UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1994
Commission file number 1-5128
Meredith Corporation
(Exact name of registrant as specified in its charter)
Iowa 42-0410230
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1716 Locust Street, Des Moines, Iowa 50309-3023
(Address of principal executive offices) (ZIP Code)
515 - 284-3000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 31, 1995
Common Stock, $1 par value 10,199,181
Class B Stock, $1 par value 3,520,977
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Part I. FINANCIAL INFORMATION
Item I. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
December 31 June 30
Assets 1994 1994
- -------------------------------------------------------------------------------
(in thousands)
Current Assets:
Cash and cash equivalents $ 49,226 $ 37,957
Marketable securities 3,004 12,178
Receivables, net 104,237 75,856
Inventories 35,482 34,962
Supplies and prepayments 21,046 18,509
Deferred income taxes 1,913 --
Subscription acquisition costs 53,538 111,567
Film rental costs 8,989 7,239
---------- ----------
Total Current Assets 277,435 298,268
---------- ----------
Property, Plant and Equipment (at cost) 241,707 231,158
Less accumulated depreciation (115,080) (106,503)
---------- ----------
Net Property, Plant and Equipment 126,627 124,655
---------- ----------
Deferred Film Rental Costs 4,669 3,874
Deferred Subscription Acquisition Costs 48,341 70,108
Other Assets 27,691 24,562
Goodwill and Other Intangibles
(at original cost less accumulated amortization) 323,528 343,000
---------- ----------
Total Assets $ 808,291 $ 864,467
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
December 31 June 30
Liabilities and Stockholders' Equity 1994 1994
- -------------------------------------------------------------------------------
Current Liabilities: (in thousands)
Current portion of long-term indebtedness $ 44,250 $ 11,178
Current portion of long-term film rental contracts 8,882 6,683
Accounts payable 41,237 35,984
Accrued taxes and expenses 55,087 55,022
Unearned subscription revenues 151,094 152,952
Deferred income taxes -- 18,560
---------- ----------
Total Current Liabilities 300,550 280,379
---------- ----------
Long-Term Indebtedness 91,052 126,822
Long-Term Film Rental Contracts 7,047 4,118
Unearned Subscription Revenues 97,912 95,407
Deferred Income Taxes 24,756 37,011
Other Deferred Items 26,990 24,966
---------- ----------
Total Liabilities 548,307 568,703
---------- ----------
Minority Interests 35,692 38,003
---------- ----------
Stockholders' Equity:
Series Preferred Stock, par value $1 per share
Authorized 5,000,000 shares; none issued. -- --
Common Stock, par value $1 per share
Authorized 80,000,000 shares; issued and outstanding
10,153,422 at December 31 and 10,119,165 at
June 30 (net of treasury shares, 5,826,788 at 10,153 10,119
December 31 and 5,763,328 shares at June 30.)
Class B stock, par value $1 per share,
convertible to Common Stock
Authorized 15,000,000; issued and outstanding
3,562,411 shares at December 31 and 3,601,932
at June 30. 3,562 3,602
Retained earnings 215,045 246,917
Unearned compensation (4,468) (2,877)
---------- ----------
Total Stockholders' Equity 224,292 257,761
---------- ----------
Total Liabilities and Stockholders' Equity $ 808,291 $ 864,467
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Six Months
Ended December 31 Ended December 31
1994 1993 * 1994 1993 *
- -------------------------------------------------------------------------------
(Dollar amounts in thousands, except per share)
Revenues (less returns and allowances)
Advertising $ 92,854 $ 85,097 $176,834 $158,446
Circulation 67,687 66,222 130,638 127,976
Consumer books 20,862 23,891 45,044 44,148
All other 33,481 29,420 62,515 56,351
--------- --------- --------- --------
Total Revenues 214,884 204,630 415,031 386,921
--------- --------- --------- ---------
Operating Costs and Expenses:
Production, distribution and edit 84,978 85,275 167,543 162,320
Selling, general and administrative 102,411 96,441 197,833 181,183
Depreciation and amortization 8,551 8,639 17,124 17,258
Non-recurring item -- 4,800 -- 4,800
--------- --------- --------- ---------
Total Operating Costs and Expenses 195,940 195,155 382,500 365,561
--------- --------- --------- ---------
Income from Operations 18,944 9,475 32,531 21,360
