan,
will be paid from the Trust Fund, and all such expenses paid by the
Participating Employers on behalf of the Plan will be reimbursed from the Trust
Fund unless the Participating Employers in their discretion elect not to submit
such expenses for reimbursement. Notwithstanding the foregoing, the members of
the Committee will not be compensated by the Plan for their services as
Committee members.
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9.5 General Powers and Duties of the Committee. The
Committee will have the full power and responsibility to administer the Plan
and the Trust Agreement and to construe and apply their provisions. For
purposes of ERISA, the Committee will be the named fiduciary with respect to
the operation and administration of the Plan and the Trust Agreement. In
addition, the Committee will have the powers and duties granted by the terms of
the Trust Agreement. The Committee, and all other persons with discretionary
control respecting the operation, administration, control, and/or management of
the Plan, the Trust Agreement, and/or the Trust Fund, will perform their duties
under the Plan and the Trust Agreement solely in the interests of Participants
and their Beneficiaries.
9.6 Specific Powers and Duties of the Committee. The
Committee will administer the Plan and the Trust Agreement and will have the
authority and discretion to (i) resolve all questions relating to the
eligibility of Employees to become Participants; (ii) determine the amount of
benefits payable to Participants or their Beneficiaries, and determine the time
and manner in which such benefits are to be paid; (iii) authorize and direct
all disbursements by the Trustee from the Trust Fund; (iv) engage any
administrative, legal, accounting, clerical, or other services it deems
appropriate in administering the Plan or the Trust Agreement; (v) construe and
interpret the Plan and the Trust Agreement, supply omissions from, correct
deficiencies in, and resolve ambiguities in the language of the Plan and the
Trust Agreement, and adopt rules for the administration of the Plan and the
Trust Agreement which are not inconsistent with the terms of such documents;
(vi) compile and maintain all records it determines to be necessary,
appropriate or convenient in connection with the administration of benefit
payments; (vii) determine the disposition of assets in the Trust Fund in the
event the Plan is terminated; (viii) review the performance of the Trustee with
respect to the Trustee's administrative duties, responsibilities and
obligations under the Plan and the Trust Agreement, report to the Board
regarding such administrative performance of the Trustee, and recommend to the
Board, if necessary, the removal of the Trustee and the appointment of a
successor Trustee; and (ix) resolve all questions of fact relating to any
matter for which it has administrative responsibility.
9.7 Allocation of Fiduciary Responsibility. The Committee
from time to time may allocate to one or more of its members and may delegate
to any other persons or organizations
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any of its rights, powers, duties and responsibilities with respect to the
operation and administration of the Plan and the Trust Agreement that are
permitted to be delegated under ERISA. Any such allocation or delegation will
be made in writing, will be reviewed periodically by the Committee, and will be
terminable upon such notice as the Committee in its discretion deems reasonable
and proper under the circumstances. Whenever a person or organization has the
power and authority under the Plan or the Trust Agreement to delegate
discretionary authority respecting the administration of the Plan or the Trust
Fund to another person or organization, the delegating party's responsibility
with respect to such delegation is limited to the selection of the person to
whom authority is delegated and the periodic review of such person's
performance and compliance with applicable law and regulations. Any breach of
fiduciary responsibility by the person to whom authority has been delegated
which is not proximately caused by the delegating party's failure to properly
select or supervise, and in which breach the delegating party does not
otherwise participate, will not be considered a breach by the delegating party.
9.8 Information to be Submitted to the Committee. To
enable the Committee to perform its functions, the Participating Employers will
supply full and timely information to the Committee on all matters relating to
Employees and Participants as the Committee may require and will maintain such
other records required by the Committee to determine the benefits due to
Participants or their Beneficiaries under the Plan.
9.9 Notices, Statements and Reports. The Company will be
the "administrator" of the Plan as defined in ERISA section 3(16)(A) for
purposes of the reporting and disclosure requirements imposed by ERISA and the
Code. The Committee will assist the Company, as requested, in complying with
such reporting and disclosure requirements.
9.10 Claims Procedure.
(a) Filing Claim for Benefits. If a Participant or
Beneficiary does not receive the benefits which he believes he is entitled to
receive under the Plan, he may file a claim for benefits with the Committee.
All claims will be made in writing and will be signed by the claimant. If the
claimant does not furnish sufficient information to determine the validity of
the claim, the Committee will indicate to the claimant any additional
information which is required.
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(b) Notification by the Committee. Each claim will
be approved or disapproved by the Committee within 90 days following the
receipt of the information necessary to process the claim. In the event the
Committee denies a claim for benefits in whole or in part, the Committee will
notify the claimant in writing of the denial of the claim. Such notice by the
Committee will also set forth, in a manner calculated to be understood by the
claimant, the specific reason for such denial, the specific Plan provisions on
which the denial is based, a description of any additional material or
information necessary to perfect the claim with an explanation of why such
material or information is necessary, and an explanation of the Plan's claim
review procedure as set forth in subsection (c). If no action is taken by the
Committee on a claim within 90 days, the claim will be deemed to be denied for
purposes of the review procedure.
(c) Review Procedure. A claimant may appeal a
denial of his claim by requesting a review of the decision by the Committee or
a person designated by the Committee, which person will be a named fiduciary
under ERISA section 402(a)(2) for purposes of this Section. An appeal must be
submitted in writing within six months after the denial and must (i) request a
review of the claim for benefits under the Plan, (ii) set forth all of the
grounds upon which the claimant's request for review is based and any facts in
support thereof, and (iii) set forth any issues or comments which the claimant
deems pertinent to the appeal. The Committee or the named fiduciary designated
by the Committee will make a full and fair review of each appeal and any
written materials submitted in connection with the appeal. The Committee or
the named fiduciary designated by the Committee will act upon each appeal
within 60 days after receipt thereof unless special circumstances require an
extension of the time for processing, in which case a decision will be rendered
as soon as possible but not later than 120 days after the appeal is received.
The claimant will be given the opportunity to review pertinent documents or
materials upon submission of a written request to the Committee or named
fiduciary, provided the Committee or named fiduciary finds the requested
documents or materials are pertinent to the appeal. On the basis of its
review, the Committee or named fiduciary will make an independent determination
of the claimant's eligibility for benefits under the Plan. The decision of the
Committee or named fiduciary on any claim for benefits will be final and
conclusive upon all parties thereto. In the event the Committee or named
fiduciary denies an appeal in whole or in part, it will give written notice of
the decision to the claimant, which notice will set forth in a manner
calculated to be understood by the claimant the specific
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reasons for such denial and which will make specific reference to the pertinent
Plan provisions on which the decision was based.
9.11 Service of Process. The Committee may from time to
time designate an agent of the Plan for the service of legal process. The
Committee will cause such agent to be identified in materials it distributes or
causes to be distributed when such identification is required under applicable
law. In the absence of such a designation, the Company will be the agent of
the Plan for the service of legal process.
9.12 Correction of Participants' Accounts. If an error or
omission is discovered in the Accounts of a Participant, or in the amount
distributed to a Participant, the Committee will make such equitable
adjustments in the records of the Plan as may be necessary or appropriate to
correct such error or omission as of the Plan Year in which such error or
omission is discovered. Further, a Participating Employer may, in its
discretion, make a special contribution to the Plan which will be allocated by
the Committee only to the Account of one or more Participants to correct such
error or omission.
9.13 Payment to Minors or Other Persons Under Legal
Disability. If any benefit becomes payable to a minor, payment of such benefit
will be made only to the guardian of the person or the estate of the minor,
provided the guardian acknowledges in writing, in a form acceptable to the
Committee, receipt of the payment on behalf of the minor. If any benefit
becomes payable to any other person under a legal disability, payment of such
benefit will be made only to the conservator or the guardian of the estate of
such person appointed by a court of competent jurisdiction. Any payment made
in accordance with the provisions of this Section on behalf of a minor or other
person under a legal disability will fully discharge the Plan's obligation to
such person.
9.14 Uniform Application of Rules and Policies. The
Committee in exercising its discretion granted under any of the provisions of
the Plan or the Trust Agreement will do so only in accordance with rules and
policies established by it which will be uniformly applicable to all
Participants and Beneficiaries.
9.15 Funding Policy. The Plan is to be funded through
Participating Employer contributions and earnings on such contributions; and
benefits will be paid to Participants and Beneficiaries as provided in the
Plan.
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9.16 The Trust Fund. The Trust Fund will be held by the
Trustee for the exclusive benefit of Participants and Beneficiaries. The
assets held in the Trust Fund will be invested and reinvested in accordance
with the terms of the Trust Agreement, which is hereby incorporated into and
made a part of the Plan. All benefits will be paid solely out of the Trust
Fund, and no Participating Employer will be otherwise liable for benefits
payable under the Plan.
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ARTICLE 10
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO
PARTICIPANTS' ACCOUNTS
10.1 Priority over Other Contribution and Allocation
Provisions. The provisions set forth in this Article will supersede any
conflicting provisions of Articles 3 and 4.
10.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Annual Addition" means the sum of the
following amounts with respect to all Qualified Plans and Welfare Benefit Funds
maintained by the Controlled Group Members:
(i) the amount of Controlled Group Member
contributions with respect to the Limitation Year allocated to the
Participant's account;
(ii) the amount of any forfeitures for the
Limitation Year allocated to the Participant's account;
(iii) the amount, if any, carried forward
pursuant to Section 10.4 or a similar provision in another Qualified Plan and
allocated to the Participant's account;
(iv) the amount of a Participant's voluntary
nondeductible contributions for the Limitation Year, provided, however, that
the Annual Addition for any Limitation Year beginning before January 1, 1987
will not be recomputed to treat all of the Participant's nondeductible
voluntary contributions as part of the Annual Addition;
(v) the amount allocated after March 31,
1984 to an individual medical benefit account (as defined in Code section
415(l)(2)) which is part of a Defined Benefit Plan or an annuity plan; and
(vi) the amount derived from contributions
paid or accrued after December 31, 1985 in taxable years ending after such date
that are attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code section 419A(d)(3))
under a Welfare Benefit Fund. A Participant's Annual Addition will not include
any nonvested
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amounts restored to his account following his reemployment before incurring
five consecutive One Year Breaks in Service, and a corrective allocation
pursuant to Section 9.12 will be considered an Annual Addition for the
Limitation Year to which it relates.
(b) "Average Contribution Percentage" means the
average of the Contribution Percentages of each Participant in a group of
Participants.
(c) "Average Deferral Percentage" means the average
of the Deferral Percentages of each Participant in a group of Participants.
(d) "Contribution Percentage" means the ratio
(expressed as a percentage) determined by dividing the Matching Contributions
made to the Plan on behalf of a Participant who is eligible to receive an
allocation of Matching Contributions for a Plan Year (but only to the extent
such Matching Contributions are not taken into account in determining the
Participant's Deferral Percentage for the Plan Year) by the Participant's
Compensation for the Plan Year. A Participant is eligible to receive an
allocation of Matching Contributions for purposes of determining his
Contribution Percentage even though no Matching Contributions are made to the
Plan on his behalf because of the suspension of his Deferral Contributions
under the terms of the Plan, because of an election not to participate, or
because of the limitations contained in Sections 10.3 through 10.5 of the Plan.
(e) "Deferral Percentage" means the ratio
(expressed as a percentage) determined by dividing the Deferral Contributions
made to the Plan on behalf of a Participant who is eligible to make Deferral
Contributions for all or any portion of a Plan Year by the Participant's
Compensation for the Plan Year. In addition, if the Matching Contributions to
the Plan for any Plan Year satisfy the requirements of Code section
401(k)(2)(B) and (C), a Participant's Deferral Percentage will be determined by
aggregating the Deferral Contributions and the Matching Contributions made to
the Plan on his behalf for such Plan Year, unless such aggregation is
prohibited in regulations prescribed by the Secretary of the Treasury. A
Participant is eligible to make Deferral Contributions for purposes of
determining his Deferral Percentage even though he does not make Deferral
Contributions because of the suspension of his Deferral Contributions under the
terms of the Plan, because of an election not to participate, or because of the
limitations contained in Sections 10.3 through 10.5 of the Plan. A Deferral
Contribution
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will be taken into account for a Plan Year only if (i) the allocation of such
contribution is not contingent on participation in the Plan or the performance
of services after the Plan Year, (ii) such contribution is paid to the Trustee
within 12 months after the end of the Plan Year, and (iii) such contribution
relates to Compensation that either would have been received by the Participant
in the Plan Year, or that is attributable to services performed during the Plan
Year and that would have been received within two and one-half months after the
Plan Year, but for the election to defer.
(f) "Defined Benefit Dollar Limitation" means for
any Limitation Year, $90,000 or such amount as determined by the Commissioner
of Internal Revenue under Code section 415(d)(1) as of the January 1 falling
within such Limitation Year.
(g) "Defined Benefit Fraction" means a fraction,
the numerator of which is the Projected Annual Benefit of a Participant under
all Defined Benefit Plans maintained by a Controlled Group Member determined as
of the close of the Limitation Year and the denominator of which is the lesser
of (i) 140% of the Participant's average Includable Compensation that may be
taken into account for the Limitation Year under Code section 415(b)(1)(B), or
(ii) 125% of the Defined Benefit Dollar Limitation, determined as of the close
of the Limitation Year. If the Participant was a participant in a Defined
Benefit Plan maintained by a Controlled Group Member in existence on July 1,
1982, or on May 6, 1986, the denominator of the Defined Benefit Fraction will
not be less than 125% of the greater of the Participant's accrued Projected
Annual Benefit under such plan as of the end of the last Limitation Year
beginning before January 1, 1983, or his accrued Projected Annual Benefit of
the end of the last Limitation Year beginning January 1, 1987. The preceding
sentence applies only if the Defined Benefit Plan satisfied the requirements of
Code section 415 as in effect at the end of such Limitation Year.
(h) "Defined Benefit Plan" means a Qualified Plan
other than a Defined Contribution Plan.
(i) "Defined Contribution Dollar Limitation" means
for any Limitation Year, $30,000 or, if greater, 25% of the Defined Benefit
Dollar Limitation for the same Limitation Year. If a short Limitation Year is
created because of a Plan amendment changing the Limitation Year to a different
12-consecutive month period, the Defined Contribution Dollar Limitation for the
short Limitation Year will not exceed the amount determined in the
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preceding sentences multiplied by a fraction, the numerator of which is the
number of months in the short Limitation Year and the denominator of which is
12.
(j) "Defined Contribution Fraction" means a
fraction, the numerator of which is the sum of the Annual Additions allocated
to the Participant's accounts for the applicable Limitation Year and each prior
Limitation Year, and the denominator of which is the sum of the lesser of the
following products for each Limitation Year in which the Participant was an
Employee (regardless of whether a Defined Contribution Plan was in existence
for such Limitation Year) (i) the Defined Contribution Dollar Limitation
(determined for this purpose without regard to the provisions of Code section
415(c)(6)) effective for the Limitation Year multiplied by 125%, or (ii) 35% of
the Participant's Includable Compensation for such Limitation Year.
(k) "Defined Contribution Plan" means a Qualified
Plan described in Code section 414(i).
(l) "Family Member" means, with respect to an
Employee, the Employee's spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
(m) "Highly Compensated Employee" means any
Employee who performs services for a Controlled Group Member during the
determination year (as hereinafter defined) and who during the look-back year
(as hereinafter defined): (i) received Compensation from a Controlled Group
Member in excess of $75,000 (as adjusted pursuant to Code section 415(d)); (ii)
received Compensation from a Controlled Group Member in excess of $50,000 (as
adjusted pursuant to Code section 415(d)) and was a member of the top-paid
group (as hereafter defined) for such year; or (iii) was an officer of a
Controlled Group Member and received Compensation during such year that is
greater than 50% of the dollar limitation in effect under Code section
415(b)(1)(A) (but limited to no more than 50 Employees or, if lesser, the
greater of three Employees or 10% of the Employees). The term Highly
Compensated Employee also includes: (i) an Employee who is both described in
the preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the 100 Employees who received
the most Compensation from the Controlled Group during the determination year;
and (ii) an Employee who is a 5-percent owner at any time during the look-back
year or determination year. If no officer has satisfied the Compensation
requirement of (ii) above during
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either a determination year or look-back year, the officer with the highest
Compensation for such year will be treated as a Highly Compensated Employee.
For purposes of this subsection, the determination year is the Plan Year, and
the look-back year is the twelve-month period immediately preceding the
determination year. A Highly Compensated Employee also includes any Employee
who separated from service (or was deemed to have separated) prior to the
determination year, performs no services for a Controlled Group Member during
the determination year, and was a Highly Compensated Employee for either the
separation year or any determination year ending on or after the Employee's
55th birthday. The term "top-paid group" means that group of Employees
consisting of the top 20% of such Employees ranked on the basis of Compensation
received during the Plan Year. For purposes of this subsection, Compensation
will include Deferral Contributions under the Plan or any other 401(k)
arrangement and any amounts that would have been received as cash but for an
election to receive benefits under a Code section 125 cafeteria plan. All
determinations under this definition will be made in accordance with Code
section 414(q) and the Treasury Regulations thereunder.
