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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, 1996
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:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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<S> <C>
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)
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
Indicate 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. [ X ]
The aggregate market value of the registrant's voting stock held by
nonaffiliates on January 31, 1997, 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 $1,146,680,000. *
Shares of Common Stock outstanding at January 31, 1997: 36,269,424 shares.
(Consisting of 27,092,611 shares of Series A Common Stock and 9,176,813 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 14, 1997 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
<S> <C> <C>
Item 1. Business.......................................................................................... 1
Item 2. Properties........................................................................................ 6
Item 3. Legal Proceedings................................................................................. 7
Item 4. Submission of Matters to a Vote of Security Holders............................................... 7
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............................. 7
Item 6. Selected Financial Data........................................................................... 8
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations............. 8
Item 8. Financial Statements and Supplementary Data (see Index to Financial Statements below)............. 14
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............. 14
PART III
Item 10. Directors and Executive Officers of the Registrant................................................ 14
Item 11. Executive Compensation............................................................................ 14
Item 12. Security Ownership of Certain Beneficial Owners and Management.................................... 14
Item 13. Certain Relationships and Related Transactions.................................................... 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................... 15
Signatures .................................................................................................. 18
INDEX TO FINANCIAL STATEMENTS
Report of Independent Auditors............................................................................... 20
Consolidated Statements of Earnings for the years ended December 31, 1996, 1995 and 1994..................... 21
Consolidated Balance Sheets as of December 31, 1996 and 1995................................................. 22
Consolidated Statements of Shareholders' Equity for the years ended December 31, 1996, 1995
and 1994 ................................................................................................. 24
Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994................... 25
Notes to Consolidated Financial Statements................................................................... 26
Management's Responsibility for Financial Statements......................................................... 36
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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 eight percent of all U.S.
television households and its principal newspaper, The Dallas Morning News, has
the country's eighth largest Sunday circulation (785,934) and ninth largest
daily circulation (513,099). 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 155 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 is tied for third. 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 daily
newspapers serving Bryan-College Station, Texas and Owensboro, Kentucky. The
Company also publishes the Arlington Morning News and eight community
newspapers in the Dallas-Fort Worth suburban area and operates a commercial
printing business.
On February 19, 1997, the shareholders of the Company and The Providence
Journal Company ("Providence Journal") approved the acquisition by Belo of
Providence Journal in a merger valued at approximately $1.5 billion in cash and
stock. The merger was completed on February 28, 1997 with the issuance of
25,394,564 shares of A. H. Belo Corporation Series A Common Stock and
$587,096,000 in cash. With completion of the merger, Belo adds to its broadcast
holdings nine network-affiliated television stations and four television
stations operated under local marketing agreements. Five of these stations are
affiliated with NBC, two are affiliates of Fox, one is an ABC affiliate and one
is a CBS affiliate. The Company also acquired from Providence Journal the
Providence Journal-Bulletin, the largest daily newspaper in terms of both
advertising and circulation in Rhode Island and southeastern Massachusetts. The
Providence Journal Company also has interactive electronic media services and
produces diversified programming, primarily through its part ownership of two
cable networks, Television Food Network ("TVFN") and America's Health Network
("AHN"). The Company has determined that it will pursue alternate financing and
operating strategies for AHN, including the possible sale of its ownership
interest.
As a result of the merger, the Company will own two television stations in
the Seattle, Washington market (KIRO and KING). To comply with Federal
Communications Commission regulations, the Company will divest one of these
stations. On February 20, 1997, the Company announced an agreement among
multiple parties whereby, through an exchange of assets, it will exchange KIRO
for CBS affiliate KMOV-TV in St. Louis, Missouri. The exchange is subject to
obtaining customary regulatory approvals.
Unless specified otherwise, all information set forth in this report
relates to the Company as of December 31, 1996, prior to the merger with
Providence Journal and related divestiture of KIRO.
Note 12 to the Consolidated Financial Statements contains information
about the Company's industry segments for the years ended December 31, 1996,
1995 and 1994.
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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 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.
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 14 1* 16%
Seattle-Tacoma...... 12 KIRO 1995 UPN 7 8 3* 9%
Sacramento.......... 20 KXTV 1984 ABC 10 9 2* 13%
Hampton-Norfolk..... 40 WVEC 1984 ABC 13 7 1* 18%
New Orleans......... 41 WWL 1994 CBS 4 7 1 27%
Tulsa............... 58 KOTV 1984 CBS 6 8 1 21%
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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 1996 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 1996 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 1996 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 are those affiliated with one of the
three major national networks (ABC, CBS and NBC), and in recent years, Fox has
effectively evolved into a 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 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 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, with the exception of the Company's UPN
affiliate, receives a specified amount of network compensation for broadcasting
network programming. To the extent a station's preemptions of network
programming exceed a designated amount, that compensation may be reduced. These
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 the right of termination by the station in the event of a reduction
in such payments. The Company has renegotiated its affiliation agreements with
ABC, resulting in an increase in the compensation paid by the network to the
Company in return for a long-term extension 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. The Company also has long-term network affiliation agreements in
place with CBS.
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Affiliation with a television network can have a significant influence on
the revenues of a television station because the audience ratings generated 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.
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 daily newspapers serving Bryan-College Station, Texas and Owensboro,
Kentucky. In April 1996, the Company began publishing the Arlington Morning
News, a daily newspaper serving Arlington, Texas.
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 513,099 785,934
Owensboro Messenger-Inquirer............... Owensboro, KY 31,717 34,250
Bryan-College Station Eagle................ Bryan-College Station, TX 21,336 26,948
</TABLE>
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(1) Average paid circulation for the six months ended September 30, 1996,
according to the unaudited Publisher's Statement of the Audit Bureau of
Circulations, an independent agency.
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 12 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, 1996, was
513,099 daily, down 3.9 percent from the 1995 average daily circulation of
534,197. Sunday's average paid circulation was 785,934, down 1.8 percent from
the six months ended September 30, 1995 average of 800,147.
The basic material used in publishing The Dallas Morning News is
newsprint. The average unit cost of newsprint consumed during 1996 was higher
than that of the prior year despite market-wide price decreases beginning in
the second quarter of the year. The Company expects the effect of the 1996
newsprint price decreases to result in lower newsprint cost per ton in 1997. At
present, newsprint is purchased from seven suppliers. During 1996, the
Company's three largest providers of newsprint supplied approximately 70
percent 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 five 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. The Rockwall Texas
Success newspaper is a paid publication that is delivered three days a week.
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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, direct satellite distribution, radio stations, cable
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 an 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 television
industry or on 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, direct satellite distribution,
billboards and other newspapers (including other newspapers owned and operated
by the Company). The Fort Worth Star-Telegram, owned by The Walt Disney
Company, competes with The Dallas Morning News in certain mid-cities markets.
REGULATION OF TELEVISION BROADCASTING
The Company's television broadcasting operations are subject to the
jurisdiction of the Federal Communications Commission ("FCC" or "Commission")
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 FCC recently announced the adoption of specific procedures to
extend broadcast license terms to the eight-year limit. 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.
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Applications for renewal of the broadcast licenses for WFAA, which expired
August 1, 1993, and WWL, which is scheduled to expire on June 1, 1997, are
pending before the FCC. The stations' licenses are, 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, 2001;
and KOTV, June 1, 1998.
FCC ownership rules limit the aggregate audience reach 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, to 35 percent of the total
national audience. 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 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
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. In November 1996, the FCC issued
further notices requesting additional comment on these and related issues.
The FCC has significantly reduced its 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 rules that restricted network
participation in program production and syndication. The FCC also eliminated
the prime time access rule ("PTAR"), effective August 30, 1996. The PTAR
limited the ability of some stations in the 50 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 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 recently adopted stricter children's programming
requirements, including a requirement that broadcasters provide a specific
minimum number of hours of children's programming on a regular basis.
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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 the FCC's current video dial tone rules. These
provisions, among others, foreshadow significant future involvement by
telephone companies in providing video services.
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 received
by viewers, and would give television broadcasters the flexibility to provide
new services, including high-definition television simultaneously with multiple
programs of standard definition television and data transmission. As currently
proposed, each existing broadcaster would be assigned, 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, while the vacated spectrum might
be reallocated and auctioned for use by other telecommunication 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 or require the early return of currently authorized channels, which
would then be auctioned by the FCC. 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 legislation,
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, 1996, the Company had 3,760 full-time employees. The
Company has 229 employees, located principally at its Dallas, Seattle, and New
Orleans television stations, that are represented by various employee unions.
The Company believes its relations with all of its employees are good.
ITEM 2. PROPERTIES
At December 31, 1996, the Company owned broadcast operating facilities in
the following U. S. cities: Dallas, Texas (WFAA); Houston, Texas (KHOU);
Seattle, Washington (KIRO); Sacramento, California (KXTV); Hampton-Norfolk,
Virginia (WVEC); New Orleans, Louisiana (WWL); and Tulsa, Oklahoma (KOTV).
Three of these broadcast facilities use broadcast towers that are jointly owned
with another network affiliated television station in the same market (WFAA,
KXTV and KOTV). The Company's television stations' towers are located in Cedar
Hill and DeWalt, Texas; Seattle, Washington; Sacramento County, California;
Driver, Virginia; Gretna, Louisiana; and Tulsa, Oklahoma.
During 1996, the Company entered into a lease for a facility in Washington
D.C. that is used by both broadcasting and publishing segments for the
gathering and distribution of news from the nation's capital. This facility
includes a broadcast studio as well as general office space.
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
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equipped with computerized input and photocomposition equipment and other
equipment that is used in the production of both news and advertising copy.
The operations of DFW Suburban Newspapers, Inc. and DFW Printing Company,
Inc. 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 has other
newspaper production facilities in Owensboro, Kentucky and Bryan-College
Station, Texas.
The Company's corporate operations, several departments of The Dallas
Morning News and certain broadcast administrative functions have offices
located in downtown Dallas in a 17-story office building owned by the Company.
All of the foregoing operations have additional leasehold interests that
are used 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.
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. See Note 8 to the Consolidated Financial Statements.
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>
- --------------------------------------------------------------------------------------
HIGH LOW CLOSE DIVIDENDS
- --------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1996 Fourth Quarter $40 $33 3/4 $34 7/8 $.11
Third Quarter $41 3/4 $33 5/8 $34 1/2 $.11
Second Quarter $39 7/8 $32 5/8 $37 1/4 $.11
First Quarter $37 3/8 $31 $34 $.08
- --------------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
On January 31, 1997, the closing price for the Company's Series A Common
Stock, as reported on the New York Stock Exchange, was $38 1/8. 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 676 and 519, 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, 1996. For a more
complete understanding of this selected financial data, 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 1996 1995 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Broadcasting revenues (A) $ 333,396 $ 322,642 $ 258,040 $ 209,083 $ 201,241
Newspaper publishing revenues (B) 487,242 409,099 369,366 335,651 314,701
Other (C) 3,670 3,602 719 101 -
- -------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 824,308 $ 735,343 $ 628,125 $ 544,835 $ 515,942
================================================================
Net earnings (D) $ 87,505 $ 66,576 $ 68,867 $ 51,077 $ 37,170
================================================================
Per share amounts:
Net earnings per common and
common equivalent share $ 2.11 $ 1.68 $ 1.70 $ 1.26 $ .95
Cash dividends declared $ .41 $ .315 $ .30 $ .28 $ .27
- -------------------------------------------------------------------------------------------------------------------
Other data:
Segment operating cash flow (E)
Broadcasting $ 122,837 $ 121,716 $ 106,396 $ 83,356 $ 75,921
Newspaper publishing $ 128,118 $ 90,915 $ 87,284 $ 61,667 $ 59,221
Operating cash flow margins
Broadcasting 36.8% 37.7% 41.2% 39.9% 37.7%
Newspaper publishing 26.3% 22.2% 23.6% 18.4% 18.8%
- -------------------------------------------------------------------------------------------------------------------
Total assets $ 1,224,072 $ 1,154,022 $ 913,791 $ 796,156 $ 758,527
Long-term debt (F) $ 631,857 $ 557,400 $ 330,400 $ 277,400 $ 302,151
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) The Company purchased KIRO in February 1995 and WWL in June 1994.
(B) The Company purchased the Bryan-College Station Eagle in December 1995 and
the Owensboro Messenger-Inquirer in January 1996.
(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) Operating cash flow is defined as segment earnings from operations plus
depreciation and amortization. Operating cash flow is used in the
broadcasting and publishing industries to analyze and compare companies on
the basis of operating performance, leverage and liquidity. However,
operating cash flow should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles. Operating cash flow for "Other"
and "Corporate" are not included herein.
See Note 12 to the Consolidated Financial Statements.
(F) Long-term debt decreased in May 1996 after the application of net proceeds
of approximately $198,500,000 from the issuance of 5,750,000 shares of
Series A Common Stock. Long-term debt subsequently increased in the fourth
quarter of 1996 when the Company borrowed $306,146,000 for the purchase of
8,321,700 shares of treasury stock.
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,
8
<PAGE> 11
Texas. In the first quarter of 1996, the Company acquired a daily newspaper in
Owensboro, Kentucky and sold its interest in its programming distribution
partnership. Comparability of year-to-year results and financial condition are
affected by these recent acquisitions and disposition.
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.
All references herein to broadcast operating cash flow or newspaper
publishing operating cash flow refer to segment earnings from operations plus
depreciation and amortization, as defined in Item 6 - Selected Financial Data.
Operating cash flow as defined should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles.
CONSOLIDATED RESULTS OF OPERATIONS
1996 Compared to 1995
The Company recorded 1996 net earnings of $87,505,000 or $2.11 per share,
compared to $66,576,000 or $1.68 per share in 1995. Results for 1996 include a
gain of $3,895,000 (6 cents per share) on the sale of the Company's interest in
its programming distribution partnership while 1995 results include a
$2,406,000 (4 cents per share) gain on the sale of the Company's investment in
Stauffer Communications, Inc. ("Stauffer") stock. Results for 1995 also include
a non-recurring charge for early retirement costs of $1,254,000 (2 cents per
share). These non-recurring items in 1996 and 1995 are included in other, net.
Excluding these non-recurring items, adjusted earnings per share are $2.05 for
1996 compared to $1.66 in 1995.
Interest expense in 1996 was $27,643,000 compared to $29,987,000 in 1995.
The decrease in interest expense was primarily due to lower average rates,
which were approximately 5.7 percent for 1996 compared to 6.3 percent in 1995.
Average debt outstanding for the year was slightly lower than in 1995. Belo
used the proceeds from its May 1996 equity offering to retire approximately
$198,500,000 in revolving debt. However, borrowing increased substantially
during the fourth quarter of 1996 as Belo purchased 8,321,700 shares of
treasury stock for an aggregate purchase price of $306,146,000.
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 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 in February 1995 for $162,500,000 and WWL in New
Orleans 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.
9
<PAGE> 12
BROADCASTING
1996 Compared to 1995
Broadcast revenues in 1996 were $333,396,000, an increase of 3.3 percent
over 1995 revenues of $322,642,000. Results for 1995 included only 11 months of
revenue for the Seattle station, which was purchased on February 1, 1995. On a
same-station basis, 1996 revenues increased 2.5 percent over 1995.
The increase in 1996 broadcast revenues over last year is primarily due to
political advertising associated with the presidential election, senate races
in Texas and California and issues advertising. Local advertising revenues also
improved over last year due primarily to a contract between the Seattle
Mariners and UPN affiliate KIRO. Both local and national revenues were up at
WWL in New Orleans, as advertisers favored this long-established market leader
when other stations in the New Orleans market switched network affiliations in
the first part of 1996. These increases in revenues were offset by declining
national advertising. Stiff competition from NBC's prime time lineup and
Olympics programming, as well as weak national sales in Dallas and Houston,
combined for decreased national revenues of 2.7 percent.
Broadcast operating cash flow for 1996 was $122,837,000, up slightly from
1995 operating cash flow of $121,716,000. Operating cash flow margins were 36.8
percent in 1996 and 37.7 percent in 1995. Excluding the effect of KIRO in
January of the current year, earnings from operations and margins improved only
slightly. Salaries, wages and employee benefits increased 7.1 percent (5.5
percent on a same-station basis) due primarily to more employees, merit
increases, and overtime associated with election coverage. Programming expense
in 1996 was also up significantly, due to the Seattle Mariners contract and
more syndicated programming at KIRO. Programming costs also increased slightly
at other stations for certain syndicated programming. These increases were
partially offset by the elimination of a weekly news show in Dallas and the
cancellation of the Oakland A's contract in Sacramento.
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 in 1995 compared to 1994, both as reported
and on a same-station basis. Political advertising revenues in 1994 were 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 the effect of including the New Orleans station for the full year. 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 late in 1994.
Broadcast operating cash flow was $121,716,000 in 1995 compared to
$106,396,000 in 1994, an increase of 14.4 percent (4.1 percent on a
same-station basis). Broadcast operating cash flow 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 cash flow margins in 1995 and
1994 were 37.7 percent and 41.2 percent, respectively. On a same-station basis,
margins in 1995 and 1994 were 41.3 percent and 41.0 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
10
<PAGE> 13
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.
NEWSPAPER PUBLISHING
1996 Compared to 1995
In 1996, newspaper publishing revenues represented 59.1 percent of total
revenues, compared to 55.6 percent in 1995. The increased contribution to total
revenues over last year is partly due to the acquisitions of the Bryan-College
Station Eagle in December 1995 and the Owensboro Messenger-Inquirer in January
1996. In addition, the Company's principal newspaper, The Dallas Morning News,
had a revenue increase of nearly 13 percent over 1995. Advertising revenues
account for approximately 87 percent of publishing revenues, while circulation
revenues represent approximately 11 percent. Other publishing revenues,
primarily commercial printing, contribute the remainder.
Newspaper advertising volume for The Dallas Morning News is measured in
column inches. Volume for the last three years was as follows:
<TABLE>
<CAPTION>
Years ended December 31,
- ------------------------------------------------------------------------------------------
In thousands 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Full-run ROP inches (1) :
Classified 2,057 2,125 2,189
Retail 1,435 1,429 1,524
General 296 254 271
- ------------------------------------------------------------------------------------------
Total 3,788 3,808 3,984
- ------------------------------------------------------------------------------------------
</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. During the periods
indicated above, The Dallas Morning News ran more full-run ROP
advertising than any other newspaper in the United States.
Revenues from newspaper publishing in 1996 were $487,242,000, an increase
of 19.1 percent over 1995 revenues of $409,099,000. Excluding the effect of the
recently acquired newspapers, revenues increased 12.4 percent. The full year
effect of two advertising rate increases in 1995, combined with additional rate
increases in January 1996, contributed the majority of the year over year
revenue improvement at The Dallas Morning News. The rate increases were
implemented in response to escalating newsprint prices throughout 1995 and in
the first quarter of 1996. Classified advertising linage fell 3.2 percent as a
result of the rate increases, which were higher in classified than in other
advertising categories. Retail advertising volume was relatively unchanged over
last year, with additional grocery store ads offsetting declines in department
store advertising. General advertising linage improved 16.5 percent despite the
higher rates, with significant gains in the technology and automotive
categories. The Dallas Morning News' preprint, total market coverage ("TMC")
and other advertising revenues increased 7.8 percent, primarily due to more TMC
participation. Circulation revenues were up nearly 10 percent over last year
due to an October 1995 increase in the daily single-copy rate from $.25 to $.50
and a February 1996 increase in the home delivery rate. Circulation volumes
declined slightly from 534,197 in 1995 to 513,099 in 1996 for daily and from
800,147 in 1995 to 785,934 in 1996 for Sunday delivery due primarily to these
rate increases.
Newspaper publishing operating cash flow for 1996 was $128,118,000
compared to $90,915,000 in 1995, an increase of 40.9 percent. Excluding the
effect of the newspaper acquisitions, operating cash flow increased 32.1
percent. The operating cash flow margin for 1996 of 26.3 percent (26.1 percent
without the new newspapers) improved over the 1995 operating cash flow margin
of 22.2 percent due to a combination of factors. While revenues increased 19.1
percent, expenses increased only 13.3 percent. Other production, distribution
and operating expenses at The Dallas Morning News were up the most compared to
last year, due to higher TMC distribution expenses, transportation costs,
advertising and promotion and outside services associated with election
coverage, research and temporary help. Salaries, wages and employee benefits
were also higher than last year due to more employees and higher performance
bonuses. Newsprint, ink and other supplies expense was up 6.5 percent (3.6
11
<PAGE> 14
percent excluding the new newspapers) over last year due to higher cost per
ton, offset somewhat by lower consumption due to decreased circulation. There
have been significant fluctuations in newsprint prices in recent years. Prices
began increasing in mid 1994 from a low of $375 per ton to a high of nearly
$675 per ton in February 1996 before declining to approximately $460 per ton in
December 1996. Future price changes, and thus overall newsprint costs, cannot
be predicted with certainty. However, for 1997, the Company expects overall
newsprint costs per ton to be lower than in 1996.
1995 Compared to 1994
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 with daily volumes of 534,197 for
1995 versus 524,567 for 1994 and Sunday volumes of 800,147 for 1995 versus
797,206 for 1994.
Despite significant increases in newsprint prices, newspaper publishing
operating cash flow for 1995 was $90,915,000, up 4.2 percent over 1994
operating cash flow of $87,284,000. Operating cash flow margins were 22.2
percent in 1995 compared to 23.6 percent in 1994. Revenue increases were 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 and lower ad linage and promotional
space. 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.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations is the Company's primary source of
liquidity. During 1996, net cash provided by operations was $164,421,000,
compared to $96,601,000 in 1995. The increase was due primarily to higher net
earnings and changes in working capital. The most significant working capital
change was a reduction in newsprint inventory balances at the end of 1996. The
decrease was due to fewer newsprint tons on hand and a lower cost per ton at
the end of 1996 versus 1995. The timing of accounts receivable collections and
income tax payments also contributed to the increase in 1996 net cash provided
by operations. Net cash provided by operations was sufficient to fund capital
expenditures and common stock dividends.
In January 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 three years. Also during 1996, the Company purchased
a 38 percent equity interest in the Press Enterprise Company, the parent
company of the Riverside Press-Enterprise newspaper in Riverside, California.
The purchase was completed using funds from the Company's revolving credit
facility.
At December 31, 1996, the Company had a $1,000,000,000 variable rate
revolving credit agreement with a syndicate of 18 banks led by Texas Commerce
Bank, Bank of Tokyo-Mitsubishi, Bank of America, and NationsBank. Borrowings
under the agreement at that time were $450,000,000. In January of 1997, in
preparation for the Providence Journal transaction, the Company replaced this
facility with a new $1,500,000,000 five-year facility and a $500,000,000
364-day facility with a syndicate of 35 banks led by the same agent banks. The
$1,500,000,000 agreement expires January 31, 2002 with extensions to January
31, 2004 at the request of the Company and with the consent of the
participating banks. Commitments under the 364-day facility terminate on
January 30, 1998, with any borrowings under such facility payable in full at
the end of the second year following
12
<PAGE> 15
the termination of the commitments. Among other things, the agreements require
the Company to maintain, as of the end of each quarter and measured over the
preceding four quarters, (1) a Funded Debt to Pro Forma Operating Cash Flow
ratio not exceeding 5.5 to 1.0, (2) a Funded Debt to Pro Forma Operating Cash
Flow ratio (excluding subordinated debt) not exceeding 5.0 to 1.0, and (3) an
Interest Coverage ratio of not less than 2.5 to 1.0, all as such terms are
defined in the agreements. For the year ended December 31, 1996, the Company's
ratio of funded debt to pro forma operating cash flow, as defined in the new
credit facility, was 2.71 compared to 2.77 for the year ended December 31,
1995, and its interest coverage ratio for 1996 was 8.44 versus 6.71 for 1995.
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, 1996, the Company had $165,800,000 in such
short-term borrowings outstanding.
With the completion of the new banking agreements and the Providence
Journal transaction, the Company's outstanding debt is expected to be
approximately $1,500,000,000 immediately following the merger. The Company
believes its current financial condition and credit relationships are adequate
to fund current obligations and near-term growth.
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 during 1996 were approximately 5.7 percent and
at the end of 1996, rates were approximately 6.1 percent.
Total debt outstanding, including the current portion of long-term debt,
increased $74,595,000 from December 31, 1995. Total debt was reduced in May
1996 by approximately $198,500,000 due to the application of the net proceeds
from an equity offering of 5,750,000 shares of Series A Common Stock. Total
long-term debt then increased in the fourth quarter of 1996 when the Company
borrowed $306,146,000 to purchase 8,321,700 shares of treasury stock. These
shares were purchased under a Board action in September of 1996, which
increased the Company's stock repurchase authorization by 10,000,000 shares.
Had these events occurred at January 1, 1996, earnings per share for the
Company would have been $2.22, rather than $2.11.
Treasury shares may or may not be used to facilitate future transactions
with third parties and will be held in treasury until such a determination has
been made. At December 31, 1996, the Company has remaining Board authority for
the purchase of approximately 5,337,000 treasury shares.
Capital expenditures in 1996 were $49,800,000. Capital projects included
additional production equipment and major building renovations at The Dallas
Morning News, a building and studio remodeling project at the Company's Dallas
television station, leasehold improvements and furniture and equipment
purchases for the Company's new consolidated Washington D.C. news bureau and
the expansion of corporate offices. The Company also completed a new studio
control room in Seattle, purchased broadcast equipment for each of the
television stations and invested in new production equipment for its two new
publishing subsidiaries. Total capital expenditures in 1997, including projects
at Providence Journal subsidiaries, are expected to be between $80,000,000 and
$90,000,000. As of December 31, 1996, required future payments for capital
projects in 1997 were $18,724,000. The Company expects to finance future
capital expenditures using cash generated from operations and, when necessary,
borrowings under the revolving credit agreement.
The Company paid dividends of $16,392,000 or 41 cents per share on Series
A and Series B Common Stock outstanding during 1996 compared to $12,279,000 or
31 1/2 cents per share in 1995. The Company expects its aggregate dividend
payment to be higher in 1997 due to the additional shares issued for the
Providence Journal merger (see Other Matters).
13
<PAGE> 16
OTHER MATTERS
On February 28, 1997, the Company completed the acquisition of Providence
Journal pursuant to a merger in which 25,394,564 shares of Series A Common
Stock and $587,096,000 in cash were paid to Providence Journal shareholders. In
addition, the Company assumed Providence Journal debt of approximately
$200,000,000 and incurred acquisition related costs of approximately
$100,000,000, including the cash-out of Providence Journal employee stock
options and stock-based compensation plans, the settlement of employment
agreements and other merger-related costs. The transaction is expected to be
dilutive to the Company's earnings primarily due to the amortization of
goodwill resulting from the transaction. As a result of the merger, the Company
currently owns two television stations in the Seattle, Washington market (KIRO
and KING). To comply with FCC regulations that require the Company to divest
one of these stations, on February 20, 1997, the Company announced an agreement
among multiple parties whereby, through an exchange of assets, it will exchange
KIRO for CBS affiliate KMOV-TV in St. Louis, Missouri. The exchange is subject
to obtaining customary regulatory approvals.
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 14, 1997, 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
14, 1997, 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 14, 1997, is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the heading "Certain Transactions"
contained in the definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 14, 1997, is incorporated herein by reference.
14
<PAGE> 17
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.
(3) Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by the Company 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.
EXHIBIT
NUMBER DESCRIPTION
2.1 * Agreement and Plan of Merger, dated as of September 26, 1996
(Exhibit 2.1 to Form 8-K dated September 27, 1996)
3.1 * Certificate of Incorporation of the Company (Exhibit 3.1 to
the Company's Annual Report on Form 10-K dated February 28,
1996(the "1995 Form 10-K"))
3.2 * Certificate of Correction to Certificate of Incorporation
dated May 13, 1987 (Exhibit 3.2 to the 1995 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 1995 Form 10-K)
3.4 * Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988 (Exhibit 3.4 to the 1995 Form 10-K)
3.5 * Certificate of Amendment of Certificate of Incorporation of the
Company dated May 3, 1995 (Exhibit 3.5 to the 1995 Form 10-K)
3.6 * Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
(Exhibit 3.6 to the 1995 Form 10-K)
3.7 * Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988 (Exhibit 3.7 to the 1995 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 Company's
Annual Report on Form 10-K dated March 18, 1993 (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)
15
<PAGE> 18
EXHIBIT
NUMBER DESCRIPTION
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
(Exhibit 4.4 to the 1995 Form 10-K)
4.5 * Supplement No. 1 to Amended and Restated Rights Agreement
between the Company and The First National Bank of Boston dated
as of November 11, 1996 (Exhibit 4.5 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 1996)
10.1 Contracts relating to television broadcasting:
* (1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC (Exhibit 10.1 (1) to the 1995 Form
10-K)
* (2) Form of Agreement for Affiliation between KXTV in
Sacramento, California and ABC (Exhibit 10.1 (2) to the
1995 Form 10-K)
* (3) Contract for Affiliation between KHOU-TV in Houston, Texas
and CBS (Exhibit 10.1 (3) to the 1995 Form 10-K)
* (4) Contract for Affiliation between WWL-TV in New Orleans,
Louisiana and CBS (Exhibit 10.1 (4) to the 1995 Form 10-K)
10.2 Financing agreements:
* (1) Credit Agreement dated as of July 31, 1996 among the
Company and Texas Commerce Bank, National Association as
Administrative Agent, The Chase Manhattan Bank, as
Competitive Advance Facility Agent, Bank of America
National Trust and Savings Association and Bank of
Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents,
NationsBank as Documentation Agent, and Societe Generale
and The Fuji Bank, Limited as Co-Agents (Exhibit 10.4 (1)
to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996)
(2) Five Year $1,500,000,000 revolving credit and competitive
advance facility dated as of January 31, 1997 among the
Company and Texas Commerce Bank National Association as
Administrative Agent, The Chase Manhattan Bank, as
Competitive Advance Facility Agent, Bank of America
National Trust and Savings Association and Bank of
Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents, and
NationsBank as Documentation Agent
(3) 364-Day $500,000,000 revolving credit and competitive
advance facility dated as of January 31, 1997 among the
Company and Texas Commerce Bank National Association as
Administrative Agent, The Chase Manhattan Bank, as
Competitive Advance Facility Agent, Bank of America
National Trust and Savings Association and Bank of
Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents, and
NationsBank as Documentation Agent
10.3 Compensatory plans:
~(1) Management Security Plan
~(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan
(Effective May 3, 1989, as amended by Amendments 1, 2,
3, 4, and 5)
*~(3) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit
10.3(13) to the 1992 Form 10-K)
*~(4) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit
10.3(9) to the 1995 Form 10-K)
16
<PAGE> 19
EXHIBIT
NUMBER DESCRIPTION
*~(5) The A. H. Belo Corporation Employee Savings and Investment
Plan Amended and Restated February 2, 1996 (Exhibit
10.3(10) to the 1995 Form 10-K)
*~(6) The G. B. Dealey Retirement Pension Plan (as Amended and
Restated Generally Effective January 1, 1989) (Exhibit
10.3(11) to the 1995 Form 10-K)
*~(7) 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 Company's Annual Report on Form
10-K dated March 18, 1994 (the "1993 Form 10-K"))
*~(8) A. H. Belo Corporation Supplemental Executive Retirement
Plan (Exhibit 10.3(27) to the 1993 Form 10-K)
*~(9) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N. A. (Exhibit 10.3(28) to the
1993 Form 10-K)
*~(10) A. H. Belo Corporation 1995 Executive Compensation Plan
(Exhibit 10.3(16) to the 1995 Form 10-K)
*~(11) A. H. Belo Corporation Employee Thrift Plan, effective
January 1, 1995 (Exhibit 10.3(17) to the 1995 Form 10-K)
*~(12) First Amendment to A. H. Belo Corporation Employee Thrift
Plan (Exhibit 10.3(18) to the 1995 Form 10-K)
*~(13) Second Amendment to A. H. Belo Corporation Employee Thrift
Plan (Exhibit 10.3(19) to the 1995 Form 10-K)
*~(14) Master Defined Contribution Trust Agreement by and between
A. H. Belo Corporation and Mellon Bank, N.A. (Exhibit
10.3(20) to the 1995 Form 10-K)
*~(15) First Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(21) to the 1995 Form 10-K)
*~(16) Second Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(22) to the 1995 Form 10-K)
~(17) A. H. Belo Corporation 1995 Executive Compensation Plan (as
restated to incorporate amendments through May 14, 1997)
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (filed electronically with the
Securities and Exchange Commission)
(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.
17
<PAGE> 20
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: March 10, 1997
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 March 10, 1997
Robert W. Decherd & Chief Executive Officer
/s/ Ward L. Huey, Jr.
- ------------------------------------ Vice Chairman of the March 10, 1997
Ward L. Huey, Jr. Board and President,
Broadcast Division
/s/ Burl Osborne
- ------------------------------------ Director, President, Publishing March 10, 1997
Burl Osborne Division and Publisher,
The Dallas Morning News
/s/ John W. Bassett, Jr.
- ------------------------------------ Director March 10, 1997
John W. Bassett, Jr.
/s/ Judith L. Craven, M.D., M.P.H.
- ------------------------------------ Director March 10, 1997
Judith L. Craven, M.D., M.P.H.
/s/ Roger A. Enrico
- ------------------------------------ Director March 10, 1997
Roger A. Enrico
/s/ Dealey D. Herndon
- ------------------------------------ Director March 10, 1997
Dealey D. Herndon
/s/ Lester A. Levy
- ------------------------------------ Director March 10, 1997
Lester A. Levy
/s/ Arturo Madrid, Ph.D.
- ------------------------------------ Director March 10, 1997
Arturo Madrid, Ph.D.
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ James M. Moroney, Jr.
- ------------------------------------ Director and Former March 10, 1997
James M. Moroney, Jr. Chairman of the Board
/s/ Hugh G. Robinson
- ------------------------------------ Director March 10, 1997
Hugh G. Robinson
/s/ William T. Solomon
- ------------------------------------ Director March 10, 1997
William T. Solomon
/s/ Thomas B. Walker, Jr.
- ------------------------------------ Director March 10, 1997
Thomas B. Walker, Jr.
/s/ J. McDonald Williams
- ------------------------------------ Director March 10, 1997
J. McDonald Williams
/s/ Michael D. Perry
- ------------------------------------ Senior Vice President and March 10, 1997
Michael D. Perry Chief Financial Officer
/s/ Vicky C. Teherani
- ------------------------------------ Vice President/Controller March 10, 1997
Vicky C. Teherani
</TABLE>
19
<PAGE> 22
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, 1996 and 1995, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1996. 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, 1996 and 1995, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/S/ERNST & YOUNG LLP
Dallas, Texas
January 27, 1997
except for Note 11, as to which the date is
February 28, 1997
20
<PAGE> 23
CONSOLIDATED STATEMENTS OF EARNINGS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES
Broadcasting (Note 2) $ 333,396 $ 322,642 $ 258,040
Newspaper publishing (Note 2) 487,242 409,099 369,366
Other 3,670 3,602 719
- ----------------------------------------------------------------------------------------------------------------
Total net operating revenues 824,308 735,343 628,125
- ----------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Salaries, wages and employee benefits (Notes 5 and 6) 231,856 204,833 178,264
Other production, distribution and operating costs (Note 7) 215,295 196,506 166,187
Newsprint, ink and other supplies 146,325 137,994 106,270
Depreciation 45,408 42,270 32,854
Amortization 19,775 17,177 13,551
- ----------------------------------------------------------------------------------------------------------------
Total operating costs and expenses 658,659 598,780 497,126
- ----------------------------------------------------------------------------------------------------------------
Earnings from operations 165,649 136,563 130,999
- ----------------------------------------------------------------------------------------------------------------
OTHER INCOME AND EXPENSE
Interest expense (Note 3) (27,643) (29,987) (16,112)
Other, net (Note 9) 6,034 4,438 (6,990)
- ----------------------------------------------------------------------------------------------------------------
Total other income and expense (21,609) (25,549) (23,102)
- ----------------------------------------------------------------------------------------------------------------
EARNINGS
Earnings before income taxes 144,040 111,014 107,897
Income taxes (Note 4) 56,535 44,438 39,030
- ----------------------------------------------------------------------------------------------------------------
Net earnings $ 87,505 $ 66,576 $ 68,867
=========================================
Net earnings per common and common equivalent share $ 2.11 $ 1.68 $ 1.70
Weighted average common and common equivalent
shares outstanding 41,510 39,646 40,446
=========================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
21
<PAGE> 24
CONSOLIDATED BALANCE SHEETS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
ASSETS December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 13,829 $ 12,846
Accounts receivable (net of allowance of
$5,276 and $4,164 in 1996 and 1995, respectively) 129,976 120,541
Inventories 13,873 20,336
Deferred income taxes (Note 4) 5,692 5,223
Other current assets 8,555 6,360
- ------------------------------------------------------------------------------------------------------------------
Total current assets 171,925 165,306
- ------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Land 27,468 26,708
Buildings 169,784 155,877
Broadcast equipment 165,752 159,909
Newspaper publishing equipment 212,401 210,362
Other 61,025 51,156
Advance payments on plant and equipment
expenditures (Note 7) 21,765 6,479
- ------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 658,195 610,491
Less accumulated depreciation 287,415 248,650
- ------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 370,780 361,841
- ------------------------------------------------------------------------------------------------------------------
Intangible assets, net (Note 2) 582,248 571,060
Other assets, at cost (Note 5) 99,119 55,815
- ------------------------------------------------------------------------------------------------------------------
Total assets $1,224,072 $1,154,022
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 25
CONSOLIDATED BALANCE SHEETS (CONTINUED)
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY December 31,
- -------------------------------------------------------------------------------------------------------------------
In thousands, except share and per share data 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 26,101 $ 28,569
Accrued compensation and benefits 31,440 24,773
Advance subscription payments 10,557 9,392
Other accrued expenses 13,307 14,098
Income taxes payable (Note 4) 7,908 4,836
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 89,313 81,668
- ------------------------------------------------------------------------------------------------------------------
Long-term debt (Note 3) 631,857 557,400
Deferred income taxes (Note 4) 121,808 114,729
Other liabilities 10,611 11,761
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 35,404,850 and 28,961,753 shares
at December 31, 1996 and 1995, respectively; 59,126 48,366
Series B: Issued 9,177,133 and 9,280,179 shares
at December 31, 1996 and 1995, respectively. 15,326 15,498
Additional paid-in capital 302,737 97,930
Retained earnings 301,316 230,203
- ------------------------------------------------------------------------------------------------------------------
Total 678,505 391,997
Less cost of 8,321,700 shares of Series A treasury stock 306,146 -
Less deferred compensation - restricted shares 1,876 3,533
- ------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 370,483 388,464
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $1,224,072 $1,154,022
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
23
<PAGE> 26
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, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK
Deferred
Additional Compensation-
Shares Shares Paid-in Retained Shares Restricted
Series A Series B Amount Capital Earnings Series A Amount Shares Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 14,467,182 5,743,099 $33,752 $116,451 $201,246 - $ - $(5,350) $346,099
Exercise of stock options 234,545 12,500 412 7,240 7,652
Restricted shares awarded 48,360 81 2,576 (2,657) -
Change in restricted share
valuation 188 (188) -
Amortization of restricted
shares 2,166 2,166
Forfeiture of restricted
shares (810) (1) (25) 6 (20)
Tax benefit from long-term
incentive plan 1,828 1,828
Purchase of treasury stock (644,000) (32,073) (32,073)
Retirement of treasury stock (644,000) (1,076) (3,827) (27,170) 644,000 32,073 -
Net earnings 68,867 68,867
Cash dividends declared
($.30 per share) (11,984) (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 - $ - $(6,023) $382,535
Exercise of stock options 405,448 18,590 708 8,674 9,382
Change in restricted share
valuation 698 (698) -
Amortization of restricted
shares 2,718 2,718
Forfeiture of restricted
shares (27,905) (48) (917) 470 (495)
Tax benefit from long-term
incentive plan 3,427 3,427
Two-for-one stock split 15,137,977 4,709,794 33,146 (32,618) (316,000) (528) -
Purchase of treasury stock (1,546,848) (63,400) (63,400)
Retirement of treasury stock (1,862,848) (3,110) (5,765) (55,053) 1,862,848 63,928 -
Net earnings 66,576 66,576
Cash dividends declared
($.315 per share) (12,279) (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 - $ - $(3,533) $388,464
Exercise of stock options 498,302 2,360 835 9,098 9,933
Change in restricted share
valuation 7 (7) -
Amortization of restricted
shares 1,664 1,664
Tax benefit from long-term
incentive plan 3,589 3,589
Employer's matching contri-
bution to Savings and
Investment Plan 89,389 150 3,214 3,364
Sale of stock 5,750,000 9,603 188,899 198,502
Purchase of treasury stock (8,321,700) (306,146) (306,146)
Net earnings 87,505 87,505
Cash dividends declared
($.41 per share) (16,392) (16,392)
Conversion of Series B
to Series A 194,795 (194,795) -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1996 35,404,850 9,177,133 $74,452 $302,737 $301,316 (8,321,700) $(306,146) $(1,876) $370,483
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
24
<PAGE> 27
CONSOLIDATED STATEMENTS OF CASH FLOWS
A. H. BELO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
CASH PROVIDED (USED) Years ended December 31,
- ---------------------------------------------------------------------------------------------------------
In thousands 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS
Net earnings $ 87,505 $ 66,576 $ 68,867
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 65,183 59,447 46,405
Deferred income taxes 6,610 6,823 1,428
Non-cash adjustments and allowances 1,112 205 1,842
Other, net 559 (4,012) 1,549
Net change in current assets and liabilities:
Accounts receivable (11,867) (19,732) (20,067)
Inventories and other current assets 3,669 (12,918) 8,234
Accounts payable (1,003) 1,270 10,187
Accrued compensation and benefits 5,207 (2,043) 5,554
Other accrued liabilities 785 2,796 (1,896)
Income taxes payable 6,661 (1,811) 16,682
- ---------------------------------------------------------------------------------------------------------
Net cash provided by operations 164,421 96,601 138,785
- ---------------------------------------------------------------------------------------------------------
INVESTMENTS
Capital expenditures (49,800) (40,830) (47,371)
Acquisitions (Note 2) (74,091) (217,428) (110,058)
Sale of interest in partnership 3,750 -- --
Other, net (3,788) 4,506 2,400
- ---------------------------------------------------------------------------------------------------------
Net cash used for investments (123,929) (253,752) (155,029)
- ---------------------------------------------------------------------------------------------------------
FINANCING
Net proceeds from sale of stock 198,502 -- --
Borrowings for acquisitions 75,180 216,934 110,000
Net proceeds from (payments on) debt (586) 10,066 (57,000)
Payments of dividends on stock (16,392) (12,279) (11,984)
Net proceeds from exercise of stock options 9,933 9,382 7,652
Purchase of treasury stock (306,146) (63,400) (32,073)
- ---------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing (39,509) 160,703 16,595
- ---------------------------------------------------------------------------------------------------------
Net increase in cash and
temporary cash investments 983 3,552 351
- ---------------------------------------------------------------------------------------------------------
Cash and temporary cash investments at beginning of year 12,846 9,294 8,943
Cash and temporary cash investments at end of year $ 13,829 $ 12,846 $ 9,294
- ---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES (Note 10)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
25
<PAGE> 28
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 estimate of amounts considered uncollectible.