Gain on dispositions -- 11,997 -- 11,997
Interest income - IRS settlement -- -- 8,554 --
Interest income 858 206 1,407 638
Interest expense (3,045) (2,875) (5,861) (5,690)
Minority interests 639 617 1,314 1,165
--------- --------- --------- ---------
Earnings before Income Taxes and 17,396 19,420 37,945 29,470
Cumulative Effect of Change in
Accounting Principle
Income taxes 8,477 7,916 18,354 14,522
--------- --------- --------- ---------
Earnings before Cumulative Effect of
Change in Accounting Principle 8,919 11,504 19,591 14,948
Cumulative Effect of Change in
Accounting Principle -- -- (46,160) --
--------- --------- --------- ---------
Net Earnings (Loss) $ 8,919 $ 11,504 $(26,569) $ 14,948
========= ========= ========= =========
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
Three Months Six Months
Ended December 31 Ended December 31
1994 1993 * 1994 1993 *
- -------------------------------------------------------------------------------
(Dollar amounts in thousands, except per share)
Net Earnings (Loss) Per Share:
Earnings before Cumulative Effect of $ 0.64 $ 0.80 $ 1.41 $ 1.04
Change in Accounting Principle
Cumulative Effect of Change in
Accounting Principle -- -- (3.33) --
--------- --------- --------- ---------
Net Earnings (Loss) Per Share $ 0.64 $ 0.80 $ (1.92) $ 1.04
========= ========= ========= =========
Dividends Paid Per Share $ 0.18 $ 0.16 $ 0.36 $ 0.32
========= ========= ========= =========
Average Number of Shares
Outstanding 13,863,000 14,366,000 13,845,000 14,427,000
========== ========== ========== ==========
Pro forma amounts assuming the new
accounting principle was applied
during all periods presented:
Earnings before Cumulative Effect of
Change in Accounting Principle $ 8,919 $11,889 $19,591 $18,222
Net Earnings $ 8,919 $11,889 $19,591 $18,222
Earnings Per Share:
Earnings before Cumulative Effect
of Change in Accounting Principle $ 0.64 $ .82 $ 1.41 $ 1.26
Net Earnings $ 0.64 $ .82 $ 1.41 $ 1.26
*Reclassified to conform with current-year presentation.
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended December 31 1994 1993*
- -------------------------------------------------------------------------------
(in thousands)
Cash Flows from Operating Activities:
Earnings before cumulative effect of change in accounting
principle $ 19,591 $ 14,948
Less cumulative effect of change in accounting principle (46,160) --
-------- --------
(26,569) 14,948
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation and amortization 17,124 17,258
Amortization of film contract rights 9,613 11,402
(Decrease) increase in deferred income taxes (32,728) 6,756
Non-recurring item (net of taxes) -- 2,592
(Increase) in receivables (28,381) (19,778)
(Increase) decrease in inventories (520) 1,472
(Increase) decrease in supplies and prepayments (2,537) 360
Decrease in subscription acquisition costs 79,796 7,127
Increase (decrease) in accounts payable and accruals 5,318 (24,718)
Gain on dispositions (net of taxes) -- (8,197)
Increase (decrease) in unearned subscription revenues 647 (7,631)
Increase in other deferred items 2,024 746
-------- --------
Net cash provided by operating activities 23,787 2,337
-------- --------
Cash Flows from Investing Activities:
Redemption of marketable securities 9,174 4,890
Proceeds from dispositions -- 33,000
Additions to property, plant, and equipment (12,445) (10,554)
Decrease (increase) in other assets 7,192 (6,971)
-------- --------
Net cash provided by investing activities 3,921 20,365
-------- --------
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended December 31 1994 1993*
- -------------------------------------------------------------------------------
(in thousands)
Cash Flows from Financing Activities:
Long-term indebtedness retired (2,698) (97)
Payments for film rental contracts (6,841) (8,452)
Proceeds from common stock issued 1,795 1,294
Purchase of company shares (3,759) (20,165)
Dividends paid (4,936) (4,639)
-------- --------
Net cash (used) by financing activities (16,439) (32,059)
-------- --------
Net increase (decrease) in cash and cash equivalents 11,269 (9,357)
Cash and cash equivalents at beginning of year 37,957 18,569
-------- --------
Cash and Cash Equivalents at End of Period $49,226 $ 9,212
======== ========
*Reclassified to conform with current-year presentation.