(n) "Includable Compensation" means an Employee's
total wages from the Controlled Group as determined for purposes of Internal
Revenue Service Form W-2, excluding, however: (i) moving expense
reimbursements that are deductible by the Employee under Code section 217, (ii)
contributions of Controlled Group Members to a simplified employee pension plan
to the extent such contributions are deductible by the Employee and
contributions of Controlled Group Members to any other plan of deferred
compensation that are not includable in the Employee's gross income, (iii)
distributions to the Employee from any plan of deferred compensation other than
an unfunded, nonqualified plan of deferred compensation, (iv) amounts realized
from the exercise of a nonqualified stock option, (v) amounts realized under
Code section 83 with respect to restricted property that becomes freely
transferable or is no longer subject to a substantial risk of forfeiture, (vi)
amounts realized from the disposition of stock acquired under a qualified stock
option within the meaning of Code section 422, and (vii) any other amounts that
receive special tax benefits within the meaning of section 1.415-2(d)(2) of the
Treasury Regulations. The annual Includable Compensation of an Employee taken
into account for any purpose for any Plan Year will not exceed $150,000 for any
Plan Year, as adjusted in regulations prescribed by the Secretary of the
Treasury. For purposes of applying the $150,000 limit set forth in the
preceding sentence, if an Employee is a Highly
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Compensated Employee who is either (i) a 5-percent owner, determined in
accordance with Code section 414(q) and the Treasury Regulations promulgated
thereunder or (ii) one of the 10 most highly compensated Employees ranked on
the basis of Compensation paid by the Controlled Group during the year, such
Highly Compensated Employee and the members of his family (as hereafter
defined) will be treated as a single employee and the Compensation of each
member of the family will be aggregated with the Compensation of the Highly
Compensated Employee. The limitation on Compensation will be allocated among
such Highly Compensated Employee and his family members in proportion to each
individual's Compensation. For purposes of this Section 10.2(m), the term
"family" means an Employee's spouse and any lineal descendants who are under
age 19 at the end of the Plan Year in question.
(o) "Limitation Year" means the
12-consecutive-month period used by a Qualified Plan for purposes of computing
the limitations on benefits and annual additions under Code section 415. The
Limitation Year for this Plan is the Plan Year.
(p) "Maximum Annual Addition" means with respect to
a Participant for any Limitation Year an amount equal to the lesser of (i) the
Defined Contribution Dollar Limitation or (ii) 25% of the Participant's
Includable Compensation.
(q) "Nonhighly Compensated Employee" means an
Employee who is neither a Highly Compensated Employee nor a Family Member of a
Highly Compensated Employee.
(r) "Projected Annual Benefit" means the annual
benefit (as defined in Code section 415(b)(2)) to which a Participant would be
entitled under the terms of a Defined Benefit Plan maintained by a Controlled
Group Member, assuming that the Participant will continue employment until his
normal retirement age under the Defined Benefit Plan (or current age, if later)
and that the Participant's Includable Compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the
Defined Benefit Plan will remain constant for all future Limitation Years.
(s) "Matching Contribution" means the Participating
Employer matching contribution made to the Plan on behalf of a Participant
pursuant to Article 3.
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(t) "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust,
corporation or other organization not exempt from federal income tax, or to the
extent provided in Treasury Regulations, any account held for an employer by
any person, which is part of a plan of an employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code sections 83(h), 404 (determined without regard to section 404(b)(2))
or 404A applies, or to which an election under Code section 463 applies.
(u) "Compensation" means the wages as defined in
Code section 3401(a) for purposes of income tax withholding at the source (but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or services performed)
that are paid to a Participant by the Participating Employers. In addition,
Compensation includes any contributions made by the Participating Employers on
behalf of an Employee pursuant to a deferral election under the Plan or under
any other employee benefit plan containing a cash or deferred arrangement under
Code section 401(k) and any amounts that would have been received as cash but
for an election to receive benefits under a cafeteria plan meeting the
requirements of Code section 125. The annual Compensation of an Employee taken
into account for any purpose will not exceed $200,000 for any Plan Year ending
before January 1, 1994, as adjusted in regulations prescribed by the Secretary
of the Treasury, and will not exceed $150,000 for any Plan Year beginning after
December 31, 1993, as adjusted in regulations prescribed by the Secretary of
the Treasury. For purposes of applying the $150,000 limit set forth in the
preceding sentence, if an Employee is a Highly Compensated Employee who is
either (i) a 5-percent owner, determined in accordance with Code section 414(q)
and the Treasury Regulations promulgated thereunder or (ii) one of the 10 most
highly compensated Employees ranked on the basis of Compensation paid by the
Controlled Group during the year, such Highly Compensated Employee and the
members of his family (as hereafter defined) will be treated as a single
employee and the Compensation of each member of the family will be aggregated
with the Compensation of the Highly Compensated Employee. The limitation on
Compensation will be allocated among such Highly Compensated Employee and his
family members in proportion to each individual's Compensation. For purposes
of this Section 10.2(u), the term "family" means an Employee's spouse and any
lineal descendants who are under age 19 at the end of the Plan Year in
question.
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10.3 General Allocation Limitation. The Annual Addition of
a Participant for any Limitation Year will not exceed the Maximum Annual
Addition. If, except for the application of this section, the Annual Addition
of a Participant for any Limitation Year would exceed the Maximum Annual
Addition, the excess Annual Addition attributable to this Plan will not be
allocated to the Participant's Account for the Plan Year included in such
Limitation Year, but will be subject to the provisions of Section 10.4. The
limitations contained in this Article will apply on an aggregate basis to all
Defined Contribution Plans and all Defined Benefit Plans (whether or not any of
such plans have terminated) established by the Controlled Group Members.
10.4 Excess Allocations.
(a) Participants Covered by One Defined
Contribution Plan. If the Participant is not covered under another Defined
Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group
Member during the Limitation Year and the amount allocated or otherwise
allocable to his Account would exceed the Maximum Annual Addition, the
Participant's Deferral Contributions will be returned to the Participant
(together with earnings, if any, attributable to the returned Deferral
Contributions) to the extent necessary to reduce the excess Annual Addition.
If an excess Annual Addition remains after the return of such Deferral
Contributions plus earnings, the Participating Employer contributions and
forfeitures which would continue to cause the Participant's Annual Addition to
exceed the Maximum Annual Addition will be successively allocated in the manner
described in Section 4.2 among the Accounts of eligible Participants whose
Annual Additions do not exceed the Maximum Annual Addition. If, after such
allocations have been made, there remain Participating Employer contributions
or forfeitures which cannot be allocated without causing the Annual Addition of
a Participant to exceed the Maximum Annual Addition, the forfeitures which
cause the Annual Addition to exceed the Maximum Annual Addition and the
Participating Employer contributions which result from a reasonable error in
estimating the Participant's Includable Compensation or from any other limited
facts and circumstances which the Commissioner of Internal Revenue finds
justifiable under section 1.415-6(b)(6) of the Treasury Regulations and which
cause the Participant's Annual Addition to exceed the Maximum Annual Addition
will be held in a suspense account in the Trust Fund to be carried forward and
used in subsequent Limitation Years to reduce Participating Employer
contributions to the Plan.
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If a suspense account is in existence at any time during a Limitation Year, all
amounts in the suspense account must be allocated before any contributions
which would constitute Annual Additions will be made to the Plan for that
Limitation Year. Such suspense account will not participate in the allocation
of the net income or net loss of the Trust Fund.
(b) Participants Covered by Two or More Defined
Contribution Plans. If, in addition to this Plan, the Participant is covered
under another Defined Contribution Plan or a Welfare Benefit Fund maintained by
a Controlled Group Member during the Limitation Year, the following provisions
will apply. The Annual Addition which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed the
Maximum Annual Addition reduced by the Annual Addition credited to a
Participant's accounts under the other Defined Contribution Plans and Welfare
Benefit Funds for the same Limitation Year. If the Annual Addition with
respect to the Participant under the other Defined Contribution Plans and
Welfare Benefit Funds maintained by a Controlled Group Member is less than the
Maximum Annual Addition and the Participating Employer contribution that would
otherwise be contributed or allocated to the Participant's Account under this
Plan would cause the Annual Addition for the Limitation Year to exceed the
Maximum Annual Addition, the amount to be contributed or allocated to the
Participant's Account under this Plan will be reduced so that the Annual
Addition under all such Defined Contribution Plans and Welfare Benefit Funds
for the Limitation Year will equal the Maximum Annual Addition. If the
aggregate Annual Addition with respect to the Participant under such other
Defined Contribution Plans and Welfare Benefit Funds is equal to or greater
than the Maximum Annual Addition, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year. An excess
Annual Addition will be reduced in the manner described in subsection (c).
(c) Reduction of Excess Allocations. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Annual Addition for the Limitation Year will be determined on the basis of the
Participant's Includable Compensation for the Limitation Year. If a
Participant's Annual Addition under this Plan and the other Defined
Contribution Plans and Welfare Benefit Funds maintained by Controlled Group
Members would result in the Annual Addition exceeding the Maximum Annual
Addition for the Limitation Year, the excess amount will be deemed to consist
of the Annual Addition last allocated. In making this determination, the
Annual Addition attributable to a
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Welfare Benefit Fund will be deemed to have been allocated first regardless of
the actual date of allocation. If an excess amount was allocated to a
Participant on an allocation date of this Plan that coincides with an
allocation date of another plan, the excess amount attributed to this Plan will
be the product of (i) the total excess amount allocated as of such date and
(ii) the ratio of the Annual Addition allocated to the Participant for the
Limitation Year as of such date under this Plan to the total Annual Addition
allocated to the Participant for the Limitation Year as of such date under this
and all the other Defined Contribution Plans. Any excess amount attributed to
this Plan will be disposed of in the manner described in subsection (a).
10.5 Aggregate Benefit Limitation. If a Controlled Group
Member maintains, or at any time maintained, one or more Defined Benefit Plans
covering any Participant in this Plan, the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction for any Limitation Year will equal no
more than one (1.0). The provisions of the Defined Benefit Plans will govern
the order of reduction of Annual Additions or benefit accruals necessary to
meet this limitation. If the provisions of the Defined Benefit Plans are
silent, the current Annual Addition under this Plan will be reduced first, and
then the rate of accrual under the Defined Benefit Plans will be reduced, if
necessary to meet this limitation. If the Defined Contribution Plans taken
into account in determining the Participant's Annual Addition under this
Article satisfied the requirements of Code section 415 as in effect for all
Limitation Years beginning before January 1, 1987, an amount will be subtracted
from the numerator of the Defined Contribution Fraction (not exceeding such
numerator) as prescribed by the Secretary of the Treasury so that the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction does not
exceed 1.0. For purposes of this Section, a Participant's voluntary
nondeductible contributions to a Defined Benefit Plan will be treated as being
part of a separate Defined Contribution Plan.
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10.6 Limitation on Deferral Contributions.
(a) Average Deferral Percentage Test.
Notwithstanding any other provision of the Plan, the Average Deferral
Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Deferral Percentage
for Participants who are Nonhighly Compensated Employees multiplied by 1.25; or
(ii) the lesser of (A) the Average Deferral Percentage for Participants who are
Nonhighly Compensated Employees plus two percentage points or (B) the Average
Deferral Percentage for Participants who are Nonhighly Compensated Employees
multiplied by 2.0. The multiple use of the alternative test in clause (ii) of
this subsection will be restricted as provided in regulations prescribed by the
Secretary of the Treasury.
(b) Suspension of Deferral Contributions. If at
any time during a Plan Year the Committee determines, on the basis of estimates
made from information then available, that the limitation described in
subsection (a) above will not be met for the Plan Year, the Committee in its
discretion may reduce or suspend the Deferral Contributions of one or more
Participants who are Highly Compensated Employees to the extent necessary (i)
to enable the Plan to meet such limitation or (ii) to reduce the amount of
excess Deferral Contributions that would otherwise be distributed pursuant to
subsection (c) below.
(c) Reduction of Excess Deferral Contributions.
If, for any Plan Year, the Average Deferral Percentage for Participants who are
Highly Compensated Employees exceeds the limitation described in subsection (a)
above, the Deferral Percentage for such Participants will be reduced (in the
order of Deferral Percentages, beginning with the highest of such percentages
as provided below) until the limitation in subsection (a) is satisfied. The
highest Deferral Percentage will be reduced first until the limitation in
subsection (a) is satisfied or the percentage equals the next highest
percentage, and the process will be repeated until such limitation is
satisfied. In order to reduce a Participant's Deferral Percentage, the
Participant's excess Deferral Contributions will be distributed to him. If
Matching Contributions are taken into account in determining Deferral
Percentages, a Participant's Deferral Percentage will be reduced by
distributing first Deferral Contributions in excess of 5% of Compensation and
by distributing next the remaining Deferral Contributions and Matching
Contributions, in proportion to the amount of such contributions
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for the Plan Year. All distributions under this subsection will be increased
by Trust Fund earnings and decreased by Trust Fund losses for the Plan Year and
for the period between the end of the Plan Year and the date of distribution
and will be made within two and one-half months following the close of the Plan
Year, if practicable, but in no event later than the last day of the
immediately following Plan Year. The amount of excess Deferral Contributions
distributed pursuant to this Section with respect to a Participant for the Plan
Year will be reduced by any Deferral Contributions previously distributed to
the Participant for the same Plan Year pursuant to Section 3.1(c). The excess
Deferral Contributions of Participants who are subject to the family
aggregation rules of Section 10.8(d) will be allocated among the family members
in proportion to the Deferral Contributions (and amounts treated as Deferral
Contributions) of the family members.
(d) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Deferral Contributions that are distributed pursuant
to subsection (c) above will be determined by multiplying the Trust Fund
earnings or losses for the Plan Year allocable to the Participant's Deferral
Contribution Account by a fraction, the numerator of which is the amount of
Deferral Contributions to be distributed to the Participant and the denominator
of which is the balance of the Participant's Deferral Contribution Account on
the last day of the Plan Year, reduced by the earnings and increased by the
losses allocable to such Account for the Plan Year. The earnings and losses of
the Trust Fund allocable to the Participant's Deferral Contributions that are
distributed pursuant to subsection (c) for the period between the end of the
Plan Year and the date of such distribution will be determined in accordance
with regulations prescribed by the Secretary of the Treasury interpreting Code
section 401(k). The earnings and losses of the Trust Fund allocable to the
portion of a Participant's Matching Contributions that are distributed pursuant
to subsection (c) above will be determined in the manner described in Section
10.7(c).
10.7 Limitation on Matching Contributions.
(a) Average Contribution Percentage Test.
Notwithstanding any other provision of the Plan, the Average Contribution
Percentage for a Plan Year for Participants who are Highly Compensated
Employees will not exceed the greater of: (i) the Average Contribution
Percentage for Participants who are Nonhighly Compensated Employees multiplied
by 1.25; or (ii) the
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lesser of (A) the Average Contribution Percentage Test for Participants who are
Nonhighly Compensated Employees plus two percentage points or (B) the Average
Contribution Percentage for Participants who are Nonhighly Compensated
Employees multiplied by 2.0. The multiple use of the alternative test
contained in clause (ii) of this subsection will be restricted as provided in
regulations prescribed by the Secretary of the Treasury.
(b) Reduction of Excess Matching Contributions.
If, for any Plan Year, the Average Contribution Percentage for Participants who
are Highly Compensated Employees exceeds the limitation described in subsection
(a) above, the Contribution Percentage for each such Participant will be
reduced (in the order of Contribution Percentages, beginning with the highest
of such percentages as provided below) until the limitation in subsection (a)
is satisfied. The highest Contribution Percentage will be reduced first until
the limitation in subsection (a) is satisfied or the percentage equals the next
highest percentage, and the process will be repeated if necessary until such
limitation is satisfied. In order to reduce a Participant's Contribution
Percentage, the Participant's excess Matching Contributions (increased by Trust
Fund earnings and decreased by Trust Fund losses for the Plan Year and for the
period between the end of the Plan Year and the date of distribution) will be
distributed to the Participant within two and one-half months following the
close of the Plan Year, if practicable, but in no event later than the last day
of the immediately following Plan Year. The excess Matching Contributions of
Participants who are subject to the family aggregation rules of Section 10.8(d)
will be allocated among the family members in proportion to the Matching
Contributions made on behalf of the family members.
(c) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year allocable to the
portion of a Participant's Matching Contributions that are distributed pursuant
to Section 10.6 or subsection (b) above will be determined by multiplying the
Trust Fund earnings or losses for the Plan Year allocable to the Participant's
Matching Contribution Account by a fraction, the numerator of which is the
amount of Matching Contributions to be distributed and the denominator of which
is the balance of the Participant's Matching Contribution Account on the last
day of the Plan Year, reduced by the earnings and increased by the losses
allocable to such Account for the Plan Year. The earnings and losses of the
Trust Fund allocable to a Participant's Matching Contributions that are
distributed pursuant to Section 10.6 or subsection (b) above for the period
between the end of the Plan Year and the date of such
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distribution will be determined in accordance with regulations prescribed by
the Secretary of the Treasury interpreting Code sections 401(k) and 401(m).
10.8 Aggregation Rules.
(a) Code Section 415. For purposes of the
allocation limitations under Code section 415 set forth in this Article, (i)
all Defined Benefit Plans ever maintained by a Controlled Group Member will be
treated as one Defined Benefit Plan, and all Defined Contribution Plans ever
maintained by a Controlled Group Member will be treated as one Defined
Contribution Plan, and (ii) Controlled Group Members will be determined in
accordance with the 50% control rule of Code section 415(h).