Expense for such uncollectible amounts, which is included in other
production, distribution and operating costs, was $5,647,000,
$5,888,000, and $4,506,000 in 1996, 1995 and 1994, respectively.
Accounts written off during these years were $4,535,000, $5,683,000
and $4,231,000, 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
Broadcast equipment 7-15 years
Newspaper publishing equipment 5-20 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, 1996 and 1995, approximately $28,544,000 and
$27,683,000, respectively, of intangible assets, net is attributable
to subscriber lists associated with certain newspaper transactions.
These assets are carried at their appraised values and amortized on a
straight-line basis over estimated useful lives of 13 to 18 years.
Accumulated amortization of intangible assets was $163,278,000 and
$143,503,000 at December 31, 1996 and 1995, respectively. The
carrying values of all intangible assets are periodically reviewed to
determine whether impairment exists and adjustments to net realizable
value are made as needed. No such adjustments were required in 1996.
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.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," ("SFAS 123") was issued in 1995 and, if
fully adopted, changed the method for recognition of cost on plans
similar to that of the Company. The Company did not adopt the cost
recognition provisions of SFAS 123 for options granted to employees.
Pro forma disclosures as if the Company had adopted the cost
recognition requirements for options granted to employees beginning
with stock option grants in 1995 are presented in Note 6.
26
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
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.
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. On December 26, 1995, Belo completed the acquisition of
the Bryan-College Station Eagle, a daily newspaper serving Bryan-College
Station, Texas. In January 1996, the Company issued notes payable for the
purchase of the Owensboro Messenger-Inquirer, a daily newspaper serving
Owensboro, Kentucky. 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, $122,767,000 for KIRO-TV, $43,352,000
for the Bryan-College Station Eagle and $30,862,000 for the Owensboro
Messenger-Inquirer. These amounts are generally being amortized on a
straight-line basis over 40 years, although subscriber lists of the acquired
newspapers have been assigned lives of 13 to 18 years.
Pro forma financial information for the current year acquisition has not
been included because the results are not material to the consolidated
operations of the Company.
See Note 11 for information regarding an acquisition subsequent to
December 31, 1996.
NOTE 3: LONG-TERM DEBT
- ------------------------------------------------------------------------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
In thousands 1996 1995
- ----------------------------------------------------------------------------------
<S> <C> <C>
Revolving credit agreement $450,000 $480,000
Short-term unsecured notes classified
as long-term debt 165,800 71,000
Other 16,057 6,400
- ----------------------------------------------------------------------------------
Total $631,857 $557,400
- ----------------------------------------------------------------------------------
</TABLE>
At the end of 1996, the Company had a revolving credit facility for
$1,000,000,000. 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,
certificate of deposit 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, 1996 and 1995, the weighted average
interest rates for borrowings under the revolving credit agreement were 5.7
percent and 6.1 percent, respectively. The agreement also provides for a
facility fee of up to .1875 percent on the total commitment. Borrowings under
the agreement mature upon expiration of the agreement on July 31, 2001, with an
extension to July 31, 2003, at the request of the Company and with the consent
of the participating banks.
The revolving credit agreement contains certain covenants, including a
requirement to maintain, as of the end of each quarter and measured over the
preceding four quarters, (1) a Funded Debt to Pro Forma Operating Cash Flow
ratio not exceeding 5.5 to 1.0, (2) a Funded Debt to Pro Forma Operating Cash
Flow ratio (excluding subordinated debt) not exceeding 5.0 to 1.0, and (3) an
Interest Coverage ratio of not less than 2.5 to 1.0, all as such terms are
defined in the agreement. At December 31, 1996, the Company was in compliance
with these requirements.
27
<PAGE> 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
During 1996, the Company used various short-term unsecured notes as an
additional source of financing. The weighted average interest rate on this debt
was 7.3 percent and 6.0 percent at December 31, 1996 and 1995, respectively.
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, $165,800,000 and $71,000,000 of short-term notes outstanding
at December 31, 1996 and 1995, respectively, have been classified as long-term.
In 1996, 1995 and 1994, the Company incurred interest costs of
$27,898,000, $30,944,000 and $16,250,000, respectively, of which $255,000,
$957,000 and $138,000, respectively, were capitalized as components of
construction cost.
Average interest rates on total debt were approximately 5.7 percent, 6.3
percent and 4.8 percent during 1996, 1995 and 1994, respectively.
At December 31, 1996, the Company had outstanding letters of credit of
$17,368,000 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
- -------------------------------------------------------------------------------
The Company uses 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.
Income tax expense for the years ended December 31, 1996, 1995 and 1994
consists of the following:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
In thousands 1996 1995 1994
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 42,298 $ 32,094 $32,548
State 7,627 5,521 5,054
- --------------------------------------------------------------------------
Total current 49,925 37,615 37,602
Deferred 6,610 6,823 1,428
- --------------------------------------------------------------------------
Total $ 56,535 $ 44,438 $39,030
- --------------------------------------------------------------------------
Effective tax rate 39.2% 40.0% 36.2%
- --------------------------------------------------------------------------
</TABLE>
Income tax provisions for the years ended December 31, 1996, 1995 and 1994
differ from amounts computed by applying the applicable U.S. federal income tax
rate as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
In thousands 1996 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected income tax expense $ 50,414 $ 38,855 $ 37,764
Amortization of excess cost 2,235 2,235 2,235
State income taxes 4,857 3,692 3,494
Stock donation (Note 9) - - (3,245)
Other (971) (344) (1,218)
- ---------------------------------------------------------------------------
$ 56,535 $ 44,438 $ 39,030
- ---------------------------------------------------------------------------
</TABLE>
28
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Significant components of the Company's deferred tax liabilities and
assets as of December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
In thousands 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Excess tax depreciation and amortization $ 108,076 $ 105,035
Deferred gain on sale of assets 3,972 4,294
Loss on investment 14,280 10,867
Expenses deductible for tax purposes in a year
different from the year accrued 6,974 6,211
Other 367 463
- --------------------------------------------------------------------------------------
Total deferred tax liabilities $ 133,669 $ 126,870
- ---------------------------------------------------------------------------------------
Deferred tax assets:
State taxes $ 4,561 $ 4,620
Deferred compensation 4,828 5,126
Expenses deductible for tax purposes in a year
different from the year accrued 3,592 3,200
Other 4,572 4,418
- ---------------------------------------------------------------------------------------
Total deferred tax assets 17,553 17,364
- ---------------------------------------------------------------------------------------
Net deferred tax liability $ 116,116 $ 109,506
- ---------------------------------------------------------------------------------------
</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.
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, 1996 and 1995:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
In thousands 1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ (88,879) $ (82,119)
Accumulated benefit obligation $ (92,124) $ (84,597)
Projected benefit obligation for service
rendered to date $(116,740) $(107,817)
Plan assets at fair value, invested primarily
in equity securities 108,008 95,291
--------------------------------------------------------------------------------
Plan assets less than projected benefit obligation (8,732) (12,526)
Unrecognized net loss 26,742 34,350
Unrecognized net transition asset being recognized
over 12.3 years (1,604) (2,837)
Unrecognized prior service cost (2,490) (2,866)
--------------------------------------------------------------------------------
Prepaid pension cost $ 13,916 $ 16,121
--------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
The net periodic pension cost for the years ended December 31, 1996, 1995
and 1994 includes the following components:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
In thousands 1996 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 5,462 $ 3,697 $ 3,666
Interest cost on projected benefit obligation 8,290 7,331 6,461
Actual return on plan assets (14,121) (17,035) (604)
Net amortization and deferral 5,257 9,498 (6,563)
-------------------------------------------------------------------------------------------------
Net periodic pension cost $ 4,888 $ 3,491 $ 2,960
-------------------------------------------------------------------------------------------------
</TABLE>
Assumptions used in the accounting for the defined benefit plan are as
follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
1996 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate in determining benefit obligation 7.50% 7.25% 8.50%
Discount rate in determining net periodic pension
cost 7.25% 8.50% 7.50%
Expected long-term rate of return on assets 10.25% 10.25% 10.25%
Rate of increase in future compensation 5.50% 5.50% 6.00%
-------------------------------------------------------------------------------------------------
</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 employees' contributions. The Company's contributions
totaled $3,587,000, $3,170,000 and $2,568,000 in 1996, 1995 and 1994,
respectively.
The Company also sponsors non-qualified retirement plans for key
employees. Expense for the plans recognized in 1996, 1995 and 1994 was
$1,150,000, $1,089,000 and $1,232,000, respectively.
NOTE 6: LONG-TERM INCENTIVE PLAN
- ------------------------------------------------------------------------------
The Company has a long-term incentive plan 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 the plan.
The non-qualified options granted to employees under the Company's
long-term incentive plan become exercisable in cumulative installments over
periods of three to seven years and expire after ten years. Shares of common
stock reserved for grants under the plan were 2,626,904 and 3,849,727 at
December 31, 1996 and 1995, respectively.
30
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Stock-based activity in the long-term incentive plan is summarized in the
following tables:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Non-Qualified Stock Options 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Weighted Option Option
Number of Average Number of Price Per Number of Price Per
Options Price (A) Options Share (A) Options Share (A)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, 3,097,777 $24.16 1,496,750 $24-$53 1,428,002 $22-$49
Two-for-one stock split - - 1,351,907 $12-$30 - -
Granted 1,237,850 $35.63 699,300 $30-$35 322,795 $50-$53
Exercised (500,662) $19.82 (424,038) $12-$27 (247,045) $22-$49
Canceled (15,027) $28.69 (26,142) $15-$27 (7,002) $29-$49
--------- --------- ----------
Outstanding at December 31, 3,819,938 $28.43 3,097,777 $12-$35 1,496,750 $24-$53
- -------------------------------------------------------------------------------------------------------------------
Weighted average fair value of
options granted $9.68
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Disclosure of weighted average price information is required by SFAS 123
for years beginning after December 15, 1995.
<TABLE>
<CAPTION>
Restricted Stock 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Price Price Price
Shares Per Share Shares Per Share Shares Per Share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, 279,096 $15-$35 212,371 $29-$57 211,792 $29-$53
Two-for-one stock split - - 211,891 $15-$31 - -
Granted - - - - 48,360 $53-$57
Vested (66,787) $20-$35 (117,261) $15-$35 (46,971) $30-$57
Forfeited - - (27,905) $15-$35 (810) $29-$43
------- --------- --------- -------
Outstanding at December 31, 212,309 $15-$35 279,096 $15-$35 212,371 $29-$57
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
A provision for restricted shares is made ratably over the restriction
period. Expense recognized under the plan for restricted shares was $1,664,000,
$2,223,000 and $2,146,000 in 1996, 1995 and 1994, respectively.
The following table summarizes information about non-qualified stock
options outstanding at December 31, 1996:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Number of Weighted Average Weighted Average Number of Weighted Average
Range of Options Remaining Exercise Options Exercise
Exercise Prices Outstanding Life (years) Price Exercisable Price
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$12-$20 863,654 (A) 4.3 $16.71 863,654 $16.71
$22-$31 1,070,244 (B) 7.6 $25.72 854,829 $25.33
$35-$39 1,886,040 (C) 9.6 $35.33 265,959 $34.75
--------- -------
$12-$39 3,819,938 7.8 $28.43 1,984,442 $22.84
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Comprised of Series A Shares, except for 67,390 Series B Shares
(B) Comprised of Series A Shares
(C) Comprised of Series B Shares
31
<PAGE> 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
Pro forma information regarding net earnings and earnings per share has
been determined as if the Company had accounted for its employee stock options
under the fair value method of SFAS 123. The fair value for those options was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions for 1996: risk-free interest rate of
6.22%; dividend yield of 1.23%; volatility factor of the expected market price
of the Company's common stock of .206; and weighted-average expected life of
the options of 5.07 years.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. Because
options vest over a period of several years and additional awards are generally
made each year, the full effect of applying SFAS 123 for providing pro forma
disclosure will not be reflected until the completion of one full vesting
cycle. Therefore, the pro forma information presented below is not indicative
of the effects on reported or pro forma net earnings for future years. The
Company's pro forma information follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
In thousands, except per share amounts 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C>
Pro forma net earnings $85,839 $66,505
Pro forma net earnings per share $ 2.09 $ 1.68
- -----------------------------------------------------------------------
</TABLE>
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 $104,298,000 at December 31, 1996 for broadcasts scheduled
through August 2001.
Advance payments on plant and equipment expenditures at December 31, 1996
primarily relate to newspaper production equipment, broadcast equipment and
building renovations and improvements. Required future payments for capital
expenditures for 1997 and 1998 are $18,724,000 and $1,000,000, respectively.
Total lease expense for property and equipment was $3,333,000, $3,435,000
and $3,131,000 in 1996, 1995 and 1994, respectively. 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.
32
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
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 5,336,872 shares under another Board
authorization.
On May 7, 1996, the Company completed a public offering of 5,750,000
shares of Series A Common Stock, resulting in net proceeds of approximately
$198,500,000. These proceeds were used to reduce long term debt. During the
fourth quarter of 1996, the Company borrowed $306,146,000 to purchase 8,321,700
shares of treasury stock. Had these transactions occurred at January 1, 1996,
earnings per share for the Company would have been $2.22.
NOTE 9: OTHER INCOME AND EXPENSE
- -----------------------------------------------------------------------------
In 1994, the Company 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 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 ($1,564,000 after-tax or 4 cents per share). In 1996, the Company
sold its interest in its programming distribution partnership, resulting in a
gain of $3,895,000 ($2,337,000 after-tax or 6 cents per share).
NOTE 10: SUPPLEMENTAL CASH FLOW INFORMATION
- ------------------------------------------------------------------------------
Net cash provided by operations reflects cash payments for interest and
income taxes during the years ended December 31, 1996, 1995 and 1994 as
follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
In thousands 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest paid, net of amounts capitalized $27,201 $30,724 $14,564
Income taxes paid, net of refunds $43,344 $39,427 $26,618
- ----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 11: SUBSEQUENT EVENTS
- --------------------------------------------------------------------------------
On February 28, 1997, the Company completed the acquisition of the
Providence Journal Company ("Providence Journal") in a merger transaction by
issuing 25,394,564 Series A shares and paying $587,096,000 in cash to
Providence Journal shareholders. In addition, the Company assumed Providence
Journal debt of approximately $200,000,000 and incurred acquisition related
costs of approximately $100,000,000, including the cash-out of Providence
Journal employee stock options and stock-based compensation, the settlement of
employment agreements and other merger-related costs. The transaction will be
accounted for as a purchase and is expected to be dilutive to the Company's
earnings primarily due to the amortization of intangible assets resulting from
the transaction. Had the transaction been complete as of December 31, 1996, the
Company's pro forma capitalization would have resulted in total long-term debt
of $1.5 billion and total shareholders' equity of $1.3 billion.
As a result of the merger, the Company currently owns two television
stations in the Seattle, Washington market (KIRO and KING). To comply with
Federal Communications Commission regulations that require the Company to
divest one of these stations, the Company announced an agreement among multiple
parties whereby, through an exchange of assets, it will exchange KIRO for CBS
affiliate KMOV-TV in St. Louis, Missouri. The exchange is subject to obtaining
customary regulatory approvals.
In January 1997, in preparation for the Providence Journal transaction,
the Company replaced its existing $1,000,000,000 revolving credit agreement
with a new $1,500,000,000 five-year facility and a $500,000,000 364-day
facility. The terms of the new agreements are generally consistent with those
of the previous facility.
33
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 12: 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 involve the sale of advertising space in published issues,
the sale of newspapers to distributors and individual subscribers and
commercial printing. The Company's principal newspaper is The Dallas Morning
News and is located in Dallas, Texas. 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 1994 has been
reclassified to conform to the current year presentation.
Selected segment data for the years ended December 31, 1996, 1995 and 1994
is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
In thousands 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net operating revenues
Broadcasting (A) $ 333,396 $ 322,642 $ 258,040
Newspaper publishing (B) 487,242 409,099 369,366
Other 3,670 3,602 719
- ----------------------------------------------------------------------------------------------------------
$ 824,308 $ 735,343 $ 628,125
- ----------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting (A) $ 83,862 $ 83,921 $ 81,319
Newspaper publishing (B) 103,046 69,999 66,568
Other (1,238) (3,972) (874)
Corporate expenses (20,021) (13,385) (16,014)
- ----------------------------------------------------------------------------------------------------------
$ 165,649 $ 136,563 $ 130,999
- ----------------------------------------------------------------------------------------------------------
Depreciation and amortization
Broadcasting (A) $ 38,975 $ 37,795 $ 25,077
Newspaper publishing (B) 25,072 20,916 20,716
Other 200 31 2
Corporate 936 705 610
- ----------------------------------------------------------------------------------------------------------
$ 65,183 $ 59,447 $ 46,405
- ----------------------------------------------------------------------------------------------------------
Identifiable assets
Broadcasting (A) $ 709,884 $ 726,766 $ 566,766
Newspaper publishing (B) 372,958 341,025 271,179
Other 6,118 8,126 1,381
Corporate (C) 135,112 78,105 74,465
- ----------------------------------------------------------------------------------------------------------
$ 1,224,072 $ 1,154,022 $ 913,791
- ----------------------------------------------------------------------------------------------------------
Capital expenditures
Broadcasting (A) $ 22,814 $ 19,605 $ 24,561
Newspaper publishing (B) 18,268 19,217 22,227
Other 1,338 154 62
Corporate 7,380 1,854 521
- ----------------------------------------------------------------------------------------------------------
$ 49,800 $ 40,830 $ 47,371
- ----------------------------------------------------------------------------------------------------------
</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) Newspaper publishing segment data for 1996 includes the operations of
the Bryan-College Station Eagle and the Owensboro Messenger-Inquirer,
which were purchased by the Company in December 1995 and January 1996,
respectively. (See Note 2).
(C) Corporate assets in 1996 include a 38 percent equity interest in the
Riverside Press-Enterprise newspaper.
34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 13: QUARTERLY RESULTS OF OPERATIONS (unaudited)
- -----------------------------------------------------------------------------
Following is a summary of the unaudited quarterly results of operations
for 1996 and 1995:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
In thousands, except per share amounts 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Net operating revenues
Broadcasting $ 70,607 $ 90,385 $ 79,803 $ 92,601
Newspaper publishing (A) 115,871 121,682 121,575 128,114
Other 766 752 769 1,383
- ------------------------------------------------------------------------------------------------------------------
$ 187,244 $ 212,819 $ 202,147 $ 222,098
- ------------------------------------------------------------------------------------------------------------------
Earnings from operations
Broadcasting $ 10,213 $ 27,616 $ 16,804 $ 29,229
Newspaper publishing (A) 21,204 25,659 26,757 29,426
Other (1,001) 7 (112) (132)
Corporate expenses (4,505) (5,229) (7,014) (3,273)
- ------------------------------------------------------------------------------------------------------------------
$ 25,911 $ 48,053 $ 36,435 $ 55,250
- ------------------------------------------------------------------------------------------------------------------
Net earnings $ 12,724(B) $ 25,496 $ 18,926 $ 30,359
- ------------------------------------------------------------------------------------------------------------------
Net earnings per common
- ------------------------------------------------------------------------------------------------------------------
and common equivalent share $ .33 $ .60 $ .42 $ .77
- ------------------------------------------------------------------------------------------------------------------
1995
Net operating revenues
Broadcasting (C) $ 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 (C) $ 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(D) $ 12,792 $ 21,143
- ------------------------------------------------------------------------------------------------------------------
Net earnings per common and
common equivalent share $ .28 $ .53 $ .33 $ .54
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Newspaper publishing results include the operations of the Bryan-College
Station Eagle and the Owensboro Messenger-Inquirer since December 1995 and
January 1996, respectively. (See Note 2).
(B) Net earnings for the first quarter of 1996 include a gain of $3,895,000 on
the sale of Belo's interest in its programming distribution partnership.
(See Note 9).
(C) Broadcasting results include the operations of KIRO-TV since February 1,
1995. (See Note 2).
(D) Net earnings for the second quarter of 1995 include an after-tax gain of
$1,564,000 related to the sale of Belo's investment in Stauffer
Communications, Inc. (See Note 9).
35
<PAGE> 38
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, 1996, 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
36
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated as of September 26, 1996 (Exhibit 2.1 to N/A
Form 8-K dated September 27, 1996)
3.1 Certificate of Incorporation of the Company (Exhibit 3.1 to the Company's Annual N/A
Report on Form 10-K dated February 28, 1996 (the "1995 Form 10-K"))
3.2 Certificate of Correction to Certificate of Incorporation dated May 13, 1987 N/A
(Exhibit 3.2 to the 1995 Form 10-K)
3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of the N/A
Company dated April 16, 1987 (Exhibit 3.3 to the 1995 Form 10-K)
3.4 Certificate of Amendment of Certificate of Incorporation of the Company dated N/A
May 4, 1988 (Exhibit 3.4 to the 1995 Form 10-K)
3.5 Certificate of Amendment of Certificate of Incorporation of the Company dated N/A
May 3, 1995 (Exhibit 3.5 to the 1995 Form 10-K)
3.6 Amended Certificate of Designation of Series A Junior Participating Preferred N/A
Stock of the Company dated May 4, 1988 (Exhibit 3.6 to the 1995 Form 10-K)
3.7 Certificate of Designation of Series B Common Stock of the Company dated N/A
May 4, 1988 (Exhibit 3.7 to the 1995 Form 10-K)
3.8 Bylaws of the Company, effective February 22, 1995 (Exhibit 3.7 to the N/A
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 N/A
Common Stock (Exhibit 4.2 to the Company's Annual Report on Form 10-K
dated March 18, 1993 (the "1992 Form 10-K"))
4.3 Specimen Form of Certificate representing shares of the Company's Series B N/A
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 N/A
between the Company and Chemical Mellon Shareholder Services, L.L.C., a
New York banking corporation (Exhibit 4.4 to the 1995 Form 10-K)
4.5 Supplement No. 1 to Amended and Restated Rights Agreement between the N/A
Company and The First National Bank of Boston dated as of November 11, 1996
(Exhibit 4.5 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1996)
</TABLE>
E-1
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
10.1 Contracts relating to television broadcasting:
(1) Form of Agreement for Affiliation between WFAA-TV in Dallas, Texas and ABC N/A
(Exhibit 10.1 (1) to the 1995 Form 10-K)
(2) Form of Agreement for Affiliation between KXTV in Sacramento, California and N/A
ABC (Exhibit 10.1 (2) to the 1995 Form 10-K)
(3) Contract for Affiliation between KHOU-TV in Houston, Texas and CBS (Exhibit N/A
10.1(3) to the 1995 Form 10-K)
(4) Contract for Affiliation between WWL-TV in New Orleans, Louisiana and CBS N/A
(Exhibit 10.1 (4) to the 1995 Form 10-K)
10.2 Financing agreements:
(1) Credit Agreement dated as of July 31, 1996 among the Company and Texas N/A
Commerce Bank, National Association as administrative agent, The Chase
Manhattan Bank, as competitive advance facility agent, Bank of America National
Trust and Savings Association and Bank of Tokyo-Mitsubishi, Ltd. as co-
syndication agents, NationsBank as documentation agent, and Societe Generale
and The Fuji Bank, Limited as co-agents (Exhibit 10.4 (1) to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996)
(2) Five Year $1,500,000,000 revolving credit and competitive advance facility dated _____
as of January 31, 1997 among the Company and Texas Commerce Bank National
Association as Administrative Agent, The Chase Manhattan Bank, as Competitive
Advance Facility Agent, Bank of America National Trust and Savings Association
and Bank of Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents, and NationsBank as
Documentation Agent
(3) 364-Day $500,000,000 revolving credit and competitive advance facility dated as _____
of January 31, 1997 among the Company and Texas Commerce Bank National
Association as Administrative Agent, The Chase Manhattan Bank, as Competitive
Advance Facility Agent, Bank of America National Trust and Savings Association
and Bank of Tokyo-Mitsubishi, Ltd. as Co-Syndication Agents, and NationsBank as
Documentation Agent
10.3 Compensatory plans:
(1) Management Security Plan _____
.
(2) The A. H. Belo Corporation 1986 Long-Term Incentive Plan (Effective May 3, _____
1989, as amended by Amendments 1, 2, 3, 4, and 5)
(3) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit 10.3(13) to the N/A
1992 Form 10-K)
(4) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit 10.3(9) to the 1995 N/A
Form 10-K)
</TABLE>
E-2
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT SEQ.
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C>
(5) The A. H. Belo Corporation Employee Savings and Investment Plan Amended and N/A
Restated February 2, 1996 (Exhibit 10.3(10) to the 1995 Form 10-K)
(6) The G. B. Dealey Retirement Pension Plan (as Amended and Restated Generally N/A
Effective January 1, 1989) (Exhibit 10.3(11) to the 1995 Form 10-K)
(7) Master Trust Agreement, effective as of July 1, 1992, between A. H. Belo N/A
Corporation and Mellon Bank, N. A. (Exhibit 10.3(26) to the Company's Annual
Report on Form 10-K dated March 18, 1994 (the "1993 Form 10-K"))
(8) A. H. Belo Corporation Supplemental Executive Retirement Plan (Exhibit 10.3(27) N/A
to the 1993 Form 10-K)
(9) Trust Agreement dated February 28, 1994, between the Company and Mellon Bank, N/A
N. A. (Exhibit 10.3(28) to the 1993 Form 10-K)
(10) A. H. Belo Corporation 1995 Executive Compensation Plan (Exhibit 10.3(16) to the N/A
1995 Form 10-K)
(11) A. H. Belo Corporation Employee Thrift Plan, effective January 1, 1995 (Exhibit 10.3 N/A
(17) to the 1995 Form 10-K)
(12) First Amendment to A. H. Belo Corporation Employee Thrift Plan (Exhibit 10.3(18) to N/A
the 1995 Form 10-K)
(13) Second Amendment to A. H. Belo Corporation Employee Thrift Plan (Exhibit 10.3(19) N/A
to the 1995 Form 10-K)
(14) Master Defined Contribution Trust Agreement by and between A. H. Belo Corporation N/A
and Mellon Bank, N.A. (Exhibit 10.3(20) to the 1995 Form 10-K)
(15) First Amendment to Master Defined Contribution Trust Agreement (Exhibit 10.3(21) to N/A
the 1995 Form 10-K)
(16) Second Amendment to Master Defined Contribution Trust Agreement (Exhibit 10.3(22) N/A
to the 1995 Form 10-K)
(17) A. H. Belo Corporation 1995 Executive Compensation Plan (as restated to incorporate _____
amendments through May 14, 1997)
21 Subsidiaries of the Company
23 Consent of Ernst & Young LLP
27 Financial Data Schedule (filed electronically with the Securities and
Exchange Commission)
</TABLE>
E-3
<PAGE> 1
EXHIBIT 10.2(2)
================================================================================
CREDIT AGREEMENT
dated as of
January 31, 1997
among
A. H. BELO CORPORATION
as Borrower,
The Lenders Party Hereto,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Administrative Agent,
THE CHASE MANHATTAN BANK,
as Competitive Advance Facility Agent
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
BANK OF TOKYO-MITSUBISHI, LTD.
as Co-Syndication Agents
NATIONSBANK
as Documentation Agent
FIVE YEAR
$1,500,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
-----------
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Classification of Loans and Borrowings . . . . . . . . . . . . . . 14
SECTION 1.03. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.03. Requests for Revolving Borrowings . . . . . . . . . . . . . . . . . 16
SECTION 2.04. Competitive Bid Procedure . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.05. Funding of Borrowings . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.06. Interest Elections . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.07. Termination and Reduction of Commitments . . . . . . . . . . . . . 21
SECTION 2.08. Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . 22
SECTION 2.09. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.10. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.11. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.12. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.13. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.14. Break Funding Payments . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . . . . 28
SECTION 2.17. Mitigation Obligations; Replacement of Lenders . . . . . . . . . . 29
SECTION 2.18 Extension of Maturity Date . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.02. Authorization; Enforceability . . . . . . . . . . . . . . . . . . . 31
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . . . . . . . 31
SECTION 3.04. Financial Condition; No Material Adverse Change . . . . . . . . . 32
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . . . . . . . 32
SECTION 3.07. Compliance with Laws and Agreements . . . . . . . . . . . . . . . . 33
SECTION 3.08. Certain Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C> <C>
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.12. Acquisition of The Providence Journal Company . . . . . . . . . . . 34
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.02. Each Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements and Other Information . . . . . . . . . . . . 36
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.03. Existence; Conduct of Business . . . . . . . . . . . . . . . . . . 38
SECTION 5.04 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.05. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . 38
SECTION 5.06. Books and Records; Inspection Rights . . . . . . . . . . . . . . . 38
SECTION 5.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.08. Use of Proceeds . . . . . . . . . . . . . . . 39
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.02. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.03. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 39
SECTION 6.04. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.05. Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.06. Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------------
ARTICLE VIII
The Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------
</TABLE>
<PAGE> 4
4
<TABLE>
<S> <C> <C>
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.02 Waivers, Amendments . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.03 Expenses; Indemnity; Damage Waiver . . . . . . . . . . . . . . . . 46
SECTION 9.04 Successors & Assigns . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.05 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.06 Counterparts; Integration; Effectiveness . . . . . . . . . . . . . 50
SECTION 9.07 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.08 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.09 Governing Law; Jurisdiction; Consent to
Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.13 Interest Rate Limitations . . . . . . . . . . . . . . . . . . . . . 52
Exhibits and Schedules
----------------------
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Opinion of Counsel -- General Counsel of A. H. Belo Corporation
Exhibit B-2 Form of Opinion of Counsel -- Locke Purnell Rain Harrell
Exhibit B-3 Form of Opinion of Counsel -- Wiley, Rein & Fielding
Schedule 2.01 Commitments
Schedule 3.06 Litigation, Labor and Environmental Matters
Schedule 6.01 Liens
Schedule 6.05 Subordinated Debt
</TABLE>
<PAGE> 5
CREDIT AGREEMENT dated as of January 31, 1997,
among A. H. BELO CORPORATION, the LENDERS party
hereto, THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as Competitive Advance
Facility Agent (in such capacity, the "CAF Agent"),
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION and BANK OF TOKYO-MITSUBISHI, LTD., as
Co-Syndication Agents, NATIONSBANK OF TEXAS, N.A., as
Documentation Agent, and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent (in such
capacity, the "Administrative Agent"; and, together
with the CAF Agent, the "Agents").
The Borrower (such term and each other capitalized term used but not
otherwise defined herein having the meaning assigned to it in Article I) has
requested the Lenders to extend credit in order to enable it to borrow on a
revolving credit basis on and after the date hereof and at any time and from
time to time prior to the Maturity Date a principal amount not to exceed
$1,500,000,000. The proceeds of such borrowings are to be used to finance a
portion of the cost of acquiring The Providence Journal Company (including
related refinancing of indebtedness and transaction costs) and for general
corporate purposes, including working capital, acquisitions, stock repurchases
and, if the Borrower shall so determine, commercial paper backup. Up to
$100,000,000 of the proceeds of such borrowings and the borrowings under the
364-day revolving credit and competitive advance facility established pursuant
to the credit agreement dated the date hereof among the Borrower, the Lenders
and the Agents may be used to fund the operations of AHN and TVFN. The
Borrower has also requested the Lenders to provide a procedure pursuant to
which the Lenders may be invited to bid on an uncommitted basis on short-term
borrowings by the Borrower. The Lenders are willing to extend such credit to
the Borrower on the terms and subject to the conditions herein set forth.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted CD Rate" means, with respect to any CD Borrowing for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/100 of 1%) equal to the sum of (a) the Fixed CD Rate for such
Interest Period multiplied by the Statutory Reserve Rate, plus (b) the
Assessment Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded
<PAGE> 6
2
upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for
such Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Texas Commerce Bank National Association,
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"AHN" means America's Health Network, a subsidiary of The Providence
Journal Company.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Percentage" means, with respect to any Eurodollar Loan
(other than any Eurodollar Competitive Loan) or CD Loan or with respect to the
facility fees referred to in Section 2.10(a), as the case may be, the
applicable percentage set forth in the table below under the caption
"Eurodollar Spread", "CD Spread" or "Facility Fee Percentage", as the case may
be, based upon the ratio of Funded Debt to Pro Forma Operating Cash Flow as of
the end of and for the most recent period of four consecutive fiscal quarters
for which financial statements of the Borrower are required to have been
delivered under Section 5.01(a) or (b), whether or not financial statements in
respect of any subsequent period shall have been delivered:
<TABLE>
<CAPTION>
Facility Fee Eurodollar Spread CD Spread
------------ ----------------- ---------
Ratio Percentage
----- ----------
<S> <C> <C> <C> <C>
Category 1 Below 3.0 to 1.0 0.0700% 0.1550% 0.2800%
Category 2 At least 3.0 to 1.0 but below
3.5 to 1.0 0.080% 0.1700% 0.2950%
Category 3 At least 3.5 to 1.0 but below
4.0 to 1.0 0.1000% 0.2250% 0.3500%
Category 4 At least 4.0 to 1.0 but below
4.5 to 1.0 0.1250% 0.2750% 0.4000%
Category 5 At least 4.5 to 1.0 but below
5.0 to 1.0 0.1500% 0.3500% 0.4750%
Category 6 Greater than or equal to 5.0 to
1.0 0.1875% 0.4375% 0.5625%
</TABLE>
<PAGE> 7
3
At any time when financial statements required to have been delivered under
Section 5.01 (a) or (b) have not been delivered, the Applicable Percentage
shall be determined by reference to Category 6.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost to the Lenders of such insurance.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.04), and accepted by the Administrative Agent, in the
form of Exhibit A or another form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means A. H. Belo Corporation, a Delaware corporation.
"Borrowing" means (a) a group of Revolving Loans of the same Type and,
in the case of CD Loans or Eurodollar Loans, as to which a single Interest
Period is in effect, (b) a Competitive Loan or group of Competitive Loans of
the same Type made on the same date and as to which a single Interest Period is
in effect.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to remain closed; provided that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"CAF Agent" means The Chase Manhattan Bank as competitive advance
facility agent for the Lenders hereunder.
<PAGE> 8
4
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CD", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted CD Rate.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange
Act of 1934 as in effect on the date hereof) other than officers of the
Borrower and Continuing Directors shall own, directly or indirectly,
beneficially or of record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
of the Borrower; or (b) a majority of the seats (other than vacant seats) on
the board of directors of the Borrower shall at any time be occupied by persons
who are not Continuing Directors.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13, by any lending office of such Lender or by such
Lender's holding company, if any) with any law, rule or regulation, or any
guideline or directive (whether or not having the force of law) of any
Governmental Authority, or any request of any Governmental Authority with which
such Lender believes in good faith that it would be disadvantageous not to
comply, in each case made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable.
<PAGE> 9
5
"Competitive Bid" means an offer by a Lender to make a Competitive
Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Continuing Directors" means (i) the members of the Board of Directors
of the Borrower on the date hereof and (ii) future members of such Board of
Directors who were nominated or appointed by a majority of the Continuing
Directors at the date of their nomination or appointment.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings, labor
controversies and the environmental matters disclosed in Schedule 3.06. The
disclosure of information in Schedule 3.06 or in any other schedule or exhibit
to this Agreement shall not constitute an admission by the Borrower that such
information is material for any purpose, including applicable securities laws,
other than this Agreement and the transactions provided for herein.
"dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon
<PAGE> 10
6
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan; (b)
the existence with respect to any Plan of an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence of any liability under Title IV of
ERISA with respect to the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or
Multiemployer Plan; (e) the receipt by the Borrower or any ERISA Affiliate from
the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; or
(f) the receipt by the Borrower or any ERISA Affiliate of any notice concerning
the imposition of Withdrawal Liability or a determination that a Multiemployer
Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate (or, in
the case of a Competitive Loan, the LIBO Rate).
"Event of Default" has the meaning assigned to such term in Article
VII.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the jurisdiction under the laws of which it
is organized, or the jurisdiction in which its principal office is located or,
in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any
similar tax imposed by any other jurisdiction in which the Borrower is located
and (c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.17(b)), any U.S. Federal withholding
tax imposed on amounts payable
<PAGE> 11
7
to such Foreign Lender under this Agreement because of its failure or inability
to comply with Section 2.15(e) or for any other reason, unless (and to the
extent that) (i) such withholding tax liability arises or is increased by
reason of a Change in Law occurring after such Foreign Lender becomes a Lender
under this Agreement or (ii) such Foreign Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such withholding tax liability pursuant to Section
2.15(a).
"FCC" means the Federal Communications Commission and any successors
thereto.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Film Contracts" mean contracts or agreements with suppliers which
provide the right to broadcast certain specified film or video tape motion
pictures.
"Financial Officer" means the chief financial officer, vice president
of finance, principal accounting officer, treasurer or controller of the
Borrower.
"Fixed CD Rate" means, with respect to any CD Borrowing for any
Interest Period, the arithmetic average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m.,
New York City time, to the Administrative Agent on the first Business Day of
such Interest Period by three negotiable certificate of deposit dealers of
recognized standing selected by the Administrative Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount of $5,000,000 and with a maturity comparable
to such Interest Period.
"Fixed Rate" means, with respect to any Competitive Loan bearing
interest at a fixed rate, the fixed rate of interest per annum specified by the
Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed
Rate.
"Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes
hereof, the United States of America and each State thereof shall be
considered to constitute a single jurisdiction.
"Funded Debt" means without duplication, all Indebtedness, other than
short-term obligations under Film Contracts.
<PAGE> 12
8
"GAAP" means generally accepted accounting principles in the United
States of America consistently applied.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" means any agreement by which the Borrower or any
Subsidiary assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of another Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assure
any creditor of such other Person against loss, but shall not include typical
and customary indemnifications, representations and warranties made in
connection with purchases and sales of property or issuances of securities.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging
arrangement.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Indebtedness" means, without duplication, the Borrower's and each
Subsidiary's (a) obligations for borrowed money, (b) obligations representing
the deferred purchase price of property (including, without limitation, under
Film Contracts) other than accounts payable arising in connection with the
purchase of inventory in the ordinary course of business, (c) obligations,
whether or not assumed, secured by Liens on or payable out of the proceeds or
production from property now or hereafter owned or acquired by the Borrower or
any Subsidiary, (d) obligations created under any conditional purchase or other
title retention agreements, (e) Capital Lease Obligations, letters of credit,
bonds or similar instruments, bankers' acceptances, (f) obligations under
Guarantees; provided, however, that Indebtedness shall not include obligations
of the Borrower or any Subsidiary incurred in connection with the
self-insurance program or employee benefit plans and programs of the Borrower
or the Subsidiaries, and (g) obligations to make payments that would be
required to be made in the event of an early termination, on the date
Indebtedness of the Borrower or any Subsidiary is being determined, in respect
of outstanding Hedging Agreements.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Coverage Ratio" means the ratio of Pro Forma Operating Cash
Flow to Interest Expense.
<PAGE> 13
9
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Expense" means, with respect to the Borrower and the
Subsidiaries for any period, the interest expense of the Borrower and the
Subsidiaries determined on a consolidated basis in accordance with GAAP,
including, without limitation, (a) the amortization of debt discounts, (b) the
amortization of all fees (including, without limitation, fees with respect to
interest rate protection agreements) payable in connection with the incurrence
of Indebtedness and (c) the portion of any Capital Lease Obligation allocable
to interest expense.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, (b) with respect to any
CD or Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration or a CD
Borrowing with an Interest Period of more than 90 days' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration or 90 days' duration, as the case may be, after the first day
of such Interest Period, (c) with respect to any Fixed Rate Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Fixed Rate Borrowing with an Interest Period of more than
90 days' duration (unless otherwise specified in the applicable Competitive Bid
Request), each day prior to the last day of such Interest Period that occurs at
intervals of 90 days' duration after the first day of such Interest Period, and
any other dates that are specified in the applicable Competitive Bid Request as
Interest Payment Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the Borrower may elect, (b) with respect to any CD
Borrowing, the period commencing on the date of such Borrowing and ending 30,
60, 90, 180, 270 or 360 days thereafter, as the Borrower may elect, and (c)
with respect to any Fixed Rate Borrowing, the period (which shall not be less
than 1 day or more than 360 days) commencing on the date of such Borrowing and
ending on the date specified in the applicable Competitive Bid Request;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and, in the case of a Revolving Borrowing,
thereafter shall be
<PAGE> 14
10
the effective date of the most recent conversion or continuation of such
Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is
not available at such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Borrowing for such Interest Period shall be the rate at which
dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered to the principal London office of the Administrative Agent
or any Affiliate designated by the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"Margin" means, with respect to any Competitive Loan bearing interest
at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be
added to or subtracted from the LIBO Rate to determine the rate of interest
applicable to such Loan, as specified by the Lender making such Loan in its
related Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower
to perform any of its obligations under this Agreement or (c) the rights of or
benefits available to the Lenders under this Agreement.