Supplemental Schedule of Noncash Investing and Financing Activities:
- The Company received $2 million of preferred stock in Granite Broadcasting
Corporation in conjunction with the sale of two broadcasting stations in
December 1993.
See accompanying Notes to Interim Consolidated Financial Statements.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
The information included in the foregoing interim financial statements is
unaudited. In the opinion of management, all adjustments, which are of a
normal recurring nature and necessary for a fair presentation of the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the entire year.
Change in accounting principle related to subscription acquisition costs:
The Company recognized a charge to earnings for the six months ended December
31, 1994 of $46,160,000 (post-tax) related to the implementation of Practice
Bulletin 13 "Direct-Response Advertising and Probable Future Benefits."
Practice Bulletin 13 was issued by the Accounting Standards Executive Committee
("AcSEC") of the American Institute of Certified Public Accountants (AICPA)
after approval by the Financial Accounting Standards Board (FASB) in December,
1994. Practice Bulletin 13 was issued to interpret Statement of Position
("SOP") 93-7 "Reporting on Advertising Costs" issued by AcSEC in December,
1993.
The Company adopted SOP 93-7 in its fiscal year ended June 30, 1994. There was
no effect on the Company's financial statements from the adoption of SOP 93-7.
This was due to the Company's belief that its policy of capitalizing most
magazine subscriber acquisition costs and recognizing expense pro rata with the
delivery of magazines was materially in compliance with the requirements of SOP
93-7. SOP 93-7 specifies that direct-response advertising costs should be
capitalized if the direct-response advertising can be shown to both (1) result
in specific sales and (2) result in probable future benefits. Probable future
benefits are defined as probable future revenues in excess of future costs
incurred to attain those revenues.
The Company has two revenue streams related to the sale of magazine subscrip-
tions: subscriber and advertising revenues. The Company believed that both
types of revenue were related to its direct-response advertising efforts.
Practice Bulletin 13, however, was issued to interpret SOP 93-7 to specify that
only "primary revenues" (those revenues from sales to customers receiving and
responding to direct-response advertising efforts) could be used in determining
probable future revenues and benefits as defined by SOP 93-7.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
Therefore, in accordance with the requirements of Practice Bulletin 13, the
Company reported the change in accounting as a cumulative effect of a change in
accounting principle as of July 1, 1994, the beginning of the Company's current
fiscal year. The effect of adopting Practice Bulletin 13 on the Company's
consolidated statements of earnings were as follows:
Three Months Three Months Six Months
Ended Ended Ended
September 30, December 31, December 31,
Earnings (Loss) 1994* 1994 1994
- ------------------ ------------- ------------ ------------
($ in thousands)
Earnings before Cumulative
Effect of Change in
Accounting Principle $ 0 $(1,586) $ (1,586)
========= ======== =========
Net (Loss) $(46,160) $(1,586) $(47,746)
========= ======== =========
Earnings (Loss) Per Share
- -------------------------
Earnings before Cumulative
Effect of Change in
Accounting Principle $ 0 $ (.11) $ (.11)
========= ======== =========
Net (Loss) $ (3.33) $ (.11) $ (3.44)
========= ======== =========
*Restated to reflect the adoption of Practice Bulletin 13 on July 1, 1994.
There was no effect on earnings from continuing operations in the first
quarter from adopting Practice Bulletin 13. The amount of subscription
acquisition costs that would have been expensed under Practice Bulletin 13
was the same amount that was expensed under the previous accounting method
for subscription costs.
The cumulative effect of the change in accounting principle, as of July 1, 1994
on the Company's balance sheet was to reduce subscription acquisition costs by
$76.9 million, deferred income tax liabilities by $30.7 million and retained
earnings by $46.2 million.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
2. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 32 percent are under the LIFO method at both
December 31, 1994 and June 30, 1994.
(unaudited)
December 31 June 30
1994 1994
-------- --------
($ in thousands)
Raw materials $18,844 $15,366
Work in process 14,558 13,132
Finished goods 12,364 15,086
-------- --------
45,766 43,584
Reserve for LIFO cost valuation (10,284) (8,622)
-------- --------
Total $35,482 $34,962
======== ========
3. Internal Revenue Service ("IRS") Settlement
The Company recognized interest income in the first quarter of fiscal 1995 of
$8,554,000 (pre-tax) related to the settlement of its 1986 through 1990 tax
years. Federal income tax deficiency notices from the IRS related to those tax
years were contested by the Company in United States Tax Court in fiscal 1993.