(b) Code Section 401(k). For purposes of the
limitation on Deferral Contributions set forth in this Article, the Average
Deferral Percentage for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have deferral contributions allocated
to his account under two or more plans or arrangements described in Code
section 401(k) that are maintained by the Company or any Controlled Group
Member will be determined as if all such deferral contributions were made under
a single arrangement (unless such plans or arrangements may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
(c) Code Section 401(m). The Contribution
Percentage of a Participant who is a Highly Compensated Employee for a Plan
Year and who is eligible to make voluntary Employee contributions or receive
deferral contributions or matching employer contributions allocated to his
account under two or more Defined Contribution Plans maintained by the Company
or a Controlled Group Member will be determined as if all such contributions
were made to a single plan (unless such plans may not be permissively
aggregated under applicable regulations). Plans that are aggregated for
purposes of satisfying the minimum coverage rules of Code section 410(b) (other
than for purposes of the average benefits percentage test) will be treated as a
single plan for such purposes.
(d) Family Members. For purposes of determining
the Contribution Percentage or the Deferral Percentage of a
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Participant who is both a Highly Compensated Employee and either (i) a
5-percent owner, determined in accordance with Code section 414(q) and the
Treasury Regulations promulgated thereunder or (ii) one of the 10 most highly
compensated Employees ranked on the basis of Compensation paid by the
Controlled Group during the year, determined in accordance with Code section
414(q) and the Treasury Regulations promulgated thereunder, the Matching
Contributions, Deferral Contributions, and Compensation of such Participant
will include the Matching Contributions, Deferral Contributions and
Compensation of Family Members, and Family Members will be disregarded in
determining the Contribution Percentage or the Deferral Percentage of
Participants who are not such Highly Compensated Employees.
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ARTICLE 11
RESTRICTIONS ON DISTRIBUTIONS TO
PARTICIPANTS AND BENEFICIARIES
11.1 Priority over Other Distribution Provisions. The
provisions set forth in this Article will supersede any conflicting provisions
of Article 6 or Article 7.
11.2 General Restrictions.
(a) Distributions Prior to a Separation from
Service. Except for distributions permitted under Article 6 with respect to
Participants who attain age 59-1/2 or suffer a hardship, a Participant's
interest in the Plan will not be distributed before the Participant's
separation from service, disability or death unless: (i) the Plan is
terminated without the establishment or maintenance by the Participating
Employers of another defined contribution plan (other than an employee stock
ownership plan as defined in Code section 4975(e)(7)); (ii) a Participating
Employer that is a corporation sells all or substantially all of the assets
used by the Participating Employer in a trade or business to a person other
than a Controlled Group Member and the Participant becomes an employee of the
acquiring employer; or (iii) a Participating Employer that is a corporation
disposes of its interest in a subsidiary to a person other than an Controlled
Group Member but only if the Participant continues employment with the
subsidiary. An event will not be treated as described in clause (ii) or (iii)
above unless the Participating Employer continues to maintain the Plan after
the disposition.
(b) Lump Sum Distribution Required. An event
described in subparagraph (a) that would otherwise permit distribution of a
Participant's interest in the Plan will not be treated as described in
subparagraph (a) unless the Participant receives a lump sum distribution by
reason of the event. A lump sum distribution for this purpose will be a
distribution described in Code section 402(d)(4), without regard to clauses
(i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B), or
subparagraph (F) thereof.
11.3 Restrictions on Commencement of Distributions. The
provisions of this Section will apply to restrict the Committee's ability to
delay the commencement of distributions. Unless a Participant elects otherwise
in writing, distribution of the
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Participant's vested interest in his Account will begin no later than the 60th
day after the close of the Plan Year in which occurs the latest of (i) the
date on which the Participant attains age 62, (ii) the tenth anniversary of the
Plan Year in which the Participant began participation in the Plan, or (iii)
the Participant's termination of employment.
11.4 Restrictions on Delay of Distributions. The following
provisions will apply to limit a Participant's ability to delay the
distribution of benefits.
(a) General Rule. Distribution of a Participant's
entire vested and nonforfeitable interest will be made or commence not later
than April 1 following the calendar year in which he attains age 70-1/2. On or
before December 31 of such calendar year and of each succeeding calendar year,
distribution of the entire amount of any additional balances in the
Participant's Accounts (determined as of the preceding Valuation Date) will be
made in a lump sum.
(b) Rule for Certain Participants Who Attained Age
70-1/2 Before 1988. Notwithstanding subsection (a), if a Participant attained
age 70-1/2 before January 1, 1988 and was not a 5-percent owner (as such term
is defined in Code Section 416(i)) at any time during the five-plan-year period
ending in the calendar year in which he attained age 70-1/2, then distribution
of his entire vested and nonforfeitable interest will be made or commence not
later than April 1 following the earlier of (i) the calendar year in which his
employment with the Controlled Group terminates or (ii) the calendar year in
which he becomes a 5-percent owner.
(c) Rule for Participants Who Attained Age 70-1/2
in 1988. If a Participant attained age 70-1/2 during 1988 and had not
terminated employment with the Controlled Group as of January 1, 1989,
distribution of his entire vested and nonforfeitable interest will be made or
commence not later than April 1, 1990.
11.5 Limitation to Assure Benefits Payable to Beneficiaries
are Incidental. In the event that any payments under the Plan are to be made
to someone other than the Participant or jointly to the Participant and his
spouse or other payee, such payments must conform to the "incidental benefit"
rules of Code section 401(a)(9)(G) and Treasury Regulation section
1.401(a)(9)-2.
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11.6 Restrictions in the Event of Death. Upon the death of
a Participant, the following distribution provisions will apply to limit the
Beneficiary's ability to delay distributions. If the Participant dies after
distribution of his benefit has begun, the remaining portion of his benefit
will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death; but if he dies before
distribution of his benefit commences, his entire benefit will be distributed
no later than five years after his death, unless an individual who is a
designated Beneficiary elects to receive distributions in substantially equal
installments over the Beneficiary's life or life expectancy beginning no later
than one year after the Participant's death. If the designated Beneficiary is
the Participant's surviving spouse, the date distributions are required to
begin will not be earlier than the date on which the Participant would have
attained age 70-1/2, and, if the spouse dies before payments begin, subsequent
distributions will be made as if the spouse had been the Participant. Any
amount paid to a child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to the surviving
spouse when the child reaches the age of majority.
11.7 Compliance with Regulations. Distributions under the
Plan to Participants or Beneficiaries will be made in accordance with Treasury
Regulations issued under Code section 401(a)(9).
11.8 Delayed Payments. If the amount of a distribution
required to begin on a date determined under the applicable provisions of the
Plan cannot be ascertained by such date, or if it is not possible to make such
payment on such date because the Committee has been unable to locate a
Participant or Beneficiary after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than 60 days after the earliest
date on which the amount of such payment can be ascertained or the date on
which the Participant or Beneficiary is located (whichever is applicable).
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ARTICLE 12
TOP-HEAVY PROVISIONS
12.1 Priority over Other Plan Provisions. If the Plan is or
becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article will
supersede any conflicting provisions of the Plan. However, the provisions of
this Article will not operate to increase the rights or benefits of
Participants under the Plan except to the extent required by Code section 416
and other provisions of law applicable to Top-Heavy Plans.
12.2 Definitions Used in this Article. The following words
and phrases, when used with initial capital letters, will have the meanings set
forth below.
(a) "Defined Benefit Dollar Limitation" means the
limitation described in Section 10.2(f).
(b) "Defined Benefit Plan" means the Qualified Plan
described in Section 10.2(h).
(c) "Defined Contribution Dollar Limitation" means
the limitation described in Section 10.2(i).
(d) "Defined Contribution Plan" means the Qualified
Plan described in Section 10.2(k).
(e) "Determination Date" means for the first Plan
Year of the Plan the last day of the Plan Year and for any subsequent Plan Year
the last day of the preceding Plan Year.
(f) "Determination Period" means the Plan Year
containing the Determination Date and the four preceding Plan Years.
(g) "Includable Compensation" means the
compensation described in Section 10.2(n).
(h) "Key Employee" means any Employee or former
Employee (and the Beneficiary of a deceased Employee) who at any time during
the Determination Period was (i) an officer of a Controlled Group Member, if
such individual's Includable Compensation (modified as described below) exceeds
50% of the Defined Benefit Dollar Limitation, (ii) an owner (or considered an
owner under Code section 318) of one of the ten largest
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interests in a Controlled Group Member, if such individual's Includable
Compensation exceeds the Defined Contribution Dollar Limitation, (iii) a 5%
owner of a Controlled Group Member, or (iv) a 1% owner of a Controlled Group
Member who has annual Includable Compensation of more than $150,000. The
determination of who is a Key Employee will be made in accordance with Code
section 416(i). For purposes of this subsection, Includable Compensation will
include the amount of any salary reduction contributions pursuant to a cash or
deferred arrangement meeting the requirements of Code section 401(k) or a
cafeteria plan meeting the requirements of Code section 125.
(i) "Minimum Allocation" means the allocation
described in the first sentence of Section 12.3(a).
(j) "Permissive Aggregation Group" means the
Required Aggregation Group of Qualified Plans plus any other Qualified Plan or
Qualified Plans of a Controlled Group Member which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code sections 401(a)(4) and 410 (including simplified employee pension
plans).
(k) "Present Value" means present value based only
on the interest and mortality rates specified in a Defined Benefit Plan.
(l) "Required Aggregation Group" means the group of
plans consisting of (i) each Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member in which at least one Key Employee
participates, and (ii) any other Qualified Plan (including simplified employee
pension plans) of a Controlled Group Member which enables a Qualified Plan to
meet the requirements of Code sections 401(a)(4) or 410.
(m) "Top-Heavy Plan" means the Plan for any Plan
Year in which any of the following conditions exists: (i) if the Top-Heavy
Ratio for the Plan exceeds 60% and the Plan is not a part of any Required
Aggregation Group or Permissive Aggregation Group of Qualified Plans; (ii) if
the Plan is a part of a Required Aggregation Group but not part of a Permissive
Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60%; or (iii) if the Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation Group of Qualified Plans
and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%.
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(n) "Top-Heavy Ratio" means a fraction, the
numerator of which is the sum of the Present Value of accrued benefits and the
account balances (as required by Code section 416)) of all Key Employees with
respect to such Qualified Plans as of the Determination Date (including any
part of any accrued benefit or account balance distributed during the five-year
period ending on the Determination Date), and the denominator of which is the
sum of the Present Value of the accrued benefits and the account balances
(including any part of any accrued benefit or account balance distributed in
the five-year period ending on the Determination Date) of all Employees with
respect to such Qualified Plans as of the Determination Date. The value of
account balances and the Present Value of accrued benefits will be determined
as of the most recent Top-Heavy Valuation Date that falls within or ends with
the 12-month period ending on the Determination Date, except as provided in
Code section 416 for the first and second Plan Years of a Defined Benefit Plan.
The account balances and accrued benefits of a participant who is not a Key
Employee but who was a Key Employee in a prior year will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, transfers and contributions unpaid as of the Determination Date are
taken into account will be made in accordance with Code section 416. Employee
contributions described in Code section 219(e)(2) will not be taken into
account for purposes of computing the Top-Heavy Ratio. When aggregating plans,
the value of account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same calendar year.
The accrued benefit of any Employee other than a Key Employee will be
determined under the method, if any, that uniformly applies for accrual
purposes under all Qualified Plans maintained by all Controlled Group Members
and included in a Required Aggregation Group or a Permissive Aggregation Group
or, if there is no such method, as if the benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional accrual rate of Code
section 411(b)(1)(C). Notwithstanding the foregoing, the account balances and
accrued benefits of any Employee who has not performed services for an employer
maintaining any of the aggregated plans during the five-year period ending on
the Determination Date will not be taken into account for purposes of this
subsection.
(o) "Top-Heavy Valuation Date" means the last day
of each Plan Year.
12.3 Minimum Allocation.
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(a) Calculation of Minimum Allocation. For any
Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is not a
Key Employee will receive an allocation of Participating Employer
contributions and forfeitures of not less than the lesser of 3% of his
Includable Compensation for such Plan Year or the percentage of Includable
Compensation that equals the largest percentage of Participating Employer
contributions (including Deferral Contributions) and forfeitures allocated to a
Key Employee. The Minimum Allocation is determined without regard to any
Social Security contribution. Deferral Contributions made on behalf of
Participants who are not Key Employees will not be treated as Participating
Employer contributions for purposes of the Minimum Allocation. Matching
Contributions that are allocated to Participants who are not Key Employees and
that are taken into account in determining a Participant's Deferral Percentage
or Contribution Percentage will not be treated as Participating Employer
contributions for such Plan Year for purposes of the Minimum Allocation. The
Minimum Allocation applies even though under other Plan provisions the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the Plan Year because (i) the non-Key
Employee fails to make mandatory contributions to the Plan, (ii) the non-Key
Employee's Includable Compensation is less than a stated amount, or (iii) the
non-Key Employee fails to complete 1,000 Hours of Service in the Plan Year.
(b) Limitation on Minimum Allocation. No Minimum
Allocation will be provided pursuant to subsection (a) to a Participant who is
not employed by a Controlled Group Member on the last day of the Plan Year.
(c) Minimum Allocation When Participant is Covered
by Another Qualified Plan. If a Controlled Group Member maintains one or more
other Defined Contribution Plans covering Employees who are Participants in
this Plan, the Minimum Allocation will be provided under this Plan, unless such
other Defined Contribution Plans make explicit reference to this Plan and
provide that the Minimum Allocation will not be provided under this Plan, in
which case the provisions of subsection (a) will not apply to any Participant
covered under such other Defined Contribution Plans. If a Controlled Group
Member maintains one or more Defined Benefit Plans covering Employees who are
Participants in this Plan, and such Defined Benefit Plans provide that
Employees who are participants therein will accrue the minimum benefit
applicable to top-heavy Defined Benefit Plans notwithstanding their
participation in this Plan, then the
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provisions of subsection (a) will not apply to any Participant covered under
such Defined Benefit Plans. If a Controlled Group Member maintains one or more
Defined Benefit Plans covering Employees who are Participants in this Plan, and
the provisions of the preceding sentence do not apply, then each Participant
who is not a Key Employee and who is covered by such Defined Benefit Plans will
receive a Minimum Allocation determined by applying the provisions of
subsection (a) with the substitution of "5%" in each place that "3%" occurs
therein.
(d) Nonforfeitability. The Participant's Minimum
Allocation, to the extent required to be nonforfeitable under Code section
416(b) and the special vesting schedule provided in this Article, may not be
forfeited under Code section 411(a)(3)(B) (relating to suspension of benefits
on reemployment) or 411(a)(3)(D) (relating to withdrawal of mandatory
contributions).
12.4 Modification of Aggregate Benefit Limit.
(a) Modification. Subject to the provisions of
subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the
aggregate benefit limit described in Article 10 will be modified by
substituting "100%" for "125%" in Sections 10.2(g) and (j).
(b) Exception. The modification of the aggregate
benefit limit described in subsection (a) will not be required if the Top-Heavy
Ratio does not exceed 90% and one of the following conditions is met: (i)
Employees who are not Key Employees do not participate in both a Defined
Benefit Plan and a Defined Contribution Plan which are in the Required
Aggregation Group, and the Minimum Allocation requirements of Section 12.3(a)
are met when such requirements are applied with the substitution of "4%" for
"3%"; (ii) the Minimum Allocation requirements of Section 12.3(c) are met when
such requirements are applied with the substitution of "7 1/2%" for "5%"; or
(iii) Employees who are not Key Employees have an accrued benefit of not less
than 3% of their average Includable Compensation for the five consecutive Plan
Years in which they had the highest Includable Compensation multiplied by their
Years of Service in which the Plan is a Top-Heavy Plan (not to exceed a total
such benefit of 30%), expressed as a life annuity commencing at the
Participant's normal retirement age in a Defined Benefit Plan which is in the
Required Aggregation Group.
12.5 Minimum Vesting.
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(a) Required Vesting. For any Plan Year in which
this Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in
subsection (b) will automatically apply to the Plan to the extent it provides
a higher vested percentage than the regular vesting schedule set forth in
Article 5. The minimum vesting schedule applies to all Account balances
including amounts attributable to Plan Years before the effective date of Code
section 416 and amounts attributable to Plan Years before the Plan became a
Top-Heavy Plan. Further, no reduction in vested Account balances may occur in
the event the Plan's status as a Top-Heavy Plan changes for any Plan Year, and
any change in the effective vesting schedule from the schedule set forth in
subsection (b) to the regular schedule set forth in Article 5 will be treated
as an amendment subject to Section 14.1(iii). However, this subsection does
not apply to the Account balances of any Employee who does not have an Hour of
Service after the Plan has initially become a Top-Heavy Plan, and such
Employee's Account balances will be determined without regard to this Section.
(b) Minimum Vesting Schedule.
<TABLE>
<CAPTION>
Percentage Vested
Years of Service and Nonforfeitable
---------------- ------------------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
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<PAGE> 62
ARTICLE 13
ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS
13.1 Adoption Procedure. Any Controlled Group Member may
become a Participating Employer under the Plan provided that (i) the Board
approves the adoption of the Plan by the Controlled Group Member and designates
the Controlled Group Member as a Participating Employer; (ii) the Controlled
Group Member adopts the Plan and Trust Agreement together with all amendments
then in effect by appropriate resolutions of the board of directors of the
Controlled Group Member; and (iii) the Controlled Group Member by appropriate
resolutions of its board of directors agrees to be bound by any other terms and
conditions which may be required by the Board, provided that such terms and
conditions are not inconsistent with the purposes of the Plan.