"Material Indebtedness" means Indebtedness (other than the Loans), of
any one or more of the Borrower and the Subsidiaries in a
<PAGE> 15
11
principal amount for any such Indebtedness in excess of $20,000,000 or in an
aggregate principal amount for all such Indebtedness in excess of $35,000,000.
"Maturity Date" means January 31, 2002, or any later date to which the
Maturity Date has been extended pursuant to Section 2.18.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Operating Cash Flow" means, for the Borrower and its Subsidiaries for
any relevant period, on a consolidated basis, the sum of (i) earnings before
income taxes for such period (without taking into account extraordinary or
nonrecurring items), plus (ii) depreciation and amortization expense during
such period, plus (iii) Interest Expense actually incurred or accrued during
such period determined in accordance with GAAP; provided, however, that
Operating Cash Flow shall not include (i) any income or loss attributable to
any investment accounted for on the "equity" method of accounting or (ii) any
operating cash flow (positive or negative) attributable to AHN or TVFN.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution or delivery of, or
otherwise with respect to, this Agreement.
"Participation Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment.
If the Commitments have terminated or expired, the Participation Percentages
shall be determined based upon the Commitments most recently in effect, giving
effect to any assignments.
"Permitted Liens" means (a) Liens for Taxes not yet due and payable,
mechanic's Liens and materialman's, shipper's or warehouseman's Liens for
services or materials and landlord's Liens for rental amounts for which payment
is not yet due or which are being contested in good faith by appropriate
proceedings, (b) Liens securing any purchase money Indebtedness (including
Capital Lease Obligations relating to assets acquired after the date hereof) if
such Liens do not encumber any property other than the property for the
purchase of which such purchase money Indebtedness was incurred, (c) the
currently existing Liens described in Schedule 6.01 hereto, if any, and
renewals thereof, (d) pledges or deposits made to secure payment of worker's
compensation, unemployment insurance, pensions, or other social security
programs, (e) good-faith pledges or deposits made to secure performance of
bids, tenders, contracts (other than for the repayment of borrowed money), or
leases, or to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds in the ordinary course of
business, (f) encumbrances consisting of zoning restrictions, easements,
utility district assessments or other restrictions on the use of property, none
of which materially impairs the operation by the Borrower and the Subsidiaries
(taken as a
<PAGE> 16
12
whole) of their business, and none of which is violated by existing or proposed
structures or land use where such violation would materially impair the
operation by the Borrower and the Subsidiaries (taken as a whole) of their
business, (g) the following, if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings and so long
as levy and execution thereon have been stayed and continue to be stayed, or
they do not in the aggregate materially detract from the value of any material
assets or the operations of the Borrower and the Subsidiaries taken as a whole:
claims and Liens for Taxes due and payable; claims and Liens upon, and defects
of title to, property, including any attachment of property or other legal
process prior to adjudication of a dispute on the merits; and claims and Liens
of mechanics, materialmen, warehousemen, carriers, landlords, or other Liens;
judgment Liens; and (h) any Lien existing on any property or asset prior to
the acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time the Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation or connection with such acquisition or such
Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the
date of such acquisition or the date such Person becomes a Subsidiary, as the
case may be.
"PBGC" means the Pension Benefit Guarantee Corporation referred to and
Defined in ERISA.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Texas Commerce Bank National Association as its prime rate
in effect at its principal office in Dallas; each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.
"Prior Agreement" means the Borrower's credit agreement dated as of
July 31, 1996.
"Pro Forma Operating Cash Flow" means, for any relevant period,
Operating Cash Flow of the Borrower and its Subsidiaries on a consolidated
basis adjusted to include the Operating Cash Flow of any operating units or
entities acquired during such relevant period and to exclude the Operating Cash
Flow of any operating units or entities divested or sold during such relevant
period (in each case, as if the acquisition or divestiture had occurred at the
beginning of such relevant period).
"Register" has the meaning set forth in Section 9.04.
<PAGE> 17
13
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing more than 51% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time; provided
that, for purposes of declaring the Loans to be due and payable pursuant to
Article VII, and for all purposes after the Loans become due and payable
pursuant to Article VII or the Commitments expire or terminate, the outstanding
Competitive Loans of the Lenders shall be included in their respective
Revolving Credit Exposures in determining the Required Lenders.
"Reportable Event" means any reportable event as defined by Section
4043 of ERISA and the regulations issued under such Section with respect to a
Plan (other than a Multiemployer Plan), excluding, however, such events as to
which the PBGC by regulation or by technical update waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event; provided that a failure to meet the minimum funding standard of
Section 412 of the Code and Section 302 of ERISA shall be a reportable event
regardless of the issuance of any waiver in accordance with Section 412(d) of
the Code.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amounts of such Lender's Revolving
Loans at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board to which the Administrative Agent is subject
(a) with respect to the Adjusted CD Rate or the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to (i) the applicable Interest Period, in the
case of the Adjusted CD Rate, and (ii) three months, in the case of the Base CD
Rate, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"Subordinated Debt" means Indebtedness of the Borrower for borrowed
money that satisfies the requirements set forth in Schedule 6.05 hereto.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would
<PAGE> 18
14
be consolidated with those of the parent in the parent's consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50%
of the ordinary voting power or, in the case of a partnership, more than 50% of
the general partnership interests are, as of such date, owned, controlled or
held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate is not so reported on such day or
such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement and the borrowing of the Loans hereunder.
"TVFN" means Television Food Network, a subsidiary of The Providence
Journal Company.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Adjusted
CD Rate, the Alternate Base Rate or, in the case of a Competitive Loan or
Borrowing, the LIBO Rate or a Fixed Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes
of this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
(e.g., a "Eurodollar Revolving Loan").
<PAGE> 19
15
Borrowings also may be classified and referred to by Class (e.g., a "Revolving
Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type
(e.g., a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights. Except as otherwise expressly provided herein, all terms of
an accounting or financial nature shall be construed in accordance with GAAP,
as in effect from time to time; provided that, if the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if
the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender's Revolving Credit Exposure exceeding
such Lender's Commitment or (b) the sum of the total Revolving Credit Exposures
plus the aggregate principal amount of outstanding Competitive Loans exceeding
the total Commitments. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.
<PAGE> 20
16
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall
be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Participation Percentages.
Each Competitive Loan shall be made in accordance with the procedures set forth
in Section 2.04. The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments and Competitive Bids of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
(b) Subject to Section 2.12, (i) each Revolving Borrowing shall be
comprised entirely of ABR Loans, CD Loans or Eurodollar Loans as the Borrower
may request in accordance herewith, and (ii) each Competitive Borrowing shall
be comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower
may request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement; provided further, that if the designation of any such
foreign branch or Affiliate shall result in any costs, reductions or Taxes
which would not otherwise have been applicable and for which such Lender would,
but for this proviso, be entitled to request compensation under Section 2.13 or
2.15, such Lender shall not be entitled to request such compensation unless it
shall in good faith have determined such designation to be necessary or
advisable to avoid any material disadvantage to it.
(c) At the commencement of each Interest Period for any CD Revolving
Borrowing or Eurodollar Revolving Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000; provided that an ABR Revolving
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments. Each Competitive Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total
of 15 CD and Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. In order to request
a Revolving Borrowing, the Borrower shall notify the Administrative Agent of
such request by telephone (a) in the case of a Eurodollar Borrowing, not later
than 11:00 a.m., Dallas time, three Business Days before the date of the
proposed Borrowing, (b) in the case of a CD Borrowing, not later than 11:00
a.m., Dallas time, two Business Days before the date of the proposed Borrowing
or (c) in the case of an ABR Borrowing, not later than 10:00 a.m., Dallas time,
on
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17
the date of the proposed Borrowing. Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing, a CD Borrowing
or a Eurodollar Borrowing;
(iv) in the case of a CD Borrowing or a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested CD or Eurodollar Revolving
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of 30 days' duration, in the case of a CD Borrowing, or one month's
duration, in the case of a Eurodollar Borrowing. Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the terms
and conditions set forth herein, from time to time during the Availability
Period the Borrower may request Competitive Bids and may (but shall not have
any obligation to) accept Competitive Bids and borrow Competitive Loans;
provided that the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans at any time shall
not exceed the total Commitments. In order to request Competitive Bids, the
Borrower shall notify the CAF Agent of such request by telephone, in the case
of a Eurodollar Borrowing, not later than 11:00 a.m., Dallas time, four
Business Days before the date of the proposed Borrowing and, in the case of a
Fixed Rate Borrowing, not later than 10:00 a.m., Dallas time, one Business Day
before the date of the proposed Borrowing; provided that a Competitive Bid
Request shall not be made within five Business Days after the date of any
previous Competitive Bid Request, unless any and all such previous Competitive
Bid Requests shall have been withdrawn or all Competitive Bids received in
response thereto rejected. Each such telephonic Competitive Bid Request shall
be confirmed promptly by hand delivery or telecopy to the CAF Agent of a
written Competitive Bid Request in a form approved by the CAF Agent and signed
by the Borrower. Each such telephonic and written Competitive Bid Request
<PAGE> 22
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shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing or a
Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing, which
shall be a period contemplated by the definition of the term "Interest
Period"; and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the CAF Agent shall notify the Lenders of the details thereof by
telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to) make one
or more Competitive Bids to the Borrower in response to a Competitive Bid
Request. Each Competitive Bid by a Lender must be in a form approved by the
CAF Agent and must be received by the Administrative Agent by telecopy, in the
case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., Dallas
time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m.,
Dallas time, on the proposed date of such Competitive Borrowing. Competitive
Bids that do not conform substantially to the form approved by the CAF Agent
may be rejected by the CAF Agent, and the CAF Agent shall notify the applicable
Lender as promptly as practicable. Each Competitive Bid shall specify (i) the
principal amount (which shall be a minimum of $5,000,000 and an integral
multiple of $1,000,000 and which may equal the entire principal amount of the
Competitive Borrowing requested by the Borrower) of the Competitive Loan or
Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or
Rates at which the Lender is prepared to make such Loan or Loans (expressed as
a percentage rate per annum in the form of a decimal to no more than four
decimal places) and (iii) the Interest Period applicable to each such Loan and
the last day thereof.
(c) The CAF Agent shall promptly notify the Borrower by telecopy of
the Competitive Bid Rate and the principal amount specified in each Competitive
Bid and the identity of the Lender that shall have made such Competitive Bid.
(d) Subject only to the provisions of this paragraph (d), the
Borrower may accept or reject any Competitive Bid. The Borrower shall notify
the CAF Agent by telephone, confirmed by telecopy in a form approved by the CAF
Agent, whether and to what extent it has decided to accept or reject each
Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not later
than 10:30 a.m., Dallas
<PAGE> 23
19
time, three Business Days before the date of the proposed Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 10:30
a.m., Dallas time, on the proposed date of the Competitive Borrowing; provided,
that (i) the failure of the Borrower to give such notice shall be deemed to be
a rejection of each Competitive Bid, (ii) the Borrower shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Borrower
rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the aggregate amount of the requested Competitive Borrowing specified in
the related Competitive Bid Request, (iv) to the extent necessary to comply
with clause (iii) above, the Borrower may accept Competitive Bids at the same
Competitive Bid Rate in part, which acceptance, in the case of multiple
Competitive Bids at such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such Competitive Bid, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000; provided further that if
a Competitive Loan must be in an amount less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be
rounded to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph (d) shall
be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender by
telecopy whether or not its Competitive Bid has been accepted (and, if so, the
amount and Competitive Bid Rate so accepted), and each successful bidder will
thereupon become bound, subject to the terms and conditions hereof, to make the
Competitive Loan in respect of which its Competitive Bid has been accepted.
(f) If any Lender that is an Affiliate of the CAF Agent shall elect
to submit a Competitive Bid in its capacity as a Lender, it shall submit such
Competitive Bid directly to the Borrower at least one quarter of an hour
earlier than the time by which the other Lenders are required to submit their
Competitive Bids to the CAF Agent pursuant to paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, Dallas time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such
Loans available to the Borrower by promptly crediting the amounts so received,
in like funds, to an account of the Borrower maintained with the Administrative
Agent in Dallas and designated by the Borrower in the applicable Borrowing
Request or Competitive Bid Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such
<PAGE> 24
20
Lender's share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available
to the Borrower a corresponding amount. In such event, if a Lender has not in
fact made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrower, the interest rate borne by
the applicable Borrowing. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a CD or Eurodollar Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter,
the Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a CD or Eurodollar Revolving
Borrowing, may elect new Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Competitive Borrowings,
which may not be converted or continued.
(b) In order to make an election pursuant to this Section, the
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such
telephonic Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of
a written Interest Election Request in a form approved by the Administrative
Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
<PAGE> 25
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(iii) whether the resulting Borrowing is to be an ABR Borrowing, a CD
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a CD Borrowing or a Eurodollar
Borrowing, the Interest Period to be applicable thereto after giving effect
to such election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a CD Borrowing or Eurodollar
Borrowing but does not specify an Interest Period, then the Borrower shall be
deemed to have selected an Interest Period of 30 days' duration, in the case of
a CD Borrowing, or one month's duration, in the case of a Eurodollar Borrowing.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a CD or Eurodollar Revolving Borrowing prior to the end
of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Revolving Borrowing may be converted to or continued as a CD or Eurodollar
Borrowing and (ii) unless repaid, each CD and Eurodollar Revolving Borrowing
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date;
provided that the Commitments shall terminate at 3:00 p.m., Dallas time, on
March 31, 1997, if the Effective Date has not occurred prior to such time.
(b) Subject to Section 2.09(d), the Borrower may at any time
terminate, or from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans, the sum of the Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans would exceed the
total Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of
<PAGE> 26
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termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
on the Maturity Date, (ii) to the Administrative Agent for the account of each
Lender the then unpaid principal amount of each Competitive Loan on the last
day of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns)
and in a form approved by the Administrative Agent.
SECTION 2.09. Prepayment of Loans. (a) Subject to Section 2.09(d),
the Borrower shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part.
(b) In the event of any termination of the Commitments, the Borrower
shall prepay all outstanding Borrowings on the date of such termination. In
the event of any reduction of the Commitments, the Borrower shall prepay
outstanding Borrowings to the extent, if any, necessary so that, on the date of
and after giving effect to such reduction, the sum of the Revolving Credit
Exposures and the aggregate
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principal amount of the outstanding Competitive Loans does not exceed the total
Commitments.
(c) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m.,
Dallas time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of a CD Borrowing, not later than 11:00 a.m., Dallas time,
two Business Days before the date of prepayment, (iii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Dallas
time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is
given in connection with a conditional notice of termination of the Commitments
as contemplated by Section 2.07, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.07.
Promptly following receipt of any such notice relating to a Revolving
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Revolving Borrowing shall be in an
amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.
(d) The Borrower shall not have the right to prepay any Competitive
Loan and shall not terminate or reduce the Commitments if such termination or
reduction would require prepayment of any Competitive Loan.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Percentage per annum on the daily amount of the
Commitment of such Lender (whether used or unused) during the period from and
including the date hereof to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Revolving
Credit Exposure after its Commitment terminates, then such facility fee shall
continue to accrue on the daily amount of such Lender's Revolving Credit
Exposure from and including the date on which its Commitment terminates to but
excluding the date on which such Lender ceases to have any Revolving Credit
Exposure. Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the
date hereof; provided that any facility fees accruing after the date on which
the Commitments terminate shall be payable on demand. All facility fees shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender, ratably in accordance with its respective Commitment,
the upfront fee separately agreed upon between
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the Borrower and the Lenders. The upfront fee shall be payable on the
Effective Date.
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed
upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate.
(b) The Loans comprising each CD Borrowing shall bear interest at a
rate per annum equal to the Adjusted CD Rate for the Interest Period in effect
for such Borrowing plus the Applicable Percentage from time to time in effect.
(c) The Loans comprising each Eurodollar Borrowing shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Percentage from time to
time in effect (or, in the case of a Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Margin offered by the
Lender making such loan and accepted by the Borrower pursuant to Section 2.04).
(d) Each Fixed Rate Loan shall bear interest at a rate per annum
equal to the Fixed Rate applicable to such Loan.
(e) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, the rate
otherwise applicable to such Loan as provided above plus 2% or (ii) in the case
of any other amount, the rate applicable to ABR Loans as provided above plus
2%.
(f) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (e) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment, (iii) in the event of any conversion of any
Loan (other than an ABR Revolving Loan) prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion and (d) in the event the Commitments are
terminated, all accrued and unpaid interest on the Loans shall be paid on the
date of such termination.
<PAGE> 29
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(g) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted CD Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.12 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a CD Borrowing or Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted CD Rate, the Adjusted LIBO Rate or the
LIBO Rate, as applicable, for such Interest Period or, in the case of a
Eurodollar Borrowing, that a Change in Law makes it unlawful for any one or
more of the Lenders to make a Eurodollar Loan; or
(b) the Administrative Agent is advised by the Required Lenders that,
as a result of a Change in Law or other unusual events or conditions
affecting the markets in which such Lenders conduct their funding
operations, the Adjusted CD Rate, the Adjusted LIBO Rate or the LIBO Rate,
as applicable, for such Interest Period will be lower than the actual cost
to such Lenders of obtaining the funds necessary to make or maintain their
Loans comprising such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a CD Borrowing or Eurodollar
Borrowing shall be ineffective, (ii) if any Borrowing Request requests a CD or
Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR
Borrowing and (iii) any request by the Borrower for a Eurodollar Competitive
Borrowing shall be ineffective; provided that (A) if the circumstances giving
rise to such notice do not affect all the Lenders, then requests by the
Borrower for Eurodollar Competitive Borrowings may be made to Lenders that are
not affected thereby and (B) if the circumstances giving rise to such notice
affect only one Type of Borrowings, then the other Type of Borrowings shall be
permitted.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except
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any such reserve requirement reflected in the Adjusted CD Rate or the
Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement, CD Loans or Eurodollar Loans or Fixed
Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any CD Loan, Eurodollar Loan or Fixed Rate Loan
or to increase the cost to such Lender or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Lender to be material, then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time the Borrower will pay to such Lender, as the case may be, such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section, and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined, shall be delivered to the Borrower and shall, if submitted in good
faith, be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right
to demand such compensation; provided that the Borrower shall not be required
to compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than six months prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the six-month period referred to above shall
be extended to include the period of retroactive effect thereof.
(e) Notwithstanding the foregoing provisions of this Section, a
Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been
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27
publicly announced prior to submission of the Competitive Bid pursuant to which
such Loan was made.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any CD Loan, Eurodollar Loan or Fixed Rate Loan
other than on the last day of an Interest Period applicable thereto, (b) the
conversion of any CD Loan or Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, prepay
or continue any Revolving Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice is permitted to be revocable
and is revoked in accordance herewith), (d) the failure to borrow any
Competitive Loan after accepting the Competitive Bid to make such Loan, or (e)
the assignment of any CD Loan, Eurodollar Loan or Fixed Rate Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.17, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to
such event by payment to such Lender of an amount determined by such Lender to
be equal to the excess, if any, of (i) the amount of interest that such Lender
would pay for a deposit equal to the principal amount of the applicable Loan
for the period from the date of such payment, conversion, failure or assignment
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow, convert, prepay or continue, the duration of the
Interest Period that would have resulted from such borrowing, conversion or
continuation) if the interest rate payable on such deposit were equal to the
Adjusted LIBO Rate, the Adjusted CD Rate or the Fixed Rate, as the case may be,
in effect (or that would have been in effect) for such Interest Period, over
(ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for dollar deposits at other banks in the London
interbank market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section, and setting forth in reasonable detail the
manner in which such amount or amounts shall have been determined, shall be
delivered to the Borrower and shall, if submitted in good faith, be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) each of the Agents or Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
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(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agents and each Lender within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the
Agents or such Lender, as the case may be, and any liability (including
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, by the Administrative Agent on its own behalf or on
behalf of a Lender, or by the CAF Agent, and setting forth in reasonable detail
the manner in which such amount shall have been determined, shall, if submitted
in good faith, be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, properly completed and executed forms prescribed by applicable
law (together with such other documentation or certification as the Borrower
may reasonably request) that will permit the Borrower to make such payments
without withholding or at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or otherwise) prior to 12:00
noon, Dallas time, on the date when due, in immediately available funds, to the
Administrative Agent at its offices at Dallas, Texas, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. The
Administrative Agent shall distribute any such payments received for the
account of any other Person to the appropriate recipient in the amount owed to
it promptly following receipt thereof. If any payment hereunder shall be due
on a day that is not a Business Day, the date for payment shall be extended to
the next succeeding Business Day and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in dollars.
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29
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to fully pay all amounts then due hereunder, such
funds shall be applied to the amounts then due hereunder in such order and
priority as the Administrative Agent may elect; provided that any funds that
the Administrative Agent elects to apply to principal, interest or fees then
due shall be applied ratably to all amounts of principal, interest or fees (as
the case may be) then due.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participation in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payments giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any
assignee or participant other than the Borrower or any Subsidiary or Affiliate
thereof. The Borrower consents to the foregoing and agrees, to the extent it
may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the good
faith judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender in such Lender's good faith judgment. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of
<PAGE> 34
30
any Lender pursuant to Section 2.15, or if any Lender defaults in its
obligation to fund Loans hereunder, then the Borrower may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in Section 9.04), all its interests,
rights and obligations under this Agreement (other than any outstanding
Competitive Loans held by it) to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment);
provided that (i) the Borrower shall have received the prior written consent of
the Administrative Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans (other than Competitive Loans, as to which
such Lender will continue to have all of its rights hereunder), accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation
under Section 2.13 or payments required to be made pursuant to Section 2.15,
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
SECTION 2.18 Extension of Maturity Date (a) The Borrower may, by
notice to the Administrative Agent (which shall promptly deliver a copy to each
of the Lenders) given not more than 60 days prior to any anniversary of the
Closing Date while the Commitments remain in effect, request that the Lenders
extend the Maturity Date for an additional one year period (but in no event
beyond the seventh anniversary of the Closing Date) from the Maturity Date then
in effect (the "Existing Maturity Date"). Each Lender shall, by notice to the
Borrower and the Administrative Agent given not later than the 10th Business
Day after the date of the Borrower's notice, advise the Borrower whether or not
such Lender agrees to such extension (and any Lender that does not so advise
the Borrower on or before such day shall be deemed to have advised the Borrower
that it will not agree to such extension).
(b) If (and only if) Lenders holding Commitments that represent at
least 51% of the total Commitments on the 60th day prior to the applicable
anniversary of the Closing Date shall have agreed to extend the Existing
Maturity Date (such Lenders being called the "Continuing Lenders"), then (i)
the Maturity Date shall be extended to the first anniversary of the Existing
Maturity Date (provided, that if such date is not a Business Day, then the
Maturity Date as so extended shall be the next following Business Day), and
(ii) the Commitment of each Lender that is not a Continuing Lender shall
terminate (with the result that the total Commitments will decrease by the
amount of such Commitment), and all Loans of each such Lender shall become due
and payable, together with all interest accrued thereon and all other amounts
owed to such Lender hereunder, on the Existing Maturity Date.
Notwithstanding the foregoing, no extension of the Maturity Date shall
be effective with respect to any Lender unless, on
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and as of the Existing Maturity Date, the conditions set forth in paragraphs
(b) and (c) of Section 4.02 shall be satisfied (with all references to a
Borrowing being deemed to be references to such extension) and the
Administrative Agent shall have received a certificate to that effect dated the
Existing Maturity Date and executed by a Financial Officer of the Borrower.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is (i) duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required and, (ii) possesses all requisite authority and power and material
licenses, permits, franchises (including, without limitation licenses, permits
and franchises issued by the FCC), and valid and subsisting network affiliation
agreements in the case of each Subsidiary that operates a network affiliated
television broadcasting enterprise, to conduct its business as presently
conducted.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement has
been duly executed and delivered by the Borrower and constitutes a legal, valid
and binding obligation of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in
equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (i) such as have been
obtained or made and are in full force and effect, and (ii) routine filings
after the Effective Date with Securities and Exchange Commission and the FCC
made pursuant to the requirements of 47 CFR 73.3613, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any Subsidiary or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture, or
other material agreement or instrument binding upon the Borrower or any
Subsidiary or its assets, or give rise to a right thereunder to require any
material payment to be made by the Borrower or any Subsidiary, and (d) will not
result in the creation or imposition of any Lien other than a Permitted Lien on
any asset of the Borrower or any Subsidiary.
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SECTION 3.04. Financial Condition; No Material Adverse Change. (a)
The Borrower has heretofore furnished to the Lenders its consolidated balance
sheet and statements of earnings, shareholders equity and cash flows (i) as of
and for the fiscal year ended December 31, 1995, reported on by Ernst & Young
LLP, independent auditors, and (ii) as of and for the fiscal quarter ended
September 30, 1996, certified by its chief financial officer. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
(b) Since September 30, 1996, there has been no material adverse
change in the business, assets, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title or interest that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their
intended purposes.
(b) Each of the Borrower and the Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation, Labor and Environmental Matters. (a) There
are not any actions, suits or proceedings by or before any arbitrator or
Governmental Authority now pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters, there are no actual or, to the
knowledge of the Borrower, threatened labor controversies, including strikes,
work stoppages, work slow downs or National Labor Relations Board proceedings
affecting the Borrower or its Subsidiaries, that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(c) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, neither the Borrower nor any
Subsidiary (i) has failed to comply with any Environmental Law or to obtain,
maintain or comply with any permit, license or other approval required under
any Environmental
<PAGE> 37
33
Law, (ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows
of any basis for any Environmental Liability.
(d) There has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Certain Legal Matters. (a) Neither the Borrower nor
any Subsidiary is (i) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (ii) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.
(b) Neither the Borrower nor any Subsidiary is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of buying or carrying margin stock, within the meaning of
Regulation U of the Board. Margin stock will at all times constitute less than
25% of the assets of the Borrower individually and the Borrower and the
Subsidiaries on a consolidated basis that are subject to the restrictions of
Section 6.01 and 6.02.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
filed or caused to be filed all tax returns and reports required to have been
filed and paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Borrower or such Subsidiary, as applicable, shall
have set aside on its books adequate reserves or (b) to the extent that the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect. As of the
date hereof, the present value of all accrued benefit liabilities under each
Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87), determined at the most recent annual valuation
date for such Plan, does not exceed by more than $10,000,000 the fair market
value of the assets of such Plan, and the present value of all accrued benefit
liabilities of all underfunded Plans (based on the assumptions used for
purposes of Statement of Financial Accounting Standards No. 87), determined at
the most recent annual valuation dates for such Plans, does not exceed by more
than $10,000,000 the fair market value of the assets of all such underfunded
Plans.
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SECTION 3.11. Disclosure. There are no agreements, instruments or
corporate restrictions to which the Borrower or any of its Subsidiaries is
subject, and no other matters known to the Borrower, that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
None of the reports, financial statements, certificates or other information
furnished by or on behalf of the Borrower to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or delivered
hereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected and pro forma financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.
SECTION 3.12. Acquisition of The Providence Journal Company. The
purchase price for the acquisition of The Providence Journal Company payable by
the Borrower or any of its Affiliates shall not exceed $600,000,000 exclusive
of (i) any consideration payable in capital stock of the Borrower, (ii)
Indebtedness of The Providence Journal Company assumed by the Borrower or any
of its Affiliates (other than any Indebtedness created in contemplation of such
acquisition), (iii) transaction costs related to the acquisition (including
those items set forth in footnote 1 on page 139 of the Borrower's Proxy
Statement dated January 8, 1997) and (iv) cash paid in lieu of fractional
shares.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received favorable written
opinions of Michael J. McCarthy, the General Counsel of the Borrower,
Locke Purnell Rain Harrell, counsel for the Borrower, and Wiley, Rein &
Fielding, special regulatory counsel to the Borrower, substantially in the
forms of Exhibits B-1, B-2 and B-3 hereto and covering such other matters
relating to this Agreement and the Transactions as the Required Lenders
shall reasonably request. Each of such opinions shall be addressed to the
Administrative Agent and the Lenders and shall
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be dated the Effective Date. The Borrower hereby requests such counsel to
deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Borrower, the authorization of the Transactions and any other legal matters
relating to this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (b) and (c) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
(f) The Prior Agreement shall have been terminated and the
obligations of the Borrower and the Subsidiaries thereunder paid in full.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived) on or prior to March 31, 1997. The Administrative Agent
shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing (but not on the occasion of any
interest election pursuant to Section 2.06 that does not increase the
outstanding principal amount of the Loans of any Lender), is subject to the
satisfaction of the following conditions:
(a) In the case of a Borrowing of Revolving Loans, the Administrative
Agent shall have received a Borrowing Request for such Borrowing in
accordance with Section 2.03; or, in the case of a Borrowing of Competitive
Loans, Borrower shall have accepted the Competitive Bid or Bids in respect
of such Loans in accordance with Section 2.04.
(b) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing.
(c) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
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Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to matters specified in paragraphs (b) and
(c) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of earnings,
stockholders' equity and cash flows as of the end of and for such year, all
reported on by Ernst & Young LLP or other independent public accountants of
recognized national standing (without a "going concern" or like emphasis
paragraph and without any qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its condensed consolidated
balance sheet and related statements of earnings and cash flows as of the
end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP for interim financial
information and with the instructions to Form 10Q and Article 10 of
Regulation S-X (and accordingly, such statements will not include all of
the information and footnotes required by GAAP for complete financial
statements);
(c) concurrently with each delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the
Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken
or proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Sections 6.05 and 6.06
and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the most recent audited financial statements
referred to in Section 3.04 or delivered pursuant to this Section 5.01 and,
if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;
<PAGE> 41
37
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on
such financial statements stating whether, in connection with their audit,
anything came to their attention that caused them to believe that the
Borrower had failed to comply with the terms, covenants, provisions or
conditions of Sections 6.05 and 6.06;
(e) promptly after the same become publicly available, copies of all
annual and quarterly reports to shareholders, reports to the Securities and
Exchange Commission on Form 10-K, Form 10-Q, Form 8-K or any successor
form, proxy statements and registration statements (other than those
relating only to employee benefit plans) filed or distributed by the
Borrower or any Subsidiary; and
(f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement,
as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish
to the Administrative Agent prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate
amount exceeding $15,000,000;
(d) the receipt of any notice from the FCC or any other Governmental
Authority of the expiration without renewal, termination or suspension of,
or the institution of any proceedings to terminate or suspend, any main
transmitter license granted by the FCC or any other material license now or
hereafter held by the Borrower or any Subsidiary which is required to
operate any television broadcasting station in compliance with all
applicable laws; and,
(e) any other development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
<PAGE> 42
38
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each Subsidiary to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
the business of the Borrower and its Subsidiaries taken as a whole; provided
that the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.02.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each Subsidiary to, pay its Indebtedness and other obligations, including
tax liabilities, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on
its books adequate reserves with respect thereto in accordance with GAAP and
(c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower
will, and will cause each Subsidiary to, (a) keep and maintain all property
material to the conduct of the business of the Borrower and its Subsidiaries
taken as a whole in good working order and condition, ordinary wear and tear
and obsolescence excepted, (b) keep and maintain all licenses, permits,
franchises and major network affiliation agreements (including those with
American Broadcasting Companies, Inc. ("ABC"), National Broadcasting Companies
("NBC"), the Columbia Broadcasting System, Inc. ("CBS"), or Fox Broadcasting
Company ("FOX") necessary for their business except as the loss of the same
could not individually or in the aggregate reasonably be expected to cause a
Material Adverse Effect, it being understood and agreed that a change from one
such major network to another shall not be considered to have such an effect;
and (b) maintain, with financially sound and reputable insurance companies,
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower
will, and will cause each Subsidiary to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will,
and will cause each Subsidiary to, permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at reasonable times and as often as shall be
reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and will
cause each Subsidiary to, comply with all laws (including Environmental Laws),
regulations and orders of any Governmental Authority applicable to it or its
property, except to the extent that failures to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
<PAGE> 43
39
SECTION 5.08. Use of Proceeds. The Borrower will cause the proceeds
of the Loans to be used only for the purposes referred to in the preamble to
this Agreement. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except that the Borrower and the Subsidiaries may assign or sell
delinquent receivables and rights in respect thereof and may create, incur,
assume or permit to exist (a) Permitted Liens and (b) other Liens securing
obligations in an aggregate amount at any time not greater than $40,000,000.
SECTION 6.02. Fundamental Changes. (a) The Borrower will not merge
into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired), or liquidate or dissolve,
except that any Subsidiary or other Person may merge into the Borrower if the
Borrower is the surviving corporation and at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
and the Borrower shall be in compliance with the financial covenants contained
in this Article VI on a pro forma basis with such merger being deemed to have
occurred at the beginning of each relevant period.
(b) The Borrower will not, and will not permit any Subsidiary to,
engage to an extent material to the Borrower and the Subsidiaries on a
consolidated basis in any business other than businesses of the type conducted
by the Borrower and its Subsidiaries on the date hereof and businesses
reasonably related thereto.
SECTION 6.03. Transactions with Affiliates. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction (including,
without limitation, the purchase or sale of any property or service) with, or
make any payment or transfer to, any of its Affiliates (other than the Borrower
or any Subsidiary) except in the ordinary course of business and upon terms no
less favorable to the Borrower or such Subsidiary than the Borrower or such
Subsidiary could obtain in a comparable arms-length transaction.
<PAGE> 44
40
SECTION 6.04. Restrictive Agreements. The Borrower will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its capital stock or to make
or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary, other than (i)
such restrictions in the partnership agreements for TVFN and AHN in effect on
the date hereof and (ii) such restrictions on Subsidiaries (other than TVFN and
AHN) that are partnerships, joint ventures, limited liability companies or
other similar entities, and in which the aggregate equity investment of the
Borrower does not exceed $20,000,000.
SECTION 6.05. Leverage. The Borrower will not permit (a) the ratio of
Funded Debt to Pro Forma Operating Cash Flow as of the end of and for any
period of four consecutive fiscal quarters ending after the Effective Date to
be greater than 5.5 to 1.0, (b) the ratio of Funded Debt (excluding
Subordinated Debt) to Pro Forma Operating Cash Flow as of the end of and for
any period of four consecutive fiscal quarters ending after the Effective Date
to be greater than 5.0 to 1.0 or (c) Funded Debt of Subsidiaries (other than
Funded Debt owed to the Borrower or any other Subsidiary) to constitute more
than 10% of the Funded Debt that would at any time be permitted to exist under
clause (a) of this Section 6.05.
SECTION 6.06. Interest Coverage. The Borrower will not permit the
ratio of Pro Forma Operating Cash Flow to Interest Expense for any period of
four consecutive fiscal quarters ending after the Effective Date to be less
than 2.5 to 1.0.
SECTION 6.07. Investments in AHN and TVFN. The Borrower will not,
and will not permit any Subsidiary to, directly or indirectly, make any loans
or advances to, or make any other investment in AHN or TVFN during the term of
the Facility in excess of $100,000,000.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement,
or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with this Agreement, shall prove to
have been incorrect in any material respect when so made or deemed made;
(b) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
<PAGE> 45
41
(c) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (b) above)
payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), (b) or (e), Section
5.03 (with respect to the Borrower's existence) or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(c) or (d), and such
failure shall continue unremedied for a period of five Business Days;
(f) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (b), (c), (d) or (e) above) and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent or any Lender to the Borrower;
(g) the Borrower or any Subsidiary shall fail to make any payment of
principal, regardless of amount, in respect of any Material Indebtedness,
when and as the same shall become due and payable;
(h) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity;
(i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Subsidiary or its debts, or of a
substantial part of the property or assets of the Borrower or a Subsidiary,
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or
any Subsidiary or for a substantial part of the property or assets of the
Borrower or any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(j) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or
other relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any
<PAGE> 46
42
proceeding or petition described in clause (i) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of the property or assets of the Borrower or any
Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(k) one or more judgments for the payment of money in an amount in
excess of $20,000,000 individually or $35,000,000 (in each case net of
insurance coverage) in the aggregate shall be rendered against the
Borrower, any Subsidiary or any combination thereof (it being understood
that the outstanding adverse declaratory judgment in the Cable L.P. I, Inc.
litigation disclosed in The Providence Journal Company's SEC filings shall
not constitute an Event of Default and that any amount payable in respect
thereof shall not be included in the individual or aggregate limit) and the
same shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any property or
assets of the Borrower or any Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(m) any main transmitter license, permit or authorization issued to
the Borrower or any Subsidiary by the FCC shall be forfeited, revoked or
not renewed, or any proceeding with respect to any such forfeiture or
revocation shall be instituted by the FCC, where such forfeiture,
revocation or non-renewal or such proceeding, as the case may be, shall be
reasonably likely to result in a Material Adverse Effect;
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other liabilities of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in any event with respect to the Borrower described in clause (i) or (j)
<PAGE> 47
43
above, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other liabilities of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Agents
Each of the Lenders hereby irrevocably appoints the Agents as its
agents and authorizes the Agents to take such actions on its behalf and to
exercise such powers as are delegated to the Agents by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Agents shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing
(a) the Agents shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing, and (b) the
Agents shall not have any duty to take any discretionary action or exercise any
discretionary powers permitted hereunder unless requested to do so in writing
by the Required Lenders. No Agent shall be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders or in
the absence of its own gross negligence or wilful misconduct. In addition, the
Agents shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection
with this Agreement, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection herewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Agents.
The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agents also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each of the Agents may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by
<PAGE> 48
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it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
Each of the Agents may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent. The Administrative Agent, the CAF Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through
Affiliates or its or its Affiliates' employees. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent, to the Affiliates
of the Administrative Agent, the CAF Agent and any such sub-agent and to the
directors, officers, employees, agents and advisors of the Administrative
Agent, the CAF Agent, any such sub-agent and their respective Affiliates.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Required Lenders, with the
consent of the Borrower (which shall not be unreasonably withheld) shall have
the right to appoint a successor Agent. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, with the consent of the Borrower (which shall not be
unreasonably withheld), on behalf of the Lenders, appoint a successor Agent
which shall be a bank with an office in Dallas or The City of New York, having
a combined capital and surplus of at least $500,000,000 or an Affiliate of any
such bank. Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After the
Agent's resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share at the time reimbursement is sought (based on its
Commitment hereunder or, if the Commitments shall have expired or terminated,
based on its portion of the total Revolving Credit Exposures and outstanding
Competitive Loans) of any expenses incurred for the benefit of the Lenders by
the Agent, including counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders, that shall not have been
reimbursed by the Borrower and (b) to indemnify and hold harmless each of the
Agents and any of its directors, officers, employees or agents, on demand, in
the amount of such pro rata share, from and against any and all liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by or asserted against it in its capacity as Agent or any
of them in any way relating to or arising out of this Agreement or any action
taken or omitted by it or any of them under this Agreement, to the extent the
same shall not have been reimbursed by the Borrower, provided that no Lender
shall be liable to any Agent or any such other indemnified
<PAGE> 49
45
person for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements that are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Agent or any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 400 South Record Street, Dallas, TX
75202, Attention of the Chief Financial Officer (Telecopy No.
214-977-8209) with a copy to the General Counsel;
(b) if to the Administrative Agent, to the attention of Loan
Syndication Services/Gale Manning (Telecopy No. 713-750-3810), with a
copy to Texas Commerce Bank National Association, at Dallas, TX,
Attention of Kevin Kelty (Telecopy No. 214-965-2997);
(c) if to the CAF Agent, to it at Loan and Agency Service Group, at
One Chase Manhattan Plaza, 8th Floor, New York, New York 10005, Attention
of Chris Consomer (Telecopy No. 212-552-5658);
(d) if to a Lender, to it at its address (or telecopy number) set
forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, except that notices and communications to the Agents
pursuant
<PAGE> 50
46
to Article II shall be deemed to have been given only when received by the
Agents.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the CAF Agent or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the CAF Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and
the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase or decrease the Commitment of any
Lender (except for a ratable decrease in the Commitments of all the Lenders),
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
or (iv) change any of the provisions of this Section or the definition of
"Required Lenders" or any other provision hereof specifying the number or
percentage of Lenders required in order to waive, amend or modify any rights
hereunder or grant any consent hereunder, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, hereunder
without the prior written consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
agrees to pay (i) all reasonable out-of-pocket expenses incurred by any Agent
and its Affiliates, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Moore, counsel for the Agents, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement or any amendments, modifications or waivers of
the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Agents or any Lender, including the reasonable fees, charges
and disbursements of any counsel for the Agents or any Lender, in connection
with the enforcement or protection of its rights in connection with this
Agreement.
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(b) The Borrower agrees to indemnify each of the Agents and each
Lender, each Affiliate of any of them and each of the respective directors,
officers, employees, agents and advisors of the foregoing (each such Person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds thereof, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee (BUT
SHALL BE AVAILABLE TO THE EXTENT THEY ARE DETERMINED TO HAVE RESULTED FROM, IN
WHOLE OR IN PART, THE SIMPLE NEGLIGENCE OF SUCH INDEMNITEE).
(c) To the extent permitted by applicable law, the Borrower agrees
not to assert, and hereby waives, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(d) All amounts due under this Section shall be payable no later than
10 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto and their respective
successors and assigns permitted hereby) any legal or equitable right, remedy
or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); provided that (i)
except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower (and, except in the case of an assignment limited to
rights in respect of an outstanding Competitive Loan, the Administrative
<PAGE> 52
48
Agent) must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment
to a Lender or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Commitment, the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $20,000,000,
(iii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this Agreement,
except that this clause shall not apply to rights in respect of outstanding
Competitive Loans, (iv) the Lenders party to each such assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500, and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.14, 2.15 and 9.03).
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall
be conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
above and any written consent to such assignment required by paragraph (b)
above, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (d).