These tax deficiency notices were primarily related to the Company's acquisi-
tion of Ladies' Home Journal magazine in January 1986. In March 1994, the
Company received a favorable decision from the Tax Court. The appeal period
with respect to this decision expired on September 16, 1994. The Company also
recognized a benefit of approximately $9 million which reduced the goodwill
recorded in connection with the Ladies' Home Journal acquisition. The benefit
of this reduction will be realized over the remaining life of the goodwill.
The Company recorded a receivable from the IRS in the first quarter related to
these issues of approximately $18 million.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
4. Acquisition
On August 19, 1994, Meredith Corporation announced that it had reached an
agreement to purchase the assets of WSMV-TV, an NBC network affiliated
television station in Nashville, Tennessee, from Cook Inlet Television
Partners. The Company obtained final regulatory approvals in December 1994, to
acquire WSMV-TV. On January 5, 1995, the Company purchased the assets of WSMV-
TV for $159 million using cash from short-term investments and lines of credit
and $100 million in a term borrowing obtained from a group of four banks led by
The Northern Trust Company as agent. A Form 8-K was filed in January 1995
describing the transaction.
5. Derivative Financial Instruments
The Company adopted Statement of Financial Accounting Standards No. 119
"Disclosure About Derivative Financial Instruments and Fair Value of Financial
Instruments" in the first quarter of fiscal 1995. The Company has a
subsidiary, Meredith/New Heritage Strategic Partners, L.P. ("Strategic
Partners") in which it has an indirect ownership interest of approximately 70
percent. Strategic Partners entered into a Swap Rate Agreement (the
"Agreement") on September 1, 1992 for $90 million of the debt outstanding under
its loan agreement with 10 banks. The Agreement is in effect through September
1, 1995 and established that Strategic Partners would receive payment based on
the six-month LIBOR interest rate, reset semi-annually, and make payments at
the fixed interest rate of 7.1 percent. The purpose of the Agreement is to
reduce interest rate risk by fixing the interest rate on $90 million of
Strategic Partners' debt. (Total debt outstanding under Strategic Partners'
term loan agreement was $135 million at December 31, 1994.) The fixed rate
payable, including the applicable margin (as defined in the underlying loan
agreement) is approximately 8.6 percent. This rate is accrued and charged to
interest expense through the term of the Agreement. Remaining payments under
the Agreement are $793,000 on March 1, 1995 and payment to or from Strategic
Partners on September 1, 1995 based on the six-month LIBOR interest rate on
March 1, 1995. The current value of the Agreement as of January 30, 1995, is
$789,000 for the March 1, 1995 payment and $130,000 for the September 1, 1995
payment. The Agreement was entered into for a purpose other than trading.
Strategic Partners' management believes there is no market risk or significant
credit risk associated with the Agreement.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
6. Long-term Indebtedness/Disposition of Property
On December 29, 1994, Meredith/New Heritage Strategic Partners L.P. ("Strategic
Partners") entered into an amendment to the loan agreement it currently has
with ten banks, led by Toronto Dominion as agent. As of December 31, 1994,
$135 million was owed under this loan agreement by Strategic Partners to the
banks. (This debt is non-recourse to Meredith Corporation.) The maturity
date, repayment provisions, required financial tests and capital expenditure
limits were the significant changes made to the loan agreement in the December
29 amendment. The maturity date has been accelerated from March 31, 2001, to
the earlier of March 31, 1996, or the date of the sale of all or the remaining
portion of Strategic Partners' cable television systems. The requirement for
regularly scheduled quarterly payments has been discontinued. New repayment
provisions require that upon the earlier of June 30, 1995, or the sale of the
North Dakota systems, Strategic Partners will pay the banks approximately $44
million. The remaining loan balance is payable on the maturity date.
(Strategic Partners entered into a contract on December 20, 1994, to sell its
North Dakota systems on or before March 31, 1995.) Strategic Partners met the
required financial tests of the loan agreement, as amended, at December 31,
1994.
7. Contingencies
Reference is made to Part II, Item 1. Legal Proceedings of the Company's Form
10-Q for the quarterly period ended September 30, 1994.