13.2 Effect of Adoption by Controlled Group Member. A
Controlled Group Member that adopts the Plan pursuant to this Article will be
deemed to be a Participating Employer for all purposes hereunder, unless
otherwise specified in the resolutions of the Board designating the Controlled
Group Member as a Participating Employer. In addition, the Board may provide,
in its discretion and by appropriate resolutions, that the Employees of the
Controlled Group Member will receive credit for their employment with the
Controlled Group Member prior to the date it became a Controlled Group Member
for purposes of determining either or both the eligibility of such Employees to
participate in the Plan and the vested and nonforfeitable interest of such
Employees in their Account balances provided that such credit will be applied
in a uniform and nondiscriminatory manner with respect to all such Employees.
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ARTICLE 14
AMENDMENT OF THE PLAN
14.1 Right to Amend the Plan.
(a) In General. The Company reserves to the
Compensation Committee of the Board of Directors the right to amend the Plan at
any time and from time to time to the extent it may deem advisable or
appropriate, provided that (i) no amendment will increase the duties or
liabilities of the Trustee without its written consent; (ii) no amendment will
cause a reversion of Plan assets to the Participating Employers not otherwise
permitted under the Plan; (iii) no amendment will have the effect of reducing
the percentage of the vested and nonforfeitable interest of any Participant in
his Account nor will the vesting provisions of the Plan be amended unless each
Participant with at least three Years of Service (including Years of Service
disregarded pursuant to the reemployment provisions (if any) of Article 5) is
permitted to elect to continue to have the prior vesting provisions apply to
him, within 60 days after the latest of the date on which the amendment is
adopted, the date on which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment; and (iv) no amendment
will be effective to the extent that it has the effect of decreasing a
Participant's Account balance or eliminating an optional form of distribution
as it applies to an existing Account balance.
(b) Authority of the Board. The Company also
reserves to the Board of Directors the right to amend the Plan at any time and
from time to time to the extent it may deem advisable or appropriate, subject
to the limitations on amendments set forth in subsection (a).
14.2 Amendment Procedure. Any amendment to the Plan will be
made only pursuant to action of the Board or of the Compensation Committee of
the Board. A certified copy of the resolutions adopting any amendment and a
copy of the executed amendment will be delivered to the Trustee, the Committee
and the Company. Upon such action by the Board or the Compensation Committee
of the Board, the Plan will be deemed amended as of the date specified as the
effective date by such action or in the instrument of amendment. The effective
date of any amendment may be before, on or after the date of such action,
except as otherwise set forth in Section 14.1.
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14.3 Effect on Participating Employers. Unless an amendment
expressly provides otherwise, all Participating Employers will be bound by any
amendment to the Plan.
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<PAGE> 65
ARTICLE 15
TERMINATION, PARTIAL TERMINATION AND
COMPLETE DISCONTINUANCE OF CONTRIBUTIONS
15.1 Continuance of Plan. The Participating Employers
expect to continue the Plan indefinitely, but they do not assume an individual
or collective contractual obligation to do so, and the right is reserved to the
Company, by action of the Board, to terminate the Plan or to completely
discontinue contributions thereto at any time. In addition, subject to
remaining provisions of this Article, any Participating Employer at any time
may discontinue its participation in the Plan with respect to its Employees.
15.2 Complete Vesting. If the Plan is terminated, or if
there is a complete discontinuance of contributions to the Plan by the
Participating Employers, the amounts allocated or to be allocated to the
Accounts of all affected Participants will become 100% vested and
nonforfeitable without regard to their Years of Service. For purposes of this
Section, a Participant who has terminated employment and is not again an
Employee at the time the Plan is terminated or there is a complete
discontinuance of Participating Employer contributions will not be an affected
Participant entitled to full vesting if the Participant had no vested interest
in his Account balance attributable to Participating Employer contributions at
his termination of employment. In the event of a partial termination of the
Plan, the amounts allocable to the Accounts of those Participants who cease to
participate on account of the facts and circumstances which result in the
partial termination will become 100% vested and nonforfeitable without regard
to their Years of Service.
15.3 Disposition of the Trust Fund. If the Plan is
terminated, or if there is a complete discontinuance of contributions to the
Plan, the Committee will instruct the Trustee either (i) to continue to
administer the Plan and pay benefits in accordance with the Plan until the
Trust Fund has been depleted, or (ii) to distribute the assets remaining in the
Trust Fund, unless distribution is prohibited by Section 11.2. If the Trust
Fund is to be distributed, the Committee will make, after deducting estimated
expenses for termination of the Trust Fund and distribution of its assets, the
allocations required under the Plan as though the date of completion of the
Trust Fund termination were a Valuation Date. The Trustee will distribute
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<PAGE> 66
to each Participant the amount credited to his Account as of the date of
completion of the Trust Fund termination.
15.4 Withdrawal by A Participating Employer. A
Participating Employer may withdraw from participation in the Plan or
completely discontinue contributions to the Plan only with the approval of the
Board. If any Participating Employer withdraws from the Plan or completely
discontinues contributions to the Plan, a copy of the resolutions of the board
of directors of the Participating Employer adopting such action, certified by
the secretary of such board of directors and reflecting approval by the Board,
will be delivered to the Committee as soon as it is administratively feasible
to do so, and the Committee will communicate such action to the Trustee and to
the Employees of the Participating Employer.
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<PAGE> 67
ARTICLE 16
MISCELLANEOUS
16.1 Reversion Prohibited.
(a) General Rule. Except as provided in
subsections (b), (c) and (d), it will be impossible for any part of the Trust
Fund either (i) to be used for or diverted to purposes other than those which
are for the exclusive benefit of Participants and their Beneficiaries (except
for the payment of taxes and administrative expenses), or (ii) to revert to a
Controlled Group Member.
(b) Disallowed Contributions. Each contribution of
the Participating Employers under the Plan is expressly conditioned upon the
deductibility of the contribution under Code section 404. If all or part of a
Participating Employer's contribution is disallowed as a deduction under Code
section 404, such disallowed amount (reduced by any Trust Fund losses
attributable thereto) may be returned by the Trustee to the Participating
Employer with respect to which the deduction was disallowed (upon the direction
of the Committee) within one year after the disallowance.
(c) Mistaken Contributions. If a contribution is
made by a Participating Employer by reason of a mistake of fact, then so much
of the contribution as was made as a result of the mistake (reduced by any
Trust Fund losses attributable thereto) may be returned by the Trustee to the
Participating Employer (upon direction of the Committee) within one year after
the mistaken contribution was made.
(d) Failure to Qualify. In the event the Internal
Revenue Service determines that the Plan and the Trust Agreement, as amended by
amendments acceptable to the Company, initially fail to constitute a qualified
plan and establish a tax-exempt trust under the Code, then notwithstanding any
other provisions of the Plan or the Trust Agreement, the contributions made by
the Participating Employers prior to the date of such determination will be
returned to the Participating Employers within one year after such
determination and the Plan and Trust Agreement will terminate, but only if the
application for determination was made within the time prescribed by law for
filing the Company's income tax return for the taxable year in which the Plan
and the Trust
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<PAGE> 68
Agreement were adopted, or such later date as the Secretary of the Treasury may
prescribe.
16.2 Bonding, Insurance and Indemnity.
(a) Bonding. To the extent required under ERISA,
the Participating Employers will obtain, pay for and keep current a bond or
bonds with respect to each Committee member and each Employee who receives,
handles, disburses, or otherwise exercises custody or control of, any of the
assets of the Plan.
(b) Insurance. The Participating Employers, in
their discretion, may obtain, pay for and keep current a policy or policies of
insurance, insuring the Committee members, the members of the board of
directors of each Participating Employer and other Employees to whom any
fiduciary responsibility with respect to the administration of the Plan has
been delegated against any and all costs, expenses and liabilities (including
attorneys' fees) incurred by such persons as a result of any act, or omission
to act, in connection with the performance of their duties, responsibilities
and obligations under the Plan and any applicable law.
(c) Indemnity. If the Participating Employers do
not obtain, pay for and keep current the type of insurance policy or policies
referred to in subsection (b), or if such insurance is provided but any of the
parties referred to in subsection (b) incur any costs or expenses which are not
covered under such policies, then the Participating Employers will indemnify
and hold harmless, to the extent permitted by law, such parties against any and
all costs, expenses and liabilities (including attorneys' fees) incurred by
such parties in performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within what was
reasonably believed to have been the best interests of the Plan and its
Participants.
16.3 Merger, Consolidation or Transfer of Assets. There
will be no merger or consolidation of all or any part of the Plan with, or
transfer of the assets or liabilities of all or any part of the Plan to, any
other Qualified Plan unless each Participant who remains a Participant
hereunder and each Participant who becomes a participant in the other Qualified
Plan would receive a benefit immediately after the merger, consolidation or
transfer (determined as if the other Qualified Plan and the Plan were then
terminated) which is equal to or greater than the benefit they would have been
entitled to receive under the Plan immediately
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<PAGE> 69
before the merger, consolidation or transfer if the Plan had then terminated.
16.4 Spendthrift Clause. The rights of any Participant or
Beneficiary to and in any benefits under the Plan will not be subject to
assignment or alienation, and no Participant or Beneficiary will have the power
to assign, transfer or dispose of such rights, nor will any such rights to
benefits be subject to attachment, execution, garnishment, sequestration, the
laws of bankruptcy or any other legal or equitable process. This Section will
not apply to a "qualified domestic relations order". A "qualified domestic
relations order" means a judgment, decree or order made pursuant to a state
domestic relations law which satisfies the requirements of Code section 414(p).
Payment to an alternate payee pursuant to a qualified domestic relations order
will be made in an immediate lump sum payment, if the order so provides.
16.5 Rights of Participants. Participation in the Plan will
not give any Participant the right to be retained in the employ of a Controlled
Group Member or any right or interest in the Plan or the Trust Fund except as
expressly provided herein.
16.6 Gender, Tense and Headings. Whenever any words are
used herein in the masculine gender, they will be construed as though they were
also used in the feminine gender in all cases where they would so apply.
Whenever any words used herein are in the singular form, they will be construed
as though they were also used in the plural form in all cases where they would
so apply. Headings of Articles, Sections and subsections as used herein are
inserted solely for convenience and reference and constitute no part of the
Plan.
16.7 GOVERNING LAW. THE PLAN WILL BE CONSTRUED AND GOVERNED
IN ALL RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT
NOT PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, INCLUDING WITHOUT LIMITATION, THE TEXAS STATUTE OF LIMITATIONS, BUT
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE.
Executed at Dallas, Texas, this ___ day of December, 1994.
A. H. BELO CORPORATION
By
-------------------------------------
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<PAGE> 70
APPENDIX A
PARTICIPATING EMPLOYERS
DFW Suburban Newspapers, Inc.
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<PAGE> 1
Exhibit 10.3(18)
FIRST AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE THRIFT PLAN
A. H. Belo Corporation, a Delaware corporation, adopts the following
amendments to the A. H. Below Employee Thrift Plan (the "Plan").
1. Section 3.2 of the Plan is amended in its entirety to read as
follows:
3.2 Participating Employer Matching Contributions.
(a) Amount of Matching Contributions. Each
Participating Employer will pay to the Plan as a matching contribution
for each payroll period the amount, if any, designated for that
Participating Employer on Appendix B to the Plan. In addition, each
Participating Employer may make an additional matching contribution for
any Plan Year if authorized by its board of directors, but no
Participating Employer will be required to make an additional matching
contribution for any Plan Year. Participating Employer matching
contributions may be made in cash or in shares of Company Stock or
both.
(b) Calculation of Matching Contributions.
Participating Employer matching contributions will be calculated solely
on the basis of Deferral Contributions and Compensation for each
payroll period within the Plan Year.
(c) Limitation on Matching Contributions.
Participating Employer matching contributions will be subject to the
limitations set forth in Section 10.7, unless such contributions are
taken into account in determining Participant deferral percentages
under Section 10.6, in which case matching contributions will be
subject to the limitations set forth in Section 10.6.
2. Section 3.3 is amended in its entirety to read as follows:
<PAGE> 2
3.3 Time of Payment. Deferral Contributions and
Participating Employer matching contributions made with respect to
payroll periods will be paid to the Trustee as soon as practicable
following the close of each calendar month during the Plan Year.
Additional matching contributions may be paid to the Trustee on any
date or dates selected by the Participating Employer, but in no event
later than the time prescribed by law (including extensions) for filing
the Participating Employer's federal income tax return for its tax year
ending with or within the Plan Year.
3. Section 4.2 is amended to read in its entirety as follows:
4.2 Allocation of Contributions and Forfeitures. Each
Deferral Contribution made by a Participating Employer on behalf of a
Participant will be allocated by the Committee to the Participant's
Deferral Contribution Account. Each Participating Employer matching
contribution made with respect to a payroll period and all forfeitures
will be allocated by the Committee to the Matching Contribution
Accounts of Participants employed by that Participating Employer in the
ratio that the Deferral Contributions made on behalf of each such
Participant bear to the total Deferral Contributions made on behalf of
all such Participants for each such payroll period, taking into account
for purposes of this ratio only Deferral Contributions that do not
exceed the percent of each Participant's Compensation for the payroll
period that is set forth on Appendix B.
4. The fourth sentence of Section 10.6(c) of the Plan
("Limitation on Deferral contributions") is amended in its entirety to read as
follows:
If Matching Contributions are taken into account in determining
Deferral Percentages, a Participant's Deferral Percentage will be
reduced by distributing first Deferral
2
<PAGE> 3
Contributions in excess of the percent of Compensation for which
Matching Contributions are made (as set forth on Appendix B) and by
distributing next the remaining Deferral Contributions and Matching
Contributions, in proportion to the amount of such contributions for
the Plan Year.
5. The Plan is amended by the addition of a new appendix, which
will read as follows:
APPENDIX B
RATE OF MATCHING CONTRIBUTIONS
1. Matching Contributions for Participants Employed by DFW
Suburban Newspapers, Inc. Effective with the first payroll period
beginning after June 3, 1995, DFW Suburban Newspapers, Inc. will pay
to the Plan as a matching contribution for each payroll period an
amount equal to 50% of each Participant's Deferral Contributions, but
only to the extent that the Participant's Deferral Contributions do not
exceed 5% of the Participant's Compensation for the payroll period.
6. The foregoing amendments will be effective on and after
June 4, 1995.
Executed at Dallas, Texas, this 17 day of July, 1995.
A. H. BELO CORPORATION
By /s/ MICHAEL D. PERRY
-------------------------------------
3
<PAGE> 1
Exhibit 10.3(19)
SECOND AMENDMENT
TO
A. H. BELO CORPORATION
EMPLOYEE THRIFT PLAN
A. H. Belo Corporation, a Delaware corporation, hereby adopts
the following amendments to the A. H. Belo Employee Thrift Plan (the "Plan").
1. Section 1.7 of the Plan is amended in its entirety to
read as follows:
1.7 "Company Stock" means the Series A Common Stock,
par value $1.67 per share, and the Series B Common Stock, par
value $1.67 per share, of the Company.
2. Section 1.20 of the Plan is hereby amended by
replacing each reference to "Section 1.30" with a reference to "Section 1.31".
3. A new Section 1.26 is hereby added, and subsequent
Sections renumbered accordingly, in its entirety to read as follows:
1.26 "Transfer Account" means the Account
established for each Participant, the balance of which is
attributable to the Participant's rollover and transfer
contributions made pursuant to Section 3.5 and earnings and
losses of the Trust Fund with respect to such contributions.
4. Section 3.1(a) is hereby amended by the addition of
the following sentence at the end of the Section:
For any payroll period beginning on or after January 1, 1996,
a Participant may elect to have Deferral Contributions made to
the Plan in any amount that does not exceed 15% of his
Compensation for the payroll period.
<PAGE> 2
5. Section 3.1(b) is hereby amended by the addition of
the following sentence before the last sentence of the Section:
For Plan Years beginning on or after January 1, 1996, if a
Participant receives a distribution on account of hardship
pursuant to Section 6.3, such Participant's Deferral
Contributions will automatically be suspended for a 12-month
period following the date on which such Participant receives
the hardship distribution.
6. Section 5.1 is hereby amended in its entirety to read
as follows:
5.1 Determination of Vested Interest. Except as
provided in Section 5.2 or 10.6(e) (with respect to
discriminatory Matching Contributions), the interest of each
Participant in his Deferral Contribution Account and his
Matching Contribution Account will be 100% vested and
nonforfeitable at all times.
7. Section 5.3 is hereby amended in its entirety to read
as follows:
5.3 Application of Forfeited Amounts. The amount
of a Participant's Accounts which is forfeited pursuant to
Sections 5.2 or 10.6(e) will be applied to reduce
Participating Employer contributions pursuant to Article 3.
8. Section 6.3(a) is hereby amended by the addition of
the following sentence at the end of the Section:
For Plan Years beginning on or after January 1, 1996, pursuant
to Section 3.1(b), a Participant's Deferral Contributions will
automatically be suspended for a 12-month period after the
date on which such Participant receives a distribution on
account of hardship.
2
<PAGE> 3
9. Section 6.5(c) is hereby amended by deleting
Subsections (vii) and (viii) and replacing them with the following:
(vii) for Plan Years beginning before January 1,
1996, no more than one outstanding loan will be permitted with
respect to a Participant at any time, except that a
Participant may have a home loan and a loan which is not a
home loan outstanding at the same time; (viii) for Plan Years
beginning on or after January 1, 1996, no more than two
outstanding loans will be permitted with respect to a
Participant at any time; (ix) for Plan Years beginning on or
after January 1, 1996, no new home loans will be permitted;
and (x) all loans will be evidenced by a note containing such
additional terms and conditions as the Committee will
determine. Notwithstanding anything in the foregoing to the
contrary, no amount of any indebtedness will be deducted
pursuant to subsection (vi) above from a Participant's
Deferral Contribution Account prior to the time that such
Account is otherwise distributable.