<PAGE> 53
49
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other
entities ("Participants") in all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agents, and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects such
Participant. Subject to paragraph (f) below, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. In connection with any
sale of a participation pursuant to this paragraph, the selling Lender shall
obtain from the Participant an undertaking to be bound by the provisions of
Section 9.12. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with paragraph (b) above shall be
treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with this paragraph.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank to secure extensions of
credit by such Federal Reserve Bank to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such Federal Reserve Bank for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations
and warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of this Agreement and the making of any Loans,
regardless of any investigation made by the Lenders or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have
<PAGE> 54
50
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans or the termination of the
Commitments, this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the Agents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Agents and when the Agents shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. Delivery of
an executed counterpart of a signature page of this Agreement by telecopy shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured.
The rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 55
51
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the CAF Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in
the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred
to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents and the Lenders
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be
<PAGE> 56
52
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, or any Lender on a nonconfidential basis from a
source other than the Borrower. For the purposes of this Section,
"Information" means all information received from the Borrower relating to the
Borrower or its business including any potential acquisition or proposed
business transaction, other than any such information that is available to the
Agents or any Lender on a nonconfidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower
after the date hereof (other than information obtained by any Lender in the
course of examining the books or records of the Borrower or any Subsidiary as
permitted by Section 5.06) such information is clearly identified at the time
of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with
<PAGE> 57
53
interest thereon at the Federal Funds Effective Rate to the date of repayment,
shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
A. H. BELO CORPORATION,
by /s/ BRENDA C. MADDOX
-------------------------------
Name: Brenda C. Maddox
Title: Vice President/Treasurer
<PAGE> 58
54
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by /s/ J. KEVIN KELTY
--------------------------------
Name: J. Kevin Kelty
Title: Senior Vice President
<PAGE> 59
55
THE CHASE MANHATTAN BANK, as CAF
Agent,
by /s/ DEBORAH DAVEY
-----------------------------
Name: Deborah Davey
Title: Vice President
Attorney-in-fact
<PAGE> 60
56
BANK OF AMERICA NT & SA,
by /s/ MATTHEW J. KOENIG
--------------------------------
Name: Matthew J. Koenig
Title: Vice President
<PAGE> 61
57
BANK OF TOKYO-MITSUBISHI, LTD.,
by /s/ J. BECKWITH
--------------------------------
Name: J. Beckwith
Title: Vice President
<PAGE> 62
58
NATIONSBANK OF TEXAS, N.A.,
by /s/ TODD SHIPLEY
-----------------------------
Name: Todd Shipley
Title: Senior Vice President
<PAGE> 63
59
MORGAN GUARANTY TRUST COMPANY,
by /s/ DONALD H. PATRICK
--------------------------------
Name: Donald H. Patrick
Title: Vice President
<PAGE> 64
60
SOCIETE GENERALE,
by /s/ CHRISTOPHER J. SPELTZ
------------------------------
Name: Christopher J. Speltz
Title: Vice President
<PAGE> 65
61
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ ROBERT F. MILORDI
--------------------------------
Name: Robert F. Milordi
Title: Managing Director
<PAGE> 66
62
FLEET BANK,
by /s/ CHRISTOPHER A. SWINDELL
--------------------------------
Name: Christopher A. Swindell
Title: Vice President
<PAGE> 67
63
THE FUJI BANK, LIMITED,
by /s/ PHILLIP C. LAUINGER, III
--------------------------------
Name: Phillip C. Lauinger, III
Title: Vice President &
Joint Manager
<PAGE> 68
64
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY,
by /s/ HENRY F. SETINA
--------------------------------
Name: Henry F. Setina
Title: Vice President
<PAGE> 69
65
CIBC INC.,
by /s/ MATTHEW B. JONES
--------------------------------
Name: Matthew B. Jones
Title: Authorized Signatory
<PAGE> 70
66
MELLON BANK, N.A.,
by /s/ STEPHEN D. LACKEY
--------------------------------
Name: Stephen D. Lackey
Title: First Vice President
<PAGE> 71
67
THE SAKURA BANK LIMITED,
NEW YORK BRANCH,
by /s/ YASUMASA KIKUCHI
--------------------------------
Name: Yasumasa Kikuchi
Title: Senior Vice President
<PAGE> 72
68
THE TOKAI BANK, LIMITED,
by /s/ STUART M. SCHULMAN
--------------------------------
Name: Stuart M. Schulman
Title: Deputy General Manager
<PAGE> 73
69
THE TOYO TRUST & BANKING CO LTD.,
by /s/ TAKAO SHIDA
--------------------------------
Name: Takao Shida
Title: Deputy General Manager
<PAGE> 74
70
THE SANWA BANK LIMITED,
DALLAS AGENCY,
by /s/ ROBERT S. SMITH
--------------------------------
Name: Robert S. Smith
Title: Vice President
<PAGE> 75
71
WACHOVIA BANK OF GEORGIA, N.A.,
by /s/ JOEL K. WOOD
--------------------------------
Name: Joel K. Wood
Title: Vice President
<PAGE> 76
72
WELLS FARGO BANK (TEXAS), N.A.,
by /s/ KEN TAYLOR
--------------------------------
Name: Ken Taylor
Title: Assistant Vice President
<PAGE> 77
73
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ JACQUES-YVES MULLIEZ
--------------------------------
Name: Jacques-Yves Mulliez
Title: Senior Vice President
<PAGE> 78
74
THE DAI-ICHI KANGYO BANK, LTD.,
by /s/ D. MURDOCK
--------------------------------
Name: D. Murdock
Title: Vice President
<PAGE> 79
75
FIRST HAWAIIAN BANK,
by /s/ DONALD C. YOUNG
--------------------------------
Name: Donald C. Young
Title: Assistant Vice President
<PAGE> 80
76
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
by /s/ KAZUTOSHI KUWAHARA
--------------------------------
Name: Kazutoshi Kuwahara
Title: Executive Vice President,
Houston Office
<PAGE> 81
77
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
by /s/ JOHN J. SULLIVAN
-----------------------------
Name: John J. Sullivan
Title: Joint General Manager
<PAGE> 82
78
MICHIGAN NATIONAL BANK,
by /s/ STEPHANIE E. LUBIN
-----------------------------
Name: Stephanie E. Lubin
Title: Relationship Manager
<PAGE> 83
79
THE NORTHERN TRUST COMPANY,
by /s/ JOHN E. BURDA
------------------------------
Name: John E. Burda
Title: Second Vice President
<PAGE> 84
80
CRESTAR BANK,
by /s/ THOMAS C. PALMER
-----------------------------
Name: Thomas C. Palmer
Title: Vice President
<PAGE> 85
81
HIBERNIA NATIONAL BANK,
by /s/ TROY J. VILLAFARRA
-----------------------------
Name: Troy J. Villafarra
Title: Vice President
<PAGE> 86
82
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by /s/ HACHIRO HOSODA
--------------------------------
Name: Hachiro Hosoda
Title: Senior Vice President
<PAGE> 87
83
SUNTRUST BANK, CENTRAL
FLORIDA, N.A.,
by /s/ JANET SAMMONS
------------------------------
Name: Janet Sammons
Title: Vice President
<PAGE> 88
84
TORONTO DOMINION (TEXAS) INC.,
by /s/ NEVA NESBITT
--------------------------------
Name: Neva Nesbitt
Title: Vice President
<PAGE> 89
85
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH,
by /s/ KHEIL MCINTYRE
------------------------------
Name: Kheil McIntyre
Title: Vice President
by /s/ SALVATORE BATTINELLI
-----------------------------
Name: Salvatore Battinelli
Title: Vice President Credit
Department
<PAGE> 90
86
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
by /s/ BRUCE W. LOFIRA
--------------------------------
Name: Bruce W. Lofira
Title: Senior Vice President
<PAGE> 91
87
CREDIT AGRICOLE,
by /s/ DAVID BOUHL
-----------------------------
Name: David Bouhl
Title: First Vice President
Head of Corporate
Banking Chicago
<PAGE> 92
88
U.S. BANK OF WASHINGTON, N.A.,
by /s/ WADE BLACK
--------------------------------
Name: Wade Black
Title: Vice President
<PAGE> 93
89
THE YASUDA TRUST & BANKING CO.,
LTD.,
by /s/ MAKOTO TAGAWA
--------------------------------
Name: Makoto Tagawa
Title: Deputy General Manager
<PAGE> 94
EXHIBIT A
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of January 31, 1997
(the "Credit Agreement"), among A. H. Belo Corporation, a Delaware corporation
(the "Borrower"), the lenders listed on Schedule 2.01 thereto (the "Lenders"),
Texas Commerce Bank National Association, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent") and The Chase Manhattan
Bank, as Competitive Advance Facility Agent (the "CAF Agent"). Terms defined
in the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register
pursuant to Section 9.04(c) of the Credit Agreement), the interests set forth
below (the "Assigned Interest") in the Assignor's rights and obligations under
the Credit Agreement, including, without limitation, the amounts and
percentages set forth below of (i) the Commitment of the Assignor on the
Effective Date and (ii) the Loans owing to the Assignor which are outstanding
on the Effective Date. Each of the Assignor and the Assignee hereby makes and
agrees to be bound by all the representations, warranties and agreements set
forth in Section 9.04(b) of the Credit Agreement, a copy of which has been
received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit
Agreement and, to the extent of the interests assigned by this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under
the Loan Documents and (ii) the Assignor shall, to the extent of the interests
assigned by this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.15(e) of the Credit Agreement, duly completed and executed by such
Assignee, (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form supplied by the
Administrative Agent and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<PAGE> 95
<TABLE>
<S> <C> <C>
Percentage Assigned of Applicable
Facility/Commitment (set forth, to
at least 8 decimals, as a
(Principal Amount Assigned and percentage of the Facility and the
Identifying Information as to aggregate Commitments of all
Facility/Commitment individual Competitive Loans Lenders thereunder)
------------------- ----------------------------- -----------------------------------
Revolving Credit $ %
Competitive Loans $ %
</TABLE>
The terms set forth above are
hereby agreed to: Accepted */
-
___________________, as Assignor TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
by:__________________________ by:_______________________
Name: Name:
Title: Title:
___________________, as Assignee
by:__________________________
Name:
Title:
<PAGE> 96
EXHIBIT B-1
[Letterhead of]
A. H. BELO CORPORATION
January [ ], 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, Texas 75201
Chase Securities Inc.,
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Dear Ladies and Gentlemen:
I have acted as General Counsel to A. H. Belo Corporation, a Delaware
corporation (the "Borrower"), in connection with the execution and delivery
today of, and the consummation of the transactions contemplated by, the Credit
Agreement dated as of January 31, 1997, (the "Credit Agreement"), among the
Borrower, the financial institutions party thereto as lenders (the "Lenders"),
Texas Commerce Bank National Association, as administrative agent (in such
capacity, the "Administrative Agent") and The Chase Manhattan Bank, as
Competitive Advance Facility Agent (the "CAF Agent"), Bank of America National
Trust and Savings Association and Bank of Tokyo-Mitsubishi, Ltd., as
Co-Syndication Agents, and NationsBank of Texas, N.A., as Documentation Agent
and any promissory notes ("Notes") delivered in connection with the Credit
Agreement. This opinion is delivered pursuant to Section 4.01(b)of the Credit
Agreement. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Credit Agreement
and such other records, agreements, instruments and other documents, and have
made such other investigations, as I have deemed necessary for the purpose of
this opinion.
Based upon the foregoing, it is my opinion that:
1. The Borrower and each Subsidiary (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business and
is in good standing in each jurisdiction where such qualification is required,
except where the failure so to qualify could not reasonably be expected to
result in a Material Adverse Effect, and (d) in the case of the Borrower, has
the corporate power and
<PAGE> 97
authority to execute, deliver and perform its obligations under the Credit
Agreement and to borrow thereunder.
2. The execution, delivery and performance of the Credit Agreement by
the Borrower and the borrowings thereunder (a) have been duly authorized by all
requisite corporate and, if necessary, stockholder action of the Borrower and
each Subsidiary and (b) will not (i) violate (A) any provision of the
certificate of incorporation or by laws of the Borrower or any Subsidiary, (B)
to my knowledge after reasonable inquiry any law, statute, rule or regulation
or any order of any Governmental Authority applicable to the Borrower or any
Subsidiary or their properties or (C) any provision of any indenture or other
material agreement or other material instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property is or
may be bound, (ii) be in conflict with, result in a breach of or constitute
(along or with notice or lapse of time or both) a default under, or give rise
to any right to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture, agreement or other
instrument or (iii) result in the creating or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary.
3. If, contrary to the intent of the parties, the Credit Agreement
were held to be governed by the laws of the State of Texas, the Credit
Agreement would nevertheless constitute a valid and binding agreement of the
Borrower, enforceable in accordance with its terms, except (a) enforcement of
the indemnification and exculpatory provisions of the Credit Agreement may be
limited by applicable securities laws and other laws and public policies, (b)
enforcement of the Credit Agreement may be limited by Debtor Relief Laws and is
subject to equitable principles, and (c) certain provisions of the Credit
Agreement may be limited by, modified or unenforceable under applicable state
and federal laws, regulations, rulings and decisions in addition to those
referenced herein, if any; however, such limitation, modification or
unenforceability should not in our opinion materially diminish or substantially
interfere with the practical realization of benefits intended to be afforded by
the Credit Agreement except for the economic consequences of any procedural
delay which may result therefrom.
4. No action, consent or approval of, registration or filing with or
any other action by any Governmental Authority is or will be required in
connection with the execution, delivery and performance of the Loan Documents
by the Borrower party thereto or the consummation of the transactions
contemplated thereby, other than routine filings with the SEC and FCC or
required of public companies and FCC licensees and such authorizations and
approvals as have already been obtained and are in full force and effect.
5. There are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to our
knowledge, threatened against or affecting the Borrower or any Subsidiary or
any business, property or rights of any such person (i) that involve the Credit
Agreement or the transactions contemplated thereby or (ii) as to which there is
a reasonable possibility of an adverse determination and that, if adversely
determined, could
<PAGE> 98
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
6. All shares of capital stock of each Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable and, except as
set forth on Schedule 6.01 to the Credit Agreement, are owned by the Borrower,
directly or indirectly, free and clear of all Liens. No authorized but
unissued or treasury shares of capital stock of any Subsidiary are subject to
any option, warrant, right to call or commitment of any kind. Other than the
ongoing stock repurchase program of the Borrower, neither the Borrower nor any
Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock or any
securities convertible into or for shares of its capital stock. Neither the
Borrower nor any Subsidiary is a party to any agreement restricting the
transfer or voting of any shares of any capital stock of any Subsidiary.
7. Neither the Borrower nor any of the Subsidiaries is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940.
8. Neither the Borrower nor any of the Subsidiaries is a "holding
company" or a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935.
9. The making of the Loans to the Borrower and the application of the
proceeds thereof by the Borrower pursuant to the terms of the Credit Agreement
will not violate Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
I am admitted to practice in the State of Texas. I express no opinion
as to matters under or involving the laws of any jurisdiction other than the
laws of the State of Texas, the General Corporation Law of the State of
Delaware and the Federal Laws of the United States.
This opinion may be relied upon by each of you, by any successors and
assigns of the Administrative Agent, and any participant, assignee or successor
to the interests of the Lenders under the Credit Agreement.
Very truly yours,
<PAGE> 99
EXHIBIT B-2
[Letterhead of]
LOCKE PURNELL RAIN HARRELL
January 31, 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, Texas 75201
Chase Securities Inc.,
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Dear Ladies and Gentlemen:
This opinion is being delivered to you pursuant to Section 4.01(b) of
that certain $1,500,000,000 Credit Agreement dated as of January 31, 1997 (the
"Credit Agreement") among A. H. Belo Corporation, a Delaware corporation
("Borrower"), the financial institutions who are parties thereto as Lenders,
Texas Commerce Bank National Association ("TCB"), as Administrative Agent and
the Chase Manhattan Bank ("Chase"), as Competitive Advance Facility Agent, Bank
of America National Trust and Savings Association and Bank of Tokyo-Mitsubishi,
Ltd., as Co-Syndication Agents, and NationsBank of Texas, N.A. ("NationsBank"),
as Documentation Agent. Terms which are defined in the Credit Agreement and
which are used but not defined herein shall have the meanings given them in the
Credit Agreement. We have acted as counsel for Borrower in connection with the
transactions provided for in the Credit Agreement. Please be advised that we
are engaged by Borrower and/or its Subsidiaries from time to time to assist
with selected matters and do not serve as general counsel to any of such
entities. Also, please be advised that we are engaged by TCB, Chase,
NationsBank and certain other Lenders (or affiliates of TCB, Chase and such
other Lenders) from time to time to assist in selected matters unrelated to the
Credit Agreement.
For purposes of this opinion, we have examined originals or copies of
the Credit Agreement and the promissory notes evidencing the Loans (referred to
herein individually as a "Principal Loan Document" and collectively as the
"Principal Loan Documents") and such corporate records of Borrower and such
other documents and matters of law which we have considered necessary for such
purposes. In connection with our examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to
us as copies, and the authenticity of the originals of such copies. As to
matters of fact material to this opinion, we have relied, without any
<PAGE> 100
independent investigation or verification upon the accuracy of the
representations, warranties and other statements of fact made in or pursuant to
the Principal Loan Documents.
In rendering the opinions expressed below, we have assumed the
accuracy and validity of the opinions of Borrower's General Counsel expressed
to you by letter of even date herewith, and to the extent relevant to our
opinions, have relied upon such opinions without independent investigation or
verification. Furthermore, we have assumed, with respect to the Credit
Agreement, that:
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all of the parties to such
documents (other than Borrower);
(ii) all signatories to such documents (other than on behalf of
Borrower) have been duly authorized;
(iii) all of the parties to such documents (other than Borrower) are
duly organized and validly existing and have the power and
authority (corporate or other) to execute, deliver and perform
such documents; and
(iv) no course of dealing, custom or practice between Borrower and
any Agent or Lender shall supersede any provision thereof.
The opinions expressed herein are limited to the laws of the State of
Texas and federal laws of the United States except that we express no opinion
with respect to, and have not taken into account the effect of, (i) the
Communications Act of 1934, as amended, the Telecommunications Act of 1996, as
amended, or the rules, regulations and policies of the FCC or (ii) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or other similar laws relating to or affecting the rights of creditors
or the obligations of debtors generally ("Debtor Relief Laws"). We call your
attention to the fact that each Principal Loan Document (to the extent provided
therein) provides that it is to be governed by and construed in accordance with
the laws of the State of New York, as to which we have made no independent
examination and express no opinion. With your permission we have assumed that
the laws of the State of New York relevant to the matters addressed in our
opinion are identical to the laws of the State of Texas.
Based upon the foregoing, having due regard for the legal
considerations we deem relevant and subject to the qualifications, assumptions
and exceptions herein set forth, we are of the opinion that the Principal Loan
Documents have been duly executed and delivered by the Borrower and constitute
legal, valid and binding obligations of the Borrower and are enforceable
against the Borrower in accordance with their terms, except (a) enforcement of
the indemnification and exculpatory provisions of the Principal Loan Documents
may be limited by applicable securities laws and other laws and public
policies, (b) enforcement of the Principal Loan Documents may be limited by
Debtor Relief Laws and is subject to equitable principles, and (c) certain
provisions of the Principal Loan Documents may be limited, modified or
<PAGE> 101
unenforceable under applicable state and federal laws, regulations, rulings and
decisions in addition to those referenced herein, if any; however, such
limitation, modification or unenforceability should not in our opinion
materially diminish or substantially interfere with the practical realization
of benefits intended to be afforded by the Principal Loan Documents except for
the economic consequences of any procedural delay which may result therefrom.
In rendering the opinions expressed herein, we have assumed that (a)
every provision of the Principal Loan Documents limiting the rate and amount of
interest charged thereunder to the maximum amount permitted by applicable law
has been and will continue to be complied with and that each and every usury
savings clause contained in the Principal Loan Documents has been and will
continue to be complied with; (b) no other fees, sums, or benefits, whether
direct or indirect, have been charged, paid, or received or are, or may be
payable to or chargeable or receivable by any Agent or Lender except as
expressly mentioned in the Principal Loan Documents, the Commitment Letter and
the fee letter referred to therein; (c) any fees or charges which have been or
may be paid to any Agent or any Lender or to any other party are, or will be,
for services actually rendered, and that such fees and charges will not exceed
just and reasonable compensation for such services rendered; and (d) any fees
paid or to be paid by the Borrower to any Agent or any Lender and denominated
"commitment fees" or the like are in fact commitment fees and not sums paid for
the use, forbearance or detention of money.
The opinions herein expressed are solely for your benefit in
connection with the transactions contemplated by the Credit Agreement, and no
one else is entitled to rely hereon (other than permitted successors and
assigns) without our written consent. No person is entitled to rely hereon to
the extent such person or its counsel shall have any knowledge why any opinion
expressed herein is not accurate in any material respect. We hereby disclaim
any obligation to advise you of any changes in fact or law which might affect
the opinions expressed herein.
Sincerely,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: __________________________
Guy Kerr
<PAGE> 102
EXHIBIT B-3
[Form of Opinion of Wiley, Rein & Fielding-
FCC Counsel for Borrower]
January [ ], 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, TX 75201
Chase Securities, Inc.
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the
Credit Agreement referred to below
(all of the Addressees, collectively, the "Creditors")
Dear Ladies and Gentlemen:
We have acted as special communications counsel to A. H. Belo Corporation,
a Delaware Corporation (the "Borrower"), in connection with the execution and
delivery today of, and the consummation of the transactions contemplated by,
the Credit Agreement dated as of January 31, 1997, (the "Credit Agreement"),
among the Borrower, the financial institutions party thereto as lenders (the
"Lenders") and Texas Commerce Bank National Association, as administrative
agent (in such capacity, the "Administrative Agent"). This opinion is
delivered pursuant to Section 4.01(b) of the Credit Agreement. Capitalized
terms used but not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
In rendering this opinion, we have examined the Credit Agreement and such
other documents and instruments and such questions of law as we have deemed
necessary for the purpose of rendering the opinion set forth herein.
Additionally, we have relied upon the representations made by the Borrower in
the Credit Agreement, upon the statements of officers and representatives of
the Borrower, and upon records relating to the Borrower and the television
broadcast stations owned and operated by the Borrower and its several
Subsidiaries (the "Stations") that are routinely available for public
inspection at the Federal Communications Commission ("FCC"). We have assumed
the genuineness of all signatures on all original documents, the conformity to
original documents of all copies submitted to us, and the full authorization,
execution, and delivery of all documents by parties responsible therefor. We
also have assumed that the documents and instruments described or referred to
herein fully express the agreements of any party thereto. Finally, we have
assumed the completeness of the public files relating to the Borrower, its
Subsidiaries, and the Stations maintained by the FCC and the accuracy and
authenticity of all documents contained therein.
Whenever our opinion herein with respect to the existence (or absence) of
facts is qualified by the phrase "to the best of our knowledge," it is intended
to indicate that, during the course of our
<PAGE> 103
representation of the Borrower, no information has come to our attention which
would give us actual knowledge of the existence (or absence) of such facts. We
have undertaken no on site inspection whatsoever of any of the Stations and,
except as otherwise specifically stated herein, we have not undertaken any
independent investigation to determine the existence or absence of such facts,
and no inference as to our knowledge of the existence (or absence) of such
facts should be drawn from the fact of our representation of the Borrower.
We are admitted to practice law in the District of Columbia. We address
herein only matters within the jurisdiction of the FCC under the Communications
Act of 1934, as amended, and the rules, regulations and published orders of the
FCC (Collectively, the "Communications Laws") applicable to the Stations. We
express no opinion as to matters arising under or involving any other laws.
Based upon the subject to the foregoing, it is our opinion that:
1. The Borrower or its Subsidiaries are the respective holders of the
licenses, permits, and authorizations issued by the FCC listed in Attachment A
hereto (the "FCC Licenses"). The FCC Licenses are in full force and effect for
the terms specified in Attachment A and, where applicable, timely renewal
applications have been filed with the FCC with respect to such FCC Licenses.
The FCC Licenses are not subject to any condition, restriction or limitation
materially adverse to the Borrower or the Stations except for conditions,
restrictions or limitations that appear on the faces of the FCC Licenses or
that are set forth in the rules, regulations or policies of the FCC that are
applicable generally to stations of the types, nature, classes, or locations of
the Stations.
2. To the best of our knowledge, no judgment, decree, order or notice has
been issued by the FCC which permits, or after notice or lapse of time or both,
would permit, revocation, nonrenewal, or termination of any of the FCC Licenses
prior to the respective expiration dates thereof, or which results or would
result in any other material impairment of any rights thereunder.
3. Neither the execution and delivery by the Borrower of the Credit
Agreement nor the fulfillment of or compliance with any of the provisions
thereof will (a) result in a violation of the Communications Laws, or (b)
require any authorization, consent, approval, exemption or other action by, or
any notice or filing with, the FCC pursuant to the Communications Laws (other
than routine filings after the date of this opinion with the FCC under Section
73.3613(b)(5) of the FCC's Rules and Regulations).
4. Other than as set forth in Attachment A and except as to any other
matters relating to the television broadcast industry in general, to the best
of our knowledge, no proceeding, claim, lawsuit, investigation or other action
is (a) currently pending before the FCC or (b) threatened in writing and
received by any Station operated by the Borrower or any Subsidiary and not
currently before the FCC, which has a substantial likelihood of resulting in a
Material Adverse Effect.
This opinion is being furnished to you subject to the qualifications and
limitations expressed herein, and has been prepared
<PAGE> 104
solely for your information in connection with the transactions contemplated
under the Credit Agreement. This opinion may not be quoted in whole or in part
or otherwise referred to, or furnished to any governmental agency or other
entity or person, without our written consent. It may not be used or replied
upon by any other person or entity without our written consent, and may be
relied upon by you only with respect to the specific matters which are the
subject hereof. The opinions expressed herein are as of the date hereof, and
we specifically disclaim any obligation to advise you of any changes in the
matters addressed in the foregoing opinion occurring after such date.
Very truly yours,
WILEY, REIN & FIELDING
<PAGE> 105
Schedule 2.01
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Texas Commerce Bank National 2200 Ross Avenue $112,500,000
Association 3rd Floor
Dallas, TX 75201
Attn: Kevin Kelty
Bank of America NT & SA 555 South Flower Street $105,000,000
Los Angeles, CA 90071
Attn: Robert Lagace
Bank of Tokyo-Mitsubishi, Ltd. 2001 Ross Avenue $105,000,000
Suite 3150
Dallas, TX 75201
Attn: Jeb Beckwith
NationsBank 901 Main Street $105,000,000
Dallas, TX 75283
Attn: Todd Shipley
Fleet Bank One Federal Street MS/OF/DO3D $73,125,000
Boston, MA 02110
Attn: Ms. Paula Lang
Morgan Guaranty Trust Company 60 Wall Street $73,125,000
22nd Floor
New York, NY 10260
Attn: Mr. Donald Patrick
Societe Generale 2001 Ross Avenue $73,125,000
Suite 4800
Dallas, TX 75201
Attn: Chris Speltz
The Fuji Bank, Limited One Houston Center $73,125,000
1221 McKinney
Suite 4100
Houston, TX 77010
Attn: Phillip Lauinger
Banque Nationale de Paris 717 North Harwood Street $37,500,000
Suite 2630
Dallas, TX 75201
Attn: Hank Setina
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C>
First National Bank of Boston 100 Federal Street $37,500,000
01-08-08
Boston, MA 02110
Attn: Ms. Kathryn Ticknor
First Union Bank of North One First Union Center $37,500,000
Carolina Charlotte, NC 28288
Attn: Adrienne Musgnug
Mellon Bank, N.A. One Mellon Bank Center $37,500,000
Pittsburgh, PA 15258
Attn: Lisa Pellow
Mitsubishi Trust 520 Madison Avenue $37,500,000
New York, NY 10022
Attn: Ms. Pat Loret De Mola
Suntrust Banks Inc. 200 South Orange Avenue $37,500,000
Tower 4
Orlando, FL 32801
Attn: Mr. Chris Aguilar
The Sakura Bank, Limited, 3940 Interfirst Plaza $37,500,000
Houston Agency. 1100 Louisiana
Houston, TX 77002
Attn: Terrance Martin
The Sanwa Bank Limited, Dallas 4100W $37,500,000
Agency Texas Commerce Tower
2200 Ross Avenue
Dallas, TX 75201
Attn: Rob Smith
The Tokai Bank, Limited 55 East 52nd Street $37,500,000
12th Floor
New York, NY 10055
Attn: Stuart Schulman
The Toyo Trust & Banking Co. 666 Fifth Avenue $37,500,000
33rd Floor
New York, NY 10103
Attn: Sharon Bonelli
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Toronto-Dominion 909 Sonin, Suite 1700 $37,500,000
Houston, TX 77010
Attn: Ms. Kimberly Burlesca
CIBC Inc. 425 Lexington Avenue $26,250,000
New York, NY 10017
Attn: Ms. Michelle Roller
Credit Agricole 600 Travis Street $26,250,000
Suite 2340
Houston, TX 77002
Attn: Mr. Ken Coulter
Credit Lyonnais New York Branch 1301 Avenue of the Americas $26,250,000
New York, NY 10019
Attn: Legal Dept.
w/copy to:
2200 Ross Avenue
Dallas, TX
Attn: Samuel Hill
Dai-Ichi Kangyo 1100 Louisiana $26,250,000
Suite 4940
Houston, TX 77002
Attn: Mr. Kelton Glasscock
Hibernia National Bank 313 Carondelet Street $26,250,000
New Orleans, LA 70130
Attn: Troy Villafarra
Industrial Bank of Japan 3 Allen Center $26,250,000
333 Clay Street
Houston, TX 77002
Attn: Mr. David Fox, II
Long-Term Credit Bank 2200 Ross Avenue $26,250,000
of Japan Suite 4700 West
Dallas, TX 75201
Attn: Mr. Robert Nelson
The Northern Trust Company 50 South LaSalle Street $26,250,000
Chicago, IL 60675
Attn: Martin Alston
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Wachovia Bank of Georgia, N.A. 191 Peachtree Street, NE $26,250,000
Atlanta, GA 30303
Attn: Joel Wood
Wells Fargo Bank (Texas), N.A. 1445 Ross Avenue $26,250,000
3rd Floor
Dallas, TX 77202
Attn: Ken Taylor
Westdeutsche Landesbank 1211 Avenue of the Americas $26,250,000
New York, NY 10036
Attn: Mr. Richard Newman
Crestar Bank 919 East Main Street $18,750,000
HDQ 1022
Richmond, VA 23261-6665
Attn: Mr. Thomas Palmer
First Hawaiian Bank 3333 Michelson Drive $18,750,000
Irvine, CA 92612
Attn: Mr. Don Young
Michigan National 27777 Inkster Road $15,000,000
Bank Farmington Hills, MI 48333-9065
Attn: Ms. Stephanie Lubin
The Yasuda Trust & Banking Co., 725 South Figueroa Street $15,000,000
Inc. Suite 3990
Los Angeles, CA 90017
U.S. Bank of Washington, N.A. 1420 Fifth Avenue, WWH276 $11,250,000
Seattle, WA 98101
</TABLE>
<PAGE> 109
Schedule 3.06
Litigation, Labor and Environmental Matters
None.
<PAGE> 110
Schedule 6.01
Liens
The liens created in connection with the $6,400,000 City of Arlington
Industrial Development Corporation Industrial Development Revenue Bonds
(Dallas-Fort Worth Suburban Newspapers Inc. Project) Series 1985.
<PAGE> 111
Schedule 3.06
Litigation, Labor and Environmental Matters
None.
<PAGE> 112
Schedule 6.01
Liens
The liens created in connection with the $6,400,000 City of Arlington
Industrial Development Corporation Industrial Development Revenue Bonds
(Dallas-Fort Worth Suburban Newspapers Inc. Project) Series 1985.
<PAGE> 113
Schedule 6.05
Subordinated Debt
Subordinated Debt shall mean any debt for borrowed money of the Borrower or
its Subsidiaries expressly subordinate to the Indebtedness of the Borrower
under the Credit Agreement which satisfies the following criteria or other
criteria which may be acceptable to the Required Lenders: (i) such subordinated
debt will not amortize or be subject to any scheduled prepayment, redemption or
repurchase requirement (other than a repurchase requirement triggered by a
change in control or similar event) until after the Maturity Date; (ii) the
financial covenants taken as a whole under any such subordinated debt will not
be more restrictive of the Borrower than those contained in this Credit
Agreement; (iii) the terms of such subordinated debt will not permit payments
to subordinated debt holders when an Event of Default has occurred and is
continuing under this Credit Agreement; and (iv) the subordinated debt holders'
rights will be subordinate to those of the Agents and the Lenders under the
Credit Agreement in the event of bankruptcy and/or liquidation of the Borrower.
<PAGE> 1
EXHIBIT 10.2(3)
CREDIT AGREEMENT
dated as of
January 31, 1997
among
A. H. BELO CORPORATION
as Borrower,
The Lenders Party Hereto,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Administrative Agent,
THE CHASE MANHATTAN BANK,
as Competitive Advance Facility Agent
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
BANK OF TOKYO-MITSUBISHI, LTD.
as Co-Syndication Agents
NATIONSBANK
as Documentation Agent
364-DAY
$500,000,000 REVOLVING CREDIT AND COMPETITIVE ADVANCE FACILITY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
-----------
<S> <C> <C> <C>
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Classification of Loans and Borrowings . . . . . . . . . . . . . . 15
SECTION 1.03. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.02. Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.03. Requests for Revolving Borrowings . . . . . . . . . . . . . . . . . 17
SECTION 2.04. Competitive Bid Procedure . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.05. Funding of Borrowings . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.06. Interest Elections . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.07. Termination and Reduction of Commitments . . . . . . . . . . . . . 21
SECTION 2.08. Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . 22
SECTION 2.09. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.10. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.11. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.12. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.13. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.14. Break Funding Payments . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs . . . . 28
SECTION 2.17. Mitigation Obligations; Replacement of Lenders . . . . . . . . . . 29
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.02. Authorization; Enforceability . . . . . . . . . . . . . . . . . . . 31
SECTION 3.03. Governmental Approvals; No Conflicts . . . . . . . . . . . . . . . 31
SECTION 3.04. Financial Condition; No Material Adverse Change . . . . . . . . . . 31
SECTION 3.05. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.06. Litigation and Environmental Matters . . . . . . . . . . . . . . . 32
SECTION 3.07. Compliance with Laws and Agreements . . . . . . . . . . . . . . . . 32
SECTION 3.08. Certain Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C> <C> <C>
SECTION 3.11. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.12. Acquisition of The Providence Journal Company . . . . . . . . . . . 33
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.02. Each Credit Event . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V
Affirmative Covenants
---------------------
SECTION 5.01. Financial Statements and Other Information . . . . . . . . . . . . 35
SECTION 5.02. Notices of Material Events . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.03. Existence; Conduct of Business . . . . . . . . . . . . . . . . . . 37
SECTION 5.04 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.05. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . 37
SECTION 5.06. Books and Records; Inspection Rights . . . . . . . . . . . . . . . 38
SECTION 5.07. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
Negative Covenants
------------------
SECTION 6.01. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.02. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.03. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 39
SECTION 6.04. Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.05. Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06. Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------------
ARTICLE VIII
The Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
----------
</TABLE>
<PAGE> 4
4
<TABLE>
<CAPTION>
ARTICLE IX
Miscellaneous
-------------
<S> <C> <C>
SECTION 9.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.02 Waivers, Amendments . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.03 Expenses; Indemnity; Damage Waiver . . . . . . . . . . . . . . . . 46
SECTION 9.04 Successors & Assigns . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.05 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.06 Counterparts; Integration; Effectiveness . . . . . . . . . . . . . 49
SECTION 9.07 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.08 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.09 Governing Law; Jurisdiction; Consent to
Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.13 Interest Rate Limitations . . . . . . . . . . . . . . . . . . . . . 52
Exhibits and Schedules
----------------------
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Opinion of Counsel -- General Counsel of A. H. Belo Corporation
Exhibit B-2 Form of Opinion of Counsel -- Locke Purnell Rain Harrell
Exhibit B-3 Form of Opinion of Counsel -- Wiley, Rein & Fielding
Schedule 2.01 Commitments
Schedule 3.06 Litigation, Labor and Environmental Matters
Schedule 6.01 Liens
Schedule 6.05 Subordinated Debt
</TABLE>
<PAGE> 5
CREDIT AGREEMENT dated as of January 31, 1997,
among A. H. BELO CORPORATION, the LENDERS party
hereto, THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as Competitive Advance
Facility Agent (in such capacity, the "CAF Agent"),
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION and BANK OF TOKYO-MITSUBISHI, LTD., as
Co-Syndication Agents, NATIONSBANK, as Documentation
Agent, and TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent (in such capacity, the
"Administrative Agent"; and, together with the CAF
Agent, the "Agents").
The Borrower (such term and each other capitalized term used but
not otherwise defined herein having the meaning assigned to it in Article I)
has requested the Lenders to extend credit in order to enable it to borrow on a
revolving credit basis on and after the date hereof and at any time and from
time to time prior to the Termination Date a principal amount not to exceed
$500,000,000. The proceeds of such borrowings are to be used to finance a
portion of the cost of acquiring The Providence Journal Company (including
related refinancing of indebtedness and transaction costs) and for general
corporate purposes, including working capital, acquisitions, stock repurchases
and, if the Borrower shall so determine, commercial paper backup. Up to
$100,000,000 of the proceeds of such borrowings and the borrowings under the
five-year revolving credit and competitive advance facility established
pursuant to the credit agreement dated the date hereof among the Borrower, the
Lenders and the Agents may be used to fund the operations of AHN and TVFN. The
Borrower has also requested the Lenders to provide a procedure pursuant to
which the Lenders may be invited to bid on an uncommitted basis on short-term
borrowings by the Borrower. The Lenders are willing to extend such credit to
the Borrower on the terms and subject to the conditions herein set forth.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted CD Rate" means, with respect to any CD Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to the sum of (a) the Fixed CD Rate for such
Interest Period multiplied by the Statutory Reserve Rate, plus (b) the
Assessment Rate.
<PAGE> 6
2
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Texas Commerce Bank National
Association, as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"AHN" means America's Health Network, a subsidiary of The
Providence Journal Company.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Percentage" means, with respect to any Eurodollar
Loan (other than any Eurodollar Competitive Loan) or CD Loan or with respect to
the facility fees referred to in Section 2.10(a), as the case may be, the
applicable percentage set forth in the table below under the caption
"Eurodollar Spread", "CD Spread" or "Facility Fee Percentage", as the case may
be, based upon the ratio of Funded Debt to Pro Forma Operating Cash Flow as of
the end of and for the most recent period of four consecutive fiscal quarters
for which financial statements of the Borrower are required to have been
delivered under Section 5.01(a) or (b), whether or not financial statements in
respect of any subsequent period shall have been delivered:
<TABLE>
<S> <C> <C> <C> <C>
Facility Fee Eurodollar Spread CD Spread
------------ ----------------- ---------
Ratio Percentage
----- ----------
Category 1 Below 3.0 to 1.0 0.055% 0.170% 0.295%
Category 2 At least 3.0 to 1.0 but below
3.5 to 1.0 0.060% 0.190% 0.315%
Category 3 At least 3.5 to 1.0 but below
4.0 to 1.0 0.070% 0.255% 0.380%
Category 4 At least 4.0 to 1.0 but below
4.5 to 1.0 0.090% 0.310% 0.435%
Category 5 At least 4.5 to 1.0 but below
5.0 to 1.0 0.125% 0.375% 0.500%
</TABLE>
<PAGE> 7
3
<TABLE>
<S> <C> <C> <C> <C>
Category 6 Greater than or equal to 5.0
to 1.0 0.150% 0.475% 0.600%
</TABLE>
At any time when financial statements required to have been delivered under
Section 5.01 (a) or (b) have not been delivered, the Applicable Percentage
shall be determined by reference to Category 6.
"Assessment Rate" means, for any day, the annual assessment rate
in effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost to the Lenders of such insurance.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or another form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Termination Date and the
date of termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" means A. H. Belo Corporation, a Delaware corporation.
"Borrowing" means (a) a group of Revolving Loans of the same Type
and, in the case of CD Loans or Eurodollar Loans, as to which a single Interest
Period is in effect, (b) a Competitive Loan or group of Competitive Loans of
the same Type made on the same date and as to which a single Interest Period is
in effect.
"Borrowing Request" means a request by the Borrower for a
Revolving Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
<PAGE> 8
4
"CAF Agent" means The Chase Manhattan Bank as competitive advance
facility agent for the Lenders hereunder.
"Capital Lease Obligations" of any Person means the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"CD", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted CD Rate.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange
Act of 1934 as in effect on the date hereof) other than officers of the
Borrower and Continuing Directors shall own, directly or indirectly,
beneficially or of record, shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
of the Borrower; or (b) a majority of the seats (other than vacant seats) on
the board of directors of the Borrower shall at any time be occupied by persons
who are not Continuing Directors.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13, by any lending office of such Lender or by such
Lender's holding company, if any) with any law, rule or regulation, or any
guideline or directive (whether or not having the force of law) of any
Governmental Authority, or any request of any Governmental Authority with which
such Lender believes in good faith that it would be disadvantageous not to
comply, in each case made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans or Competitive Loans.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" means, with respect to each Lender, the commitment
of such Lender to make Revolving Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.09 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the
<PAGE> 9
5
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Commitment, as applicable.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive
Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making
such Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Continuing Directors" means (i) the members of the Board of
Directors of the Borrower on the date hereof and (ii) future members of such
Board of Directors who were nominated or appointed by a majority of the
Continuing Directors at the date of their nomination or appointment.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings,
labor controversies and the environmental matters disclosed in Schedule 3.06.
The disclosure of information in Schedule 3.06 or in any other schedule or
exhibit to this Agreement shall not constitute an admission by the Borrower
that such information is material for any purpose, including applicable
securities laws, other than this Agreement and the transactions provided for
herein.
"dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified
in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
<PAGE> 10
6
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any
Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; or (f) the receipt by the Borrower or any ERISA Affiliate of any
notice concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate
(or, in the case of a Competitive Loan, the LIBO Rate).
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of the Borrower hereunder, (a) income or franchise taxes imposed
on (or measured by) its net income by the jurisdiction under the laws of which
it is organized, or the jurisdiction in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America
or
<PAGE> 11
7
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.17(b)), any U.S. Federal
withholding tax imposed on amounts payable to such Foreign Lender under this
Agreement because of its failure or inability to comply with Section 2.15(e) or
for any other reason, unless (and to the extent that) (i) such withholding tax
liability arises or is increased by reason of a Change in Law occurring after
such Foreign Lender becomes a Lender under this Agreement or (ii) such Foreign
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such withholding tax
liability pursuant to Section 2.15(a).
"FCC" means the Federal Communications Commission and any
successors thereto.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Film Contracts" mean contracts or agreements with suppliers
which provide the right to broadcast certain specified film or video tape
motion pictures.
"Financial Officer" means the chief financial officer, vice
president of finance, principal accounting officer, treasurer or controller of
the Borrower.
"Fixed CD Rate" means, with respect to any CD Borrowing for any
Interest Period, the arithmetic average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m.,
New York City time, to the Administrative Agent on the first Business Day of
such Interest Period by three negotiable certificate of deposit dealers of
recognized standing selected by the Administrative Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount of $5,000,000 and with a maturity comparable
to such Interest Period.
"Fixed Rate" means, with respect to any Competitive Loan bearing
interest at a fixed rate, the fixed rate of interest per annum specified by the
Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a
Fixed Rate.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is
<PAGE> 12
8
located. For purposes hereof, the United States of America and each State
thereof shall be considered to constitute a single jurisdiction.
"Funded Debt" means without duplication, all Indebtedness, other
than short-term obligations under Film Contracts.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" means any agreement by which the Borrower or any
Subsidiary assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of another Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise assure
any creditor of such other Person against loss, but shall not include typical
and customary indemnifications, representations and warranties made in
connection with purchases and sales of property or issuances of securities.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging
arrangement.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Indebtedness" means, without duplication, the Borrower's and
each Subsidiary's (a) obligations for borrowed money, (b) obligations
representing the deferred purchase price of property (including, without
limitation, under Film Contracts) other than accounts payable arising in
connection with the purchase of inventory in the ordinary course of business,
(c) obligations, whether or not assumed, secured by Liens on or payable out of
the proceeds or production from property now or hereafter owned or acquired by
the Borrower or any Subsidiary, (d) obligations created under any conditional
purchase or other title retention agreements, (e) Capital Lease Obligations,
letters of credit, bonds or similar instruments, bankers' acceptances, (f)
obligations under Guarantees; provided, however, that Indebtedness shall not
include obligations of the Borrower or any Subsidiary incurred in connection
with the self- insurance program or employee benefit plans and programs of the
Borrower or the Subsidiaries, and (g) obligations to make payments that would
be required to be made in the event of an early termination, on the date
Indebtedness of the Borrower or any
<PAGE> 13
9
Subsidiary is being determined, in respect of outstanding Hedging Agreements.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Coverage Ratio" means the ratio of Pro Forma Operating
Cash Flow to Interest Expense.
"Interest Election Request" means a request by the Borrower to
convert or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Expense" means, with respect to the Borrower and the
Subsidiaries for any period, the interest expense of the Borrower and the
Subsidiaries determined on a consolidated basis in accordance with GAAP,
including, without limitation, (a) the amortization of debt discounts, (b) the
amortization of all fees (including, without limitation, fees with respect to
interest rate protection agreements) payable in connection with the incurrence
of Indebtedness and (c) the portion of any Capital Lease Obligation allocable
to interest expense.
"Interest Payment Date" means (a) with respect to any ABR Loan,
the last day of each March, June, September and December, (b) with respect to
any CD or Eurodollar Loan, the last day of the Interest Period applicable to
the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration or a CD
Borrowing with an Interest Period of more than 90 days' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration or 90 days' duration, as the case may be, after the first day
of such Interest Period, (c) with respect to any Fixed Rate Loan, the last day
of the Interest Period applicable to the Borrowing of which such Loan is a part
and, in the case of a Fixed Rate Borrowing with an Interest Period of more than
90 days' duration (unless otherwise specified in the applicable Competitive Bid
Request), each day prior to the last day of such Interest Period that occurs at
intervals of 90 days' duration after the first day of such Interest Period, and
any other dates that are specified in the applicable Competitive Bid Request as
Interest Payment Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the calendar month that is one, two, three
or six months thereafter, as the Borrower may elect, (b) with respect to any CD
Borrowing, the period commencing on the date of such Borrowing and ending 30,
60, 90, 180, 270 or 360 days thereafter, as the Borrower may elect, and (c)
with respect to any Fixed Rate Borrowing, the period (which shall not be less
than 1 day or more than 360 days) commencing on the date of such Borrowing and
ending on the date specified in the applicable Competitive Bid Request;
provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period
<PAGE> 14
10
pertaining to a Eurodollar Borrowing that commences on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Telerate Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is
not available at such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Borrowing for such Interest Period shall be the rate at which
dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered to the principal London office of the Administrative Agent
or any Affiliate designated by the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.
"Margin" means, with respect to any Competitive Loan bearing
interest at a rate based on the LIBO Rate, the marginal rate of interest, if
any, to be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such Loan
in its related Competitive Bid.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations or condition, financial or
<PAGE> 15
11
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the
ability of the Borrower to perform any of its obligations under this Agreement
or (c) the rights of or benefits available to the Lenders under this Agreement.
"Material Indebtedness" means Indebtedness (other than the
Loans), of any one or more of the Borrower and the Subsidiaries in a principal
amount for any such Indebtedness in excess of $20,000,000 or in an aggregate
principal amount for all such Indebtedness in excess of $35,000,000.
"Maturity Date" means January 31, 2000.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Operating Cash Flow" means, for the Borrower and its
Subsidiaries for any relevant period, on a consolidated basis, the sum of (i)
earnings before income taxes for such period (without taking into account
extraordinary or nonrecurring items), plus (ii) depreciation and amortization
expense during such period, plus (iii) Interest Expense actually incurred or
accrued during such period determined in accordance with GAAP; provided,
however, that Operating Cash Flow shall not include (i) any income or loss
attributable to any investment accounted for on the "equity" method of
accounting or (ii) any operating cash flow (positive or negative) attributable
to AHN or TVFN.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution or
delivery of, or otherwise with respect to, this Agreement.
"Participation Percentage" means, with respect to any Lender,
the percentage of the total Commitments represented by such Lender's
Commitment. If the Commitments have terminated or expired, the Participation
Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.
"Permitted Liens" means (a) Liens for Taxes not yet due and
payable, mechanic's Liens and materialman's, shipper's or warehouseman's Liens
for services or materials and landlord's Liens for rental amounts for which
payment is not yet due or which are being contested in good faith by
appropriate proceedings, (b) Liens securing any purchase money Indebtedness
(including Capital Lease Obligations relating to assets acquired after the date
hereof) if such Liens do not encumber any property other than the property for
the purchase of which such purchase money Indebtedness was incurred, (c) the
currently existing Liens described in Schedule 6.01 hereto, if any, and
renewals thereof, (d) pledges or deposits made to secure payment of worker's
compensation, unemployment insurance, pensions, or other social security
programs, (e) good-faith pledges or deposits made to secure performance of
bids, tenders, contracts (other than for the repayment of borrowed money), or
leases, or to secure statutory obligations, surety or appeal bonds, or
indemnity, performance, or other similar bonds in the ordinary course of
business, (f) encumbrances consisting
<PAGE> 16
12
of zoning restrictions, easements, utility district assessments or other
restrictions on the use of property, none of which materially impairs the
operation by the Borrower and the Subsidiaries (taken as a whole) of their
business, and none of which is violated by existing or proposed structures or
land use where such violation would materially impair the operation by the
Borrower and the Subsidiaries (taken as a whole) of their business, (g) the
following, if the validity or amount thereof is being contested in good faith
and by appropriate and lawful proceedings and so long as levy and execution
thereon have been stayed and continue to be stayed, or they do not in the
aggregate materially detract from the value of any material assets or the
operations of the Borrower and the Subsidiaries taken as a whole: claims and
Liens for Taxes due and payable; claims and Liens upon, and defects of title
to, property, including any attachment of property or other legal process prior
to adjudication of a dispute on the merits; and claims and Liens of mechanics,
materialmen, warehousemen, carriers, landlords, or other Liens; judgment Liens;
and (h) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary or existing on any property or asset
of any Person that becomes a Subsidiary after the date hereof prior to the time
the Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation or connection with such acquisition or such Person becoming a
Subsidiary, as the case may be, (ii) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) such Lien shall
secure only those obligations which it secures on the date of such acquisition
or the date such Person becomes a Subsidiary, as the case may be.
"PBGC" means the Pension Benefit Guarantee Corporation
referred to and Defined in ERISA.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Texas Commerce Bank National Association as its
prime rate in effect at its principal office in Dallas; each change in the
Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
"Prior Agreement" means the Borrower's credit agreement dated
as of July 31, 1996.
"Pro Forma Operating Cash Flow" means, for any relevant
period, Operating Cash Flow of the Borrower and its Subsidiaries on a
consolidated basis adjusted to include the Operating Cash Flow of any operating
units or entities acquired during such relevant period and to exclude the
Operating Cash Flow of any operating units or entities
<PAGE> 17
13
divested or sold during such relevant period (in each case, as if the
acquisition or divestiture had occurred at the beginning of such relevant
period).
"Register" has the meaning set forth in Section 9.04.
"Required Lenders" means, at any time, Lenders having
Revolving Credit Exposures and unused Commitments representing more than 51% of
the sum of the total Revolving Credit Exposures and unused Commitments at such
time; provided that, for purposes of declaring the Loans to be due and payable
pursuant to Article VII, and for all purposes after the Loans become due and
payable pursuant to Article VII or the Commitments expire or terminate, the
outstanding Competitive Loans of the Lenders shall be included in their
respective Revolving Credit Exposures in determining the Required Lenders.
"Reportable Event" means any reportable event as defined by
Section 4043 of ERISA and the regulations issued under such Section with
respect to a Plan (other than a Multiemployer Plan), excluding, however, such
events as to which the PBGC by regulation or by technical update waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event; provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waiver in accordance with
Section 412(d) of the Code.
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the sum of the outstanding principal amounts of such Lender's
Revolving Loans at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject (a) with respect to the Adjusted CD Rate or the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to (i) the applicable Interest Period, in the
case of the Adjusted CD Rate, and (ii) three months, in the case of the Base CD
Rate, and (b) with respect to the Adjusted LIBO Rate, for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such
Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
<PAGE> 18
14
"Subordinated Debt" means Indebtedness of the Borrower for
borrowed money that satisfies the requirements set forth in Schedule 6.05
hereto.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent.
"Subsidiary" means any subsidiary of the Borrower.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Termination Date" means the date that is 364 days after the
date hereof.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate is not
so reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.
"Transactions" means the execution, delivery and performance
by the Borrower of this Agreement and the borrowing of the Loans hereunder.
"TVFN" means Television Food Network, a subsidiary of The
Providence Journal Company.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate, the
Adjusted CD Rate, the Alternate Base Rate or, in the case of a Competitive Loan
or Borrowing, the LIBO Rate or a Fixed Rate.
<PAGE> 19
15
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class
and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be
classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person shall
be construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided that, if the Borrower
notifies the Administrative Agent that the Borrower requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the
date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the
Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
<PAGE> 20
16
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Revolving Loans to the
Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in (a) such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment or (b) the sum of the total
Revolving Credit Exposures plus the aggregate principal amount of outstanding
Competitive Loans exceeding the total Commitments. No Competitive Loans or any
new additional Revolving Loans will be made after the Termination Date. Within
the foregoing limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan
shall be made as part of a Borrowing consisting of Revolving Loans made by the
Lenders ratably in accordance with their respective Participation Percentages.
Each Competitive Loan shall be made in accordance with the procedures set forth
in Section 2.04. The failure of any Lender to make any Loan required to be
made by it shall not relieve any other Lender of its obligations hereunder;
provided that the Commitments and Competitive Bids of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
(b) Subject to Section 2.12, (i) each Revolving Borrowing
shall be comprised entirely of ABR Loans, CD Loans or Eurodollar Loans as the
Borrower may request in accordance herewith, and (ii) each Competitive
Borrowing shall be comprised entirely of Eurodollar Loans or Fixed Rate Loans
as the Borrower may request in accordance herewith. Each Lender at its option
may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement; provided further, that if the
designation of any such foreign branch or Affiliate shall result in any costs,
reductions or Taxes which would not otherwise have been applicable and for
which such Lender would, but for this proviso, be entitled to request
compensation under Section 2.13 or 2.15, such Lender shall not be entitled to
request such compensation unless it shall in good faith have determined such
designation to be necessary or advisable to avoid any material disadvantage to
it.
(c) At the commencement of each Interest Period for any CD
Revolving Borrowing or Eurodollar Revolving Borrowing, such Borrowing shall be
in an aggregate amount that is an integral multiple of $1,000,000 and not less
than $5,000,000. At the time that each ABR Revolving Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$1,000,000 and not less than $5,000,000; provided that an ABR Revolving
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments. Each Competitive Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any
<PAGE> 21
17
time be more than a total of 15 CD and Eurodollar Revolving Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement,
the Borrower shall not be entitled to request, or elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. In order to
request a Revolving Borrowing, the Borrower shall notify the Administrative
Agent of such request by telephone (a) in the case of a Eurodollar Borrowing,
not later than 11:00 a.m., Dallas time, three Business Days before the date of
the proposed Borrowing, (b) in the case of a CD Borrowing, not later than 11:00
a.m., Dallas time, two Business Days before the date of the proposed Borrowing
or (c) in the case of an ABR Borrowing, not later than 10:00 a.m., Dallas time,
on the date of the proposed Borrowing. Each such telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing, a CD
Borrowing or a Eurodollar Borrowing;
(iv) in the case of a CD Borrowing or a Eurodollar Borrowing,
the initial Interest Period to be applicable thereto, which shall be a
period contemplated by the definition of the term "Interest Period";
and
(v) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested CD or Eurodollar Revolving
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of 30 days' duration, in the case of a CD Borrowing, or one month's
duration, in the case of a Eurodollar Borrowing. Promptly following receipt of
a Borrowing Request in accordance with this Section, the Administrative Agent
shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the
terms and conditions set forth herein, from time to time during the
Availability Period the Borrower may request Competitive Bids and may (but
shall not have any obligation to) accept Competitive Bids and borrow
Competitive Loans; provided that the sum of the total Revolving
<PAGE> 22
18
Credit Exposures plus the aggregate principal amount of outstanding Competitive
Loans at any time shall not exceed the total Commitments. In order to request
Competitive Bids, the Borrower shall notify the CAF Agent of such request by
telephone, in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
Dallas time, four Business Days before the date of the proposed Borrowing and,
in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., Dallas time,
one Business Day before the date of the proposed Borrowing; provided that a
Competitive Bid Request shall not be made within five Business Days after the
date of any previous Competitive Bid Request, unless any and all such previous
Competitive Bid Requests shall have been withdrawn or all Competitive Bids
received in response thereto rejected. Each such telephonic Competitive Bid
Request shall be confirmed promptly by hand delivery or telecopy to the CAF
Agent of a written Competitive Bid Request in a form approved by the CAF Agent
and signed by the Borrower. Each such telephonic and written Competitive Bid
Request shall specify the following information in compliance with Section
2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing
or a Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(v) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the CAF Agent shall notify the Lenders of the details thereof by
telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to)
make one or more Competitive Bids to the Borrower in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by
the CAF Agent and must be received by the Administrative Agent by telecopy, in
the case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m.,
Dallas time, three Business Days before the proposed date of such Competitive
Borrowing, and in the case of a Fixed Rate Borrowing, not later than 9:30 a.m.,
Dallas time, on the proposed date of such Competitive Borrowing. Competitive
Bids that do not conform substantially to the form approved by the CAF Agent
may be rejected by the CAF Agent, and the CAF Agent shall notify the applicable
Lender as promptly as practicable. Each Competitive Bid shall specify (i) the
principal amount (which shall be a minimum of $5,000,000 and an integral
multiple of $1,000,000 and which may equal the entire principal amount of the
Competitive Borrowing requested by the Borrower) of the Competitive Loan or
Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or
Rates at
<PAGE> 23
19
which the Lender is prepared to make such Loan or Loans (expressed as a
percentage rate per annum in the form of a decimal to no more than four decimal
places) and (iii) the Interest Period applicable to each such Loan and the last
day thereof.
(c) The CAF Agent shall promptly notify the Borrower by
telecopy of the Competitive Bid Rate and the principal amount specified in each
Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph (d), the
Borrower may accept or reject any Competitive Bid. The Borrower shall notify
the CAF Agent by telephone, confirmed by telecopy in a form approved by the CAF
Agent, whether and to what extent it has decided to accept or reject each
Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not later
than 10:30 a.m., Dallas time, three Business Days before the date of the
proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not
later than 10:30 a.m., Dallas time, on the proposed date of the Competitive
Borrowing; provided, that (i) the failure of the Borrower to give such notice
shall be deemed to be a rejection of each Competitive Bid, (ii) the Borrower
shall not accept a Competitive Bid made at a particular Competitive Bid Rate if
the Borrower rejects a Competitive Bid made at a lower Competitive Bid Rate,
(iii) the aggregate amount of the Competitive Bids accepted by the Borrower
shall not exceed the aggregate amount of the requested Competitive Borrowing
specified in the related Competitive Bid Request, (iv) to the extent necessary
to comply with clause (iii) above, the Borrower may accept Competitive Bids at
the same Competitive Bid Rate in part, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata
in accordance with the amount of each such Competitive Bid, and (v) except
pursuant to clause (iv) above, no Competitive Bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000; provided further that if
a Competitive Loan must be in an amount less than $5,000,000 because of the
provisions of clause (iv) above, such Competitive Loan may be for a minimum of
$1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be
rounded to integral multiples of $1,000,000 in a manner determined by the
Borrower. A notice given by the Borrower pursuant to this paragraph (d) shall
be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender
by telecopy whether or not its Competitive Bid has been accepted (and, if so,
the amount and Competitive Bid Rate so accepted), and each successful bidder
will thereupon become bound, subject to the terms and conditions hereof, to
make the Competitive Loan in respect of which its Competitive Bid has been
accepted.
(f) If any Lender that is an Affiliate of the CAF Agent shall
elect to submit a Competitive Bid in its capacity as a Lender, it shall submit
such Competitive Bid directly to the Borrower at least one quarter of an hour
earlier than the time by which the other
<PAGE> 24
20
Lenders are required to submit their Competitive Bids to the CAF Agent pursuant
to paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, Dallas time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such
Loans available to the Borrower by promptly crediting the amounts so received,
in like funds, to an account of the Borrower maintained with the Administrative
Agent in Dallas and designated by the Borrower in the applicable Borrowing
Request or Competitive Bid Request.
(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of the Borrower, the interest rate borne by
the applicable Borrowing. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a CD or Eurodollar Revolving Borrowing, shall have
an initial Interest Period as specified in such Borrowing Request. Thereafter,
the Borrower may elect to convert such Borrowing to a different Type or to
continue such Borrowing and, in the case of a CD or Eurodollar Revolving
Borrowing, may elect new Interest Periods therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Competitive Borrowings,
which may not be converted or continued.
(b) In order to make an election pursuant to this Section,
the Borrower shall notify the Administrative Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Revolving Borrowing of the Type
resulting from such election to be made on the effective date of such election.
Each such telephonic Interest Election Request shall be irrevocable and shall
be confirmed
<PAGE> 25
21
promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in a form approved by the Administrative Agent and
signed by the Borrower.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing, a CD Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a CD Borrowing or a
Eurodollar Borrowing, the Interest Period to be applicable thereto
after giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a CD Borrowing or Eurodollar
Borrowing but does not specify an Interest Period, then the Borrower shall be
deemed to have selected an Interest Period of 30 days' duration, in the case of
a CD Borrowing, or one month's duration, in the case of a Eurodollar Borrowing.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest
Election Request with respect to a CD or Eurodollar Revolving Borrowing prior
to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Revolving Borrowing may be converted to or continued as a CD or Eurodollar
Borrowing and (ii) unless repaid, each CD and Eurodollar Revolving Borrowing
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a)
Unless previously terminated, the Commitments shall terminate on the
Termination Date; provided that the Commitments shall terminate at 3:00 p.m.,
Dallas time, on March 31, 1997, if the Effective Date has not occurred prior to
such time.
<PAGE> 26
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(b) Subject to Section 2.09(d), the Borrower may at any time
terminate, or from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent
prepayment of the Loans, the sum of the Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans would exceed the
total Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date, (ii) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Competitive
Loan on the last day of the Interest Period applicable to such Loan.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
<PAGE> 27
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(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to the order of such Lender
(or, if requested by such Lender, to such Lender and its registered assigns)
and in a form approved by the Administrative Agent.
SECTION 2.09. Prepayment of Loans. (a) Subject to Section
2.09(d), the Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part.
(b) In the event of any termination of the Commitments, the
Borrower shall prepay all outstanding Borrowings on the date of such
termination. In the event of any reduction of the Commitments, the Borrower
shall prepay outstanding Borrowings to the extent, if any, necessary so that,
on the date of and after giving effect to such reduction, the sum of the
Revolving Credit Exposures and the aggregate principal amount of the
outstanding Competitive Loans does not exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m.,
Dallas time, three Business Days before the date of prepayment, (ii) in the
case of prepayment of a CD Borrowing, not later than 11:00 a.m., Dallas time,
two Business Days before the date of prepayment, (iii) in the case of
prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Dallas
time, on the date of prepayment. Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is
given in connection with a conditional notice of termination of the Commitments
as contemplated by Section 2.07, then such notice of prepayment may be revoked
if such notice of termination is revoked in accordance with Section 2.07.
Promptly following receipt of any such notice relating to a Revolving
Borrowing, the Administrative Agent shall advise the Lenders of the contents
thereof. Each partial prepayment of any Revolving Borrowing shall be in an
amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.e
(d) The Borrower shall not have the right to prepay any
Competitive Loan and shall not terminate or reduce the Commitments if such
termination or reduction would require prepayment of any Competitive Loan.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Percentage per annum on the daily amount of the
Commitment of such Lender (whether used or unused) during the period from and
including the date hereof to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Revolving
Credit Exposure after its
<PAGE> 28
24
Commitment terminates, then such facility fee shall continue to accrue on the
daily amount of such Lender's Revolving Credit Exposure from and including the
date on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Revolving Credit Exposure. Accrued facility fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitments terminate,
commencing on the first such date to occur after the date hereof; provided that
any facility fees accruing after the date on which the Commitments terminate
shall be payable on demand. All facility fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender, ratably in accordance with its respective
Commitment, the upfront fee separately agreed upon between the Borrower and the
Lenders. The upfront fee shall be payable on the Effective Date.
(c) The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent for
distribution, in the case of facility fees, to the Lenders. Fees paid shall
not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at a rate per annum equal to the Alternate Base
Rate.
(b) The Loans comprising each CD Borrowing shall bear
interest at a rate per annum equal to the Adjusted CD Rate for the Interest
Period in effect for such Borrowing plus the Applicable Percentage from time to
time in effect.
(c) The Loans comprising each Eurodollar Borrowing shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Percentage from time to
time in effect (or, in the case of a Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Margin offered by the
Lender making such loan and accepted by the Borrower pursuant to Section 2.04).
(d) Each Fixed Rate Loan shall bear interest at a rate per
annum equal to the Fixed Rate applicable to such Loan.
(e) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, the rate otherwise applicable to such Loan as provided above plus 2%
or (ii) in
<PAGE> 29
25
the case of any other amount, the rate applicable to ABR Loans as provided
above plus 2%.
(f) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (e) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment, (iii) in the event of any conversion of any
Loan (other than an ABR Revolving Loan) prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion and (d) in the event the Commitments are
terminated, all accrued and unpaid interest on the Loans shall be paid on the
date of such termination.
(g) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate, Adjusted CD Rate, Adjusted LIBO Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.12 Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a CD Borrowing or Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted CD Rate,
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
Interest Period or, in the case of a Eurodollar Borrowing, that a
Change in Law makes it unlawful for any one or more of the Lenders to
make a Eurodollar Loan; or
(b) the Administrative Agent is advised by the Required
Lenders that, as a result of a Change in Law or other unusual events
or conditions affecting the markets in which such Lenders conduct
their funding operations, the Adjusted CD Rate, the Adjusted LIBO Rate
or the LIBO Rate, as applicable, for such Interest Period will be
lower than the actual cost to such Lenders of obtaining the funds
necessary to make or maintain their Loans comprising such Borrowing
for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a CD Borrowing or Eurodollar
Borrowing shall be ineffective, (ii) if any Borrowing Request requests a CD or
<PAGE> 30
26
Eurodollar Revolving Borrowing, such Borrowing shall be made as an ABR
Borrowing and (iii) any request by the Borrower for a Eurodollar Competitive
Borrowing shall be ineffective; provided that (A) if the circumstances giving
rise to such notice do not affect all the Lenders, then requests by the
Borrower for Eurodollar Competitive Borrowings may be made to Lenders that are
not affected thereby and (B) if the circumstances giving rise to such notice
affect only one Type of Borrowings, then the other Type of Borrowings shall be
permitted.
SECTION 2.13. Increased Costs. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted CD Rate or the Adjusted
LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement, CD Loans or Eurodollar Loans
or Fixed Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any CD Loan, Eurodollar Loan or Fixed Rate Loan
or to increase the cost to such Lender or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Lender to be material, then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender to a level below that which such Lender or such Lender's holding company
could have achieved but for such Change in Law (taking into consideration such
Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time the Borrower will pay to such Lender, as the case may
be, such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section, and setting forth
in reasonable detail the manner in which such amount or amounts shall have been
determined, shall be delivered to the Borrower and shall, if submitted in good
faith, be conclusive absent manifest error. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of
<PAGE> 31
27
such Lender's right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than six months prior to the date
that such Lender notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof.
(e) Notwithstanding the foregoing provisions of this Section,
a Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been publicly announced prior to
submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.14. Break Funding Payments. In the event of (a)
the payment of any principal of any CD Loan, Eurodollar Loan or Fixed Rate Loan
other than on the last day of an Interest Period applicable thereto, (b) the
conversion of any CD Loan or Eurodollar Loan other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, prepay
or continue any Revolving Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice is permitted to be revocable
and is revoked in accordance herewith), (d) the failure to borrow any
Competitive Loan after accepting the Competitive Bid to make such Loan, or (e)
the assignment of any CD Loan, Eurodollar Loan or Fixed Rate Loan other than on
the last day of the Interest Period applicable thereto as a result of a request
by the Borrower pursuant to Section 2.17, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to
such event by payment to such Lender of an amount determined by such Lender to
be equal to the excess, if any, of (i) the amount of interest that such Lender
would pay for a deposit equal to the principal amount of the applicable Loan
for the period from the date of such payment, conversion, failure or assignment
to the last day of the then current Interest Period for such Loan (or, in the
case of a failure to borrow, convert, prepay or continue, the duration of the
Interest Period that would have resulted from such borrowing, conversion or
continuation) if the interest rate payable on such deposit were equal to the
Adjusted LIBO Rate, the Adjusted CD Rate or the Fixed Rate, as the case may be,
in effect (or that would have been in effect) for such Interest Period, over
(ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for dollar deposits at other banks in the London
interbank market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section, and setting forth in reasonable detail the
manner in which such amount or amounts shall have been determined, shall be
delivered to the Borrower and shall, if submitted in good faith, be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.
<PAGE> 32
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SECTION 2.15. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) each of the Agents or
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Agents and each Lender
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Agents or such Lender, as the case may be, and any liability
(including penalties, interest and reasonable expenses) arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender, by the Administrative Agent on its own
behalf or on behalf of a Lender, or by the CAF Agent, and setting forth in
reasonable detail the manner in which such amount shall have been determined,
shall, if submitted in good faith, be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law, properly completed and executed forms prescribed by applicable
law (together with such other documentation or certification as the Borrower
may reasonably request) that will permit the Borrower to make such payments
without withholding or at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs. (a) The Borrower shall make each payment required to be made by
it hereunder (whether of principal, interest, fees or otherwise) prior to 12:00
noon, Dallas time, on the date when
<PAGE> 33
29
due, in immediately available funds, to the Administrative Agent at its offices
at Dallas, Texas, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. The Administrative Agent shall distribute any
such payments received for the account of any other Person to the appropriate
recipient in the amount owed to it promptly following receipt thereof. If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to fully pay all amounts then due
hereunder, such funds shall be applied to the amounts then due hereunder in
such order and priority as the Administrative Agent may elect; provided that
any funds that the Administrative Agent elects to apply to principal, interest
or fees then due shall be applied ratably to all amounts of principal, interest
or fees (as the case may be) then due.
(c) If any Lender shall, by exercising any right of set-off
or counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participation in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payments giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any
assignee or participant other than the Borrower or any Subsidiary or Affiliate
thereof. The Borrower consents to the foregoing and agrees, to the extent it
may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set- off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.13, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking
<PAGE> 34
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its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the good faith judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender in such
Lender's good faith judgment. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.13,
or if the Borrower is required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this
Agreement (other than any outstanding Competitive Loans held by it) to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent,
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
(other than Competitive Loans, as to which such Lender will continue to have
all of its rights hereunder), accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is (i) duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required and, (ii) possesses all requisite authority and power and material
licenses, permits, franchises (including, without limitation
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31
licenses, permits and franchises issued by the FCC), and valid and subsisting
network affiliation agreements in the case of each Subsidiary that operates a
network affiliated television broadcasting enterprise, to conduct its business
as presently conducted.
SECTION 3.02. Authorization; Enforceability. The
Transactions are within the Borrower's corporate powers and have been duly
authorized by all necessary corporate and, if required, stockholder action.
This Agreement has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except (i)
such as have been obtained or made and are in full force and effect, and (ii)
routine filings after the Effective Date with Securities and Exchange
Commission and the FCC made pursuant to the requirements of 47 CFR 73.3613, (b)
will not violate any applicable law or regulation or the charter, by-laws or
other organizational documents of the Borrower or any Subsidiary or any order
of any Governmental Authority, (c) will not violate or result in a default
under any indenture, or other material agreement or instrument binding upon the
Borrower or any Subsidiary or its assets, or give rise to a right thereunder to
require any material payment to be made by the Borrower or any Subsidiary, and
(d) will not result in the creation or imposition of any Lien other than a
Permitted Lien on any asset of the Borrower or any Subsidiary.
SECTION 3.04. Financial Condition; No Material Adverse
Change. (a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of earnings, shareholders equity and
cash flows (i) as of and for the fiscal year ended December 31, 1995, reported
on by Ernst & Young LLP, independent auditors, and (ii) as of and for the
fiscal quarter ended September 30, 1996, certified by its chief financial
officer. Such financial statements present fairly, in all material respects,
the financial position and results of operations and cash flows of the Borrower
and its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) Since September 30, 1996, there has been no material
adverse change in the business, assets, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title or interest that do not interfere with its
<PAGE> 36
32
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Borrower and the Subsidiaries owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.06. Litigation, Labor and Environmental Matters.
(a) There are not any actions, suits or proceedings by or before any arbitrator
or Governmental Authority now pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary (i) as
to which there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters, there are no actual or,
to the knowledge of the Borrower, threatened labor controversies, including
strikes, work stoppages, work slow downs or National Labor Relations Board
proceedings affecting the Borrower or its Subsidiaries, that could,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
(c) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, neither the Borrower
nor any Subsidiary (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(d) There has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of
the Borrower and its Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property and
all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. No
Default has occurred and is continuing.
SECTION 3.08. Certain Legal Matters. (a) Neither the
Borrower nor any Subsidiary is (i) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (ii) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
<PAGE> 37
33
(b) Neither the Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying margin stock, within the
meaning of Regulation U of the Board. Margin stock will at all times
constitute less than 25% of the assets of the Borrower individually and the
Borrower and the Subsidiaries on a consolidated basis that are subject to the
restrictions of Section 6.01 and 6.02.
SECTION 3.09. Taxes. Each of the Borrower and its
Subsidiaries has filed or caused to be filed all tax returns and reports
required to have been filed and paid or caused to be paid all Taxes required to
have been paid by it, except (a) Taxes that are being contested in good faith
by appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves or (b) to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events, could reasonably be expected to result in a Material Adverse
Effect. As of the date hereof, the present value of all accrued benefit
liabilities under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87), determined at the most
recent annual valuation date for such Plan, does not exceed by more than
$10,000,000 the fair market value of the assets of such Plan, and the present
value of all accrued benefit liabilities of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87), determined at the most recent annual valuation dates for such Plans,
does not exceed by more than $10,000,000 the fair market value of the assets of
all such underfunded Plans.
SECTION 3.11. Disclosure. There are no agreements,
instruments or corporate restrictions to which the Borrower or any of its
Subsidiaries is subject, and no other matters known to the Borrower, that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected and pro forma financial information, the
Borrower represents only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.
SECTION 3.12. Acquisition of The Providence Journal Company.
The purchase price for the acquisition of The Providence Journal Company
payable by the Borrower or any of its Affiliates shall not exceed $600,000,000
exclusive of (i) any consideration payable in capital stock of the Borrower,
(ii) Indebtedness of The Providence Journal Company assumed by the Borrower or
any of its Affiliates (other than any Indebtedness created in contemplation of
such
<PAGE> 38
34
acquisition), (iii) transaction costs related to the acquisition (including
those items set forth in footnote 1 on page 139 of the Borrower's Proxy
Statement dated January 8, 1997) and (iv) cash paid in lieu of fractional
shares.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders
to make Loans hereunder shall not become effective until the date on which each
of the following conditions is satisfied (or waived in accordance with Section
9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received favorable
written opinions of Michael J. McCarthy, the General Counsel of the
Borrower, Locke Purnell Rain Harrell, counsel for the Borrower, and
Wiley, Rein & Fielding, special regulatory counsel to the Borrower,
substantially in the forms of Exhibits B-1, B-2 and B-3 hereto and
covering such other matters relating to this Agreement and the
Transactions as the Required Lenders shall reasonably request. Each
of such opinions shall be addressed to the Administrative Agent and
the Lenders and shall be dated the Effective Date. The Borrower
hereby requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and
good standing of the Borrower, the authorization of the Transactions
and any other legal matters relating to this Agreement or the
Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (b) and (c) of
Section 4.02.
(e) The Administrative Agent shall have received all fees and
other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.
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35
(f) The Prior Agreement shall have been terminated and the
obligations of the Borrower and the Subsidiaries thereunder paid in
full.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived) on or prior to March 31, 1997. The Administrative Agent
shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event. The obligation of each
Lender to make a Loan on the occasion of any Borrowing (but not on the occasion
of any interest election pursuant to Section 2.06 that does not increase the
outstanding principal amount of the Loans of any Lender), is subject to the
satisfaction of the following conditions:
(a) In the case of a Borrowing of Revolving Loans, the
Administrative Agent shall have received a Borrowing Request for such
Borrowing in accordance with Section 2.03; or, in the case of a
Borrowing of Competitive Loans, Borrower shall have accepted the
Competitive Bid or Bids in respect of such Loans in accordance with
Section 2.04.
(b) The representations and warranties of the Borrower set
forth in this Agreement shall be true and correct on and as of the
date of such Borrowing.
(c) At the time of and immediately after giving effect to
such Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to matters specified in paragraphs (b) and
(c) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the
Borrower, its audited consolidated balance sheet and related
statements of earnings, stockholders' equity and cash flows as of the
end of and for such year, all reported on by Ernst & Young LLP or
other independent public accountants of recognized national standing
(without a "going concern" or like emphasis paragraph and without any
qualification or exception as to the scope of such audit) to the
effect that such consolidated
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36
financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, its condensed
consolidated balance sheet and related statements of earnings and cash
flows as of the end of and for such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP for interim financial information and with the instructions to
Form 10Q and Article 10 of Regulation S-X (and accordingly, such
statements will not include all of the information and footnotes
required by GAAP for complete financial statements);
(c) concurrently with each delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
the Borrower (i) certifying as to whether a Default has occurred and,
if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii)
setting forth reasonably detailed calculations demonstrating
compliance with Sections 6.05 and 6.06 and (iii) stating whether any
change in GAAP or in the application thereof has occurred since the
date of the most recent audited financial statements referred to in
Section 3.04 or delivered pursuant to this Section 5.01 and, if any
such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether, in connection
with their audit, anything came to their attention that caused them to
believe that the Borrower had failed to comply with the terms,
covenants, provisions or conditions of Sections 6.05 and 6.06;
(e) promptly after the same become publicly available, copies
of all annual and quarterly reports to shareholders, reports to the
Securities and Exchange Commission on Form 10-K, Form 10-Q, Form 8-K
or any successor form, proxy statements and registration statements
(other than those relating only to employee benefit plans) filed or
distributed by the Borrower or any Subsidiary; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any Subsidiary, or compliance with the
terms of this Agreement, as the Administrative Agent or any Lender may
reasonably request.
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37
SECTION 5.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agent prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries
in an aggregate amount exceeding $15,000,000;
(d) the receipt of any notice from the FCC or any other
Governmental Authority of the expiration without renewal, termination
or suspension of, or the institution of any proceedings to terminate
or suspend, any main transmitter license granted by the FCC or any
other material license now or hereafter held by the Borrower or any
Subsidiary which is required to operate any television broadcasting
station in compliance with all applicable laws; and,
(e) any other development that has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth
the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower
will, and will cause each Subsidiary to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.02.
SECTION 5.04. Payment of Obligations. The Borrower will, and
will cause each Subsidiary to, pay its Indebtedness and other obligations,
including tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance
with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The
Borrower will, and will cause each Subsidiary to, (a) keep and
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38
maintain all property material to the conduct of the business of the Borrower
and its Subsidiaries taken as a whole in good working order and condition,
ordinary wear and tear and obsolescence excepted, (b) keep and maintain all
licenses, permits, franchises and major network affiliation agreements
(including those with American Broadcasting Companies, Inc. ("ABC"), National
Broadcasting Companies ("NBC"), the Columbia Broadcasting System, Inc. ("CBS"),
or Fox Broadcasting Company ("FOX") necessary for their business except as the
loss of the same could not individually or in the aggregate reasonably be
expected to cause a Material Adverse Effect, it being understood and agreed
that a change from one such major network to another shall not be considered to
have such an effect; and (b) maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each Subsidiary to, keep proper books of record
and account in which full, true and correct entries are made of all dealings
and transactions in relation to its business and activities. The Borrower
will, and will cause each Subsidiary to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at reasonable times and as often as
shall be reasonably requested.
SECTION 5.07. Compliance with Laws. The Borrower will, and
will cause each Subsidiary to, comply with all laws (including Environmental
Laws), regulations and orders of any Governmental Authority applicable to it or
its property, except to the extent that failures to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.08. Use of Proceeds. The Borrower will cause the
proceeds of the Loans to be used only for the purposes referred to in the
preamble to this Agreement. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations G, U and X.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have
been paid in full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
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39
Lien on any property or asset now owned or hereafter acquired by it, or assign
or sell any income or revenues (including accounts receivable) or rights in
respect of any thereof, except that the Borrower and the Subsidiaries may
assign or sell delinquent receivables and rights in respect thereof and may
create, incur, assume or permit to exist (a) Permitted Liens and (b) other
Liens securing obligations in an aggregate amount at any time not greater than
$40,000,000.
SECTION 6.02. Fundamental Changes. (a) The Borrower will not
merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired), or
liquidate or dissolve, except that any Subsidiary or other Person may merge
into the Borrower if the Borrower is the surviving corporation and at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing and the Borrower shall be in compliance with the
financial covenants contained in this Article VI on a pro forma basis with such
merger being deemed to have occurred at the beginning of each relevant period.
(b) The Borrower will not, and will not permit any Subsidiary
to, engage to an extent material to the Borrower and the Subsidiaries on a
consolidated basis in any business other than businesses of the type conducted
by the Borrower and its Subsidiaries on the date hereof and businesses
reasonably related thereto.
SECTION 6.03. Transactions with Affiliates. The Borrower
will not, and will not permit any Subsidiary to, enter into any transaction
(including, without limitation, the purchase or sale of any property or
service) with, or make any payment or transfer to, any of its Affiliates (other
than the Borrower or any Subsidiary) except in the ordinary course of business
and upon terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary could obtain in a comparable arms-length
transaction.
SECTION 6.04. Restrictive Agreements. The Borrower will not,
and will not permit any Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrower or any other
Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary, other than (i) such restrictions in the partnership agreements for
TVFN and AHN in effect on the date hereof and (ii) such restrictions on
Subsidiaries (other than TVFN and AHN) that are partnerships, joint ventures,
limited liability companies or other similar entities, and in which the
aggregate equity investment of the Borrower does not exceed $20,000,000.
SECTION 6.05. Leverage. The Borrower will not permit (a) the
ratio of Funded Debt to Pro Forma Operating Cash Flow as of the end of and for
any period of four consecutive fiscal quarters ending after the Effective Date
to be greater than 5.5 to 1.0, (b) the
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40
ratio of Funded Debt (excluding Subordinated Debt) to Pro Forma Operating Cash
Flow as of the end of and for any period of four consecutive fiscal quarters
ending after the Effective Date to be greater than 5.0 to 1.0 or (c) Funded
Debt of Subsidiaries (other than Funded Debt owed to the Borrower or any other
Subsidiary) to constitute more than 10% of the Funded Debt that would at any
time be permitted to exist under clause (a) of this Section 6.05.
SECTION 6.06. Interest Coverage. The Borrower will not permit
the ratio of Pro Forma Operating Cash Flow to Interest Expense for any period
of four consecutive fiscal quarters ending after the Effective Date to be less
than 2.5 to 1.0.