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations: Second Quarter Fiscal 1995 Compared with Second Quarter
Fiscal 1994
Meredith Corporation net earnings for the quarter ended December 31, 1994 were
$8,919,000, or 64 cents per share, an increase of more than 50 percent from
prior-year second quarter earnings before the gain on dispositions and the non-
recurring item, both net of tax. Net earnings in the prior-year second quarter
were $11,504,000, or 80 cents per share, which included a post-tax gain of
$8,197,000, or 57 cents per share, from the December 1993 sale of two
television properties and a non-recurring post-tax charge of $2,592,000, or 18
cents per share, for taxes on disposed properties. Excluding these special
items, prior-year second quarter earnings were $5,899,000, or 41 cents per
share. Record profits in the Company's Broadcast Group were the primary factor
in the increase in comparable earnings. Two cents of the increase in
comparable earnings per share resulted from fewer shares outstanding due to the
Company's share repurchase program.
Revenues for the three months ended December 31, 1994 were $214,884,000, a five
percent increase from prior-year second quarter revenues of $204,630,000.
Increased advertising revenues from magazine operations and the five comparable
television stations were the most significant factor in the increase.
Revenues by Segment
Three Months Ended December 31 1994 1993
-------------------------------------------------------------------
Publishing $164,537 $156,360
Broadcast 31,085 30,299
Real Estate 6,008 5,343
Cable 13,273 12,641
Less: Inter-segment Revenue (19) (13)
-------- --------
Total Revenues $214,884 $204,630
======== ========
Income from operations was $18,944,000 in the fiscal second quarter, almost
double operating income of $9,475,000 in the prior-year period. The operating
margin rose from 4.6 percent of net revenues in the fiscal 1994 second quarter
to 8.8 percent in the current quarter. Excluding the non-recurring charge from
the prior-year period, the operating margin increased 26 percent. The
following table shows the percentage of revenues each major expense
classification represented in the current and prior year quarter:
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Expenses as Percentage of Revenues
Three Months Ended December 31 1994 1993*
- ------------------------------------------------------------------------
Production, distribution and editorial (PD&E) 39.5% 41.7%
Selling, general and administrative (SG&A) 47.7% 47.1%
Depreciation and amortization 4.0% 4.2%
Non-recurring items -- 2.3%
* Reclassified to conform with current-year presentation.
PD&E expense declined as a percentage of total revenues due to increased
advertising revenues in the Broadcast Group.
SG&A expenses increased slightly as a percentage of revenues compared to the
prior year period. The primary factor in the increase was the operating effect
of a change in accounting principle related to subscription acquisition costs
(see further explanation in Publishing Segment discussion). This accounting
change added approximately $2.9 million to SG&A expenses in the second quarter.
Prior year SG&A expenses would have been 46.8 percent of net revenues on a pro
forma basis if the accounting change was reflected in the prior year due to the
timing of subscriber acquisition efforts.
The charge for non-recurring items represents a prior-year reserve for taxes on
disposed properties.
A discussion of results by segment follows:
Publishing: Revenues in the Magazine Group increased ten percent from the
prior-year second quarter primarily due to increased advertising revenues
resulting from a 15 percent increase in advertising pages. Almost all titles
reported higher ad pages and revenues. Better Homes and Gardens, the Company's
largest circulation title, recorded an advertising page gain of 13 percent.
Other titles with double-digit percentage gains in ad pages included
Traditional Home, Golf For Women, WOOD and the Company's line-up of Better
Homes and Gardens Special Interest Publications. Magazine Group circulation
revenues were up 4 percent from the prior year primarily due to subscription
revenues on new titles, including Better Homes and Gardens Floral & Nature
Crafts, and newsstand sales of a new line of custom publications. Ancillary
revenues in the Magazine Group also grew due to increased sales of specialty
products and services.
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Magazine Group profits increased from the prior year second quarter despite the
negative operating effect of a change in accounting principle related to
subscription acquisition costs. In December 1994, the Financial Accounting
Standards Board (FASB) approved the issuance of Practice Bulletin 13 which
interpreted AICPA Statement of Position 93-7, "Reporting on Advertising Costs,"
previously adopted by the Company. Practice Bulletin 13 required the Company
to change from a method of deferring most subscription acquisition costs to
deferring only those costs generating future subscription revenues in excess
of future costs incurred. Therefore, subscription acquisition expenses may now
vary significantly by quarter, depending on the timing of subscriber promotion
efforts.