10. Section 10.6(c) is hereby amended by the deletion of
the fourth sentence thereof in its entirety and by the deletion of the
parenthetical "(and amounts treated as Deferral Contributions)" in the last
sentence of the Section.
11. Section 10.6(d) is hereby amended by the deletion of
the last sentence thereof in its entirety.
12. Section 10.6 is hereby amended by the addition of a
new Subsection (e) at the end of the Section:
(e) Discriminatory Matching Contributions. If
the allocation of Matching Contributions to a Participant's
Matching Contribution Account results in a discriminatory
matching contribution (as determined under Code sections
401(a)(4) or 401(m) and the regulations thereunder) for such
Participant because the Matching Contribution relates to a
Deferral
3
<PAGE> 4
Contribution that exceeds the limitations described in Section
3.1 or this Section 10.6, or because of any other reason, and
such discriminatory matching contribution cannot be
distributed as an excess Matching Contribution pursuant to
Section 10.7, such discriminatory matching contribution, or
the portion thereof that results in prohibited discrimination,
will be forfeited notwithstanding any other provision of the
Plan to the contrary.
13. Section 10.7(c) is hereby amended in its entirety to
read as follows:
(c) Determination of Earnings and Losses. The
earnings and losses of the Trust Fund for the Plan Year
allocable to the portion of a Participant's Matching
Contributions that are forfeited pursuant to Section 10.6(e)
or distributed pursuant to subsection (b) above will be
determined by multiplying the Trust Fund earnings or losses
for the Plan Year by a fraction, the numerator of which is the
amount of Matching Contributions to be distributed or
forfeited and the denominator of which is the balance of the
Participant's Matching Contribution Account on the last day of
the Plan Year, reduced by the earnings and increased by the
losses allocable to such Account for the Plan Year. The
earnings and losses of the Trust Fund allocable to a
Participant's Matching Contributions that are forfeited
pursuant to Section 10.6(e) or distributed pursuant to
subsection (b) above for the period between the end of the
Plan Year and the date of such distribution or forfeiture will
be determined in accordance with regulations prescribed by the
Secretary of the Treasury interpreting Code sections 401(k)
and 401(m).
14. The foregoing amendments will be effective on and
after January 1, 1995. Executed at Dallas, Texas, this 2 day of February,
1996.
A. H. BELO CORPORATION
By /s/ MICHAEL J. McCARTHY
-------------------------------------
4
<PAGE> 1
EXHIBIT 10.3 (20)
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
by and between
A.H. BELO CORPORATION
and
MELLON BANK, N.A.
<PAGE> 2
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
THIS MASTER TRUST AGREEMENT made and entered into on this 22nd day of
December, 1992, effective as of January 1st, 1993, by and between A.H. BELO
CORPORATION (hereinafter referred to as the "Corporation") and MELLON BANK,
N.A. (hereinafter referred to as the "Master Trustee"),
WITNESSETH:
WHEREAS, the Corporation desires to establish a master trust which
will serve as a funding medium to eligible employee benefit plans at the
Corporation and its subsidiaries and affiliates; and
WHEREAS, the Master Trustee is willing to act as trustee of such trust
upon all of the terms and conditions hereinafter set forth; and
WHEREAS, the Corporation and the Master Trustee wish to amend those
trust agreements referred to in Exhibit A hereto (the "Prior Agreements") so
that this Agreement shall be deemed to supersede all such Prior Agreements and
so that all the separate trusts established by the Prior Agreements shall be
deemed consolidated into the master trust established hereby;
<PAGE> 3
NOW, THEREFORE, the Corporation and the Master Trustee declare and
agree that the Master Trust will receive, hold and administer all sums of money
and such other property acceptable to Master Trustee as shall from time to time
be contributed, paid or delivered to it hereunder, IN TRUST, upon all of the
following terms and conditions.
SECTION 1
General
1.1 Definitions. Where used in this Agreement, unless the context otherwise
requires or unless otherwise expressly provided:
(a) "Account Party" shall mean an officer of the Corporation designated to
represent the Company for this purpose, the Named Fiduciary and any Person to
whom the Master Trustee shall be instructed by the Named Fiduciary to deliver
its annual account under Section 12.2.
(b) "Accounting Period" shall mean either the twelve consecutive month period
coincident with the calendar year or, if different, the fiscal year of the
Participating Plans or the shorter period in any year in which the Master
Trustee accepts appointment as Master Trustee hereunder or ceases to act as
Master Trustee for any reason.
(c) "Administrative Committee" shall mean the committee or committees,
individually or collectively, responsible for benefit administration under the
Plans.
(d) "Agreement" shall mean all of the provisions of this instrument and of all
other instruments amendatory hereof.
(e) "Asset Manager" shall mean the Master Trustee, Named Fiduciary or
Investment Manager, individually or collectively as the context shall require,
with respect to those assets held in an Investment Account over which it
exercises, or to the extent it is authorized to exercise, discretionary
investment authority or control.
(f) "Bank business day" shall mean a day on which the Master Trustee is open for
business.
(g) "Board of Directors" shall mean the Board of Directors of the Corporation.
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(h) "Code" shall mean the internal Revenue Code of 1986, as amended from time
to time, and Regulations issued thereunder.
(i) "Directed Fund" shall mean any Investment Account, or part thereof, subject
to the discretionary management and control of the Named Fiduciary or any
Investment Manager.
(j) "Discretionary Fund" shall mean any Investment Account, or part thereof,
subject to the discretionary management and control of the Master Trustee.
(k) "ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and Regulations issued thereunder.
(l) "Fund" shall mean all cash and property contributed, paid or delivered to
the Master Trustee hereunder, all investments made therewith and proceeds
thereof and all earnings and profits thereon, less payments, transfers or other
distributions which, at the time of reference, shall have been made by the
Master Trustee, as authorized herein. The Fund shall include all evidences of
ownership, interest or participation in an Investment Vehicle, but shall not,
solely by reason of the Fund's investment therein, be deemed to include any
assets of such Investment Vehicle.
(m) "Insurance Contract" shall mean any contract or policy of any kind issued
by an insurance company, whether or not providing for the allocation of amounts
received by the insurance company thereunder solely to the general account or
solely to one or more separate accounts (including separate accounts maintained
for the collective investment of qualified retirement plans), or a combination
thereof, and whether or not any such allocation may be made in the discretion
of the insurance company or the Named Fiduciary.
(n) "Investment Account" shall mean each pool of assets in the Master Trust in
which one or more Plans has an interest during an Accounting period.
(o) "Investment Manager" shall mean a bank, insurance company or investment
adviser satisfying the requirements of Section 3(38) of ERISA which has
provided the Master Trustee with written acknowledgment of compliance with
ERISA.
(p) "Investment Vehicle" shall mean any common, collective or commingled trust,
investment company, corporation functioning as an investment intermediary,
insurance contract, partnership, joint venture or other entity or arrangement
to which, or pursuant to which, assets of the Master Trust may be transferred
or in which the Master Trust has an interest, beneficial or otherwise (whether
or not the underlying assets thereof are deemed to constitute "plan assets" for
any purpose under ERISA).
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(q) "Master Trust" shall mean the trust created hereby.
(r) "Named Fiduciary" shall mean the fiduciary with respect to the Plans within
the meaning of Section 402(a)(2), 402(c)(3) or 403(a)(1) of ERISA who has the
authority to perform the separate functions allocated to the "Named Fiduciary"
under this Agreement.
(s) "Plan" shall mean any employee benefit plan which meets the requirements
for eligibility specified in Section 1.3 and as of the date of this Agreement
includes those plans listed on Exhibit B.
(t) "Person" shall mean a natural person, trust, estate, corporation of any
kind or purpose, mutual company, joint-stock company, unincorporated
organization, association, partnership, joint venture, employee organization,
committee, board, participant, beneficiary, trustee, partner, or venturer
acting in an individual, fiduciary or representative capacity, as the context
may require.
(u) "Qualifying Employer Security" shall mean the employer securities as
defined in Section 407(d) of ERISA.
(v) "Valuation Date" shall mean the last day of the Accounting Period,
calendar quarter or any more frequent reporting date agreed to by the Master
Trustee.
The plural of any term shall have a meaning corresponding to the singular
thereof as so defined and any neuter pronoun used herein shall include the
masculine or feminine, as the context shall require.
1.2 Compliance With Law. The Trust hereinafter established is intended to
comply with ERISA and to be tax exempt under Section 501(a) of the Code.
1.3 Eligibility. Any employee benefit plan established by the Corporation, or a
subsidiary or an affiliate of the Corporation, may be funded, in whole or
in part, through the Master Trust if (i) the plan is qualified under Section
401(a) of the Code, (ii) the Master Trust is exempt from taxation under Section
501(a) of the Code, and (iii) this Agreement has been duly adopted by the Board
of Directors or by the board of directors of a subsidiary or affiliate of the
Corporation and, in the case of such subsidiary or affiliate, the Board of
Directors has consented thereto.
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SECTION 2
Establishment of Trust
2.1 Establishment of Trust. The Corporation hereby establishes with the Master
Trustee the Master Trust consisting of such sums of money and such property
acceptable to the Master Trustee as shall from time to time be paid or
delivered to the Master Trustee.
2.2 Contributions to the Trust. The Master Trustee shall have no duty to
determine or collect contributions under any Plan and shall be solely
accountable for monies or properties actually received by it. The Corporation
shall have the sole duty and responsibility for the determination of the
accuracy or sufficiency of the contributions to be made under any of their
Plans, the transmittal of the contributions to the Master Trustee and
compliance with any statute, regulation or rule applicable to contributions.
2.3 Prior Administration. The Master Trustee shall not have any duty to inquire
into the administration of the Plans or actions taken under any of the Plans by
any prior trustee.
2.4 Fund to be Held in Trust. The Fund shall be held by the Master Trustee in
trust and dealt with in accordance with the provisions of this Agreement and
the Act.
2.5 Fund to be Held for Benefit of Plan Participants. Except as may be provided
by law for the purpose of returning any of the Corporation's contributions or
in case any Plan of which this Trust forms a part provides for the return of
the Corporation's contributions in the event such Plan fails to initially
qualify under the applicable provisions of the Code, at no time prior to the
satisfaction of all liabilities for benefits under any Plan shall any part of
the Fund be used for or diverted to purposes other than for the exclusive
benefit of participants, retired participants, or their beneficiaries under the
Plans and for the payment of the reasonable expenses of the Plans.
2.6 Commingling. The Master Trustee may commingle the assets attributable to
the Plans for which contributions are made under this Agreement if this
Agreement is applicable to more than one Plan and may commingle the Fund with
funds of other trusts of similar nature created by the Corporation for the
exclusive benefit of their employees. Where commingling is effected with other
trusts maintained by the Corporation, the combined trust, to the extent that
assets are attributable to contributions made under this Agreement, shall be
the Fund referred to herein. The Master Trustee shall maintain such records as
are necessary in order to maintain a separation of the Fund from the funds of
the other trusts maintained by the
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Corporation and to separate the assets attributable to each of the Plans for
which contributions are made under this Agreement. The Corporation shall be
responsible for causing sufficient records to be maintained to insure that
benefits and liabilities payable with respect to each Plan shall be paid from
the assets allocable to each such Plan. Should separation be required, either
of the Fund from other trusts maintained by the Corporation or of any Plan for
which contributions are made under this Agreement from the Fund, the Master
Trustee shall make such separation in accordance with generally accepted
accounting principles and, where applicable, upon the certification of an
actuary.
SECTION 3
Administration of the Plan
3.1 Administrator. The Plans shall be administered by the Administrative
Committee which shall have the sole fiduciary duty as to plan administration
and the Master Trustee shall not be responsible in any respect for such
administration.
3.2 Indemnity. The Corporation shall fully indemnify and save harmless the
Master Trustee from liability and expense incident to any act or failure to act
by reason of the Master Trustee's reliance upon or compliance with instructions
issued by the Administrative Committee or the Corporation.
SECTION 4
Disbursement from the Fund
4.1 Disbursements by Master Trustee. The Master Trustee shall make such
payments out of the Fund as the Administrative Committee may from time to time
in writing direct. In the discretion of the Administrative Committee, such
payments may be made directly to the person specified by the Administrative
Committee or deposited in a checking account maintained by the Administrative
Committee for the purpose of making payments to the person, or persons entitled
to such payments under the Plans, or to an account maintained by some other
entity which the Administrative Committee may designate to make payments.
4.2 Direction to the Master Trustee. Any direction given to the Master Trustee
in accordance with this Section need not specify the specific application of
the payment to be made, but shall specify that the payment is for the purposes
of the Plans or the payment of Plans' expenses.
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SECTION 5
Allocation of Investment Responsibilities
5.1 Asset Managers. (a) The Named Fiduciary will from time to time, in its sole
discretion, appoint one or more Asset Managers to manage specified portions of
the Fund. Upon the appointment of each Asset Manager, the Named Fiduciary
shall so notify the Master Trustee and instruct the Master Trustee in writing
to separate into a separate account those assets as to which each Asset Manager
has discretion and control. The Asset Manager shall designate in writing the
person or persons who are to represent any such Asset Manager in dealings with
the Master Trustee. Upon the separation of the assets in accordance with the
instructions of the Named Fiduciary, the Master Trustee shall thereupon be
relieved and released of all investment duties, responsibilities and
liabilities normally and statutorily incident to a trustee as to such directed
funds, and, as to such directed funds, the Master Trustee shall act as
custodian. Except as otherwise provided by the Named Fiduciary in writing from
time to time, the Master Trustee shall take no action with respect to the
duties or powers allocated to an Asset Manager in Section 6 or Section 7
without receipt of written directions of the Asset Manager. Unless specifically
prohibited in writing, the Master Trustee, as custodian, may hold the assets of
such directed funds in the name of a nominee or nominees.
(b) Should an Asset Manager at any time elect to place security transactions
directly with a broker or dealer, the Master Trustee shall not recognize such
transaction unless and until it has received instructions or confirmation of
such fact from the Asset Manager. Should the Asset Manager direct the Master
Trustee to utilize the services of any person with regard to the assets under
its management or control, such instructions shall be in writing and shall
specifically set forth the actions to be taken by the Master Trustee as to such
services.
(c) In the event that an Asset Manager places security transactions directly
or directs the utilization of a service, the Asset Manager shall be solely
responsible for the acts of such persons. The sole duty of the Master Trustee
as to such transactions shall be incident to its duties as custodian.
5.2 Transfer of Assets to Asset Managers. (a) Upon receipt of written
directions by the Named Fiduciary, the Master Trustee shall (i) transfer and
deliver such part of the assets of the Fund as may be specified in such writing
to any Asset Manager so appointed, and (ii) accept the transfer back to it of
any such assets at any time held by an Asset Manager, provided that the Named
Fiduciary may only direct such transfers as are in conformity with the
provisions of the
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Plans, this Agreement, and ERISA, and Sections 401(a) and 501(a) of the Code.
Any such written direction shall constitute a certification to the Master
Trustee by the Named Fiduciary that the transfer so directed is one which the
Named Fiduciary is authorized to direct and is in conformity with the aforesaid
provisions.
(b) If any assets are so transferred to the custody of an Asset Manager, such
Asset Manager shall undertake and be responsible for all the custodial duties
therefor, and such assets shall remain for all purposes a part of the Fund and
the Trust, and as such, subject to all the terms and provisions of this
Agreement. Any Asset Manager receiving such assets may invest any part or all
of such assets in units of any collective, common or pooled trust fund operated
or maintained by a bank or trust company, including the Investment Manager or
any affiliate of the Investment Manager, exclusively for the commingling and
collective investment of monies or other assets held under or as part of a plan
which is established in conformity with and qualifies under Section 401(a) of
the Code. Notwithstanding the provisions of this Agreement which place
restrictions upon the actions of the Master Trustee, or the Asset Manager, to
the extent monies or other assets are utilized to acquire units of any
collective trust, the terms of the collective trust indenture shall solely
govern the investment duties, responsibilities and powers of the trustee of
such collective trust, and to the extent required by law, such terms,
responsibilities and powers shall be incorporated herein by reference and shall
be part of this Agreement. For the purposes of valuation of any interest under
the Plans of which this trust forms a part, the value of the interest
maintained by the Fund in such collective trust shall be the fair market value
of the collective fund units held determined in accordance with generally
recognized valuation procedures.
(c) The Master Trustee shall have no duty or responsibility as to the
safekeeping of such assets or as to the investment and reinvestment of the
same, except that the Master Trustee shall require such statements and reports
from such Asset Manager as may be necessary to enable the Master Trustee and
the Administrative Committees to carry out their recordkeeping and reporting
duties under this Agreement. The Master Trustee shall enter into and execute
such agreements, receipts and releases as shall be required to carry out the
directions of the Named Fiduciary with respect to the transfer of any assets of
the Fund to or from an Asset Manager in accordance with this Section 5.2.
5.3 The Master Trustee. Subject to investment policies, objectives and
guidelines communicated to the Master Trustee by the Named Fiduciary as
contemplated by this Section 5, the Master Trustee sha11 from time to time
invest and reinvest the Discretionary Fund and keep it invested in accordance
with such policies, objectives and guidelines.