SECTION 6.07. Investments in AHN and TVFN. The Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, make any
loans or advances to, or make any other investment in AHN or TVFN during the
term of the Facility in excess of $100,000,000.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) any representation or warranty made or deemed made by or
on behalf of the Borrower or any Subsidiary in or in connection with
this Agreement, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this
Agreement, shall prove to have been incorrect in any material respect
when so made or deemed made;
(b) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(c) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in
clause (b) above) payable under this Agreement, when and as the same
shall become due and payable, and such failure shall continue
unremedied for a period of three Business Days;
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02(a), (b) or
(e), Section 5.03 (with respect to the Borrower's existence) or in
Article VI;
(e) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.02(c) or (d),
and such failure shall continue unremedied for a period of five
Business Days;
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41
(f) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other
than those specified in clause (b), (c), (d) or (e) above) and such
failure shall continue unremedied for a period of 30 days after notice
thereof from the Administrative Agent or any Lender to the Borrower;
(g) the Borrower or any Subsidiary shall fail to make any
payment of principal, regardless of amount, in respect of any Material
Indebtedness, when and as the same shall become due and payable;
(h) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity;
(i) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any
Subsidiary or its debts, or of a substantial part of the property or
assets of the Borrower or a Subsidiary, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law or (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of the property or assets of the
Borrower or any Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(j) the Borrower or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (i)
above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Subsidiary or for a substantial part of the
property or assets of the Borrower or any Subsidiary, (iv) file an
answer admitting the material allegations of a petition filed against
it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of
effecting any of the foregoing;
(k) one or more judgments for the payment of money in an
amount in excess of $20,000,000 individually or $35,000,000 (in each
case net of insurance coverage) in the aggregate shall be rendered
against the Borrower, any Subsidiary or any combination thereof (it
being understood that the outstanding adverse declaratory judgment in
the Cable L.P. I, Inc. litigation disclosed in The Providence Journal
Company's SEC filings shall
<PAGE> 46
42
not constitute an Event of Default and that any amount payable in
respect thereof shall not be included in the individual or aggregate
limit) and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any property or assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a
Material Adverse Effect;
(m) any main transmitter license, permit or authorization
issued to the Borrower or any Subsidiary by the FCC shall be
forfeited, revoked or not renewed, or any proceeding with respect to
any such forfeiture or revocation shall be instituted by the FCC,
where such forfeiture, revocation or non-renewal or such proceeding,
as the case may be, shall be reasonably likely to result in a Material
Adverse Effect;
(n) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders shall, by notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other liabilities of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in any event with respect to the Borrower described in clause (i) or (j)
above, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other liabilities of the Borrower accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Agents
Each of the Lenders hereby irrevocably appoints the Agents as
its agents and authorizes the Agents to take such actions on its behalf and to
exercise such powers as are delegated to the Agents by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
<PAGE> 47
43
The bank serving as the Administrative Agent hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Agents shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing (a) the Agents shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, and (b)
the Agents shall not have any duty to take any discretionary action or exercise
any discretionary powers permitted hereunder unless requested to do so in
writing by the Required Lenders. No Agent shall be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
or in the absence of its own gross negligence or wilful misconduct. In
addition, the Agents shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness
or genuineness of this Agreement or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Agents.
The Agents shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Agents also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each of the Agents may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by it,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountants or experts.
Each of the Agents may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by such Agent. The Administrative Agent, the CAF Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through Affiliates or its or its Affiliates' employees. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent, to
the Affiliates of the Administrative Agent, the CAF Agent and any such
sub-agent and to the directors, officers, employees, agents and advisors of the
Administrative Agent, the CAF Agent, any such sub-agent and their respective
Affiliates.
Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent may resign at any time by
<PAGE> 48
44
notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders, with the consent of the Borrower (which shall not be
unreasonably withheld) shall have the right to appoint a successor Agent. If
no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, with the consent of the
Borrower (which shall not be unreasonably withheld), on behalf of the Lenders,
appoint a successor Agent which shall be a bank with an office in Dallas or The
City of New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After the Agent's resignation hereunder, the provisions
of this Article and Section 9.03 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in
the amount of its pro rata share at the time reimbursement is sought (based on
its Commitment hereunder or, if the Commitments shall have expired or
terminated, based on its portion of the total Revolving Credit Exposures and
outstanding Competitive Loans) of any expenses incurred for the benefit of the
Lenders by the Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, that shall not
have been reimbursed by the Borrower and (b) to indemnify and hold harmless
each of the Agents and any of its directors, officers, employees or agents, on
demand, in the amount of such pro rata share, from and against any and all
liabilities, taxes, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against it in its
capacity as Agent or any of them in any way relating to or arising out of this
Agreement or any action taken or omitted by it or any of them under this
Agreement, to the extent the same shall not have been reimbursed by the
Borrower, provided that no Lender shall be liable to any Agent or any such
other indemnified person for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents
or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any related
agreement or any document furnished hereunder or thereunder.
<PAGE> 49
45
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 400 South Record Street,
Dallas, TX 75202, Attention of the Chief Financial Officer (Telecopy
No. 214-977-8209) with a copy to the General Counsel;
(b) if to the Administrative Agent, to the attention of Loan
Syndication Services/Gale Manning (Telecopy No. 713-750-3810), with a
copy to Texas Commerce Bank National Association, at Dallas, TX,
Attention of Kevin Kelty (Telecopy No. 214-965-2997);
(c) if to the CAF Agent, to it at Loan and Agency Service
Group, at One Chase Manhattan Plaza, 8th Floor, New York, New York
10005, Attention of Chris Consomer (Telecopy No. 212-552-5658);
(d) if to a Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, except that notices and communications to the Agents
pursuant to Article II shall be deemed to have been given only when received by
the Agents.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay
by the Administrative Agent, the CAF Agent or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the CAF Agent and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
<PAGE> 50
46
agreements in writing entered into by the Borrower and the Required Lenders or
by the Borrower and the Administrative Agent with the consent of the Required
Lenders; provided that no such agreement shall (i) increase or decrease the
Commitment of any Lender (except for a ratable decrease in the Commitments of
all the Lenders), without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount
of any Loan, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Lender
affected thereby, or (iv) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required in order to waive, amend or modify any
rights hereunder or grant any consent hereunder, without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent, hereunder
without the prior written consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by
any Agent and its Affiliates, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Agents, in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Agents or any Lender,
including the reasonable fees, charges and disbursements of any counsel for the
Agents or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement.
(b) The Borrower agrees to indemnify each of the Agents and
each Lender, each Affiliate of any of them and each of the respective
directors, officers, employees, agents and advisors of the foregoing (each such
Person being called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds thereof, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to
<PAGE> 51
47
the extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee (BUT SHALL BE AVAILABLE TO THE EXTENT THEY ARE DETERMINED TO
HAVE RESULTED FROM, IN WHOLE OR IN PART, THE SIMPLE NEGLIGENCE OF SUCH
INDEMNITEE).
(c) To the extent permitted by applicable law, the Borrower
agrees not to assert, and hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds
thereof.
(d) All amounts due under this Section shall be payable no
later than 10 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto and their
respective successors and assigns permitted hereby) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender or an Affiliate of a
Lender, each of the Borrower (and, except in the case of an assignment limited
to rights in respect of an outstanding Competitive Loan, the Administrative
Agent) must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld), (ii) except in the case of an assignment
to a Lender or an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Commitment, the amount of the
Commitment of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $20,000,000,
(iii) each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this Agreement,
except that this clause shall not apply to rights in respect of outstanding
Competitive Loans, (iv) the Lenders party to each such assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, together
with a processing and recordation fee of $3,500, and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire. Upon acceptance and recording pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, the
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48
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15
and 9.03).
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices in The City of New
York a copy of each Assignment and Acceptance delivered to it and a register
for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and any written consent to such assignment required by paragraph (b)
above, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Lenders. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (d).
(e) Any Lender may, without the consent of the Borrower or
the Administrative Agent, sell participations to one or more banks or other
entities ("Participants") in all or a portion of its rights and obligations
under this Agreement (including all or a portion of its Commitment and the
Loans owing to it); provided that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agents, and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects such
Participant. Subject to paragraph (f) below, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14
<PAGE> 53
49
and 2.15 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. In
connection with any sale of a participation pursuant to this paragraph, the
selling Lender shall obtain from the Participant an undertaking to be bound by
the provisions of Section 9.12. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with paragraph
(b) above shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
this paragraph.
(f) A Participant shall not be entitled to receive any
greater payment under Section 2.13 or 2.15 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 2.15 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time assign all or any portion of
its rights under this Agreement to a Federal Reserve Bank to secure extensions
of credit by such Federal Reserve Bank to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such Federal Reserve Bank for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the Lenders and
shall survive the execution and delivery of this Agreement and the making of
any Loans, regardless of any investigation made by the Lenders or on their
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans or the termination of the
Commitments, this Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement
and any separate letter agreements with respect to fees payable to the Agents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter
<PAGE> 54
50
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Agents and when the Agents
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured.
The rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service
of Process. (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the CAF Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in
the courts of any jurisdiction.
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(c) The Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Agents and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the consent
of the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Administrative Agent, or any Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section,
"Information" means all information received from the Borrower relating to the
Borrower or its business including any potential acquisition or proposed
business transaction, other than any such information that is available to the
Agents or any Lender on
<PAGE> 56
52
a nonconfidential basis prior to disclosure by the Borrower; provided that, in
the case of information received from the Borrower after the date hereof (other
than information obtained by any Lender in the course of examining the books or
records of the Borrower or any Subsidiary as permitted by Section 5.06) such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
A. H. BELO CORPORATION,
by
/s/ BRENDA C. MADDOX
--------------------------------
Name:Brenda C. Maddox
Title:Vice President/Treasurer
<PAGE> 57
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
individually and as Administrative Agent,
by /s/ J. KEVIN KELTY
--------------------------------
Name: J. Kevin Kelty
Title: Senior Vice President
<PAGE> 58
by /s/ DEBORAH DAVEY
--------------------------------
Name: Deborah Davey
Title: Vice President
<PAGE> 59
BANK OF AMERICA NT & SA,
by /s/ MATTHEW J. KOENIG
-----------------------------
Name: Matthew J. Koenig
Title: Vice President
<PAGE> 60
BANK OF TOKYO-MITSUBISHI, LTD.,
by /s/ J. BECKWITH
---------------------------
Name: J. Beckwith
Title: Vice President
<PAGE> 61
NATIONSBANK OF TEXAS, N.A.,
by /s/ TODD SHIPLEY
---------------------------
Name: Todd Shipley
Title: Senior Vice President
<PAGE> 62
MORGAN GUARANTY TRUST COMPANY,
by /s/ DONALD H. PATRICK
---------------------------
Name: Donald H. Patrick
Title: Vice President
<PAGE> 63
SOCIETE GENERALE,
by /s/ CHRISTOPHER J. SPELTZ
----------------------------
Name: Christopher J. Speltz
Title: Vice President
<PAGE> 64
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ ROBERT F. MILORDI
--------------------------------
Name: Robert F. Milordi
Title: Managing Director
<PAGE> 65
FLEET BANK,
by /s/ CHRISTOPHER A. SWINDELL
--------------------------------
Name: Christopher A. Swindell
Title: Vice President
<PAGE> 66
THE FUJI BANK, LIMITED,
by /s/ PHILLIP C. LAUINGER, III
--------------------------------
Name: Phillip C. Lauinger, III
Title: Vice President &
Joint Manager
<PAGE> 67
BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY,
by /s/ HENRY F. SETINA
-----------------------
Name: Henry F. Setina
Title: Vice President
<PAGE> 68
CIBC INC.,
by /s/ MATTHEW B. JONES
----------------------------
Name: Matthew B. Jones
Title: Authorized Signatory
<PAGE> 69
MELLON BANK, N.A.,
by /s/ STEPHEN D. LACKEY
-----------------------------
Name: Stephen D. Lackey
Title: First Vice President
<PAGE> 70
THE SAKURA BANK LIMITED,
HOUSTON AGENCY,
by /s/ YASUMASA KIKUCHI
--------------------------
Name: Yasumasa Kikuchi
Title: Senior Vice President
<PAGE> 71
THE TOKAI BANK, LIMITED,
by /s/ STUART M. SCHULMAN
------------------------------
Name: Stuart M. Schulman
Title: Deputy General Manager
<PAGE> 72
THE TOYO TRUST & BANKING CO LTD.,
by /s/ TAKAO SHIDA
--------------------------------
Name: Takao Shida
Title: Deputy General Manager
<PAGE> 73
THE SANWA BANK LIMITED,
DALLAS AGENCY,
by /s/ ROBERT S. SMITH
--------------------------------
Name: Robert S. Smith
Title: Vice President
<PAGE> 74
WACHOVIA BANK OF GEORGIA, N.A.,
by /s/ JOEL K. WOOD
----------------------------
Name: Joel K. Wood
Title: Vice President
<PAGE> 75
WELLS FARGO BANK (TEXAS), N.A.,
by /s/ KEN TAYLOR
--------------------------------
Name: Ken Taylor
Title: Assistant Vice President
<PAGE> 76
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ JACQUES-YVES MULLIEZ
--------------------------------
Name: Jacques-Yves Mulliez
Title: Senior Vice President
<PAGE> 77
THE DAI-ICHI KANGYO BANK, LTD.,
by /s/ D. MURDOCK
-----------------------------
Name: D. Murdock
Title: Vice President
<PAGE> 78
FIRST HAWAIIAN BANK,
by /s/ DONALD C. YOUNG
--------------------------------
Name: Donald C. Young
Title: Assistant Vice President
<PAGE> 79
THE INDUSTRIAL BANK OF JAPAN,
LIMITED NEW YORK BRANCH,
by /s/ KAZUTOSHI KUWAHARA
--------------------------------
Name: Kazutoshi Kuwahara
Title: Executive Vice President,
Houston Office
<PAGE> 80
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
by /s/ JOHN J. SULLIVAN
--------------------------------
Name: John J. Sullivan
Title: Joint General Manager
<PAGE> 81
MICHIGAN NATIONAL BANK,
by /s/ STEPHANIE LUBIN
-----------------------------
Name: Stephanie Lubin
Title: Relationship Manager
<PAGE> 82
THE NORTHERN TRUST COMPANY,
by /s/ JOHN E. BURDA
-----------------------------
Name: John E. Burda
Title: Second Vice President
<PAGE> 83
CRESTAR BANK,
by /s/ THOMAS C. PALMER
------------------------
Name: Thomas C. Palmer
Title: Vice President
<PAGE> 84
HIBERNIA NATIONAL BANK,
by /s/ TROY J. VILLAFARRA
---------------------------
Name: Troy J. Villafarra
Title: Vice President
<PAGE> 85
THE MITSUBISHI TRUST AND
BANKING CORPORATION,
by /s/ HACHIRO HOSODA
--------------------------------
Name: Hachiro Hosoda
Title: Senior Vice President
<PAGE> 86
SUNTRUST BANK, CENTRAL FLORIDA, N.A.,
by /s/ JANET SAMMONS
--------------------------------
Name: Janet Summons
Title: Vice President
<PAGE> 87
TORONTO DOMINION (TEXAS) INC.,
by /s/ NEVA NESBITT
----------------------------
Name: Neva Nesbitt
Title: Vice President
<PAGE> 88
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH,
by /s/ KHEIL MCINTYRE
--------------------------------
Name: Kheil McIntyre
Title: Vice President
by /s/ SALVATORE BATTINELLI
--------------------------------
Name: Salvatore Battinelli
Title: Vice President Credit
Department
<PAGE> 89
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
by /s/ BRUCE W. LOFIRA
------------------------------
Name: Bruce W. Lofira
Title: Senior Vice President
<PAGE> 90
CREDIT AGRICOLE,
by /s/ DAVID BOUHL
--------------------------------
Name: David Bouhl
Title: First Vice President Head of
Corporate Banking Chicago
<PAGE> 91
U.S. BANK OF WASHINGTON, N.A.,
by /s/ WADE BLACK
--------------------------------
Name: Wade Black
Title: Vice President
<PAGE> 92
THE YASUDA TRUST & BANKING CO., LTD.,
by /s/ MAKOTO TAGAWA
--------------------------------
Name: Makoto Tagawa
Title: Deputy General Manager
<PAGE> 93
EXHIBIT A
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of January
31, 1997 (the "Credit Agreement"), among A. H. Belo Corporation, a Delaware
corporation (the "Borrower"), the lenders listed on Schedule 2.01 thereto (the
"Lenders"), Texas Commerce Bank National Association, as administrative agent
for the Lenders (in such capacity, the "Administrative Agent") and The Chase
Manhattan Bank, as Competitive Advance Facility Agent (the "CAF Agent"). Terms
defined in the Credit Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Effective Date set forth below
(but not prior to the registration of the information contained herein in the
Register pursuant to Section 9.04(c) of the Credit Agreement), the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
amounts and percentages set forth below of (i) the Commitment of the Assignor
on the Effective Date and (ii) the Loans owing to the Assignor which are
outstanding on the Effective Date. Each of the Assignor and the Assignee
hereby makes and agrees to be bound by all the representations, warranties and
agreements set forth in Section 9.04(b) of the Credit Agreement, a copy of
which has been received by each such party. From and after the Effective Date
(i) the Assignee shall be a party to and be bound by the provisions of the
Credit Agreement and, to the extent of the interests assigned by this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (ii) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.15(e) of the Credit Agreement, duly completed and executed by such
Assignee, (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form supplied by the
Administrative Agent and (iii) a processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<PAGE> 94
<TABLE>
<S> <C> <C>
Percentage Assigned of
Applicable Facility/Commitment
(set forth, to at least 8
decimals, as a percentage of the
Facility and the aggregate
(Principal Amount Assigned and Commitments of all Lenders
Identifying Information as to thereunder)
individual Competitive Loans)
Facility/Commitment
----------------------------------------------------------------------------------------------------
Revolving Credit $ %
Competitive Loans $ %
</TABLE>
The terms set forth above are
hereby agreed to: Accepted */
-
___________________, as Assignor TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Administrative Agent
by:__________________________ by:_______________________
Name: Name:
Title: Title:
___________________, as Assignee
by:__________________________
Name:
Title:
<PAGE> 95
EXHIBIT B-1
[Letterhead of]
A. H. BELO CORPORATION
January [ ], 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, Texas 75201
Chase Securities Inc.,
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Dear Ladies and Gentlemen:
I have acted as General Counsel to A. H. Belo Corporation, a
Delaware corporation (the "Borrower"), in connection with the execution and
delivery today of, and the consummation of the transactions contemplated by,
the Credit Agreement dated as of January 31, 1997, (the "Credit Agreement"),
among the Borrower, the financial institutions party thereto as lenders (the
"Lenders"), Texas Commerce Bank National Association, as administrative agent
(in such capacity, the "Administrative Agent") and The Chase Manhattan Bank, as
Competitive Advance Facility Agent (the "CAF Agent"), Bank of America National
Trust and Savings Association and Bank of Tokyo-Mitsubishi, Ltd., as
Co-Syndication Agents, and NationsBank, as Documentation Agent and any
promissory notes ("Notes") delivered in connection with the Credit Agreement.
This opinion is delivered pursuant to Section 4.01(b)of the Credit Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Credit Agreement.
In connection with this opinion, I have examined originals or
copies, certified or otherwise identified to our satisfaction, of the Credit
Agreement and such other records, agreements, instruments and other documents,
and have made such other investigations, as I have deemed necessary for the
purpose of this opinion.
Based upon the foregoing, it is my opinion that:
1. The Borrower and each Subsidiary (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business and
is in good standing in each jurisdiction where such qualification is required,
except where the failure so to qualify could not reasonably be expected to
result in a Material Adverse Effect, and (d) in the case of the Borrower, has
the corporate power and authority to execute, deliver and perform its
obligations under the Credit Agreement and to borrow thereunder.
<PAGE> 96
2. The execution, delivery and performance of the Credit
Agreement by the Borrower and the borrowings thereunder (a) have been duly
authorized by all requisite corporate and, if necessary, stockholder action of
the Borrower and each Subsidiary and (b) will not (i) violate (A) any provision
of the certificate of incorporation or by laws of the Borrower or any
Subsidiary, (B) to my knowledge after reasonable inquiry any law, statute, rule
or regulation or any order of any Governmental Authority applicable to the
Borrower or any Subsidiary or their properties or (C) any provision of any
indenture or other material agreement or other material instrument to which the
Borrower or any Subsidiary is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (along or with notice or lapse of time or both) a default under, or
give rise to any right to accelerate or to require the prepayment, repurchase
or redemption of any obligation under any such indenture, agreement or other
instrument or (iii) result in the creating or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary.
3. If, contrary to the intent of the parties, the Credit
Agreement were held to be governed by the laws of the State of Texas, the
Credit Agreement would nevertheless constitute a valid and binding agreement of
the Borrower, enforceable in accordance with its terms, except (a) enforcement
of the indemnification and exculpatory provisions of the Credit Agreement may
be limited by applicable securities laws and other laws and public policies,
(b) enforcement of the Credit Agreement may be limited by Debtor Relief Laws
and is subject to equitable principles, and (c) certain provisions of the
Credit Agreement may be limited by, modified or unenforceable under applicable
state and federal laws, regulations, rulings and decisions in addition to those
referenced herein, if any; however, such limitation, modification or
unenforceability should not in our opinion materially diminish or substantially
interfere with the practical realization of benefits intended to be afforded by
the Credit Agreement except for the economic consequences of any procedural
delay which may result therefrom.
4. No action, consent or approval of, registration or filing
with or any other action by any Governmental Authority is or will be required
in connection with the execution, delivery and performance of the Loan
Documents by the Borrower party thereto or the consummation of the transactions
contemplated thereby, other than routine filings with the SEC and FCC or
required of public companies and FCC licensees and such authorizations and
approvals as have already been obtained and are in full force and effect.
5. There are not any actions, suits or proceedings at law or
in equity or by or before any Governmental Authority now pending or, to our
knowledge, threatened against or affecting the Borrower or any Subsidiary or
any business, property or rights of any such person (i) that involve the Credit
Agreement or the transactions contemplated thereby or (ii) as to which there is
a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
<PAGE> 97
6. All shares of capital stock of each Subsidiary have been
duly and validly authorized and issued, are fully paid and non-assessable and,
except as set forth on Schedule 6.01 to the Credit Agreement, are owned by the
Borrower, directly or indirectly, free and clear of all Liens. No authorized
but unissued or treasury shares of capital stock of any Subsidiary are subject
to any option, warrant, right to call or commitment of any kind. Other than
the ongoing stock repurchase program of the Borrower, neither the Borrower nor
any Subsidiary is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or
any securities convertible into or for shares of its capital stock. Neither
the Borrower nor any Subsidiary is a party to any agreement restricting the
transfer or voting of any shares of any capital stock of any Subsidiary.
7. Neither the Borrower nor any of the Subsidiaries is an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.
8. Neither the Borrower nor any of the Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935.
9. The making of the Loans to the Borrower and the
application of the proceeds thereof by the Borrower pursuant to the terms of
the Credit Agreement will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
I am admitted to practice in the State of Texas. I express no
opinion as to matters under or involving the laws of any jurisdiction other
than the laws of the State of Texas, the General Corporation Law of the State
of Delaware and the Federal Laws of the United States.
This opinion may be relied upon by each of you, by any
successors and assigns of the Administrative Agent, and any participant,
assignee or successor to the interests of the Lenders under the Credit
Agreement.
Very truly yours,
<PAGE> 98
EXHIBIT B-2
[Letterhead of]
LOCKE PURNELL RAIN HARRELL
January [ ], 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, Texas 75201
Chase Securities Inc.,
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the Credit
Agreement referred to below (all of
the Addressees, collectively, the
"Creditors")
Dear Ladies and Gentlemen:
This opinion is being delivered to you pursuant to Section
4.01(b) of that certain $500,000,000 Credit Agreement dated as of January 31,
1997 (the "Credit Agreement") among A. H. Belo Corporation, a Delaware
corporation ("Borrower"), the financial institutions who are parties thereto as
Lenders, Texas Commerce Bank National Association ("TCB"), as Administrative
Agent and the Chase Manhattan Bank ("Chase"), as Competitive Advance Facility
Agent, Bank of America National Trust and Savings Association and Bank of
Tokyo-Mitsubishi, Ltd., as Co-Syndication Agents, and NationsBank
("NationsBank"), as Documentation Agent. Terms which are defined in the Credit
Agreement and which are used but not defined herein shall have the meanings
given them in the Credit Agreement. We have acted as counsel for Borrower in
connection with the transactions provided for in the Credit Agreement. Please
be advised that we are engaged by Borrower and/or its Subsidiaries from time to
time to assist with selected matters and do not serve as general counsel to any
of such entities. Also, please be advised that we are engaged by TCB, Chase,
NationsBank and certain other Lenders (or affiliates of TCB, Chase and such
other Lenders) from time to time to assist in selected matters unrelated to the
Credit Agreement.
For purposes of this opinion, we have examined originals or
copies of the Credit Agreement and the promissory notes evidencing the Loans
(referred to herein individually as a "Principal Loan Document" and
collectively as the "Principal Loan Documents") and such corporate records of
Borrower and such other documents and matters of law which we have considered
necessary for such purposes. In connection with our examination, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as copies, and the authenticity of the originals of
such copies. As to matters of fact material to this opinion, we have relied,
without any
<PAGE> 99
independent investigation or verification upon the accuracy of the
representations, warranties and other statements of fact made in or pursuant to
the Principal Loan Documents.
In rendering the opinions expressed below, we have assumed the
accuracy and validity of the opinions of Borrower's General Counsel expressed
to you by letter of even date herewith, and to the extent relevant to our
opinions, have relied upon such opinions without independent investigation or
verification. Furthermore, we have assumed, with respect to the Credit
Agreement, that:
(i) such documents have been duly authorized by, have
been duly executed and delivered by, and constitute
legal, valid, binding and enforceable obligations of,
all of the parties to such documents (other than
Borrower);
(ii) all signatories to such documents (other than on
behalf of Borrower) have been duly authorized;
(iii) all of the parties to such documents (other than
Borrower) are duly organized and validly existing and
have the power and authority (corporate or other) to
execute, deliver and perform such documents; and
(iv) no course of dealing, custom or practice between
Borrower and any Agent or Lender shall supersede any
provision thereof.
The opinions expressed herein are limited to the laws of the
State of Texas and federal laws of the United States except that we express no
opinion with respect to, and have not taken into account the effect of, (i) the
Communications Act of 1934, as amended, the Telecommunications Act of 1996, as
amended, or the rules, regulations and policies of the FCC or (ii) applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or other similar laws relating to or affecting the rights of creditors
or the obligations of debtors generally ("Debtor Relief Laws"). We call your
attention to the fact that each Principal Loan Document (to the extent provided
therein) provides that it is to be governed by and construed in accordance with
the laws of the State of New York, as to which we have made no independent
examination and express no opinion. With your permission we have assumed that
the laws of the State of New York relevant to the matters addressed in our
opinion are identical to the laws of the State of Texas.
Based upon the foregoing, having due regard for the legal
considerations we deem relevant and subject to the qualifications, assumptions
and exceptions herein set forth, we are of the opinion that the Principal Loan
Documents have been duly executed and delivered by the Borrower and constitute
legal, valid and binding obligations of the Borrower and are enforceable
against the Borrower in accordance with their terms, except (a) enforcement of
the indemnification and exculpatory provisions of the Principal Loan Documents
may be limited by applicable securities laws and other laws and public
policies, (b) enforcement of the Principal Loan Documents may be limited by
Debtor Relief Laws and is subject to equitable principles, and (c) certain
provisions of the Principal Loan Documents may be limited, modified or
<PAGE> 100
unenforceable under applicable state and federal laws, regulations, rulings and
decisions in addition to those referenced herein, if any; however, such
limitation, modification or unenforceability should not in our opinion
materially diminish or substantially interfere with the practical realization
of benefits intended to be afforded by the Principal Loan Documents except for
the economic consequences of any procedural delay which may result therefrom.
In rendering the opinions expressed herein, we have assumed
that (a) every provision of the Principal Loan Documents limiting the rate and
amount of interest charged thereunder to the maximum amount permitted by
applicable law has been and will continue to be complied with and that each and
every usury savings clause contained in the Principal Loan Documents has been
and will continue to be complied with; (b) no other fees, sums, or benefits,
whether direct or indirect, have been charged, paid, or received or are, or may
be payable to or chargeable or receivable by any Agent or Lender except as
expressly mentioned in the Principal Loan Documents, the Commitment Letter and
the fee letter referred to therein; (c) any fees or charges which have been or
may be paid to any Agent or any Lender or to any other party are, or will be,
for services actually rendered, and that such fees and charges will not exceed
just and reasonable compensation for such services rendered; and (d) any fees
paid or to be paid by the Borrower to any Agent or any Lender and denominated
"commitment fees" or the like are in fact commitment fees and not sums paid for
the use, forbearance or detention of money.
The opinions herein expressed are solely for your benefit in
connection with the transactions contemplated by the Credit Agreement, and no
one else is entitled to rely hereon (other than permitted successors and
assigns) without our written consent. No person is entitled to rely hereon to
the extent such person or its counsel shall have any knowledge why any opinion
expressed herein is not accurate in any material respect. We hereby disclaim
any obligation to advise you of any changes in fact or law which might affect
the opinions expressed herein.
Sincerely,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: __________________________
Guy Kerr
<PAGE> 101
EXHIBIT B-3
[Form of Opinion of Wiley, Rein & Fielding-
FCC Counsel for Borrower]
January [ ], 1997
Texas Commerce Bank National Association
as Administrative Agent
2200 Ross Avenue
Dallas, TX 75201
Chase Securities, Inc.
as Arranger
270 Park Avenue
New York, NY 10017
The Lenders from time to time party to the
Credit Agreement referred to below
(all of the Addressees, collectively, the "Creditors")
Dear Ladies and Gentlemen:
We have acted as special communications counsel to A. H. Belo
Corporation, a Delaware Corporation (the "Borrower"), in connection with the
execution and delivery today of, and the consummation of the transactions
contemplated by, the Credit Agreement dated as of January 31, 1997, (the
"Credit Agreement"), among the Borrower, the financial institutions party
thereto as lenders (the "Lenders") and Texas Commerce Bank National
Association, as administrative agent (in such capacity, the "Administrative
Agent"). This opinion is delivered pursuant to Section 4.01(b) of the Credit
Agreement. Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
In rendering this opinion, we have examined the Credit Agreement and
such other documents and instruments and such questions of law as we have
deemed necessary for the purpose of rendering the opinion set forth herein.
Additionally, we have relied upon the representations made by the Borrower in
the Credit Agreement, upon the statements of officers and representatives of
the Borrower, and upon records relating to the Borrower and the television
broadcast stations owned and operated by the Borrower and its several
Subsidiaries (the "Stations") that are routinely available for public
inspection at the Federal Communications Commission ("FCC"). We have assumed
the genuineness of all signatures on all original documents, the conformity to
original documents of all copies submitted to us, and the full authorization,
execution, and delivery of all documents by parties responsible therefor. We
also have assumed that the documents and instruments described or referred to
herein fully express the agreements of any party thereto. Finally, we have
assumed the completeness of the public files relating to the Borrower, its
Subsidiaries, and the Stations maintained by the FCC and the accuracy and
authenticity of all documents contained therein.
Whenever our opinion herein with respect to the existence (or absence)
of facts is qualified by the phrase "to the best of our knowledge," it is
intended to indicate that, during the course of our
<PAGE> 102
representation of the Borrower, no information has come to our attention which
would give us actual knowledge of the existence (or absence) of such facts. We
have undertaken no on site inspection whatsoever of any of the Stations and,
except as otherwise specifically stated herein, we have not undertaken any
independent investigation to determine the existence or absence of such facts,
and no inference as to our knowledge of the existence (or absence) of such
facts should be drawn from the fact of our representation of the Borrower.
We are admitted to practice law in the District of Columbia. We
address herein only matters within the jurisdiction of the FCC under the
Communications Act of 1934, as amended, and the rules, regulations and
published orders of the FCC (Collectively, the "Communications Laws")
applicable to the Stations. We express no opinion as to matters arising under
or involving any other laws.
Based upon the subject to the foregoing, it is our opinion that:
1. The Borrower or its Subsidiaries are the respective holders of the
licenses, permits, and authorizations issued by the FCC listed in Attachment A
hereto (the "FCC Licenses"). The FCC Licenses are in full force and effect for
the terms specified in Attachment A and, where applicable, timely renewal
applications have been filed with the FCC with respect to such FCC Licenses.
The FCC Licenses are not subject to any condition, restriction or limitation
materially adverse to the Borrower or the Stations except for conditions,
restrictions or limitations that appear on the faces of the FCC Licenses or
that are set forth in the rules, regulations or policies of the FCC that are
applicable generally to stations of the types, nature, classes, or locations of
the Stations.
2. To the best of our knowledge, no judgment, decree, order or notice
has been issued by the FCC which permits, or after notice or lapse of time or
both, would permit, revocation, nonrenewal, or termination of any of the FCC
Licenses prior to the respective expiration dates thereof, or which results or
would result in any other material impairment of any rights thereunder.
3. Neither the execution and delivery by the Borrower of the Credit
Agreement nor the fulfillment of or compliance with any of the provisions
thereof will (a) result in a violation of the Communications Laws, or (b)
require any authorization, consent, approval, exemption or other action by, or
any notice or filing with, the FCC pursuant to the Communications Laws (other
than routine filings after the date of this opinion with the FCC under Section
73.3613(b)(5) of the FCC's Rules and Regulations).
4. Other than as set forth in Attachment A and except as to any other
matters relating to the television broadcast industry in general, to the best
of our knowledge, no proceeding, claim, lawsuit, investigation or other action
is (a) currently pending before the FCC or (b) threatened in writing and
received by any Station operated by the Borrower or any Subsidiary and not
currently before the FCC, which has a substantial likelihood of resulting in a
Material Adverse Effect.
This opinion is being furnished to you subject to the qualifications
and limitations expressed herein, and has been prepared
<PAGE> 103
solely for your information in connection with the transactions contemplated
under the Credit Agreement. This opinion may not be quoted in whole or in part
or otherwise referred to, or furnished to any governmental agency or other
entity or person, without our written consent. It may not be used or replied
upon by any other person or entity without our written consent, and may be
relied upon by you only with respect to the specific matters which are the
subject hereof. The opinions expressed herein are as of the date hereof, and
we specifically disclaim any obligation to advise you of any changes in the
matters addressed in the foregoing opinion occurring after such date.
Very truly yours,
WILEY, REIN & FIELDING
<PAGE> 104
Schedule 2.01
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Texas Commerce Bank National 2200 Ross Avenue $37,500,000
Association 3rd Floor
Dallas, TX 75201
Attn: Kevin Kelty
Bank of America NT & SA 555 South Flower Street $35,000,000
Los Angeles, CA 90071
Attn: Robert Lagace
Bank of Tokyo-Mitsubishi, Ltd. 2001 Ross Avenue $35,000,000
Suite 3150
Dallas, TX 75201
Attn: Jeb Beckwith
NationsBank 901 Main Street $35,000,000
Dallas, TX 75283
Attn: Todd Shipley
Fleet Bank One Federal Street MS/OF/DO3D $24,375,000
Boston, MA 02110
Attn: Ms. Paula Lang
Morgan Guaranty Trust Company 60 Wall Street $24,375,000
22nd Floor
New York, NY 10260
Attn: Mr. Donald Patrick
Societe Generale 2001 Ross Avenue $24,375,000
Suite 4800
Dallas, TX 75201
Attn: Chris Speltz
The Fuji Bank, Limited One Houston Center $24,375,000
1221 McKinney
Suite 4100
Houston, TX 77010
Attn: Phillip Lauinger
Banque Nationale de Paris 717 North Harwood Street $12,500,000
Suite 2630
Dallas, TX 75201
Attn: Hank Setina
</TABLE>
<PAGE> 105
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
First National Bank of Boston 100 Federal Street $12,500,000
01-08-08
Boston, MA 02110
Attn: Ms. Kathryn Ticknor
First Union Bank of North One First Union Center $12,500,000
Carolina Charlotte, NC 28288
Attn: Adrienne Musgnug
Mellon Bank, N.A. One Mellon Bank Center $12,500,000
Pittsburgh, PA 15258
Attn: Lisa Pellow
Mitsubishi Trust 520 Madison Avenue $12,500,000
New York, NY 10022
Attn: Ms. Pat Loret De Mola
Suntrust Banks Inc. 200 South Orange Avenue $12,500,000
Tower 4
Orlando, FL 32801
Attn: Mr. Chris Aguilar
The Sakura Bank, Limited, 3940 Interfirst Plaza $12,500,000
Houston Agency. 1100 Louisiana
Houston, TX 77002
Attn: Terrance Martin
The Sanwa Bank Limited, Dallas 4100W $12,500,000
Agency Texas Commerce Tower
2200 Ross Avenue
Dallas, TX 75201
Attn: Rob Smith
The Tokai Bank, Limited 55 East 52nd Street $12,500,000
12th Floor
New York, NY 10055
Attn: Stuart Schulman
The Toyo Trust & Banking Co. 666 Fifth Avenue $12,500,000
33rd Floor
New York, NY 10103
Attn: Sharon Bonelli
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Toronto-Dominion 909 Sonin, Suite 1700 $12,500,000
Houston, TX 77010
Attn: Ms. Kimberly Burlesca
425 Lexington Avenue $8,750,000
CIBC Inc. New York, NY 10017
Attn: Ms. Michelle Roller
Credit Agricole 600 Travis Street $8,750,000
Suite 2340
Houston, TX 77002
Attn: Mr. Ken Coulter
Credit Lyonnais New York 1301 Avenue of the Americas $8,750,000
Branch New York, NY 10019
Attn: Legal Dept.
w/copy to:
2200 Ross Avenue
Dallas, TX
Attn: Samuel Hill
Dai-Ichi Kangyo 1100 Louisiana $8,750,000
Suite 4940
Houston, TX 77002
Attn: Mr. Kelton Glasscock
Hibernia National Bank 313 Carondelet Street $8,750,000
New Orleans, LA 70130
Attn: Troy Villafarra
Industrial Bank of Japan 3 Allen Center $8,750,000
333 Clay Street
Houston, TX 77002
Attn: Mr. David Fox, II
Long-Term Credit Bank 2200 Ross Avenue $8,750,000
of Japan Suite 4700 West
Dallas, TX 75201
Attn: Mr. Robert Nelson
The Northern Trust Company 50 South LaSalle Street $8,750,000
Chicago, IL 60675
Attn: Martin Alston
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
NAME ADDRESS COMMITMENT
---- ------- ----------
<S> <C> <C>
Wachovia Bank of Georgia, N.A. 191 Peachtree Street, NE $8,750,000
Atlanta, GA 30303
Attn: Joel Wood
Wells Fargo Bank (Texas), N.A. 1445 Ross Avenue $8,750,000
3rd Floor
Dallas, TX 77202
Attn: Ken Taylor
Westdeutsche Landesbank 1211 Avenue of the Americas $8,750,000
New York, NY 10036
Attn: Mr. Richard Newman
Crestar Bank 919 East Main Street $6,250,000
HDQ 1022
Richmond, VA 23261-6665
Attn: Mr. Thomas Palmer
First Hawaiian Bank 3333 Michelson Drive $6,250,000
Irvine, CA 92612
Attn: Mr. Don Young
Michigan National 27777 Inkster Road $5,000,000
Bank Farmington Hills, MI 48333-9065
Attn: Ms. Stephanie Lubin
The Yasuda Trust & Banking 725 South Figueroa Street $5,000,000
Co., Inc. Suite 3990
Los Angeles, CA 90017
U.S. Bank of Washington, N.A. 1420 Fifth Avenue, WWH276 $3,750,000
Seattle, WA 98101
</TABLE>
<PAGE> 108
Schedule 3.06
Litigation, Labor and Environmental Matters
None.
<PAGE> 109
Schedule 6.01
Liens
The liens created in connection with the $6,400,000 City of Arlington
Industrial Development Corporation Industrial Development Revenue Bonds
(Dallas-Fort Worth Suburban Newspapers Inc. Project) Series 1985.
<PAGE> 110
Schedule 6.05
Subordinated Debt
Subordinated Debt shall mean any debt for borrowed money of the
Borrower or its Subsidiaries expressly subordinate to the Indebtedness of the
Borrower under the Credit Agreement which satisfies the following criteria or
other criteria which may be acceptable to the Required Lenders: (i) such
subordinated debt will not amortize or be subject to any scheduled prepayment,
redemption or repurchase requirement (other than a repurchase requirement
triggered by a change in control or similar event) until after the Maturity
Date; (ii) the financial covenants taken as a whole under any such subordinated
debt will not be more restrictive of the Borrower than those contained in this
Credit Agreement; (iii) the terms of such subordinated debt will not permit
payments to subordinated debt holders when an Event of Default has occurred and
is continuing under this Credit Agreement; and (iv) the subordinated debt
holders' rights will be subordinate to those of the Agents and the Lenders
under the Credit Agreement in the event of bankruptcy and/or liquidation of the
Borrower.