Excluding the effect of this change in accounting principle, profits increased
more than 30 percent from the prior year period. Better Homes and Gardens
magazine led the Group with a profit improvement in excess of 50 percent
resulting primarily from a gain in advertising revenues. Increased ad revenues
also were the primary factor in improved results for Golf For Women, WOOD,
Country America and the Better Homes and Gardens Special Interest Publications.
Current quarter profits were held down by higher new title start-up costs and
expansion in the custom publishing area. The increase in new title start-up
costs primarily reflected costs associated with a new bi-monthly gardening
magazine, Home Garden, which will debut in the Company's fiscal third quarter.
Book Group revenues declined 14 percent from the prior year second quarter due
to lower sales volumes in the retail marketing, direct mail and Craftways
operations. After several successive quarters of improvement, operating
results for the Group also were short of the prior year's performance. Profits
in retail marketing operations suffered from lower sales volume and margins, a
result of the mix of products sold. The decline in sales volume reflected a
significant prior year sale of garden titles to Wal-Mart Stores, Inc. This
sale coincided with the January 1994 opening of Wal-Mart/Better Homes and
Gardens Garden Centers in more than 2,000 stores nationwide. Increased new
member acquisition efforts held-down profits in Better Homes and Garden Crafts
Club, the largest of the Company's five book clubs. Direct mail operating
results also fell short of the prior year quarter due to lower sales volumes
and increased promotion costs relative to net revenues.
Revenues and profits from the Company's licensing agreement with Wal-Mart
Stores, Inc., contributed to the improvement in second quarter Publishing
segment results.
Broadcast: Increases in local and national advertising revenues resulted in
record second quarter profits for the Broadcast Group. Advertising revenues of
the five comparable stations increased 25 percent from the prior year second
quarter. Increased market demand for advertising led to higher spot rates
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which fueled the revenue growth. Increased revenues at KPHO, the Company's
television station in Phoenix, also reflected its affiliation with the CBS
network effective September 10, 1994. Broadcast Group profits increased more
than 75 percent from comparable fiscal 1994 second quarter earnings. This
comparison excludes the operating results of two stations sold in December
1993. All of the Company's five stations reported higher profits primarily due
to revenue increases. Lower programming expenses also contributed to improved
performance, especially at KPHO. The decline in programming expense at KPHO
reflects a reduced need for station-supplied programming, due to its
affiliation with CBS, which led to a one-time write-down of certain film assets
in the prior year.
Real Estate: Second quarter revenues increased 12 percent in the Real Estate
Group due to higher transaction fee revenues and product and publication sales
volumes. The increase in transaction fees, which are generated by members'
sales volumes, reflected continued strength in existing home sales. Profits
also exceeded the prior year second quarter, primarily due to revenue
increases.
Cable Television: Subscriber growth led to a five percent revenue increase in
the cable television operations. The Company indirectly owns approximately 70
percent of two cable television systems located in North Dakota and Minnesota.
Lower average revenue per subscriber, a result of government re-regulation of
cable pricing, partially offset the increase in revenues from additional
subscribers. Operating profits, before interest expense, also exceeded the
prior year period due to the revenue increase. However, due to higher interest
rates on debt, the cable television operations recorded an increased net loss
for the quarter compared to the prior year.
In December 1994, Meredith/New Heritage Strategic Partners, L.P. ("Strategic
Partners") announced the sale of its cable television system in Bismarck -
Mandan, North Dakota. This is the smaller of two systems owned by Strategic
Partners. The sale is expected to close in fiscal 1995, subject to regulatory
approval. Sale proceeds are required, per Strategic Partners' loan agreement
(as amended), to be applied against the outstanding debt of Strategic Partners.
This will have a favorable effect on interest expense of Strategic Partners
going forward.
Other: Increased interest income resulted from additional cash available for
investment and higher effective yields in the current period. Interest
expense, which relates almost entirely to the cable operations debt, increased
from the prior year period reflecting higher rates.
The increase in the overall effective tax rate, from 41 percent in the fiscal
1994 second quarter to 49 percent in the current quarter, reflected a favorable
effective tax rate on the prior-year gain on disposition of two broadcast
television properties.