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SECTION 6
Participant Accounts
6.1 Establishment of Accounts. The Administrative Committee shall direct the
Master Trustee to establish on its books and records accounts sufficient to
accommodate investment options, other than investments in Qualifying Employer
Securities, available to the employees as specified by the Plan. The
Administrative Committee shall establish an investment purpose for each
account, either by separate written designation or through an agreement between
the Administrative Committee and the Master Trustee that shall incorporate
therein the investment purposes and, if applicable, the investment restrictions
which the Plan provides as to investment options. The accounts so established
shall, until changed by the Administrative Committee operate in the manner and
form established.
6.2 Qualifying Employer Securities. As provided in the Plan, all amounts
received by the Master Trustee which are directed by the Administrative
Committee to be placed in an account which has as its investment purpose
investment in Qualifying Employer Securities or any amount received by the
Master Trustee as a result of holding such Qualifying Employer Securities shall
be invested and reinvested in Qualifying Employer Securities. The investment
purpose of the account so established shall be to invest one hundred (100%) in
such Qualifying Employer Securities. However, the Master Trustee may, but shall
not be required to, place amounts received by it for the purpose of investment
in temporary investments, if in the opinion of the Master Trustee market
conditions are such that investment in Qualifying Employer Securities would be
disruptive or could not be accomplished. In the operation of this account, the
Master Trustee shall have no investment discretion, except as hereinafter
provided, and no duty or responsibility to determine the investment quality or
prudence of such investment. The Corporation shall have the duty and
responsibility to determine whether or not the investment in the Qualifying
Employer Securities is prudent. The Master Trustee shall acquire or dispose of
all Qualifying Employer Securities in the open market or through the method of
purchase and sales which is used by the Master Trustee in the normal course of
its security transactions. The Master Trustee shall be permitted to net all
purchases and sales for an account limited in investment purposes to Qualifying
Employer Securities, provided, however, both sales and purchases will be at
market value and the books and records of the Master Trustee shall clearly
reflect such fact. Should the Master Trustee for any reason be unable to
acquire or dispose of the Qualifying Employer Securities in the manner provided
by this Section, it
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shall notify the Named Fiduciary of such fact and shall thereafter make no
purchases or sales of securities until instructions are received from the Named
Fiduciary.
6.3 Allocation of Contributions. The Administrative Committee shall, upon the
making of any contribution to this Trust by the Corporation, or, if applicable,
a Participant, or both, instruct the Master Trustee in writing of the manner
that such contribution is to be allocated between the account previously
established.
6.4 Responsibility of Master Trustee. The Master Trustee shall not be
responsible nor liable to establish or maintain a record or account in the name
of any individual Participant. The Master Trustee shall not be required to
establish the value of any Participant's individual interest in the Fund or any
account established hereunder. Should the Master Trustee and the Administrative
Committee or the Corporation agree that the Master Trustee shall maintain
individual account records, such agreement shall be separate and apart from the
terms of this Trust. Such an agreement shall not be construed as implying any
duty upon the Master Trustee hereunder even though the Master Trustee, in its
corporate capacity as record keeper for the accounts of individual instructions
or directions as to the disposition or distribution of any assets held
hereunder.
6.5 Accounts as Separate Trusts. For the purposes of application of this
Agreement of Trust, each account created hereunder shall be considered a
separate trust insofar as the application of powers granted the Master Trustee.
Notwithstanding the provisions of this Agreement of Trust which established
powers and duties with regard to the Trust as a whole, the Master Trustee shall
exercise such of those powers as are consistent with the investment purposes of
each account. Where applicable or required, the Master Trustee with the
Corporation's consent may subdivide any account as may be required to fulfill
either its duties hereunder or the instructions of the Administrative
Committee.
SECTION 7
Investment of the Fund
7.1 Standard of Care. The Master Trustee, each Asset Manager and the Named
Fiduciary shall discharge their respective investment duties as provided under
Sections 5 and 6 hereof with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character with like aims and by diversifying the investments held hereunder
consistent with investment policies, objectives and guidelines so as to
minimize the risk of large losses, unless it would be clearly not prudent to
diversify.
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7.2 Waiver of Investment Restrictions. Such investment and reinvestment shall
not be restricted to securities or property of the character authorized for
investments by trustees or asset managers under any statute or other laws of
any state, district or territory.
7.3 Grant of Investment Powers. In addition to any power granted to trustees or
asset managers under any statute or other laws, such laws and statutes if
necessary being incorporated herein by reference, the Master Trustee's, and
each Asset Manager's investment powers may, unless restricted in writing by the
Named Fiduciary, includes, but shall not be limited to, investment in the
following:
(a) domestic or foreign common and preferred stocks and options thereon, as
well as warrants, rights and preferred stocks convertible into common stock,
regardless of where or how traded;
(b) the purchase or sale, writing or issuing, of puts, calls or other options,
covered or uncovered, entering into financial futures contracts, forward
placement contracts and standby contracts, and in connection therewith,
depositing, holding (or directing the Master Trustee, in its individual
capacity, to deposit or bold) or pledging assets of the Fund;
(c) corporate bonds and debentures and any such securities which are
convertible into common stock, domestic or foreign;
(d) bonds or other obligations of the United States of America or any foreign
nation, and any agencies thereof, or any bonds or other obligations which are
directly or indirectly guaranteed by the United States or any foreign nation,
or any agency thereof;
(e) obligations of the states and of municipalities or of any agencies thereof;
(f) notes of any nature, of foreign or domestic issuers;
(g) mortgages and real estate, wherever situate and whether developed or
undeveloped, including sales and leasebacks, interests or participations in
real estate investment trusts or corporations organized under Section 501(c)(2)
or 501(c)(25) of the Code and non income producing properties. Notwithstanding
any other provision of this Agreement, including, without limitation, any
specific or general power granted to the Master Trustee, the Master Trustee
shall have no responsibility or discretion with respect to the ownership,
management, administration, operation or control of any real estate properties,
mortgages, leases or other interests now or hereafter held in the Fund,
including without limitation responsibility for or in connection with any of
the following
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conditions which now exist or may hereafter be found to exist in, under, about
or in connection with any real estate held in the Fund or any interest in any
trust, partnership or corporation: (i) any violation of any applicable
environmental or health or safety law, ordinance, regulation or ruling; or (ii)
the presence, use, generation, storage, release, threatened release, or
containment, treatment or disposal of any petroleum, including crude oil or any
fraction thereof, hazardous substances, pollutants or contaminants as defined
in the Comprehensive Environmental Response Compensation and Liability Act, as
amended (CERCLA) or hazardous, toxic or dangerous substances or materials as
any of these terms may be defined under any federal or state law in the
broadest sense from time to time. Notwithstanding anything to the contrary
herein or elsewhere set forth, to the extent permitted by law, the Master
Trustee shall be indemnified by the Corporation, to the extent not paid by the
Fund, from and against any and all claims, demands, suits, liabilities, losses,
damages, costs and expenses (including reasonable attorneys' fees and expenses)
arising from or in connection with any matter relating to conditions in
subsections (i) or (ii). This paragraph shall survive the sale or other
disposition of any real estate investment of the Fund and/or the merger or
termination of this Master Trust or appointment of a successor master trustee.
(h) savings accounts, certificates of deposit and other types of time deposits,
bearing a reasonable rate of interest based upon the duration, amount, type and
geographical area, with any financial institution or quasi-financial
institution or any department of the same, either domestic or foreign, under
the supervision of the United States or any State, including any such
financial institution owned, operated or maintained by the Master Trustee in
its corporate or Association capacity (including any department or division of
the same) or a corporation or association affiliated with the same;
(i) leaseholds of any duration;
(j) mineral and other natural resources, including, but not limited to, oil,
gas, timber and coal, and any participation therein in any form, including but
limited to, royalties, ownership, drilling and exploration;
(k) any collective or common trust fund or composite security owned, operated
and maintained by the Master Trustee, including, but not limited to, demand
notes, short-term notes and cash equivalent funds;
(l) any collective, common or pooled trust fund operated or maintained
exclusively for commingling and collective investment of monies or other assets
including any such fund operated or maintained by the Master Trustee.
Notwithstanding
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the provisions of this Agreement which place restrictions upon the actions of
the Master Trustee or an Investment Manager, to the extent monies or other
assets are utilized to acquire units of any collective trust, the terms of the
collective trust indenture shall solely govern the investment duties,
responsibilities and powers of the trustee of such collective trust and, to the
extent required by law, such terms, responsibilities and powers shall be
incorporated herein by reference and shall be part of this Agreement. For
purposes of valuation, the value of the interest maintained by the Fund in such
collective trust shall be the fair market value of the collective fund units
held, determined in accordance with generally recognized valuation procedures.
The Corporation expressly understands and agrees that any such collective fund
may provide for the lending of its securities by the collective fund trustee
and that such collective fund's trustee will receive compensation from such
collective fund for the lending of securities that is separate from any
compensation of the Master Trustee hereunder, or any compensation of the
collective fund trustee for the management of such collective fund;
(m) open-end and closed-end investment companies, regardless of the purposes
for which such fund or funds were created, and any partnership, limited or
unlimited, joint venture and other forms of joint enterprise created for any
lawful purpose;
(n) individual or group insurance policies and contracts including, but not
limited to, life insurance, annuity (fixed or variable) and investment policies
and contracts, but only if directed by the Administrative Committee or the
Named Fiduciary, as appropriate, to purchase or retain such policies and
contracts.
7.4 Maintenance of Cash Balances. The Master Trustee shall keep such portion of
the Fund in cash or cash balances as may be specified from time to time in a
written request from the Administrative Committee or as required by the Named
Fiduciary to meet contemplated payments from the Fund. The Master Trustee shall
invest such cash balances and any other portions of the Fund which may be in
cash or cash balances in accordance with such investment policies, objectives
and guidelines as may be communicated to the Master Trustee from time to time
by the Named Fiduciary pursuant to Section 5. The Master Trustee shall not be
liable for interest on any reasonable cash balances so maintained.
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SECTION 8
Powers of the Master Trustee,
Asset Managers and the Named Fiduciary
8.1 Qualifying Employer Securities Accounts. The Plans provide generally with
respect to accounts established to invest in Qualifying Employer Securities
that the right to vote, the right to tender in the event of a tender offer, or
the exercise of certain other rights concerning such Securities are vested in
the Named Fiduciary. The Master Trustee shall act only in accordance with the
procedures set forth in the Plans by which the Named Fiduciary exercise such
rights. Prior to the time any such action is to be taken under any Plan, the
Administrative Committee will advise the Master Trustee of the impending action
and agree with the Master Trustee on the manner of implementing that specific
action.
8.2 General Powers. As to all assets other than Qualifying Employer Securities,
the Master Trustee shall have and exercise the following powers and authority
in the administration of the Fund only on the direction of an Asset Manager and
the Named Fiduciary where such powers and authority relate to a Directed Fund
and in its sole discretion where such powers and authority relate to
investments made by the Master Trustee in accordance with Section 5.3:
(a) to purchase, receive or subscribe for any securities or other property and
to retain in trust such securities or other property;
(b) to sell, exchange, convey, transfer, lend, or otherwise dispose of any
property held in the Fund and to make any sale by private contract or public
auction; and no person dealing with the Master Trustee shall be bound to see to
the application of the purchase money or to inquire into the validity,
expediency or propriety of any such sale or other disposition;
(c) to vote in person or by proxy any stocks, bonds or other securities held in
the Fund;
(d) to exercise any rights appurtenant to any such stocks, bonds or other
securities for the conversion thereof into other stocks, bonds or securities,
or to exercise rights or options to subscribe for or purchase additional
stocks, bonds or other securities, and to make any and all necessary payments
with respect to any such conversion or exercise, as well as to write options
with respect to such stocks and to enter into any transactions in other forms
of options with respect to any options which the Fund has outstanding at any
time;
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(e) to join in, dissent from or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties of which the Fund
may bold stocks, bonds or other securities or in which it may be interested,
upon such terms and conditions as deemed wise, to pay any expenses, assessments
or subscriptions in connection therewith, and to accept any securities or
property, whether or not trustees would be authorized to invest in such
securities or property, which may be issued upon any such reorganization,
recapitalization, consolidation, sale or merger and thereafter to hold the
same, without any duty to sell;
(f) to manage, administer, operate or lease for any number of years, regardless
of any restrictions on leases made by fiduciaries, develop, improve, repair,
alter, demolish, mortgage, pledge, grant options with respect to, or otherwise
deal with any real property or interest therein at any time held by it, all
upon such terms and conditions as may be deemed advisable, to renew or extend
or participate in the renewal or extension of any mortgage upon such terms as
may be deemed advisable, and to agree to a reduction in the rate of interest on
any mortgage or any other modification or change in the terms of any mortgage
or of any guarantee pertaining thereto in any manner and to any extent that may
be deemed advisable for the protection of the Fund or the preservation of the
value of the investment; to waive any default, whether in the performance of
any guarantee, or to enforce any default in such manner and to such extent as
may be deemed advisable; to exercise and enforce any and all rights of
foreclosure, to bid on the property in foreclosure, to take a deed in lieu of
foreclosure, with or without paying a consideration therefor, and in connection
therewith to release the obligation on the bonds or notes secured by such
mortgage and to exercise and enforce in any action, suit or proceeding at law
or in equity any right or remedy in respect to any such mortgage or guarantee;
(g) to explore for and to develop mineral interests and other natural resources
and to acquire land, either by lease or purchase, for such purpose, and to
enter into any type of contract or agreement incident thereto, and to sell any
product produced by reason of or resulting from such development or exploration
to any person or persons on such terms and conditions as the Master Trustee or
Asset Manager deems advisable, and to enter into agreements and contracts for
transportation of the same;
(h) to insure, according to customary standards, any property held in the Fund
for any amount and to pay any premiums required for such coverage;
(i) to purchase or otherwise acquire and make payment therefor from the Fund
any bond or other form of guarantee or surety required by any authority having
jurisdiction over this Trust
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and its operation, or believed the Master Trustee or Asset Manager to be in the
best interests of the Fund, except the Master Trustee or Asset Manager may not
obtain any insurance whose premium obligation extended to the Fund which would
protect the Master Trustee or Asset Manager against its liability for breach of
fiduciary duty;
(j) to enter into any type of with any insurance company or companies, either
for the purposes of investment or otherwise; provided that no insurance company
dealing with the Master Trustee shall be considered to be a party to this
Agreement and shall only be bound by and held accountable to the extent of its
contract with the Master Trustee. Except as otherwise provided by any contract,
the insurance company need only look to the Master Trustee with regard to any
instructions issued and shall make disbursements or payments to any person,
including the Master Trustee, as shall be directed by the Master Trustee. Where
applicable, the Master Trustee shall be the sole owner of any and all insurance
policies or contracts issued. Such contracts or policies, unless otherwise
determined, shall be held as an asset of the Fund for safekeeping or custodian
purposes only;
(k) to lend the assets of the Fund upon such terms and conditions as are deemed
appropriate in the sole discretion of the Master Trustee and, specifically, to
loan any securities to brokers, dealers or banks upon such terms, and secured
in such manner, as may be determined by the Master Trustee, to permit the
loaned securities to be transferred into the name of the borrower or others and
to permit the borrower to exercise such rights of ownership over the loaned
securities as may be required under the terms of any such loan; provided, that,
with respect to the lending of securities pursuant to this paragraph, the
Master Trustee's powers shall subsume the role of custodian (the expressed
intent hereunder being that the Corporation, in such case, be deemed a
financial institution, within the meaning of section 101(22) of the Bankruptcy
Code); and provided, further, that any loans made from the Fund shall be made
in conformity with such laws or regulations governing such lending activities
which may have been promulgated by any appropriate regulatory body at the time
of such loan;
(l) to purchase, enter, sell, hold, and generally deal in any manner in and
with contracts for the immediate or future delivery of financial instruments of
any issuer or of any other property; to grant, purchase, sell, exercise, permit
to expire, permit to be held in escrow, and otherwise to acquire, dispose of,
hold and generally deal in any manner with and in all forms of options in any
combination;
(m) to lend the assets of the Fund to participants of the Plan. The
Corporation shall have full and exclusive
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responsibility for loans made to participants, including, without limitation,
full and exclusive responsibility for the following: development of procedures
and documentation for such loans; acceptance of loan applications; approval of
loan applications; disclosure of interest rate information required by
Regulation Z of the Federal Reserve Board promulgated pursuant to the Truth in
Lending Act, 15 U.S.C. Section 1601 et seq.; acting as agent for the physical
custody and safekeeping of the promissory notes and other loan documents;
performing necessary and appropriate recordkeeping and accounting functions
with respect to loan transactions; enforcement of promissory note terms,
including, but not limited to, directing the Master Trustee to take specified
actions; and maintenance of accounts and records regarding interest and
principal payments on notes. The Master Trustee shall not in any way be
responsible for holding or reviewing such documents, records and procedures and
shall be entitled to rely upon such information as is provided by the
Corporation or its own sub-agent or recordkeeper without any requirement or
responsibility to inquire as to the completeness or accuracy thereof, but may
from time to time examine such documents, records and procedures, as it deems
appropriate. The Corporation shall indemnify and hold the Master Trustee
harmless from all damages, costs or expenses, including reasonable attorneys
fees, arising out of any action or inaction of the Corporation with respect to
its agency responsibilities described herein with respect to participant loans.