<PAGE> 1
EXHIBIT 10.3(1)
MANAGEMENT SECURITY PLAN
OF
A. H. BELO CORPORATION
AND
AFFILIATED COMPANIES
AS RESTATED EFFECTIVE
JANUARY 1, 1982
<PAGE> 2
A. H. BELO
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Subject Page
------- ------- ----
<S> <C> <C>
1 Definitions 1
2 Eligibility and Membership 2
3 Retirement Benefit and Benefit
Upon Separation from Service 2
4 Death Benefit 3
5 Beneficiary 6
6 Leave of Absence 6
7 Source of Benefits 6
8 Employer Obligation 7
9 Termination of Participation 7
10 Termination, Amendment,
Modification, or Supplement
of Plan 7
11 Other Benefits and Agreements 8
12 Restrictions on Alienation
of Benefits 8
13 Administration of the Plan 8
14 Miscellaneous 10
15 Adoption of Plan by Subsidiary,
Affiliated or Associated
Companies 10
Plan Agreement I-1
</TABLE>
<PAGE> 3
MANAGEMENT SECURITY PLAN
OF
A.H. BELO CORPORATION
AND AFFILIATED COMPANIES
AS RESTATED EFFECTIVE
JANUARY 1, 1982
PURPOSE
WHEREAS, A. H. BELO CORPORATION (hereinafter, the "Company"), a Texas
corporation, in order to provide retirement and death benefits at a reduced
cost to a select group of management and highly compensated employees who
contribute materially to the continued growth, development and future business
success of the Company and certain of its affiliates, has heretofore adopted
the Management Security Plan of A. H. Belo Corporation and Affiliated Companies
(hereinafter the "Plan"), the Plan set forth herein; and
WHEREAS, the following affiliate of the Company has heretofore adopted
the Plan for the benefit of its eligible employees: Belo Broadcasting
Corporation (hereinafter, "Broadcasting"); and
WHEREAS, pursuant to Section 10.1 of the Plan, the Company, joined by
Broadcasting, desires hereby to amend and restate the Plan in its entirety;
NOW, THEREFORE, the Company, joined by Broadcasting, does hereby agree
as follows:
ARTICLE 1
DEFINITIONS
For the purposes of the Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the following respective
meanings:
1.0 "Company" shall mean A. H. Belo Corporation, A Texas corporation, and
its successor or successors.
1.1 "Beneficiary" shall mean the person or persons designated by a
Participant to receive any benefits under this Plan upon the death of
such Participant. In the absence of such designation, or in the event
that a Beneficiary so designated dies prior to the receipt of all
benefits to which he is entitled, then such death benefits (or the
balance thereof) shall be paid to such Participant's estate.
1.2 "Committee" shall mean the Administrative Committee appointed to
manage and administer the Plan in accordance with the provisions of
Article 13 of the Plan.
1.3 "Employee" shall mean any person who is in the regular full-time
employment of an Employer as determined by the personnel rules and
-1-
<PAGE> 4
practices of the Employer. The term does not include persons who are
retained as consultants or other independent contractors.
1.4 "Employer" shall mean the Company, Broadcasting, and any other
affiliate of the Company which shall duly adopt the Plan with the
approval of the Company as provided in Article 15 hereof. Where the
context dictates, the term "Employer," as used herein, refers to the
particular Employer which has entered into a Plan Agreement with a
specific Participant.
1.5 "Covered Salary" shall mean that portion of a Participant's includable
base annual salary, excluding bonuses or other fringe benefits, if
any, which the Participant chooses as a basis for computation of his
retirement or death benefits pursuant to the terms and conditions of
the Plan.
1.6 "Participant" shall mean an Employee who is selected and elects to
participate in the Plan as provided in Article 2 hereof.
1.7 "Plan" shall mean the Management Security Plan of A. H. Belo
Corporation and Affiliated Companies, which shall be evidenced by this
instrument and by each Plan Agreement.
1.8 "Plan Agreement" shall mean the form of written agreement, attached
hereto as Exhibit I, which is entered into by and between an Employer
and a Participant.
1.9 "Early Retirement Date" shall mean, with respect to a Participant, the
first day of the month following the later of (i) his sixty-second
(62nd) birthday, or (ii) the date on which he shall have been employed
by the Company or its affiliates for ten (10) or more years and, in
addition, shall have reached or passed his fifty-fifth (55th)
birthday.
1.10 "Retirement" and "Retire" shall mean, with respect to a Participant,
severance from employment with the Employers on or after his Early
Retirement Date.
ARTICLE 2
ELIGIBILITY AND MEMBERSHIP
2.0 The Committee shall have the sole discretion to determine the
Employees who are eligible to become Participants in accordance with
the purposes of the Plan.
2.1 As a condition of participation, each Participant so selected shall
complete, execute, and return to the Committee a Plan Agreement in the
form attached hereto as Exhibit I and comply with such further
conditions as may be established by and in the sole discretion of the
Committee.
ARTICLE 3
RETIREMENT BENEFIT AND BENEFIT
UPON SEPARATION FROM SERVICE
3.0 If a Participant who has remained an Employee until age sixty-five
(65) retires, and if the Plan and Plan Agreement have been kept in
force, the Employer will pay, or cause to be paid, to such Participant
the amount specified in the Plan Agreement as a monthly retirement
benefit. Monthly
-2-
<PAGE> 5
retirement benefit payments shall commence on the first day of the
month following such Retirement and continue for a total of one
hundred twenty (120) months.
3.1 The Committee, in its sole discretion, may permit a Participant to
receive an early retirement benefit commencing at any time after the
Participant's Early Retirement Date, but before his attainment of age
sixty-five (65). In such event, his monthly retirement benefit shall
be determined by the Committee, but in no event shall it be more than
the monthly amount of the retirement benefit set forth in the Plan
Agreement nor less than such monthly amount multiplied by a fraction,
the numerator of which is the number of whole years said Employee has
been a Participant in the Plan and the denominator of which is the
number of whole years between such Participant's age at entry into the
Plan and his sixty-fifth (65th) birthday. The said reduced monthly
amount payable for one hundred twenty (120) months shall be the only
benefit to which such Participant shall be entitled.
3.2 If a Participant who has attained his Early Retirement Date shall die
after Retirement but before the applicable retirement benefit is paid
in full, the unpaid retirement benefit payments to which such
Participant is entitled shall continue to be paid to such
Participant's Beneficiary. Such payments shall be made in accordance
with the payment schedule applicable to that Participant pursuant to
Section 3.0 or 3.1 of the Plan.
3.3 A Participant may irrevocably elect to have any retirement benefit due
him paid to his Beneficiary solely as a death benefit either in a lump
sum or in specified installments. Such election to treat unpaid
retirement benefits as a death benefit shall be set forth in the Plan
Agreement by the Participant's completion of Section 2(c) thereof.
3.4 No Death Benefit described in Article 4 shall be paid to the
Beneficiary of a Participant who dies after Retirement but before his
retirement benefit is paid in full.
3.5 A Participant who ceases to be an Employee after his completion of ten
(10) full years of participation in the Plan, but before his Early
Retirement Date, shall receive a portion of his monthly retirement
benefit upon the earlier of (i) his death or (ii) his attainment of
age sixty-five (65). Said portion shall be the monthly amount of the
retirement benefit set forth in his Plan Agreement multiplied by a
fraction, the numerator of which is the number of whole years said
Employee has been a Participant in the Plan and the denominator of
which is the number of whole years between such Participant's age at
entry into the Plan and his sixty-fifth (65th) birthday. The said
reduced monthly amount payable for one hundred twenty (120) months
shall be the only benefit to which such Participant shall be entitled.
3.6 If a Participant elects to continue employment beyond age 65, the
Committee, and only the Committee, will specify the amount of his
retirement benefit, which shall be evidenced by a new Plan Agreement
to be executed by the Participant.
ARTICLE 4
DEATH BENEFIT
4.0 If a Participant dies before Retirement and the Plan is in effect at
the date of his death, his Employer will pay or cause to be paid a
death benefit to such
-3-
<PAGE> 6
Participant's Beneficiary. The said death benefit shall be a monthly
amount equal to (i) one hundred percent (100%) of the Participant's
Covered Salary as set forth in his Plan Agreement for the twelve (12)
month period beginning on the date of his death and (ii) fifty percent
(50%) of said Covered Salary for the next one hundred and eight (108)
months, or until the Participant would have attained age sixty-five
(65), whichever is later. Such payments shall commence on the first
day of the month following the date of such Participant's death. In
the sole discretion of the Committee, the present value of the entire
death benefit described in this Section 4.0 may be paid in a lump sum
within a reasonable period (as determined by the Committee) after the
Participant's death.
4.1 The obligation of an Employer to pay the death benefit described in
Section 4.0 on behalf of a Participant shall exist only if:
(a) at the time of his death, the Participant was an Employee,
totally disabled, or on an authorized leave of absence;
(b) the Participant had made all payments required by Sections 4.2
through 4.5, other than any amounts waived as a result of
disability;
(c) the Plan Agreement had been kept in force until the date of
his death; and
(d) his death was not a result of suicide occurring within two (2)
years after the date of execution of his Plan Agreement.
4.2 Each Participant shall periodically pay to his Employer a portion of
the cost of his death benefit protection. The amount and time of each
such payment shall be stated in the Plan Agreement and shall be
dependent upon the amount of the benefits therein specified, the
Participant's age, and his annual salary.
4.3 The amount to be paid by a Participant may be increased by the
Committee to reflect increases in the Participant's Covered Salary.
4.4 Any increases in the Participant's Covered Salary and additional
amounts to be paid as a result thereof shall be evidenced by an
amendment to his Plan Agreement.
4.5 The Participant's obligation to make the aforesaid payments shall:
(a) be stated in his Plan Agreement;
(b) commence on the date specified in the Plan Agreement; and
(c) except as otherwise provided in Section 4.7 (c), 4.7 (d), and
4.7 (g), continue thereafter during the term of his
participation until the earlier of (i) his death, (ii) his
Retirement, (iii) his other termination of employment, or (iv)
the date on which the Committee determines that such payments
are no longer required.
4.6 A Participant may, with the consent of his Employer, increase or
decrease the amount of the benefits initially selected by amending his
Plan Agreement in accordance with rules from time to time adopted by
the Committee.
-4-
<PAGE> 7
4.7 Payments by a Participant pursuant to Sections 4.2 through 4.5 and the
Plan Agreement shall be made in the following manner and subject to
the following terms and conditions:
(a) The Participant shall, in the Plan Agreement, authorize his
Employer to deduct and retain from his salary the amount of
his monthly contribution.
(b) The amounts retained by the Employer shall be and become the
property of that Employer without obligation to use the same
in any specific manner and with no right of the Participant to
reimbursement at any time.
(c) If the Participant is, prior to his Retirement, totally
disabled for more than six (6) months, then, subject to the
provisions of Section 4.7 (d) hereof, he shall not be required
to make any payments as provided in Sections 4.2 through 4.5
of this Plan beginning with the seventh month following the
date such total disability occurs and for as long as it
continues.
(d) An Employer shall waive payments by a totally disabled
Participant, only if:
(i) the Participant's disability is not caused by illegal
or criminal acts or is not intentionally
self-inflicted;
(ii) the Participant is an Employee or on an authorized
leave of absence at the time such total disability
occurs;
(iii) the Participant has made all payments required by the
Plan and his Plan Agreement; and
(iv) the Participant's Plan Agreement is in full force and
effect at the time of such total disability.
(e) If a Participant dies prior to Retirement while payments are
being waived, the death benefit provided in Section 4.0 shall
be paid on behalf of such Participant in accordance with the
provisions of that Section.
(f) If a Participant retires on or after his Early Retirement Date
while payments are being waived, the retirement benefits
provided in Section 3 shall be paid to such Participant in
accordance with the provisions of that Section.
(g) The determinations of total disability and recovery therefrom
shall be made by the Committee, in its sole discretion, and
any such determination shall be binding and conclusive on all
interested parties.
-5-
<PAGE> 8
ARTICLE 5
BENEFICIARY
5.0 A Participant shall, on his Plan Agreement, designate one or more
persons as his Beneficiary or Beneficiaries to receive any death
benefits under the Plan. If more than one Beneficiary is named, the
shares and preferences of each shall be indicated.
5.1 Unless a Participant has previously named an irrevocable Beneficiary,
he shall have the right to change any prior Beneficiary designation by
submitting to the Committee a Change of Beneficiary Form, a specimen
of which is attached hereto as Exhibit II.
5.2 No change of Beneficiary shall be effective until acknowledged in
writing by the Employer.
5.3 If an Employer has any doubt as to the proper Beneficiary to receive
payments pursuant to this Plan, it shall have the right to withhold
such payments until the matter is finally adjudicated.
5.4 Any payment made by an Employer in accordance with this Plan in good
faith shall fully discharge the Employer from all further obligations
with respect to such payment.
ARTICLE 6
LEAVE OF ABSENCE
6.0 If a Participant is authorized by his Employer for any reason to take
a leave of absence from employment, such Participant shall, except as
provided in Article 4.7 hereof, be required to continue to make all
monthly payments in order to maintain his Plan Agreement in force.
6.1 A Participant's failure to make such payments shall cause his Plan
Agreement to terminate without the necessity of any notice from either
party to the other. From and after such termination, neither party
shall have any further obligation to the other party under the Plan or
Plan Agreement.
ARTICLE 7
SOURCE OF BENEFITS
7.0 Amounts payable to a Participant shall be paid exclusively from the
general assets of the Employer.
7.1 No person entitled to any payment hereunder shall have any claim,
right, security or other interest, implied or otherwise, in any asset
of the Employer.
7.2 An Employer's liability for the payment of benefits hereunder shall be
evidenced only by this Plan and each Plan Agreement entered into
between the Employer and a Participant.
7.3 The Employer may, but shall not be obligated to, invest in any
specific asset, trust, fund or insurance policy.
-6-
<PAGE> 9
7.4 The Employer shall require that a Participant satisfy evidence of good
health when enrolling for any increment of his Covered Salary. The
Participant agrees to cooperate by:
(a) furnishing such information as the Employer may require,
including but not limited to the physical examination reports
of any previous employer;
(b) taking such additional physical examinations as may be
requested by the Employer, and;
(c) doing any other act which may be requested by the Employer.
7.5 If a Participant does not cooperate in the completion of such
requirements, the Employer shall have no further obligation to the
Participant under the Plan, and such Participant's Plan Agreement
shall terminate.
7.6 The Employer shall have no obligation of any nature whatsoever to a
Participant under the Plan and Plan Agreement, except as otherwise
provided in the Plan, if the Participant's death is determined to be
from a bodily or mental cause or causes, the information about which
was withheld, or knowingly concealed, or falsely provided by the
Participant, when requested by the Employer to furnish evidence of
good health upon the Participant's enrolling in the Plan for any
increment of his Covered Salary.
ARTICLE 8
EMPLOYER OBLIGATION
Neither the Plan nor any Plan Agreement, either singly or
collectively, obligate any Employer to continue the employment of a Participant
or limits the right of an Employer at any time and for any reason to terminate
a Participant's employment. Termination of a Participant's employment with an
Employer for any reason, whether by action of the Employer or Participant,
shall immediately terminate the Participant's participation in the Plan and
Plan Agreement and all further obligations of either party to the other. In no
event shall the Plan or a Plan Agreement, either singly or collectively, by
their terms or implications, constitute an employment contract of any nature
whatsoever between an Employer and a Participant.
ARTICLE 9
TERMINATION OF PARTICIPATION
A Participant may terminate participation in the Plan and Plan
Agreement at his election by giving his Employer written notice of such
termination within 30 days prior to the anniversary date of the date of
execution of his Plan Agreement.
ARTICLE 10
TERMINATION, AMENDMENT, MODIFICATION
OR SUPPLEMENT OF PLAN
10.0 The Company reserves the right to terminate this Plan at any time.
10.1 The Company reserves the right to amend, modify or supplement this
Plan, in whole or in part, at any time and from time to time.
-7-
<PAGE> 10
10.2 Each Employer reserves the right to terminate the Plan Agreement of
any of its Employees.
10.3 No action to terminate, amend, modify or supplement the Plan or
terminate any Plan Agreement shall be taken except upon written notice
to each Participant to be affected thereby not less than 30 days prior
to such action.
10.4 In the event that a Participant or his Beneficiary becomes entitled to
any benefits described in Article 3 or 4 of this Plan, no action shall
be taken to terminate the Plan or a Plan Agreement with respect to
such person.
10.5 Upon the termination of this Plan or any Plan Agreement, respectively,
by either an Employer or a Participant in accordance with any
provisions for such termination, neither the Plan nor the Plan
Agreement shall be of any further force and effect and no party shall
have any further obligation under either this Plan or any Plan
Agreement so terminated.
ARTICLE 11
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his Beneficiary under the
Plan are in addition to any other benefits available to such Participant under
any other plan or program for employees of the Company or any Employer, and the
Plan shall supplement and shall not supersede, modify or amend any other plan
or program except as may otherwise be expressly provided. Benefits under the
Plan shall not be considered compensation for purposes of computing
contributions or benefits under any plan maintained by the Company or any of
its subsidiaries which is qualified under Section 401(a) and 501(a) of the
Internal Revenue Code of 1954, as amended.
ARTICLE 12
RESTRICTIONS ON ALIENATION OF BENEFITS
No right or benefit under the Plan or a Plan Agreement shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber
or charge the same shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities, or torts
of the person entitled to such benefit.
ARTICLE 13
ADMINISTRATION OF THE PLAN
13.0 The general administration of this Plan, as well as construction and
interpretation thereof, shall be vested in the Committee, the number
and members of which shall be designated and appointed from time to
time by, and shall serve at the pleasure of, the Board of Directors of
the Company. Any member of the Committee may resign by notice in
writing filed with the Secretary of the Committee. Vacancies shall be
filled promptly by the Board of Directors of the Company, but any
vacancies remaining unfilled for ninety days may be filled by a
majority vote of the remaining members of the Committee. Each person
appointed a member of the Committee shall signify his acceptance by
filing a written acceptance with the Secretary of the Committee.
-8-
<PAGE> 11
13.1 The Board of Directors of the Company shall designate one of the
members of the Committee as Chairman and shall appoint a Secretary who
need not be a member of the Committee. The Secretary shall keep
minutes of the proceedings of the Committee and all data, records and
documents relating to the administration of the Plan by the Committee.
The Committee may appoint from its number such subcommittees with such
powers as the Committee shall determine and may authorize one or more
members of the Committee or any agent to execute or deliver any
instrument or make any payment on behalf of the Committee.
13.2 All resolutions or other actions taken by the Committee shall be by
the vote of a majority of those present at a meeting at which a
majority of the members are present, or in writing by all the members
at the time in office if they act without a meeting.
13.3 Subject to the Plan, the Committee shall from time to time establish
rules, forms and procedures for the administration of the Plan.
Except as herein otherwise expressly provided, the Committee shall
have the exclusive right to interpret the Plan and to decide any and
all matters arising thereunder or in connection with the
administration of the Plan, and it shall endeavor to act, whether by
general rules or by particular decisions, so as not to discriminate in
favor of or against any person. The Committee shall have the
exclusive right to determine (a) disability in respect to a
Participant, and (b) the degree thereof, either or both determinations
to be made on the basis of such medical and/or other evidence as the
Committee, in it its sole judgment, may require. Such decisions,
actions and records of the Committee shall be conclusive and binding
upon the Employers and all persons having or claiming to have any
right or interest in or under the Plan.
13.4 The members of the Committee and the officers and directors of the
Employers shall be entitled to rely on all certificates and reports
made by any duly appointed accountants and on all opinions given by
any duly appointed legal counsel. Such legal counsel may be counsel
for the Company.
13.5 No member of the Committee shall be liable for any act or omission of
any other member of the Committee, nor for any act or omission on his
own part, excepting only his own willful misconduct. The Company
shall indemnify and save harmless each member of the Committee against
any and all expenses and liabilities arising out of his membership on
the Committee, excepting only expenses and liabilities arising out of
his own willful misconduct. Expenses against which a member of the
Committee shall be indemnified hereunder shall include, without
limitation, the amount of any settlement or judgment, costs, counsel
fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof. The
foregoing right of indemnification shall be in addition to any other
rights to which any such member may be entitled as a matter of law or
otherwise.
13.6 In addition to the powers hereinabove specified, the Committee shall
have the power to compute and certify under the Plan the amount and
kind of benefits from time to time payable to Participants and their
Beneficiaries and to authorize all disbursements for such purposes.
13.7 To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters
relating to the compensation of all Participants, their Retirement,
death or other cause for
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<PAGE> 12
termination of employment, and such other pertinent facts as the
Committee may require.
13.8 The Committee shall also have the power, in its sole discretion, to
change the manner and time of payments to be made to a Participant or
his Beneficiary from that set forth in the Participant's Plan
Agreement, if requested to do so by such Participant or Beneficiary.
ARTICLE 14
MISCELLANEOUS
14.0 Any notice which shall be or may be given under the Plan or a Plan
Agreement shall be in writing and shall be mailed by United States
mail, postage prepaid. If notice is to be given to an Employer, such
notice shall be addressed to:
A. H. Belo Corporation
P. O. Box 225237
Dallas, Texas 75265
marked for the attention of the Secretary, Administrative Committee,
Management Security Plan; or, if notice to a Participant, addressed to
the address shown on such Participant's Plan Agreement.
14.1 Any party may from time to time change the address to which notice
shall be mailed by giving written notice of such new address.
14.2 The Plan shall be binding upon the Employers and their successors and
assigns, and upon a Participant, his Beneficiary, assigns, heirs,
executors and administrators.
14.3 The Plan and Plan Agreement shall be governed and construed under the
laws of the State of Texas as in effect at the time of their adoption
and execution, respectively.
14.4 Masculine pronouns wherever used shall include feminine pronouns and
the singular shall include the plural where applicable.
ARTICLE 15
ADOPTION OF PLAN BY SUBSIDIARY,
AFFILIATED OR ASSOCIATED COMPANIES
15.0 Any corporation which is a subsidiary, affiliated or associated
company of the Company may, with the approval of the Company, adopt
this Plan and thereby come within the definition of the term
"Employer" in Article 1 hereof.
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<PAGE> 13
ANNEX I
MANAGEMENT SECURITY PLAN AGREEMENT
OF
A. H. BELO AND AFFILIATED COMPANIES
The undersigned employee ("Employee") acknowledges that, as an
Employee of A. H. BELO CORPORATION ("Employer"), Employee has been offered an
opportunity to participate in the Management Security Plan ("Plan") described
in the attached document and subject to the terms and conditions stated
therein, and that Employee has elected one of the two alternatives set forth
below as indicated by the space checked:
To participate in the Plan
- -------------
Not to participate in the Plan
- -------------
Employee's covered salary, benefits, contributions to the cost of
death benefits under the Plan, and designated Beneficiary(ies) are agreed to be
as follows:
1. EMPLOYEE'S COVERED SALARY: $_____________________ per month.
This represents (the full amount) or _______% of base earnings
eligible for coverage at the date of application for this coverage.
2. RETIREMENT BENEFIT at age 65: $_______________ total benefit.
(a) Retirement Benefit to be paid at rate of $_________________
per month for 120 months.
(b) Retirement before or after age 65: Amounts to be determined
by the Committee.
(c) I irrevocably elect to have my Retirement Benefit held and
paid solely as a death benefit to my Beneficiary.
Signature:
------------------------------------
If the above (2(c)) is signed, in general, the following will result:
1. Retirement Benefits ($_____________________ per month for 120
months) will not be paid to Participant but will be paid to
Participant's Beneficiary as a Death Benefit.
2. In such event and assuming the Participant's Beneficiary is
his or her surviving spouse (or certain types of trusts for
the benefit of his or her surviving spouse), the Benefits
should qualify for the Federal Estate Tax marital deduction,
and thus, no Federal Estate Taxes will be payable.
If the above (2(c)) is not signed, in general, the following will
result:
1. Retirement Benefits ($_____________________ per month for 120
months) will be paid to Participant. If Participant dies
before receiving 120 payments, installments will be continued
to Participant's Beneficiary until a total, including
installments paid to Participant, of 120 payments have been
made.
<PAGE> 14
2. In such event and assuming the Participant's Beneficiary is
his or her surviving spouse (or certain types of trusts for
the benefit of his or her surviving spouse), the benefits
after the Retired Participant dies should qualify for the
Federal Estate Tax marital deduction and, thus, no Federal
Estate Taxes would be payable.
If the Participant has not named as a Beneficiary his or her
surviving spouse (or certain types of trusts for the benefit
of his or her surviving spouse), the unpaid Retirement
Benefits at the time of the Retired Participant's death will
be included in his or her estate for Federal Estate Tax
purposes.
3. DISABILITY BENEFIT: (total disability before age 65); limited to a
waiver of Employee's contribution listed in number 5(a) below.
4. DEATH BENEFIT:
(a) One hundred percent (100%) of Covered Salary
($_________________) per month for the first 12 months.
(b) Fifty percent (50%) of Covered Salary ($____________________)
for next 108 months or until Employee would have attained age
65, whichever is later.
5. EMPLOYEE'S CONTRIBUTION to cost of Plan:
$_______________________ per month.
(a) EMPLOYEE'S AUTHORIZATION to deduct payments:
(b) Employee hereby authorizes the Employer to deduct said monthly
amount(s) from Employee's salary commencing with salary
carried during the month of _______________________________,
19_____ and continuing for each month thereafter until no
longer required by the terms of the Plan or by the Committee.
6. Employee hereby designates as Primary Beneficiary under this Plan and
Plan Agreement:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
and Employee hereby designates as Secondary Beneficiary under this
Plan and Plan Agreement:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The term Beneficiary, as used herein, shall mean the Primary
Beneficiary, if such Primary Beneficiary survives Employee by at least
30 days, and shall mean the estate of Employee, if neither Primary
Beneficiary nor Secondary Beneficiary survives Employee by at least 30
days. Employee shall have the right to change Employee's designation
of Primary Beneficiary and/or Secondary Beneficiary from time to time
in such manner as shall be required by the Committee, it being agreed
that no change in Beneficiary shall be effective until acknowledged in
writing by the Employer. (If Beneficiary is to be irrevocable, strike
and initial the previous sentence.)
I-2
<PAGE> 15
Employee further acknowledges that neither the Employer nor any of its
subsidiaries, affiliated companies, officers, employees, or agents has any
responsibility whatsoever for any changes made by Employee in other personal
plans or programs as a result of employee's decision to participate or not to
participate in the Plan, and they are fully released to such extent; and
Employee further understands that the Plan may be terminated at any time, in
the sole discretion of A. H. Belo Corporation, without any obligation of any
nature whatsoever to the Employer, except that a Participant or Beneficiary of
a Participant shall have those rights provided for in Articles 3, 4, and 10 of
said Plan, to the extent that such may be applicable at the time of such
termination.
IN WITNESS WHEREOF, and Employee have
----------------------------------
executed this Plan Agreement as of 19 .
------------------------ ----
A. H. BELO CORPORATION
By
----------------------------
Title
----------------------------
EMPLOYEE
------------------------------------
(Signature)
------------------------------------
(Type or print name under signature)
------------------------------------
------------------------------------
(Address of Employee)
I-3
<PAGE> 1
EXHIBIT 10.3(2)
THE A. H. BELO CORPORATION
1986 LONG TERM INCENTIVE PLAN
(Effective May 3, 1989, as amended
by Amendments 1, 2, 3, 4, and 5)
1. Purpose
The A. H. Belo Corporation (the "Corporation") desires to
attract and retain the best available talent and encourage the highest level of
performance by directors and employees in order to serve the best interests of
the Corporation and its shareholders. By affording directors and eligible
employees the opportunity to acquire proprietary interests in the Corporation
and by providing them incentives to put forth maximum efforts for the success
of the Corporation's business, the A. H. Belo Corporation 1986 Long Term
Incentive Plan (the "1986 Plan") is expected to contribute to the attainment of
those objectives.
2. Scope and Duration
Awards under the 1986 Plan may be granted in the form of incentive stock
options ("incentive stock options") as provided in Section 422A of the Internal
Revenue Code of 1954, as amended (the "Code"), in the form of non-qualified
stock options ("non-qualified options") (unless otherwise indicated references
in the 1986 Plan to "options" include incentive stock options and non-qualified
options), in the form of shares of the Common Stock of the Corporation (the
"Common Stock") which are restricted as provided in paragraph 12 ("restricted
shares") or in the form of units valued based upon the long-term performance of
the Corporation as determined pursuant to paragraph 13 ("performance units").
Options may be accompanied by stock appreciation rights ("rights") and limited
stock appreciation rights ("limited rights"). Rights and limited rights may
also be granted without accompanying options. The maximum aggregate number of
shares of Common Stock with respect to which options and restricted shares, and
rights and limited rights granted without accompanying options, may be granted
from time to time under the 1986 Plan shall be 2,400,000 shares (subject to
adjustment as described in paragraph 16) less the number of performance units
granted pursuant to the 1986 Plan. The maximum number of performance units
which may be granted pursuant to the 1986 Plan shall be 2,400,000 less the
number of shares of Common Stock with respect to which options and restricted
shares, and rights and limited rights issued without accompanying options, are
granted pursuant to the 1986 Plan.
<PAGE> 2
Shares of Common Stock with respect to which awards are granted may be, in
whole or in part, authorized but unissued shares or issued shares reacquired by
the Corporation, as the Board of Directors of the Corporation (the "Board of
Directors") shall from time to time determine. If for any reason (other than
surrender of options upon exercise of rights as provided in paragraph 8 or
limited rights as provided in paragraph 9 or payments in settlement of
performance units as provided in paragraph 13) any shares as to which an option
has been granted cease to be subject to purchase thereunder, or any restricted
shares or performance units are forfeited to the Corporation, or any right or
limited right issued without accompanying options terminates or expires without
being exercised, then (unless the 1986 Plan shall have been terminated) the
shares in respect of which such option, right or limited right was granted, or
such restricted shares or performance units, shall become available for
subsequent awards under the 1986 Plan (to the same employee who received the
original award or to a different employee or employees). As provided in
paragraph 17, the 1986 Plan shall become effective on May 8, 1986, subject to
approval by shareholders of the Corporation. No incentive stock option shall
be granted hereunder more than 10 years after the date that the 1986 Plan is
adopted.
Provided that shares of Series B Common Stock are issued and
outstanding, (i) each option to purchase shares of Common Stock granted after
May 13, 1988 shall be an option to purchase shares of Series B Common Stock and
(ii) each award of restricted shares after May 13, 1988 shall be an award of
restricted shares of Series B Common Stock (each event in clauses (i) and (ii)
subject to adjustment as described in paragraph 16). Notwithstanding the
foregoing, in the event such a grant or award with respect to Series B Common
Stock would cause the Series A Common Stock to be excluded from trading on the
New York Stock Exchange, the American Stock Exchange, or other national
securities exchanges, or to be excluded from quotation on the National
Association of Securities Dealers Automated Quotation Systems ("NASDAQ") or any
other national quotation system then in use, in the discretion of the Committee
such grants of options to purchase shares and awards of restricted shares after
May 13, 1988 shall be with respect to Series A Common Stock. In the event that
all issued and outstanding shares of Series B Common Stock are converted into
shares of Series A Common Stock, (i) each option to purchase shares of Series B
Common Stock will automatically convert into an option to purchase a like
amount of shares of Series A Common Stock or Common Stock, as the case may be,
and (ii) each restricted share of Series B Common Stock will automatically
convert into a restricted share of Series A Common Stock or Common Stock, as
the case may be.
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<PAGE> 3
So long as the Common Stock of the Company shall be issued in
series, for purposes of this 1986 Plan the term "Common Stock" shall mean (a)
in the case of shares of Common Stock issued prior. to the effective date of
Amendment No. 4 to the 1986 Plan (or after the conversion of all issued and
outstanding shares of Series B Common Stock into shares of Series A Common
Stock) Series A Common Stock or Common Stock, as the case may be, and (b) in
the case of shares of Common Stock issued after the effective date of Amendment
No. 4 to the 1986 Plan (provided shares of Series B Common Stock remain
outstanding) Series B Common Stock.
3. Administration
The Compensation Committee or any successor thereto (the "Committee") of the
Board of Directors of the Corporation shall administer, construe and interpret
the 1986 Plan. The Committee shall consist of either (a) not less than three
members of the Board of Directors, none of whom is an employee of the
Corporation who is, or who shall have been for at least one year prior to being
appointed to the Committee, eligible to participate in the 1986 Plan, or any
other plan of the Corporation or any of its affiliates (as defined in paragraph
4) entitling participants to acquire stock, stock options, rights or limited
rights of the Corporation or its affiliates or (b) all the members of the
Board of Directors.
The Committee shall have plenary authority in its sole
discretion, subject to and not inconsistent with the express provisions of the
1986 Plan, to grant options, to determine the purchase price of the Common
Stock covered by each option (the "exercise price"), the term of each option,
the employees to whom, and the time or times at which, options shall be granted
and the number of shares to be covered by each option; to designate options as
incentive stock options or non-qualified options and to determine which
options shall be accompanied by rights and limited rights; to grant rights and
limited rights without accompanying options to determine the employees to whom,
and the time or times at which, such rights and limited rights shall be
granted, and the exercise price of, the term of and the number of shares of
Common Stock covered by the Deemed Option (as defined in paragraph 8)
corresponding thereto; to grant restricted shares and performance units and to
determine the term of the restricted period and appropriate long-term earnings
objectives and other conditions applicable to such restricted shares or
performance units, the employees to whom, and the time or times at which,
restricted shares or performance units shall be granted and the number of
restricted shares or performance units to be covered by each grant; to
interpret the 1986 Plan;
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<PAGE> 4
to prescribe, amend and rescind rules and regulations relating to the 1986
Plan; to determine the terms and provisions of the option agreements, right or
limited right agreements, and the restricted share and performance unit
agreements (which need not be identical) entered into in connection with awards
under the 1986 Plan; to prepare and distribute, in such manner as the Committee
determines to be appropriate, information about the 1986 Plan, and to make all
other determinations deemed necessary or advisable for the administration of
the 1986 Plan. The Committee may delegate to one or more of its members or to
one or more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the 1986 Plan; provided, however, that
the Committee shall not delegate its authority to construe and interpret the
1986 Plan, to determine which employees may participate in the 1986 Plan, or
its authority to make grants of options, restricted shares, performance units,
rights and limited rights.
The Committee may adopt such rules as it deems necessary,
desirable or appropriate. The Committee may act at a meeting or in writing
without a meeting. The Committee shall elect one of its members as chairman,
appoint a secretary (who may or may not be a Committee member, as the case may
be) and advise the Board of Directors of such actions. The secretary shall keep
a record of all minutes and forward all necessary communications to the
Corporation. The Committee may adopt such bylaws which it deems desirable for
the conduct of its affairs. All decisions of the Committee, including actions
in writing taken without a meeting, shall be made by a vote of the majority. A
dissenting Committee member who, within a reasonable time after he has
knowledge of any action or failure to act by the majority, registers his
dissent in writing delivered to the other Committee members and to the Board of
Directors, shall not be responsible for any such action or failure to act.
All usual and reasonable expenses of the Committee shall be
paid by the Corporation, and no member shall receive compensation with respect
to his services for the Committee except as may be authorized by the Board of
Directors. The Committee may employ attorneys, consultants, accountants or
other persons and the Committee, the Corporation and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and binding upon all
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<PAGE> 5
employees who have received awards, the Corporation and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to
the 1986 Plan or awards made thereunder, and the Corporation shall indemnify
and hold harmless each member of the Committee against all loss, cost, expenses
or damages, occasioned by any act or omission to act in connection with any
such action, determination or interpretation under or of the 1986 Plan,
consistent with the Corporation's bylaws.
4. Eligibility; Factors To Be Considered in Granting Awards
Except for options awarded to nonemployee directors pursuant
to the terms of this paragraph 4, awards shall be granted only to persons who
are regular full-time employees of the Corporation or one or more of its
present or future subsidiaries (as defined below) and either are officers of,
or in the opinion of the Committee hold key positions in or for, the Corporation
or one or more of its subsidiaries. In determining the employees to whom awards
shall be granted, the number of shares of Common Stock with respect to which
each award shall be granted, the number of performance units granted by each
award, and the terms and conditions of each award, the Committee shall take
into account the nature of employees' duties, their present and potential
contributions to the growth and success of the Corporation and such other
factors as the Committee shall deem relevant in connection with accomplishing
the purposes of the 1986 Plan. The Chief Executive Officer of the Corporation
shall assist the Committee in this determination by making recommendations. An
employee who has been granted an award or awards under the 1986 Plan may be
granted an additional award or awards, subject to such limitations as may be
imposed by the Code on the grant of incentive stock options. The Committee,
with the consent of the employee, may grant to an employee who has been granted
an option under the 1986 Plan or any other option plan maintained by the
Corporation, any of its subsidiaries or a parent, or any predecessors or
successors thereto, in exchange for the surrender and cancellation of such
option, a new option having an exercise price lower or higher than the exercise
price provided in the option so surrendered and cancelled and containing such
other terms as the Committee may deem appropriate, subject to such limitations
or restrictions as may be imposed by the Code on an incentive stock option.
For purposes of this 1986 Plan, the term subsidiary means any
corporation (other than the Corporation) in an
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<PAGE> 6
unbroken chain of corporations beginning with the Corporation if, at the time
of granting of an option, right, limited right, restricted share or performance
unit, each of the corporations in the chain, other than the last corporation,
owns stock possessing 50 percent or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain. For
purposes of this 1986 Plan, the term "parent" means any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation if, at the time (of the granting of an option, right, limited
right, restricted share or performance unit, each of the corporations other
than the Corporation owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. For purposes of this 1986 Plan, the term "affiliate" shall have
the same meaning as in Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
Each director of the Corporation who is not also a regular
full-time employee ("nonemployee director") on the date Amendment No. 3 to the
1986 Plan is approved by the Board of Directors (the "effective date") shall be
granted an option to purchase 10,000 shares of Common Stock on the effective
date. Each individual who first becomes a nonemployee director after the
effective date shall be granted an option to purchase 10,000 shares of Common
Stock on the date such individual becomes a nonemployee director. Options
granted to nonemployee directors shall not be accompanied by rights or limited
rights. A nonemployee director who has been granted an option to purchase
Common Stock pursuant to this paragraph shall not be eligible to receive
another option upon re-election to the Board of Directors. The exercise price
per share of Common Stock of each option granted to at nonemployee director
shall be the Fair Market Value per Share of Common Stock (as such term is
defined in paragraph 5) on the date the option is granted, and the other terms
and conditions of each such option shall be determined under paragraphs 6 and
7.
Unless a different meaning is indicated or required by the
context, the term "regular full-time employee" or "employee" as used in the
Plan shall include a nonemployee director of the Corporation, and the term
"employed" or "employment" shall include service by a nonemployee director.
5. Option Price; Fair Market value
The exercise price of each option per share of Common Stock
shall be determined by the Committee, but in no event shall be less than 100%
of the Fair Market Value per Share of
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<PAGE> 7
Common Stock on the date the option is granted. For purposes of this 1986
Plan, "Fair Market Value per Share of Common Stock" as of any date shall mean,
except as provided in Section 8(c) hereof, (a) in the case of shares of Common
Stock with respect to which restricted shares, options, rights and limited
rights (other than incentive stock options and rights and limited rights
relating to incentive stock options) shall be granted, the closing price of the
Common Stock on such date (or if there are no sales on such date, on the next
preceding date on which there were sales), as reported on the New York Stock
Exchange Composite Tape, or if the Common Stock is not listed or admitted to
trading on the New York Stock Exchange, as reported on the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading, or if the Common Stock is not listed or admitted to
trading on any national securities exchange, the last quoted sales 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 National Association of Securities
Dealers Inc. Automated Quotation System or such other system as may then be in
use, of if the Common Stock is not reported on any such system and is not
listed or admitted to trading on any national securities exchange, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors, or if,
in addition, no such market maker is making a market in the Common Stock, the
fair value of the Common Stock as determined in good faith by the Board of
Directors, and (b) in the case of shares of Common Stock with respect to which
incentive stock options (and rights and limited rights relating to incentive
stock options) shall be granted, the mean between the highest and lowest sales
prices of the Common Stock on such date (or if there are no sales on such date,
on the next preceding date on which there were sales), as reported on the New
York Stock Exchange Composite Tape, or if the Common Stock is not listed or
admitted to trading on the New York Stock Exchange, as reported on the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Stock
is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last quoted sales
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 National Association of
Securities Dealers, Inc. Automated Quotation System or such other system as
may then be in use, or if the Common Stock is not reported on any such system
and is not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked
-7-
<PAGE> 8
prices as furnished by a professional market maker making a market in the
Common Stock selected by the Board of Directors, and if, in addition, no such
market maker is making a market in the Common Stock, the fair value of the
Common Stock as determined in good faith by the Board of Directors; provided,
however, that the Fair Market Value per Share of Common Stock shall be
appropriately adjusted to reflect events described in paragraph 16. The
Committee shall determine the date on which an option is granted, provided that
such date is consistent with the Code and any applicable rules or regulations
thereunder; in the absence of such determination, the date on which the
Committee adopts a resolution granting an option shall be considered the date
on which such option is granted, provided the employee to whom the option is
granted is promptly notified of the grant and a written option agreement is
duly executed as of the date of the resolution. The exercise price so
determined shall also be applicable in connection with the exercise of any
related right or limited right.
6. Term of Options
The term of each incentive stock option granted under the 1986
Plan shall be as the Committee shall determine, but in no event shall any
incentive stock option have a term of more than 10 years from the date of
grant, subject to earlier termination as provided in paragraphs 14 and 15. The
term of each non-qualified option granted under the 1986 Plan shall be 10 years
and one day after the date of grant, subject to earlier termination as provided
in paragraphs 14 and 15.
7. Exercise of Options
(a) Subject to the provisions of the 1986 Plan and
unless otherwise provided in the option agreement, an option granted under the
1986 Plan shall become 100% vested at the earliest of the employee's
retirement from active employment at or after Early Retirement Age (as defined
in paragraph 14), the employee's death or the employee's total and permanent
disability (as defined in paragraph 15) or three years from the date of grant.