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Results of Operations: First Six Months Fiscal 1995 Compared with First Six
Months Fiscal 1994
The effect of a change in accounting principle resulted in a net loss of
$26,569,000, or a negative $1.92 per share, for the first six months of fiscal
1995. In December 1994, the FASB approved the issuance of Practice Bulletin 13
which interpreted AICPA Statement of Position 93-7, "Reporting on Advertising
Costs," previously adopted by the Company. Practice Bulletin 13 required the
Company to change from a method of deferring most subscription acquisition
costs to deferring only those costs generating future subscription revenues in
excess of future costs incurred. The cumulative effect of this change in
accounting principle, as of July 1, 1994, was to reduce subscription
acquisition costs by $76.9 million, deferred income tax liabilities by $30.7
million and net earnings by $46.2 million, or $3.33 per share.
Earnings before the cumulative effect of a change in accounting principle were
$19,591,000, or $1.41 per share and included $4,747,000, or 34 cents per share,
in post-tax interest income from the Internal Revenue Service ("IRS"). The
Company recognized interest income in the first quarter of $8,554,000 (pre-tax)
related to the settlement of its 1986 through 1990 tax years. Federal income
tax deficiency notices from the IRS for those tax years were contested in
United States Tax Court in fiscal 1993. These tax deficiency notices primarily
related to the Company's acquisition of Ladies' Home Journal magazine in
January 1986. In March 1994, the Company received a favorable decision from
the Tax Court. The appeal period with respect to this decision expired on
September 16, 1994. In addition to the interest income reported above, the
Company recognized a benefit of approximately $9 million which reduced the
goodwill recorded in connection with the Ladies' Home Journal acquisition. The
benefit of this reduction will be realized over the remaining life of the
goodwill.
Fiscal 1994 net earnings for the first six months were $14,948,000, or $1.04
per share. This included a post-tax gain of $8,197,000 (57 cents per share) on
the dispositions of the Syracuse and Fresno television properties and a non-
recurring post-tax charge of $2,592,000 (18 cents per share) for taxes on
disposed properties.
Excluding these one-time occurrences, earnings were $14,844,000, or $1.07 per
share, for the six months ended December 31,1994, an increase of 65 percent
from comparable prior year per-share earnings of 65 cents, or $9,343,000. The
improvement resulted primarily from increased profits in the Broadcast Group.
Also contributing were improvements in Magazine, Real Estate and Licensing
operations. Four cents of the increase in comparable earnings per share
resulted from fewer shares outstanding due to the Company's share repurchase
program.
- 17 -
<PAGE>
Revenues for the first six months of fiscal 1995 were $415,031,000, a seven
percent increase from prior year revenues of $386,921,000. Advertising
revenues increased 12 percent due to gains from magazine operations and the
five comparable television stations. Increases in Real Estate Group revenues
and the addition of revenues from a licensing agreement were the primary
factors in the increase in other revenues.
Revenues by Segment
Six Months Ended December 31 1994 1993
-----------------------------------------------------------------
Publishing $319,606 $296,225
Broadcast 57,068 54,907
Real Estate 12,301 10,253
Cable 26,087 25,555
Less: Inter-segment Revenue (31) (19)
-------- --------
Total Revenues $415,031 $386,921
======== ========
Income from operations was $32,531,000 for the six months ended December
31,1994 compared to $21,360,000 in the prior year period. The operating margin
increased from 5.5 percent of net revenues in the prior year period to 7.8
percent in the current period. Excluding the non-recurring charge from the
prior year, the operating margin increased 15 percent. The following table
shows the percentage of revenues each major expense classification represented
in the current and prior year periods:
Expenses as Percentage of Revenues
Six Months Ended December 31 1994 1993*
- ------------------------------------------------------------------------
Production, distribution and editorial (PD&E) 40.4% 41.9%
Selling, general and administrative (SG&A) 47.7% 46.8%
Depreciation and amortization 4.1% 4.5%
Non-recurring items -- 1.2%
* Reclassified to conform with current-year presentation.
PD&E expense declined as a percentage of total revenues due to increased
advertising revenues in the Broadcast Group.
- 18 -
<PAGE>
SG&A expenses increased approximately one percent of revenues compared to the
prior year period. The operating effect of the change in accounting principle,
related to subscription acquisition costs, was the primary factor in the
increase. Prior year SG&A expenses would have been 45.4 percent of net
revenues on a pro forma basis if the accounting change was reflected in the
prior year. The increase in current period expense reflected the timing and
volume of subscriber acquisition efforts. Corporate non-operating expenses
also increased due to higher administrative expenses in the current year and
several one-time favorable adjustments in the prior year period.