8.3 Specific Powers of Master Trustee. The Master Trustee shall have the
following powers and authority, to be exercised in its sole discretion with
respect to the Fund:
(a) to appoint agents, custodians, depositories or counsel, domestic or
foreign, as to part or all of the Fund and functions incident thereto where, in
the sole discretion of the Master Trustee, such delegation is necessary in
order to facilitate the operations of the Fund and such delegation is not
inconsistent with the purposes of the Fund or in contravention of any
applicable law. To the extent that the appointment of any such person or entity
may be deemed to be the appointment of a fiduciary, the Master Trustee may
exercise the powers granted hereby to appoint as such a fiduciary any person or
entity, including, but not limited to, the Named Fiduciary or the Corporation,
notwithstanding the fact that such person or entity is then considered a
fiduciary, a party in interest or a disqualified person. Upon such delegation,
the Master Trustee may require such reports, bonds or written agreements as it
deems necessary to properly monitor the actions of its delegate;
(b) to cause any investment, either in whole or in part, in the Fund to be
registered in, or transferred into, the Master Trustee's name or the names of a
nominee or nominees, including
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but not limited to that of the Master Trustee, a clearing corporation, or a
depository, or in book entry form, or to retain any such investment
unregistered or in a form permitting transfer by delivery, provided that the
books and records of the Master Trustee shall at all times show that such
investments are a part of the Fund; and to cause any such investment, or the
evidence thereof, to be held by the Master Trustee, in a depository, in a
clearing corporation, in book entry form, or by any other entity or in any
other manner permitted by law;
(c) to make, execute and deliver, as trustee, any and all deeds, leases,
mortgages, conveyances, waivers, releases or other instruments in writing
necessary or desirable for the accomplishment of any of the foregoing powers;
(d) to defend against or participate in any legal actions involving the Fund or
the Master Trustee in its capacity stated herein, in the manner and to the
extent it deems advisable, the costs of any such defense or participation to be
borne by the Fund, unless paid by the Corporation in accordance with Section
11; provided however, the Master Trustee shall notify the Named Fiduciary and
the Corporation of all such actions and the Corporation may, in its sole
discretion, determine against the incurrence of any such legal fees and
expenses which may be incurred beyond those necessary to protect the Fund
against default or immediate loss and may participate in the selection of and
instructions to legal counsel;
(e) to form corporations and to create trusts, to hold title to any security or
other property, to enter into agreements creating partnerships or joint
ventures for any purpose or purposes determined by the Master Trustee to be in
the best interests of the Fund;
(f) to establish and maintain such separate accounts in accordance with the
instructions of the Administrative Committee for the proper administration of
the Plans, or as determined to be necessary by the Master Trustee. Such
accounts shall be subject to the general terms of this Agreement, unless the
Master Trustee is notified of a contrary intent by the Administrative Committee
or the Named Fiduciary in writing; and
(g) to generally take all action, whether or not expressly authorized, which
the Master Trustee may deem necessary or desirable for the protection of the
Fund.
8.4 Maintenance of Indicia of Ownership. The Master Trustee shall not maintain
indicia of ownership of any asset of the Fund held by it outside the
jurisdiction of the District Courts of the United States unless such holding is
approved through
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ruling or regulations promugulated under the Act by the Secretary of Labor.
8.5 Third Party Transactions. In addition, and not by way of limitation, the
Master Trustee shall have any and all powers and duties concerning the
investment, retention or sale of property held in trust as if it were absolute
owner of the property, and no restrictions with regard to the property so held
shall be implied, warranted or sustained by reason of this Agreement; provided,
however, at no time shall the exercise of such powers and duties establish any
evidence which would permit a third party to assert a right, title or interest
superior to that of the Plans in the property held in the Fund.
SECTION 9
Discretionary Powers
9.1 Master Trustee Granted Discretion. The Master Trustee is hereby granted any
and all discretionary powers not explicitly or implicitly conferred by this
Agreement which it may deem necessary or proper for the protection of the
property held hereunder.
SECTION 10
Prohibited Transactions
10.1 Transactions which are Prohibited. Notwithstanding any provision of this
Agreement, either appearing before or after this Section, the Master Trustee
shall not engage in or cause the Trust to engage in any transaction if it knows
or should know, that such transaction constitutes a direct or indirect
prohibited transaction, as defined in Section 406 of ERISA or Section 4975 of
the Code.
10.2 Provision of Ancillary Services by Master Trustee. Notwithstanding the
foregoing, the Master Trustee may, in addition to the services rendered in
conjunction with its duties and responsibilities as Master Trustee under the
terms of this Agreement, provide such ancillary services as meet the following
standards:
(a) there have been adopted by the Master Trustee internal safeguards which
assure that such ancillary services are consistent with sound banking and
financial practices as determined by the appropriate banking authority;
(b) the ancillary services are provided in accordance with guidelines which
are intended to meet the standards established by the appropriate banking
authority; and
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(c) the compensation received by the Master Trustee for such services is
reasonable and established in an arm's length manner.
SECTION 11
Expenses, Compensation and Taxes
11.1 Compensation and Expenses of the Master Trustee. The Master Trustee shall
be entitled to such reasonable compensation for services rendered by it in
accordance with the schedule of compensation as agreed upon by the Corporation
and the Master Trustee from time to time together with all reasonable expenses
incurred by the Master Trustee as a result of the execution of its duties
hereunder, including, but not limited to, legal and accounting expenses,
expenses incurred as a result of disbursements and payments made by the Master
Trustee, and reasonable compensation for agents, counsel or other services
rendered to the Master Trustee by third parties and expenses incident thereto.
11.2 Payment from the Fund. All compensation, expenses, taxes and assessments
in respect of the Fund, to the extent that they are not paid by the
Corporation, shall constitute a charge upon the Fund and be paid by the Master
Trustee from the Fund upon written notice to the Corporation.
11.3 Payment of Taxes. The Master Trustee shall notify the Corporation upon
receipt of notice with regard to any proposed tax deficiencies or any tax
assessments which it receives on any income or property in the Fund and, unless
notified to the contrary by the Corporation within thirty (30) days, shall pay
any such assessments. If the Corporation notifies the Master Trustee within
said period that, in its opinion or the opinion of counsel, such assessments
are invalid or that they should be contested, then the Master Trustee shall
take whatever action is indicated in the notice received from the Corporation
or counsel, including contesting the assessment or litigating any claims.
SECTION 12
Accounts, Books and Records of the Fund
12.1 Recordkeeping Duty of Master Trustee. The Master Trustee shall keep
accurate and detailed accounts of all investments, receipts and disbursements
and other transactions hereunder, and all accounts, books and records
relating thereto shall be open at all reasonable times to inspection and audit
by any person designated by the Corporation.
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12.2 Periodic Reports. In addition, within sixty (60) days following the close
of each fiscal year of the Fund, or following the close of such other period as
may be agreed upon between the Master Trustee and the Corporation, and within
one hundred twenty (120) days, or such other agreed upon period, unless such
period be waived, after the removal or resignation of the Master Trustee as
provided for in this Agreement, the Master Trustee shall file with the
Administrative Committee, Named Fiduciary and/or the Corporation a certified
written report setting forth all investments, receipts and disbursements, and
other transactions effected during the fiscal year or other annual period or
during the period from the close of the preceding fiscal year or other
preceding period to the date of such removal or resignation, including a
description of all securities and investment purchases and sales with the cost
or net proceeds of such purchases or sales and showing all cash, securities and
other property held at the close of such fiscal year or other period, valued
currently, and such other information as may be required of the Master Trustee
under any applicable law.
12.3 Additional Accounting. Except as provided below, neither the
Administrative Committee, Named Fiduciary nor the Corporation shall have the
right to demand or be entitled to any further accounting different from the
normal accounting rendered by the Master Trustee. Further, no participant,
beneficiary or any other person shall have the right to demand or be entitled
to any accounting by the Master Trustee, other than those to which they may be
entitled under the law. The Administrative Committee, Named Fiduciary or the
Corporation shall have the right to inspect the Master Trustee's books and
records relating to the Fund during normal business hours or to designate an
accountant to make such inspection, study, and/or audit with all expenses
related thereto to be paid by the Corporation.
12.4 Judicial Determination Accounts. Nothing contained herein will be
construed or interpreted to deny the Master Trustee or the Corporation the
right to have the Master Trustee's account judicially determined.
12.5 Limitation of Actions. Notwithstanding any other provision of the Plans or
this Agreement, the Master Trustee shall not be subject to any liability for
any act or omission, regardless of its nature, unless an action has been
commenced against the Master Trustee with respect to such act or omission
within the period set forth in Section 413 of the Act.
12.6 Filings be Administrative Committee. For the purposes of this Section, the
Master Trustee shall conclusively presume that the Administrative Committee has
made or caused to be made, or, will make or cause to be made, all Federal
filings as of the date required. Should the Master Trustee incur any
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liability by reason of failure of the Administrative Committee to timely file,
the Corporation shall fully reimburse the Master Trustee for any and all
obligations, including penalties, interest or expenses, so incurred by the
Master Trustee.
12.7 Determination of Fair Market Value. The Master Trustee shall determine the
fair market value of the Fund monthly and annually based upon generally
accepted accounting principles applicable to trusts of a same or similar nature
to the one created herein.
12.8 Retention of Records. All records and accounts maintained by the Master
Trustee with respect to the Fund shall be preserved for such period as may be
required under any applicable law. Upon the expiration of any such required
retention period, the Master Trustee shall have the right to destroy such
records and accounts after first notifying the Corporation in writing of its
intention and transferring to the Corporation any records and accounts
requested. The Master Trustee shall have the right to preserve all records and
accounts in original form, or on microfilm, magnetic tape, or any other similar
process.
SECTION 13
Fiduciary Duties of Master Trustee
13.1 Acknowledgement of Fiduciary Duty. The Master Trustee acknowledges that it
assumes the fiduciary duties established by this Agreement.
13.2 Judicial Determination. The Master Trustee shall not, however, be liable
for any loss to or diminution of the Fund except to the extent that any such
loss or diminution results from act or inaction on the part of the Master
Trustee which is judicially determined to be a breach of its fiduciary duties.
SECTION 14
Resignation and Removal
14.1 Power to Resign or Remove. The Master Trustee may be removed with
respect to all, or a part of, the Fund by the Corporation, upon written notice
to the Master Trustee to that effect. The Master Trustee may resign as Master
Trustee hereunder, upon written notice to that effect delivered to the
Corporation.
14.2 Notice. Such removal or resignation shall become effective as of the last
day of the month which coincides with or next follows the expiration of sixty
(60) days from the date
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of the delivery of such written notice, unless an earlier or later date is
agreed upon in writing by the Corporation and the Master Trustee.
14.3 Successor Appointment. In the event of such removal or resignation, a
successor Master Trustee, or a separate trustee or trustees, shall be appointed
by the Corporation to become Master Trustee, or a separate trustee or trustees,
as of the time such removal or resignation becomes effective. Such successor
Master Trustee, or separate trustee or trustees, shall accept such appointment
by an instrument in writing delivered to the
Corporation and the Master Trustee and upon becoming successor Master Trustee,
or separate trustee or trustees, shall be vested with all the rights, powers,
duties, privileges and immunities as successor Master Trustee, or separate
trustee or trustees, hereunder as if originally designated as Master Trustee,
or separate trustee or trustees, in this Agreement.
14.4 Transfer of Fund to Successor. Upon such appointment and acceptance, the
retiring Master Trustee shall endorse, transfer, assign, convey and deliver to
the successor Master Trustee, or separate trustee or trustees, all of the
funds, securities and other property then held by it in the Fund, except such
amount as may be reasonable and necessary to cover its compensation and
expenses as may be agreed to by the Corporation in connection with the
settlement of its accounts and the delivery of the Fund to the successor Master
Trustee, or separate trustee or trustees, and the balance remaining of any
amount so reserved shall be transferred and paid over to the successor Master
Trustee, or separate trustee or trustees, promptly upon settlement of its
accounts, subject to the right of the retiring Master Trustee to retain any
property deemed unsuitable by it for transfer until such time as transfer can
be made.
14.5 Retention of Nontransferable Assets. If the retiring Master Trustee holds
any property unsuitable for transfer, it shall retain such property, and as to
such property alone it shall be a co-trustee with the successor Master Trustee,
or separate trustee or trustees, its duties and obligations being solely
limited to any such property, and it shall not have fiduciary duties of any
nature as to assets transferred. Should the successor Master Trustee, or
separate trustee or trustees, accept fiduciary responsibility as to such
property, the Master Trustee shall retain only custodian duties as to such
property.
14.6 Accounting. In the event of the removal or resignation of the Master
Trustee hereunder, the Master Trustee shall file with the Corporation a
statement and report of its accounts and proceedings covering the period from
its last annual statement
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and report, and its liability and accountability to anyone with respect to
the propriety of it acts and transactions shown in such written statement and
report shall be governed by the terms of this Agreement.
SECTION 15
Actions by the Corporation,
the Administrative Committee or Named Fiduciary
15.1 Action by Corporation. Any action by the Corporation pursuant to this
Agreement shall be evidenced or empowered in writing to the Master Trustee, and
the Master Trustee shall be entitled to rely on such writing.
15.2 Act by the Administrative Committee or Named Fiduciary. Any action by any
person or entity duly empowered to act on behalf of the Administrative
Committee or the Named Fiduciary with respect to any rights, powers or duties
specified in this Agreement shall be in writing, signed by such person or by
the person designated by the Administrative Committee or the Named Fiduciary
and the Master Trustee shall act and shall be fully protected in acting in
accordance with such writing.
SECTION 16
Amendment or Termination
16.1 Amendment or Termination. The Corporation shall have the right at any time
and from time to time by appropriate action:
(a) to modify or amend in whole or in part any or all of the provisions of this
Agreement upon sixty (60) days' prior notice in writing to the Master Trustee,
unless the Master Trustee agrees to waive such notice; provided, however, that
no modification or amendment which affects the rights, duties or
responsibilities of the Master Trustee may be made without the Master Trustee's
consent, or
(b) to terminate this Agreement sixty (60) days' prior notice in writing
delivered to the Master Trustee;
provided, further, that no termination, modification or amendment shall permit
any part of the corpus or income of the Fund to be used for or diverted to
purposes other than for the exclusive benefit of such participants, retired
participants and their beneficiaries, except for the return of Corporation
contributions which are allowed by law and permitted under a Plan.
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16.2 PBGC Approval. Should this Trust form a part of a Plan subject to the
jurisdiction of the Pension Benefit Guaranty Corporation ("PBGC") as provided
in ERISA, and should the Corporation notify the Master Trustee of the
termination of a Plan, the Master Trustee shall take no action as to the
termination of this Trust with respect to such Plan, until it has received
notice from the Named Fiduciary or the Corporation that such termination has
been approved by the PBGC. Thereafter and in the event that this Trust does
not form a part of a Plan subject to the jurisdiction of the PBGC, the Master
Trustee shall distribute all cash, securities and other property then
constituting the Fund, less any amounts constituting charges and expenses
payable from the Fund, on the date or dates specified by the Administrative
Committee to such persons and in such manner as the Administrative Committee
shall direct. In making such distributions, the Master Trustee shall be
entitled to assume that such distributions are in full compliance with and are
not in violation of any applicable law regulating the termination of any kind
whatsoever arising from any distribution made by the Master Trustee at the
direction of the Administrative Committee as a result of the termination of
this Agreement and shall indemnify and save the Master Trustee harmless from
any attempt to impose any liability on the Master Trustee with respect to any
such distribution.
16.3 Retention of Nontransferable Property. The Master Trustee reserves the
right to retain such property as is not, in the sole discretion of the Master
Trustee, suitable for distribution at the time of termination of this Agreement
and shall hold such property as custodian for those persons or other entities
entitled to such property until such time as the Master Trustee is able to make
distribution. The Master Trustee's duties and obligations with respect to any
property held in accordance with the above shall be purely custodial in nature
and the Master Trustee shall only be obligated to see to the safekeeping of
such property and make a reasonable effort to prevent deterioration or waste of
such property prior to its distribution. Upon complete distribution of all
property constituting the Fund, this Agreement shall be deemed terminated.
16.4 Termination in the Absence of Directions From the Administrative
Committee. In the event no direction is provided by the Administrative
Committee with respect to the distribution of a Plan's portion of the Fund upon
termination of this Agreement, the Master Trustee shall make such distributions
as are specified by the Plan after notice to the Corporation. In the event the
Plan is silent as to the distributions to be made upon termination of the Plan
or the terms of the Plan are inconsistent with the then applicable law or the
Master Trustee is unable to obtain a copy of the most recent Plan, the Master
Trustee shall distribute the Fund to participants and their beneficiaries under
the Plan in an
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equitable manner that will not adversely affect the qualified status of the
Plan under Section 401(a) of the Code or any other statute of similar import and
that will comply with any applicable provisions of ERISA regulating the
allocation of assets upon termination of plans such as the Plan. The Master
Trustee, in such cases, reserves the right to seek a judicial and
administrative determination as to the proper method of distribution of the
Fund upon termination of this Agreement.
16.5 Termination on Corporate Dissolution. If the Corporation ceases to exist
as a result of liquidation, dissolution or acquisition in some manner, the Fund
shall be distributed as provided above upon termination of a Plan unless a
successor company elects to continue the Plan and this Agreement as provided in
this Agreement.
SECTION 17
Merger or Consolidation
17.1 Merger or Consolidation of Master Trustee. Any corporation, or national
association, into which the Master Trustee may be merged or with which it may
be consolidated, or any corporation, or national association, resulting from
any merger or consolidation to which the Master Trustee is a party, or any
corporation, or national association, succeeding to the trust business of the
Master Trustee, shall become the successor of the Master Trustee hereunder,
without the execution or filing of any instrument or the performance of any
further act on the part of the parties hereto.