Prior to becoming 100% vested, each option shall become exercisable in
cumulative installments as follows: after the commencement of the second year
of the term of the option, to the extent of 40% of the number of shares of
Common Stock originally covered thereby; and after the commencement of the
third year of the term of the option, to the extent of an additional 30%. In
its sole discretion, the Committee may, in any case or cases, prescribe
different installments. The Committee may also, in its sole discretion,
accelerate the exercisability of any option At any time. Notwithstanding the
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<PAGE> 9
installments set forth above, provided the Board has not adopted a resolution
prior to any event specified in clauses (i) - (iv) below stipulating that the
following provision shall be inoperative, an option shall become immediately
exercisable with respect to all shares of Common Stock remaining subject to the
option on or following either (i) the commencement of, or first public
announcement of the intention of any person or group to commence, a tender
offer or exchange offer (other than an offer by the Corporation or any of its
subsidiaries) for all, or any part of, the Common Stock (an "Offer"), (ii) a
"Change in Control" of the Corporation (as defined in this paragraph), (iii)
approval by the Corporation's shareholders (or, if such approval is not
required, consummation) of a merger in which the Corporation does not survive
as an independent, publicly owned corporation, a consolidation, or a sale,
exchange, or other disposition of all or substantially all the Corporation's
assets, or (iv) a change in the composition of the Board of Directors during
any period of two consecutive years such that individuals who at the beginning
of such period were members of the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Corporation'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 (the date upon which an
event described in clause (i), (ii), (iii), or (iv) of this paragraph 7(a)
occurs shall be referred to herein as an "Acceleration Date"). A "Change in
Control" is deemed to occur at the time when any group (within the meaning of
Rule 12b-2 promulgated under the Exchange Act), entity or person (other than
the Corporation, any subsidiary, or any savings, pension or other benefit plan
for the benefit of employees of the Corporation or its subsidiaries) that
theretofore beneficially owned (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) less than 30% of the total number of outstanding shares
of common stock (including common stock and, if issued and outstanding, Series
A Common Stock and Series B Common Stock, hereafter for purposes of this
Paragraph 7(a), "Common Stock"), acquires shares of Common Stock in a
transaction or series of transactions that results in such group, entity or
person directly or indirectly owning beneficially more than 30% of the total
number of outstanding shares of Common Stock.
(b) An option may be exercised at any time or from time
to time (subject, in the case of an incentive stock option, to such
restrictions as may be imposed by the Code), as to any or all full shares of
Common Stock as to which the option has become exercisable; provided, however,
that an option shall not be exercised at any one time as to less than 100
shares (or less
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than the number of shares of Common Stock as to which the option is then
exercisable, if that number is less than 100 shares).
(c) At the time of exercise of any option, the exercise
price of such option per share of Common Stock shall be paid in full for each
share of Common Stock with respect to which such option is exercised. Payment
may be made in cash, which may be paid by check or other instrument acceptable
to the Corporation, or, with the approval of the Committee, in shares of the
Common Stock, valued at the Fair Market Value per Share of Common Stock on the
date of exercise. An option holder may also make payment at the time of
exercise of an option by delivering to the Corporation a properly executed
exercise notice together with irrevocable instructions to a broker approved by
the Corporation that upon such broker's sale of shares with respect to which
such option is exercised, it is to deliver promptly to the Corporation the
amount of sale proceeds necessary to satisfy the option exercise price and any
required withholding taxes.
(d) Except as provided in paragraphs 14 and 15, no
option shall be exercised at any time unless the holder thereof is then a
regular full-time employee of the Corporation, one of its subsidiaries or a
parent. For this purpose, "parent" or "subsidiary" shall include, as under
Treasury Regulations Section 1.421-7(h)(3) and (4), Example (3), any
corporation which is a parent or subsidiary of the Corporation during the
entire portion of the requisite period of employment during which it is the
employer of the holder.
(e) If the Fair Market Value per Share of Common Stock
with respect to any option exceeds the exercise price of such option per share
of Common Stock, the Committee, in its sole discretion, may elect in lieu of
delivering all or a portion of the shares of Common Stock as to which an option
has been exercised, to reimburse the employee the exercise price tendered and
to pay the employee in cash or in shares of Common Stock, or a combination of
cash and Common Stock, an amount having an aggregate value equal to the product
of (x) the excess of (A) the Fair Market Value per Share of Common Stock over
(B) the exercise price of the option per share of Common Stock and (y) the
number of shares of Common Stock as to which an option has been exercised. The
Committee's election pursuant to this paragraph 7(e) shall be made by giving
written notice to the employee (or other person exercising the option). No such
election shall be made after the occurrence of an Acceleration Date. Shares of
Common Stock paid pursuant to this subparagraph will be valued at the Fair
Market Value
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per Share of Common Stock on the exercise date with cash paid in lieu of
issuance of any fractional share of Common Stock.
(f) Upon the exercise of an option or portion thereof in
accordance with the 1986 Plan, the option agreement and such rules and
regulations as may be established by the Committee, the holder thereof shall
have the rights of a shareholder with respect to the Common Stock issued as a
result of such exercise.
8. Award and Exercise of Rights
(a) A right may be awarded by the Committee either alone or in
connection with any option granted under the 1986 Plan. Each right and limited
right granted without a corresponding option shall nevertheless be deemed for
certain purposes described in this paragraph 8 and in paragraph 9 to have been
accompanied by any option (a "Deemed Option"). A Deemed Option shall have no
value, and no shares of Common Stock (and no other consideration) shall be
delivered upon exercise thereof, but such Deemed Option shall serve solely to
establish the terms and conditions of the corresponding right or limited right.
At the time of grant of a right or limited right not granted in connection with
an option, the Committee shall set forth the terms and conditions of a
corresponding Deemed Option. The terms and conditions of such Deemed Option
shall include all terms and conditions which at the time of grant are required,
and, in the discretion of the Committee, may include any additional terms and
conditions which at such time are permitted, to be included in options granted
under this 1986 Plan. A right granted in connection with an option may be
granted either at the time the option is granted or, in the case of an option
which is not an incentive stock option, thereafter at any time prior to the
exercise, termination or expiration of such option. Each right shall be subject
to the same terms and conditions as the related option or Deemed Option and
shall be exercisable only to the extent the option or Deemed Option is
exercisable. No right, with or without an underlying option, shall be
exercisable for cash by an employee who is subject to the provisions of Section
16(b) of the Exchange Act (an "Insider") prior to the expiration of six months
from the date the right is awarded; provided, however, that this limitation
shall not apply in the event the death or total and permanent disability (as
defined in paragraph 15) of such employee occurs prior to the expiration of the
six-month period. Subject to the foregoing, and provided that the Board has
not adopted a resolution prior to an Acceleration Date stipulating that rights
shall not be so exercisable, a right shall be exercisable on or after an
Acceleration Date.
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(b) A right shall entitle the employee to surrender
unexercised the related option or Deemed Option (or any portion or portions
thereof which the employee from time to time determines to surrender for this
purpose) and to receive in exchange, subject to the provisions of the 1986 Plan
and such rules and regulations as from time to time may be established by the
Committee, a payment having an aggregate value equal to (A) the excess of (i)
the Fair Market Value per Share of Common Stock on the exercise date over (ii)
the exercise price of the option or Deemed Option per Share of Common Stock,
times (B) the number of shares of Common Stock subject to the option, Deemed
Option or portion thereof which is surrendered. Surrender of an option or
Deemed Option or portion thereof in exchange for a payment as described in this
paragraph is referred to as the "exercise of a right."
The payment shall be made in the form of cash shares
of Common Stock, or a combination thereof, as elected by the employee, provided
that the Committee shall have sole discretion to consent to or disapprove the
election of an Insider to receive all or part of a payment in cash (which
consent or disapproval may be given at any time after the election to which it
relates). Shares of Common Stock paid upon exercise of a right will be valued
at the Fair Market Value per Share of Common Stock on the exercise date. Cash
will be paid in lieu of any fractional share based upon the Fair Market Value
per Share of Common Stock on the exercise date.
Subject to Section 19 hereof, no payment will be
required from the employee upon exercise of a right.
(c) Solely for purposes of paragraph 8(b), with respect
to exercises of rights (other than rights which relate to an incentive stock
option) by an Insider, during any period commencing on the third business day
following the date of release for publication of any annual or quarterly
summary statements of the Corporation's sales and earnings and ending on the
twelfth business day following such date (a "window period"), the Committee may
prescribe, by rule of general application, such other measure of Fair Market
Value per Share of Common Stock as the Committee may, in its sole discretion,
determine, but not in excess of the highest sale price of the Common Stock
during such window period as reported on the New York Stock Exchange Composite
Tape, or if the Common Stock is not listed or admitted to trading on the New
York Stock Exchange, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if the Common Stock is not
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<PAGE> 13
listed or admitted to trading on any national securities exchange, the last
quoted sales price in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or such
other system as may then be in use, or if the Common Stock is not reported on
any such system and is not listed or admitted to trading on any national
securities exchange, the fair value of the Common Stock as determined in good
faith by the Board of Directors; provided, however, that Fair Market Value per
Share of Common Stock shall be appropriately adjusted to reflect events
described in paragraph 16. In the case of rights that relate to an incentive
stock option, the Committee may prescribe a similar measure of Fair Market
Value per Share of Common Stock; provided, however that such measure shall not
exceed the maximum amount that would be permissible under Section 422A of the
Code without disqualifying such option as an incentive stock option under
Section 422A or causing such option not to be considered fully exercised within
the meaning of Section 422A.
(d) Upon exercise of a right, the number of shares of
Common Stock subject to exercise under the related option or Deemed Option
shall automatically be reduced by the number of shares of Common Stock
represented by the option, Deemed Option or portion thereof surrendered. Shares
of Common Stock subject to options, Deemed Options or portions thereof
surrendered upon the exercise of rights shall not be available for subsequent
awards under the 1986 Plan.
(e) A right related to an incentive stock option may only
be exercised if the Fair Market Value per Share of Common Stock on the exercise
date (as determined pursuant to paragraph 5 and without regard to paragraph
8(c)) exceeds the exercise price of the option per share of Common Stock.
(f) If neither the right nor, in the case of a right with
a related option, the related option, is exercised before the end of the day on
which the right ceases to be exercisable, such right shall be deemed exercised
as of such date and, subject to paragraph 19, a payment in the amount
prescribed by paragraph 8(b) shall be paid to the employee in cash.
9. Award and Exercise of Limited Rights
(a) A limited right may be granted by the Committee either
alone or in connection with any option granted under the 1986 Plan. If granted
in connection with an option, a limited right may be granted with respect to
all or some of the shares of Common Stock covered by such option, and may be
granted either at the time such option is granted or, if such option is
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not an incentive stock option, at any time thereafter prior to the exercise,
termination or expiration of such option. If not granted in connection with an
option, a limited right shall be granted in connection with a Deemed Option, as
described in paragraph 8(a). A limited right may be granted to an employee
irrespective of whether such employee is being granted or has been granted a
right under paragraph 8. Provided that the Board has not adopted a resolution
prior to an Acceleration Date stipulating that limited rights shall not be so
exercisable, a limited right shall be exercisable during the 90-day period
beginning on an Acceleration Date (as defined in paragraph 7(a)). In addition,
each limited right shall be exercisable only if, and to the extent that, the
related option or Deemed option is exercisable and, in the case of a limited
right granted in respect of an incentive stock option, only when the Fair
Market Value per Share of Common Stock exceeds the exercise price of the option
per share of Common Stock. Notwithstanding the provisions of the two
immediately preceding sentences, no limited right shall be exercisable by an
Insider until the expiration of six months from the date of grant of the
limited right; provided, however, that this limitation shall not apply in the
event the death or total and permanent disability (as defined in paragraph 15)
of such employee occurs prior to the expiration of the six-month period. Upon
exercise of a limited right, in whole or in part, the related option or Deemed
Option shall cease to be exercisable to the extent of the shares of Common
Stock with respect to which such limited right is exercised, and shall be
considered to have been exercised to that extent for purposes of determining
the number of shares of Common Stock available for further grants pursuant to
the 1986 Plan. Upon the exercise or termination of an option or Deemed Option,
the related limited right shall terminate to the extent of the shares of Common
Stock with respect to which such option or Deemed Option was exercised or
terminated.
(b) Upon the exercise of limited rights, the holder
thereof shall receive in cash whichever of the following amounts is applicable:
(i) in the case of an exercise of limited rights
by reason of the commencement or announcement of an Offer described irk
paragraph (a)(i), an amount equal to the Offer Spread (as defined in paragraph
9(d));
(ii) in the case of an exercise of limited rights
by reason of an acquisition of Common Stock described in paragraph 7(a)(ii), an
amount equal to the Acquisition Spread (as defined in paragraph 9(h) hereof);
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<PAGE> 15
(iii) in the case Of an exercise of limited rights
by reason of an event described in paragraph 7(a)(iii), an amount equal to the
Merger Spread (as defined in paragraph 9(f) hereof); or
(iv) in the case of an exercise of limited rights
by reason of a change in the composition of the Board of Directors as described
in paragraph 7(a)(iv), an amount equal to the Spread (as defined in paragraph
9(i) hereof).
Notwithstanding the foregoing, in the case of a
limited right granted in respect of an incentive stock option, the holder shall
not receive an amount in excess of such amount as will enable such option to
qualify as an incentive stock option under Section 422A of the Code.
(c) The term "Offer Price per Share" as used in this
paragraph 9 shall mean, with respect to the exercise of any limited right by
reason of the occurrence of an Offer, the greater of (i) the highest price per
share of Common Stock paid in any purchase pursuant to an Offer, which Offer is
in effect at any time during the ninety-day period ending on the date on which
such limited right is exercised, or (ii) the highest Fair Market Value per
Share of Common Stock as of any date during such ninety-day period. Any
securities or property which are part or all of the consideration paid for
shares of Common Stock in the Offer shall be valued in determining the Offer
Price per Share at the higher of (A) the valuation placed on such securities or
property by the corporation, person or other entity making such Offer or (B)
the valuation placed on such securities or property by the Committee.
(d) The term "Offer Spread" as used in this paragraph 9
shall mean an amount equal to the product computed by multiplying (i) the
excess of (A) the Offer Price per Share over (B) the exercise price of the
related option or Deemed Option per share of Common Stock, by (ii) the number
of shares of Common Stock with respect to which such limited right is being
exercised.
(e) The term "Merger Price per Share" as used in this
paragraph 9 shall mean, with respect to the exercise of any limited right by
reason of an event described in paragraph 7(a)(iii), the greater of (i) the
fixed or formula price to be received by shareholders of the Corporation
pursuant to such event for their shares of Common Stock occurring if such fixed
or formula price is determinable on the date on which such limited right is
exercised, and (ii) the highest Fair Market Value per Share of Common Stock as
of any date during the
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ninety-day period ending on the date on which such limited right is exercised.
Any securities or property which are part or all of the consideration paid for
shares of Common Stock pursuant to such event shall be valued in determining
the Merger Price per Share at the higher of (A) the valuation placed on such
securities or property by the corporation, person or other entity which is a
party with the Corporation to such event or (B) the valuation placed on such
securities or property by the Committee.
(f) The term "Merger Spread" as used in this paragraph 9
shall mean an amount equal to the product computed by multiplying (i) the
excess of (A) the Merger Price per Share over (B) the exercise price of the
related option or Deemed Option per share of Common Stock, by (ii) the number
of shares of Common Stock with respect to which such limited right is being
exercised.
(g) The term "Acquisition Price per Share" as used in
this paragraph 9 shall mean, with respect to the exercise of any limited right
by reason of an acquisition of Common Stock described in paragraph 7(a)(ii),
the greater of (i) the highest price per share stated on Schedule 13D or any
amendment thereto filed by the holder of 30% or more of the Corporation's
voting power which gives rise to the exercise of such limited right, and (ii)
the highest Fair Market Value per Share of Common Stock on any date during the
ninety-day period ending on the date the limited right is exercised.
(h) The term Acquisition Spread" as used in this
paragraph 9 shall mean an amount equal to the product computed by multiplying
(i) the excess of (A) the Acquisition Price per Share over (B) the exercise
price of the related option or Deemed Option per share of Common Stock, by (ii)
the number of shares of Common Stock with respect to which such limited right
is being exercised.
(i) The term "Spread" as used in this paragraph 9 shall
mean, with respect to the exercise of any limited right by reason of a change
in the composition of the Board of Directors described in paragraph 7(a)(iv),
an amount equal to the product computed by multiplying (i) the excess of (A)
the highest Fair Market Value per Share of Common Stock on any date during the
ninety-day period ending on the date the limited right is exercised over (B)
the exercise price of the related option or Deemed Option per share of Common
Stock, by (ii) the number of shares of Common Stock with respect to which the
limited right is being exercised.
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(j) Notwithstanding any other provision of the 1986 Plan,
rights granted pursuant to paragraph 8 may not be exercised to the extent that
any limited rights granted with respect to the same option are then
exercisable.
10. Incentive Stock Options
(a) Prior to January 1, 1987, the aggregate Fair Market
Value per Share of Common Stock (determined at the time of grant) of the Common
Stock in respect of which any employee may be granted incentive stock options
in any calendar year (under the 1986 Plan and any other plan of the
Corporation, any parent or any subsidiary or any predecessor of any such
corporations) shall not exceed $100,000 plus any unused limit carryover to such
year, as defined in Section 422A of the Code applicable to incentive stock
options granted prior to January 1, 1987.
(b) No incentive stock option granted hereunder to an
employee prior to January 1, 1987 shall be exercisable at any time while there
is outstanding any incentive stock option (as defined in Sections 422A(b)(7)
and (c)(7) of the Code for options granted prior to January 1, 1987) previously
granted to such employee.
(c) After December 31, 1986, in no event shall any
employee be granted incentive stock options that will first become exercisable
by such employee in any one calendar year covering Common Stock the aggregate
Fair Market Value per Share of which exceeds $100,000. For these purposes, the
aggregate Fair Market Value per Share of Common Stock shall be determined as of
the date on which an option is granted.
(d) In the event of amendments to the Code or applicable
rules or regulations relating to incentive stock options subsequent to the date
hereof, the Corporation may amend the provisions of the 1986 Plan, and the
Corporation and the employees holding options may agree to amend outstanding
option agreements to conform to such amendments.
11. Non-Transferability of Options, Rights and Limited Rights
Options, rights and limited rights granted under the 1986 Plan
shall not be transferable otherwise than by will or the laws of descent and
distribution, and options, rights and limited rights shall be exercisable
during the lifetime of the employee only by the employee or by the employee's
guardian or legal representative (unless such exercise would disqualify an
option as an incentive stock option).
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12. Award and Delivery-of Restricted Shares
(a) At the time an award of restricted shares is made,
the Committee shall establish a period of time (the "Restricted Period")
applicable to such award which shall not be more than 10 years. Each award of
restricted shares may have a different Restricted Period. The Committee may, in
its sole discretion at the time an award is made, provide for the incremental
lapse of restrictions during the Restricted Period and for the lapse or
termination of restrictions upon the satisfaction of other conditions in
addition to or other than the expiration of the Restricted Period with respect
to all or any portion of the restricted shares. The Committee may also, in its
sole discretion, shorten or terminate the Restricted Period or waive any
conditions for the lapse or termination of restrictions with respect to all or
any portion of the restricted shares. Notwithstanding the foregoing, all
restrictions shall lapse or terminate with respect to all restricted shares
upon (i) the employee's death, total and permanent disability (as defined in
paragraph 15), or retirement from active employment at or after the Early
Retirement Age, or (ii) provided that the Board has not adopted a resolution
prior to an Acceleration Date stipulating that such restrictions shall not
lapse and not terminate, the occurrence of an Acceleration Date as defined in
paragraph 7(a).
(b) At the time a grant of restricted shares is made to
an employee, a stock certificate representing a number of shares of Common
Stock equal to the number of such restricted shares shall be registered in the
employee's name but shall be held in custody by the Corporation for such
employee's account. The employee shall generally have the rights and privileges
of a shareholder as to such restricted shares, including, without limitation,
the right to vote such restricted shares, except that, subject to the
provisions of paragraph 14, the following restrictions shall apply: (i) the
employee shall not be entitled to delivery of the certificate until the
expiration or termination of the Restricted Period and the satisfaction of any
other conditions prescribed by the Committee; (ii) none of the restricted
shares shall be sold, transferred, assigned, pledged, or otherwise encumbered
or disposed of during the Restricted Period and until the satisfaction of any
other conditions prescribed by the Committee; and (iii) all of the restricted
shares shall be forfeited and all rights of the employee to such restricted
shares shall terminate without further obligation on the part of the
Corporation if the employee ceases to be a regular full-time employee of the
Corporation, any of its subsidiaries, any parent or any combination thereof
before the expiration or termination of the Restricted Period and the
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satisfaction of any other conditions prescribed by the Committee applicable to
such restricted shares. Dividends in respect of restricted shares shall be
currently paid; provided, however, that in lieu of paying currently a dividend
of shares of Common Stock in respect of restricted shares, the Committee may,
in its sole discretion, register in the name of an employee a stock certificate
representing such shares of Common Stock issued as a dividend in respect of
restricted shares, and may cause the Corporation to hold such certificate in
custody for the employee's account subject to the same terms and conditions as
such restricted shares. Upon the forfeiture of any restricted shares, such
forfeited restricted shares shall be transferred to the Corporation without
further action by the employee. The employee shall have the same rights and
privileges, and be subject to the same restrictions, with respect to any shares
received pursuant to paragraph 16.
(c) Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the Committee
or at such earlier time as provided for in paragraph 14, the restrictions
applicable to the restricted shares shall lapse and a certificate for a number
of shares of Common Stock equal to the number of restricted shares with respect
to which the restrictions have expired or terminated shall be delivered, free
of all such restrictions, except any that may be imposed by law, to the
employee or the employee's Beneficiary (as defined in paragraph 14). The
Corporation shall not be required to deliver any fractional share of Common
Stock but shall pay to the employee or the employee's Beneficiary (as defined
in paragraph 14), in lieu thereof, the product of (i) the Fair Market Value per
Share of Common Stock (determined as of the date the restrictions expire or
terminate) and (ii) the fraction of a share to which such employee would
otherwise be entitled. Subject to paragraph 19 hereof, no payment will be
required from the employee upon the issuance or delivery of any Common Stock
upon the expiration or termination of the Restricted Period with respect to any
restricted shares.
13. Award of Performance Units
(a) At the time an award of performance units is made,
the Committee shall prescribe a range of long-term earnings objectives,
including minimum, maximum and target objectives of the Corporation during the
Incentive Period (as defined in paragraph 13(c)) applicable to such performance
units and shall determine a range of dollar values of each performance unit
associated with such range of long-term earnings objectives. If the minimum
long-term earnings objective prescribed by the
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Committee for any performance unit is not achieved or exceeded, then such
performance unit shall have no value and no amount shall be payable with
respect thereto. If such minimum long-term earnings objective is achieved or
exceeded, then the dollar value of all performance units to be paid with
respect thereto shall be based upon the level of earnings achieved, subject to
any maximum performance unit value imposed by the Committee. If during the
course of an Incentive Period there shall occur significant events which were
not foreseen in establishing the minimum long-term earnings objective for such
Incentive Period and which the Committee, in its discretion, with the advice of
the Corporation's independent auditors, expects to have a substantial effect on
such objective during such Incentive Period, the Committee may revise such
objective.
(b) Any employee who is an employee of the Corporation or
a parent or subsidiary as of the Valuation Date (as defined in paragraph 13(d))
with respect to performance units which have been previously awarded to him,
shall, if the minimum long-term earnings objectives specified in paragraph
13(a) are met, be eligible to receive a cash award equal to the value of such
performance units determined pursuant to such paragraph 13(a) as of the
Valuation Date applicable thereto. Payment of such cash award shall be made as
soon as practicable following the last day of the calendar year in which occurs
the Valuation Date of such performance units. Except as otherwise provided in
paragraph 14 hereof, any performance units awarded to an employee during his
employment period for which the Incentive Period has not ended shall be
forfeited upon the date such employment terminates, and he shall not be
entitled to any payment in respect thereof.
(c) Unless otherwise provided by the Committee at the
time a performance unit is granted, or unless prior to an Acceleration Date
the Board has adopted a resolution making the provision immediately below
inoperative, any employee who is an employee of the Corporation or a parent or
subsidiary as of an Acceleration Date shall be eligible to receive with respect
to performance units previously granted to him a cash award equal to the amount
determined by multiplying the amount of the award which could have been earned
assuming attainment of the target long-term earnings objective prescribed by
the Committee by a fraction, the numerator of which is the number of full
calendar months in the Incentive Period prior to the Acceleration Date
(disregarding any months in the Incentive Period prior to the effectiveness of
the grant of the performance unit) and the denominator of which is the total
number of full calendar months in the Incentive Period. If the employee remains
in the employ of the Corporation, any subsidiary, any parent or any
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combination thereof following the Acceleration Date, he shall be entitled to
receive in respect of performance units previously granted to him any
additional award which is earned (as determined in accordance with paragraph
13(a)) during the portion of the Incentive Period occurring after the
Acceleration Date. Notwithstanding the provisions of paragraph 13(a),
following an Acceleration Date, the Committee shall not adjust the minimum
long-term earnings objective or other terms specified in a performance unit in
effect immediately prior to the Acceleration Date in any manner adverse to the
employee.
(d) For purposes of the 1986 Plan,
(i) The "Incentive Period" with respect to a
performance unit shall be the five-year period beginning on the date such
performance unit is granted or such other period (not shorter than 3 years or
longer than 10 years) as the Committee may designate.
(ii) The "Valuation Date" means the last day of
the Incentive Period for a performance unit.
14. Termination of Employment
In the event that the employment of an employee to whom an
option, right or limited right has been granted under the 1986 Plan shall be
terminated (except as set forth in paragraph 15), such option, right or limited
right may, subject to the provisions of the 1986 Plan, be exercised (to the
extent that the employee was entitled to do so at the termination of his
employment) at any time within 3 months after such termination, or, in the case
of an employee whose termination results from retirement from active employment
at or after the earliest permissible retirement date (the "Early Retirement
Age") specified in the G. B. Dealey Retirement Pension Plan, or any successor
qualified retirement plan of the Corporation, one of its subsidiaries or a
parent covering such employee (the "Pension Plan"), within 3 years after such
termination, but in no case later than the date on which the option, right or
limited right terminates; provided, however, that any option, right or limited
right held by an employee whose employment is terminated for cause (as
determined by the Board of Directors of the Corporation in its sole discretion)
or an employee who leaves the employ of the Corporation voluntarily (other than
after an Acceleration Date) shall, to the extent not theretofore exercised,
forthwith terminate.
(b) Unless otherwise determined by the Committee, if an
employee to whom restricted shares have been granted ceases
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to be an employee of the Corporation or of a subsidiary or parent prior to the
end of the Restricted Period and the satisfaction of any other conditions
prescribed by the Committee for any reason other than death, total and
permanent disability (as defined in paragraph 15), or retirement from active
employment at or after the Early Retirement Age, the employee shall immediately
forfeit all restricted shares.
(c) Unless otherwise determined by the Committee, if an
employee to whom performance units have been granted ceases to be an employee
of the Corporation prior to the end of the Incentive Period with respect to
such performance units for any reason other than death, total and permanent
disability (as defined in paragraph 15) or retirement from active employment at
or after the Early Retirement Age, the employee shall immediately forfeit all
such performance units. If an employee to whom performance units have been
granted terminates employment by reason of retirement on or after the Early
Retirement Age, total and permanent disability, or death, he shall, if the
minimum long-term earnings objectives specified in paragraph 13(a) are met, be
eligible to receive a cash award equal to the value of such performance units,
determined pursuant to such paragraph 13(a) and payable as soon as practicable
following the last day of the calendar year in which occurs the Valuation Date
of such performance units. If the employee terminates employment due to his
death or if an employee who retires from active employment on or after his
Early Retirement Age or terminated employment due to total and permanent
disability dies prior to receipt of any such payment, then his designated
Beneficiary shall, if the minimum long-term earnings objectives specified in
paragraph 13(a) are met, be entitled to receive a cash award equal to the
value of such performance units, determined pursuant to such paragraph 13(a)
and payable as soon as practicable following the last day of the calendar year
in which occurs the Valuation Date of such performance units. In the event
that the person or persons designated by the employee as his Beneficiary or
Beneficiaries shall not be living at the time, or if no designation has been
made, then the payment of such cash award shall be made to the estate of the
employee. An employee's "Beneficiary" is a person or persons (natural or
otherwise) designated by such employee, pursuant to a written instrument
executed by such employee and filed with the Committee, to receive any benefits
payable hereunder in the event of such employee's death.
(d) Awards granted under the 1986 Plan shall not be
affected by any change of duties or position so long as the holder continues to
be a regular full-time employee of the Corporation or any of its subsidiaries
or a parent. Any option,
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right, limited right, restricted share or performance unit agreement, and any
rules and regulations relating to the 1986 Plan, may contain such provisions as
the Committee shall approve with reference to the determination of the date
employment terminates and the effect of leaves of absence. Any such rules and
regulations with reference to any option agreement shall be consistent with the
provisions of the Code and any applicable rules and regulations thereunder.
Nothing in the 1986 Plan or in any award granted pursuant to the 1986 Plan
shall confer upon any employee any right to continue in the employ of the
Corporation or any of its subsidiaries or parent or interfere in any way with
the right of the Corporation or any such subsidiary or parent to terminate such
employment at any time.
15. Death or Total Disability of Employee
If an employee to whom an option, right, or limited right has
been granted under the 1986 Plan shall die or suffer a total and permanent
disability while employed by the Corporation, one of its subsidiaries or a
parent or within three months (or, in the case of an employee who retires from
active employment at or after Early Retirement Age, within one year) after the
termination of such employment (other than (i) an employee terminated for
cause, or (ii) an employee who leaves the employ of the Corporation
voluntarily, both of which events will be governed by the provisions of
Paragraph 14(a) hereof), such option, right, or limited right may be
exercised, to the extent that the employee was entitled to do so at the
termination of employment (including by reason of death or total disability),
as set forth herein (subject to any restrictions set forth in paragraphs 8 and
9 with respect to Insiders) by the employee, legal guardian of the employee
(unless such exercise would disqualify an option as an incentive stock option),
a legatee or legatees of the employee under the employee's last will, or by the
employee's personal representatives or distributees, whichever is applicable,
at any time within one year after the date of the employee's death or total
disability, but in no event later than the date on which the option, right, or
limited right terminates. Notwithstanding the above, if an employee who
terminates employment by reason of total and permanent disability shall die
within three months of such termination, a legatee or legatees of such employee
under the employee's last will, or the executor of such employee's estate,
shall only have the right to exercise such option, right, or limited right, to
the extent that the employee was entitled to do so at the termination of
employment, during the period ending one year after the date of the employee's
termination of employment by reason of disability. For purposes hereof, "total
and permanent disability" is defined as such term is used in the Pension Plan.
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16. Adjustments upon Changes in Capitalization, etc.
Notwithstanding any other provision of the 1986 Plan, the
Committee may at any time make or provide for such adjustments to the 1986
Plan, to the number and class of shares available thereunder or to any
outstanding options, rights, limited rights, restricted shares or performance
units as it shall deem appropriate to prevent dilution or enlargement,
including adjustments in the event of changes in the outstanding Common Stock
by reason of stock dividends, split-ups recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like. In the event of any offer to
holders of Common Stock generally relating to the acquisition of their shares,
the Committee may make such adjustment as it deems equitable in respect to
outstanding options, rights, limited rights, restricted shares and performance
units, including, in the Committee's discretion, revision of outstanding
options, rights, limited rights, restricted shares and performance units so
that they may be exercisable or redeemable for or payable in the consideration
payable in the acquisition transaction. Any such determination by the Committee
shall be conclusive. Any fractional shares resulting from such adjustments to
options, rights, limited rights, or restricted shares shall be eliminated.
17. Effective Date
The 1986 Plan shall become effective on May 8, 1986, provided
that the adoption of the 1986 Plan shall have been ratified by the shareholders
of the Corporation. The Committee thereafter may, in its discretion, grant
awards under the 1986 Plan, the grant, exercise or payment of which shall be
expressly subject to the conditions that to the extent required at the time of
grant, exercise or payment (i) the shares of Common Stock covered by such
awards shall be duly listed, upon official notice of issuance, on the New York
Stock Exchange, and (ii) if the Corporation deems it necessary or desirable, a
Registration Statement under the Securities Act of 1933 with respect to such
shares shall be effective.
18. Termination and Amendment
The Board of Directors of the Corporation may suspend,
terminate, modify or amend the 1986 Plan, provided that any amendment that
would increase the aggregate number of shares which may be issued under the
1986 Plan, materially increase the benefits accruing to participants under the
1986 Plan, or materially modify the requirements as to eligibility for
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<PAGE> 25
participation in the 1986 Plan, shall be subject to the approval of the
Corporation's shareholders, except that any such increase or modification that
may result from adjustments authorized by paragraph 16 does not require such
approval. If the 1986 Plan is terminated, the terms of the 1986 Plan shall,
notwithstanding such termination, continue to apply to awards granted prior to
such termination. In addition, no suspension, termination, modification or
amendment of the 1986 Plan may, without the consent of the employee to whom an
award shall theretofore have been granted, adversely affect the rights of such
employee under such award.
19. Withholding Tax
(a) The Corporation shall have the right to deduct from all
amounts paid in cash in consequence of the exercise of an option, right or
limited right under the 1986 Plan any taxes required by law to be withheld with
respect to such cash payments. Where an employee or other person is entitled to
receive shares of Common Stock pursuant to the exercise of an option, a right
or a limited right pursuant to the 1986 Plan, the Corporation shall have the
right to require the employee or such other person to pay to the Corporation
the amount of any taxes which the Corporation is required to withhold with
respect to such shares, or, in lieu thereof, to retain, or sell without notice,
a sufficient number of such shares to cover the amount required to be withheld.
Upon the disposition (within the meaning of Section 425(c) of the Code) of
shares of Common Stock acquired pursuant to the exercise of an incentive stock
option prior to the expiration of the holding period requirements of Section
422A(a)(1) of the Code, the employee shall be required to give notice to the
Corporation of such disposition and the Corporation shall have the right to
require the payment of the amount of any taxes which are required by law to be
withheld with respect to such disposition.
(b) Upon termination of the Restricted Period with respect
to any restricted shares (or such earlier time, if any, as an election is made
by the employee under Section 83(b) of the Code, or any successor provisions
thereto, to include the value of such shares in taxable income), the
Corporation shall have the right to require the employee or other person
receiving shares of Common Stock in respect of such restricted shares to pay to
the Corporation the amount of taxes which the Corporation is required to
withhold with respect to such shares of Common Stock or, in lieu thereof, to
retain or sell without notice a sufficient number of shares of Common Stock
held by it to cover the amount required to be withheld. The Corporation shall
have the right to deduct from all dividends paid with respect to
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<PAGE> 26
restricted shares the amount of taxes which the Corporation is required to
withhold with respect to such dividend payments.
20. Written Agreements
Each award of options, rights, limited rights, restricted
shares or performance units shall be evidenced by a written agreement, executed
by the employee and the Corporation, which shall contain such restrictions,
terms and conditions as the Committee may require.
21. Effect on Other Stock Plans
The adoption of the 1986 Plan shall have no effect on awards
made or to be made pursuant to other plans covering employees of the
Corporation, its subsidiaries or parent, or any predecessors or successors
thereto.
22. Preferred Share Purchase Rights
Any reference in the 1986 Plan to the "Common Stock" shall be
deemed to refer also to the preferred share purchase rights issued by the
Corporation pursuant to the Agreement dated as of March 15, 1986 between the
Corporation and RepublicBank Dallas, N.A. (the "Rights Agreement") until the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms aria defined in Sections 3 and 7 of the Rights Agreement)
and thereafter to refer only to the Common Stock, $1.67 par value, of the
Corporation. Notwithstanding the previous sentence, (a) after the Distribution
Date until the earlier of the Redemption Date and the Final Expiration Date,
every holder of any unexercised option granted prior to the Distribution Date
shall upon exercise thereof be entitled to receive one preferred share purchase
right for each share of Common Stock received, (b) after the Distribution Date
until the earlier of the Redemption Date and the Final Expiration Date, any
reference in paragraph 8(b), 8(e), 9(c), 9(e), 9(g) or 9(i) to the "Fair Market
Value per Share of Common Stock" with respect to any unexercised right or
limited right granted prior to the Distribution Date shall be deemed to refer
instead to the sum of the Fair Market Value per Share of Common Stock and the
fair market value of the preferred share purchase right and (c) as soon as
practicable after the Distribution Date, the Rights Agent (as defined in the
preamble to the Rights Amendment) shall send to each person who immediately
prior to the Distribution Date was a holder of restricted shares, by,
first-class, insured, postage-prepaid mail, a Right Certificate (as defined in
Section 3(a) of the Rights Agreement) evidencing one preferred share purchase
right for each such restricted
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<PAGE> 27
share held, and the holder of such Right Certificate may at any time after the
Distribution Date exercise the preferred share purchase rights evidenced
thereby in the manner and subject only to the restrictions described in the
Rights Agreement. For purposes of the 1986 Plan, the fair market value of a
preferred share purchase right shall mean the value of a preferred share
purchase right, calculated in the same manner as the Fair Market Value per
Share of Common Stock would be calculated but for this paragraph 22.
A. H. BELO CORPORATION
By: /s/ ROBERT W. DECHERD
----------------------------------------
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
-------------------------------------
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<PAGE> 1
EXHIBIT 10.3 (17)
EXHIBIT A
A. H. BELO CORPORATION
1995 EXECUTIVE COMPENSATION PLAN
(As Restated to Incorporate Amendments
through May 14, 1997)
A. H. Belo Corporation, a Delaware corporation (the "Company"),
established the A. H. Belo Corporation 1995 Executive Compensation Plan (the
"Plan"), effective as of January 1, 1995, and has restated the Plan to
incorporate amendments through May 14, 1997, 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
<PAGE> 2
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.
(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
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<PAGE> 3
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
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<PAGE> 4
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.
(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
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<PAGE> 5
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 5,000,000 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 5,000,000 shares reserved for
issuance under the Plan, no more than 1,200,000 shares of Common Stock
will be issued or transferred as Restricted Stock.
(b) No more than 5,000,000 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 not exceed 500,000 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.
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<PAGE> 6
(e) The payment of an Executive Compensation Plan Bonus
to any Participant will not exceed $1,500,000.
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.
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<PAGE> 7
(h) If a Participant terminates employment by reason of
death, disability or retirement at or after attaining the earliest age
that qualifies as the Participant's Early Retirement Age under the G.
B. Dealey Retirement Pension Plan, as amended from time to time, each
outstanding Stock Option granted to the Participant will remain
exercisable until the term of the Stock Option expires (determined
without regard to the Participant's termination of employment).
(i) 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 1996 annual meeting of
shareholders of the Company will be granted an option to purchase 20,000 shares
of Common Stock on the date of election to the Board. Each Director will be
granted an additional option to purchase 5,000 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. 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
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<PAGE> 8
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
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<PAGE> 9
Value per Share at the date of exercise).
(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) If a Participant terminates employment by reason of
death, disability or retirement at or after attaining the earliest age
that qualifies as the Participant's Early Retirement Age under the G.
B. Dealey Retirement Pension Plan, as amended from time to time, each
outstanding Appreciation Right granted to the Participant will remain
exercisable until the Appreciation Right expires by its terms
(determined without regard to the Participant's termination of
employment).
(g) 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.
-9-
<PAGE> 10
(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
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
-10-
<PAGE> 11
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 or an award of Stock Options to a
Director under Paragraph 6, (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 or
the Director other than by will or the laws of descent and distribution and
(ii) no Stock Option or Appreciation Right granted to the Participant or the
Director will be exercisable during the Participant's or Director's lifetime by
any person other than the Participant or Director, or such person's guardian or
legal representative.
12. Adjustments. The Committee will make or provide for such
adjustments in the maximum number of shares specified in Paragraphs 3, 4 and 6
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
-11-
<PAGE> 12
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 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 will be administered by the Committee, which at all times
will consist of two or more Directors appointed by the Board, all of whom will
qualify as "non-employee directors" as defined in Rule 16b-3 and as "outside
directors" as defined in regulations adopted under Section 162(m) of the Code,
as such terms may be amended from time to time. 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) 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.
-12-
<PAGE> 13
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 any applicable requirements of the New York Stock
Exchange (or any other exchange or market system upon which shares of Common
Stock are listed or admitted to trading), Rule 16b-3 or Section 162(m) of the
Code.
(b) The Plan may be terminated at any time by action of
the Board. The termination of the Plan will not adversely affect the terms of
any outstanding Award.
(c) 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.
(d) 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 provision will be
invalid and cease to have any effect without affecting the validity or
effectiveness of any other provision of the Plan.
-13-
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
(AS OF DECEMBER 31, 1996)
<TABLE>
<CAPTION>
STATE OF
NAME OF CORPORATION INCORPORATION
- ------------------- -------------
<S> <C> <C>
NEWSPAPER PUBLISHING:
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 WWLL, 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, Form S-8 No. 33-32526, Form S-8 No. 33-18771, Form S-8
No. 33-61491, and Form S-8 No. 33-61439) pertaining to the Employee Savings
and Investment Plan, Long-Term Incentive Plan, Employee Thrift Plan, and 1995
Executive Compensation Plan of A. H. Belo Corporation of our report dated
January 27, 1997, except for Note 11, as to which the date is February 28,
1997, 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, 1996.
/s/ ERNST & YOUNG LLP
Dallas, Texas
March 7, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 13,829
<SECURITIES> 0
<RECEIVABLES> 135,252
<ALLOWANCES> (5,276)
<INVENTORY> 13,873
<CURRENT-ASSETS> 171,925
<PP&E> 658,195
<DEPRECIATION> (287,415)
<TOTAL-ASSETS> 1,224,072
<CURRENT-LIABILITIES> 89,313
<BONDS> 631,857
0
0
<COMMON> 74,452
<OTHER-SE> 296,031
<TOTAL-LIABILITY-AND-EQUITY> 1,224,072
<SALES> 0
<TOTAL-REVENUES> 824,308
<CGS> 0
<TOTAL-COSTS> 593,476
<OTHER-EXPENSES> 65,183
<LOSS-PROVISION> 5,647
<INTEREST-EXPENSE> 27,643
<INCOME-PRETAX> 144,040
<INCOME-TAX> 56,535
<INCOME-CONTINUING> 87,505
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,505
<EPS-PRIMARY> 2.11
<EPS-DILUTED> 2.11
</TABLE>