17.2 Merger or Consolidation of Corporation. Any corporation into which the
Corporation may be merged or with which it may be consolidated, or any
corporation succeeding to all or a substantial part of the business interests
of the Corporation may become the Corporation hereunder by expressly adopting
and agreeing to be bound by the terms and conditions of the Plan and this
Agreement and so notifying the Master Trustee to such effect by submission to
the Master Trustee of an appropriate written document.
17.3 Merger or Consolidation of Plan. In the event that the Named Fiduciary or
the Corporation authorizes and directs that the assets of another plan be
merged or consolidated with or transferred to a Plan participating in this
Trust, the Master Trustee shall take no action with regard to such merger,
consolidation or transfer until it has been notified in writing that each
participant covered under the plan the assets of which are to be merged
consolidated or transferred will immediately after such merger, consolidation
or transfer be entitled to a benefit either equal to or then greater than the
benefit he would have been entitled to had the Plan been terminated.
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SECTION 18
Acceptance of Trust
18.1 Acceptance by Master Trustee. The Master Trustee accepts the Trust
created hereunder and agrees to be bound by all the terms of this Agreement.
SECTION 19
Nonalienation of Trust
19.1 Trust not Subject to Assignment or Alienation. Except as heretofore
provided, no company, participant or beneficiary of the Plans to which the
Trust applies shall have any interest in or right to the assets of this Trust,
and to the full extent of all applicable laws, the assets of this Trust shall
not be subject to any form of attachment, garnishment, sequestration or other
actions of collection afforded creditors of the Corporation, participants or
beneficiaries. The Master Trustee shall not recognize any assignment or
alienation of benefits unless, and then only to the extent, written notices are
received from the Administrative Committee.
19.2 Plans' Interest in Trust not Assignable. The equity or interest of any
participating Plan in the Fund shall not be assignable.
SECTION 20
Governing Law
20.1 Governing Law. This Agreement shall be construed and enforced, to the
extent possible, according to the laws of the Commonwealth of Pennsylvania, and
all provisions hereof shall be administered according to the laws of said
Commonwealth and any federal laws, regulations or rules which may from time to
time be applicable. In case of any conflict between the provisions of the Plans
and this Agreement, the provisions of this Agreement shall govern.
SECTION 21
Parties to Court Proceedings
21.1 Only Corporation and Master Trustee Necessary. To the extent permitted by
law, only the Master Trustee and the Corporation shall be necessary parties in
any application to the courts for an interpretation of this Agreement or for an
accounting by the Master Trustee, and no participant under any Plan or other
person having an interest in the Fund shall be
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entitled to any notice or service of process. Any final judgment entered in
such an action or proceeding shall, to the extent permitted by law, be
conclusive upon all persons claiming under this Agreement or any Plan.
Section 22
Subsidiaries and Affiliates
22.1 Adoption of Master Trust by Subsidiaries and Affiliates. Any Company which
is a subsidiary of the Corporation or which may be affiliated with the
Corporation in any way and which is now or may hereafter be organized under the
laws of the United States of America, or of any State or Territory thereof,
with the approval of the Corporation, by resolution of its own Board of
Directors, may adopt this Agreement, if such subsidiary or affiliate shall have
adopted one or more Plans qualified under Section 401(a) of the Code, as
amended. If any such subsidiary or affiliate so adopts this Agreement, this
Agreement shall establish the trust for such Plans as are specified by such
subsidiary or affiliate and shall constitute a continuation, amendment and
restatement of any prior trust for any such Plans. Furthermore, the assets of
any such Plans may be commingled with the assets of other Plans held in the
Fund pursuant to Section 2.7 hereof. However, the assets of any Plan so held
in the Fund shall not be subject to any claim arising under any other Plan, the
assets of which are commingled therewith by the Master Trustee for investment
purposes, and under no circumstances shall any of the assets of one Plan be
available to provide the benefits under another Plan. A separate trust shall be
deemed to have been created with respect to each Plan of such subsidiary or
affiliate.
22.2 Segregation from Further Participation. Any subsidiary or affiliate of the
Corporation may, at any time, with the consent of the Corporation, segregate a
Plan's trust from further participation in this Agreement. In such event, such
subsidiary or affiliate shall file with the Master Trustee a document
evidencing the segregation of the Plan from the Fund and its continuance of a
separate trust in accordance with the provisions of this Agreement as though
such subsidiary or affiliate were the sole creator thereof. In such event, the
Master Trustee shall deliver to itself as Master Trustee of such separate trust
such share of the Fund as may be determined by the Master Trustee to constitute
the appropriate share of the Fund, as confirmed by the Corporation, then held
in respect of the participating employees of such subsidiary or affiliate. Such
subsidiary or affiliate may thereafter exercise, in respect of such separate
trust, all of the rights and powers reserved to the Corporation under the
provisions of this Agreement. The equitable share of any Plan participating in
the Fund shall be immediately segregated and withdrawn from the Fund if the
Plan ceases to be qualified under Section
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401(a) of the Code and the Corporation shall promptly notify the Master Trustee
of any determination by the Internal Revenue Service that any such Plan has
ceased to be so qualified.
22.3 Segregation of Assets Allocable to specific employees. The Administrative
Committee may at any time direct the Master Trustee to segregate and withdraw
the equitable share of any such Plan, or that portion of such equitable share
as may be certified to the Master Trustee by the Administrative Committee as
allocable to any specified group or groups of employees or beneficiaries.
Whenever segregation is required, the Master Trustee shall withdraw from the
Fund such assets as it shall in its absolute discretion deem to be equal in
value to the equitable share to be segregated. Such withdrawal from the Fund
shall be in cash or in any property held in such Fund, or in a combination of
both, in the absolute discretion of the Master Trustee. The Master Trustee
shall thereafter hold the assets so withdrawn as a separate trust fund in
accordance with the provisions of this Agreement, which shall be construed in
respect of such assets as if the employer maintaining such Plan (determined
without regard to whether any subsidiaries or affiliates of such employer have
joined in such Plan) has been named as the Corporation hereunder. Such
segregation shall not preclude later readmission to the Fund.
SECTION 23
Authorities
23.1 Corporation. Whenever the provisions of this Agreement specifically
require or permit any action to be taken by "the Corporation", such action must
be authorized by the Board of Directors. Any resolution adopted by the Board of
Directors or other evidence of such authorization shall be certified to the
Master Trustee by the Secretary or an Assistant Secretary of the Corporation
under its corporate seal, and the Trustee may rely upon any authorization so
certified until revoked or modified by a further action of the Board of
Directors similarly certified to the Master Trustee.
23.2 Subsidiary or Affiliate. Any action required or permitted to be taken under
this Agreement by a subsidiary or affiliate of the Corporation shall be given
by the board of directors thereof in the manner described in Section 23.1.
23.3 Named Fiduciary and Administrative Committee. The Corporation shall
furnish the Master Trustee from time to time with a list of the names and
signatures of all Persons (other than the Corporation) authorized to act as the
Corporation designee under Section 1.1, is a Named Fiduciary, as members of the
Administrative Committee, or in any other manner authorized to issue orders,
notices, requests, instructions and objections
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to the Master Trustee pursuant to the provisions of this Agreement. Any such
list shall be certified by the Secretary or an Assistant Secretary of the
Corporation (or by the Secretary or an Assistant Secretary of any subsidary or
affiliate of the Corporation with respect to members of the Administrative
Committee of the Participating Plans), and may be relied upon for accuracy and
completeness by the Master Trustee. Each such Person shall thereupon furnish
the Master Trustee with a list of the names and signatures of those individuals
who are authorized, jointly or severally, to act for such Person hereunder, and
the Master Trustee shall be fully protected in acting upon any notices or
directions received from any of them.
23.4 Investment Manager. The Named Fiduciary shall cause each Investment Manager
to furnish the Master Trustee from time to time with the names and signatures
of those persons authorized to direct the Master Trustee on its behalf
hereunder.
23.5 Form of Communications. Any agreement between the Corporation and any
Person (including an Investment Manager) or any other provision of this
Agreement to the contrary notwithstanding, all notices, directions and
other communications to the Master Trustee shall be in writing or in such other
form, including transmission by electronic means through the facilities of
third parties or otherwise, specifically agreed to in writing by the Master
Trustee, and the Master Trustee shall be fully protected in acting in
accordance therewith.
23.6 Continuation of Authority. The Master Trustee shall have the right to
assume, in the absence of written notice to the contrary, that no event
constituting a change in the Named Fiduciary or membership of the
Administrative Committee or terminating the authority of any Person, including
any Investment Manager, has occurred.
23.7 No Obligation to Act on Unsatisfactory Notice. The Master Trustee shall
incur no liability under this Agreement for any failure to act pursuant to any
notice, direction or any other communication from any Asset Manager, the
Corporation, the Administrative Committee, or any other Person or the designee
of any of them unless and until it shall have received instructions in form
satisfactory to it.
-30-
<PAGE> 32
SECTION 24
Counterparts
24.1 Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument and may be sufficiently
evidenced by any one counterpart.
IN WITNESS WHEREOF, the parties hereto, each intending to be legally
bound hereby, have hereunto set their hands and seals as of the day and year
first above written.
A.H. BELO CORPORATION
By /s/ MICHAEL J. McCARTHY
-------------------------------------
Name: Michael J. McCarthy
Title: Sr. VP, General Counsel
MELLON BANK, N.A.
By /s/ ROBERT T. BORZA
-------------------------------------
Name: Robert T. Borza
Title: Vice President
-31-
<PAGE> 33
EXHIBIT "A"
A.H. Belo Employee Savings and Investment Plan Trust Agreement
-32-
<PAGE> 34
EXHIBIT "B"
A.H. Belo Employee Savings and Investment Plan
-33-
<PAGE> 1
EXHIBIT 10.3(21)
FIRST AMENDMENT TO
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
by and between
A.H. BELO CORPORATION
and
MELLON BANK, N.A.
THIS FIRST AMENDMENT TO MASTER DEFINED CONTRIBUTION TRUST AGREEMENT is
made and entered into this 3rd day of March, 1995, effective March 3rd, 1995
(this "Amendment"), by and between A.H. BELO CORPORATION (hereinafter referred
to as the "Corporation") and MELLON BANK, N.A. (hereinafter referred to as the
"Master Trustee").
W I T N E S S E T H:
WHEREAS, the Corporation and the Master Trustee made and entered into
a Master Defined Contribution Trust Agreement (the "Agreement") on December 22,
1992, effective as of January 1, 1993; and
WHEREAS, the Corporation and the Master Trustee desire to amend the
Agreement in certain ways;
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby amend the Agreement as follows:
1. The representations and definitions set forth above are
incorporated herein by this reference thereto.
2. The following text shall be added as new Section 1.4:
"1.4 Notwithstanding anything else in this Agreement
to the contrary: (1) the Master Trustee is not a
party to, and has no duties or
<PAGE> 2
responsibilities under, the Plans; (2) the
Administrative Committee shall be required to certify
in writing to the Master Trustee the identity of any
fiduciary which is named in the Plans and which has
the power to manage and control Plan assets, and the
Master Trustee shall be entitled to rely upon such
certification until notified otherwise in writing by
the Administrative Committee; (3) in any and all
cases where the Master Trustee is required by this
Agreement to act with reference to Plan terms, the
Administrative Committee shall have the
responsibility to certify the relevant provisions to
the Master Trustee in writing, and the Master Trustee
shall be entitled to rely upon such certification
until notified otherwise in writing by the
Administrative Committee; (4) absent written
certification to the Master Trustee pursuant to this
paragraph, the Master Trustee shall be chargeable
with no knowledge of any Plan terms and shall be
deemed to be in compliance with the Plans; and (5) in
any case in which a provision of this Agreement
conflicts with any provision in the Plans, this
Agreement shall control. Notwithstanding the
preceding sentence, the Master Trustee reserves the
right to seek a judicial and/or administrative
determination as to its proper course of action under
this Agreement."
3. Section 22.1 shall be amended by substituting "Section 2.6"
for "Section 2.7".
4. Except as set forth herein, the Agreement is hereby ratified
and confirmed and remains in full force and effect.
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto, each intending to be legally
bound hereby, have executed this First Amendment to Master Defined Contribution
Trust Agreement as of the day and year first above written.
A.H. BELO CORPORATION
By /s/ VICKY C. TEHERANI
-----------------------------------
Name: Vicky C. Teherani
Title: Vice President & Treasurer
MELLON BANK, N.A.
REVIEWED By /s/ ROBERT F. SASS
-----------------------------------
[ILLEGIBLE] Name: Robert F. Sass
----------------- Title: Vice President
LEGAL DEPARTMENT
- 3 -
<PAGE> 1
EXHIBIT 10.3(22)
SECOND AMENDMENT
TO
MASTER DEFINED CONTRIBUTION TRUST AGREEMENT
A. H. Belo Corporation (the "Corporation"), Mellon Bank, N.A.
("Mellon"), and U. S. Trust Company of California, N. A. ("U. S. Trust"),
hereby agree to amend the Master Defined Contribution Trust Agreement (the
"Master Trust") by and between A. H. Belo Corporation and Mellon Bank, N.A.,
dated as of December 22, 1992 and effective as of January 1, 1993, as amended
effective March 3, 1995 as follows, effective as of this 28th day of
February, 1996:
1. All references in the Master Trust to "Mellon Bank, N.A." are
hereby amended to refer to "U. S. Trust Company of California, N.A."
2. Exhibit B is hereby amended by the addition of the following
plan: "A. H. Belo Corporation Employee Thrift Plan".
IN WITNESS WHEREOF, this Second Amendment is executed this 28th day
of February, 1996.
A. H. BELO CORPORATION
By: /s/ VICKY C. TEHERANI
-----------------------------------
Vicky C. Teherani
Vice President & Controller
ACCEPTANCE OF APPOINTMENT
By executing this Second Amendment, U. S. Trust Company of California,
N.A. hereby accepts its appointment as successor Master Trustee pursuant to
Section 14.3 of the Master Trust and shall be vested with all the rights,
powers, duties, privileges and immunities as successor Master Trustee as if
originally designated as Master Trustee in the Master Trust.
U. S. TRUST COMPANY
OF CALIFORNIA, N.A.
By: /s/ CHARLES E. WERT
-----------------------------------
Charles E. Wert
Executive Vice President
<PAGE> 2
CONSENT OF MELLON BANK
By executing this Second Amendment, Mellon Bank, N.A. hereby accepts
its removal as Master Trustee effective as of the date of U. S. Trust's
appointment as successor Master Trustee, consents to waive the 60-day notice
period provided in Section 14.2 of the Master Defined Contribution Trust
Agreement (the "Master Trust") and consents to the amendment of the Master
Trust as provided herein.
MELLON BANK
By: /s/
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
STATE OF
NAME OF CORPORATION INCORPORATION
- ------------------- -------------
NEWSPAPER PUBLISHING:
<S> <C> <C>
The Dallas Morning News, Inc. d/b/a The Dallas Morning News Delaware
Owensboro Messenger-Inquirer, Inc. Delaware
Bryan-College Station Eagle, Inc. Delaware
TELEVISION BROADCASTING:
Great Western Broadcasting Corp. d/b/a KXTV, Channel 10 Delaware
KHOU-TV, Inc. d/b/a KHOU, Channel 11 Delaware
KOTV, Inc. d/b/a KOTV, Channel 6 Delaware
Third Avenue Television, Inc. d/b/a KIRO, Channel 7 Delaware
WFAA-TV, Inc. d/b/a WFAA, Channel 8 Delaware
WVEC Television, Inc. d/b/a WVEC, Channel 13 Delaware
WWL-TV, Inc. d/b/a WWL, Channel 4 Delaware
Blue Ridge Tower Corporation Texas
Hill Tower, Inc. Texas
Transtower, Inc. California
</TABLE>
Except as noted below, all of the subsidiaries are wholly-owned subsidiaries of
the Company. The Company through wholly-owned subsidiaries owns 50% of the
outstanding common stock of Hill Tower, Inc.; 50% of the outstanding common
stock of Blue Ridge Tower Corporation; and 33 1/3% of the outstanding common
stock of Transtower, Inc.
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-30994 and Form S-8 No. 33- 32526) pertaining to the Employee
Savings and Investment Plan and Long-Term Incentive Plan of A.H. Belo
Corporation of our report dated January 24, 1996, with respect to the
consolidated financial statements of A.H. Belo Corporation included in this
Annual Report (Form 10-K) for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
Dallas, Texas
February 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 12,846
<SECURITIES> 0
<RECEIVABLES> 124,705
<ALLOWANCES> 4,164
<INVENTORY> 20,336
<CURRENT-ASSETS> 165,306
<PP&E> 610,491
<DEPRECIATION> (248,650)
<TOTAL-ASSETS> 1,154,022
<CURRENT-LIABILITIES> 81,668
<BONDS> 557,400
<COMMON> 63,864
0
0
<OTHER-SE> 324,600
<TOTAL-LIABILITY-AND-EQUITY> 1,154,022
<SALES> 0
<TOTAL-REVENUES> 735,343
<CGS> 0
<TOTAL-COSTS> 539,333
<OTHER-EXPENSES> 59,447
<LOSS-PROVISION> 5,888
<INTEREST-EXPENSE> 29,987
<INCOME-PRETAX> 111,014
<INCOME-TAX> 44,438
<INCOME-CONTINUING> 66,576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,576
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
</TABLE>