The charge for non-recurring items represents a prior-year reserve for taxes on
disposed properties.
A discussion of results by segment follows:
Publishing: Revenues in the Magazine Group increased nine percent in the
current period over the prior year period. Advertising revenues grew 15
percent due to strong advertising page gains by virtually all titles. Better
Homes and Gardens and Ladies' Home Journal magazines, the Company's two largest
circulation titles, reported ad page increases of 15 percent and 8 percent,
respectively. Traditional Home, Country Home, Wood, Successful Farming, Golf
For Women and the Better Homes and Gardens Special Interest Publications all
reported double-digit percentage gains in ad pages. Magazine Group circulation
revenues increased four percent due to higher subscription revenues on new
titles, including Crayola Kids and Better Homes and Gardens Floral & Nature
Crafts. Growth of ancillary revenues from the sale of specialty products and
services also contributed to the Group's revenue increase.
Magazine Group profits increased nine percent from the prior year period
despite the unfavorable effect on operating results of the change in accounting
principle related to subscription acquisition costs. That change resulted in
the recognition of an additional $2.9 million in subscription expense in the
current period. Excluding that impact, Magazine Group profits were up 18
percent, largely due to the strong performance of its flagship title, Better
Homes and Gardens magazine. Advertising revenue growth fueled the Better Homes
and Gardens profit increase and also led to improved performances by Ladies'
Home Journal, Golf For Women, Successful Farming and WOOD magazines. Magazine
Group profits also benefited from rebates negotiated with major suppliers.
Partially offsetting these improvements were increased costs for new magazine
start-ups and expansion in the custom publishing area. The increase in new
title start-up costs primarily reflected costs associated with a new bi-monthly
gardening magazine, Home Garden, which debuts in the Company's fiscal third
quarter.
Book Group revenues declined slightly in the current six month period primarily
due to lower subscription levels of Cross Stitch & Country Crafts. Book Group
- 19 -
<PAGE>
operating results also lagged behind the prior year. Lower profits in the
retail marketing operations resulted from lower margins on sales, a function of
the mix of products sold. Higher promotion costs occurred in the direct mail
operations and circulation contribution declined in Cross Stitch & Country
Crafts.
Revenues and profits from the Company's licensing agreement with Wal-Mart
Stores, Inc., contributed to the improvement in Publishing segment results.
Better Homes and Gardens Garden Centers opened in more than 2,000 stores
nationwide in January 1994.
Paper and postage are significant and essential expenses in the Publishing
segment. Paper prices, which had been relatively stable in fiscal 1994 have
increased approximately 20 percent since the end of fiscal 1994. This includes
a January 1995 price increase. The price increases reflect a tightening of the
paper market due to strong demand. While the Company does not expect to
experience a shortage of paper in the foreseeable future, the current tight
market is expected to lead to further price increases. Each 10 percent
increase in price equates to a $10 million increase in paper costs for the
Company based on current annual volumes. The Company will consider changes in
paper types and weights in an effort to minimize the impact of the price
increases, but only where it believes product quality will not be adversely
affected. A postal rate increase occurred in January 1995 increasing the
Company's current level of postage costs by approximately $10 million on an
annual basis.
Broadcast: Broadcast Group revenues increased four percent in the six months
ended December 31, 1994 despite the absence of revenues from two television
stations sold in December 1993. Excluding those stations, comparable revenues
increased 25 percent due to strong local and national advertising revenues.
Each of the five comparable stations reported double-digit percentage gains in
ad revenues, a result of higher spot rates due to increased market demand for
television advertising. The advertising revenue increase led to a 70 percent
increase in comparable profits for the six months. This comparison with prior
year results excludes a favorable adjustment to accrued music license fees and
the operating results of two stations sold in December 1993. All five
television stations reported significant profit improvement. KPHO, the
Company's Phoenix station which joined the CBS network in September 1994,
reported the largest percentage profit improvement. The CBS affiliation is
expected to have a favorable long-term effect on the revenues and profits of
KPHO.
The Company completed the purchase of WSMV-TV, an NBC affiliate serving the
Nashville, Tennessee market, on January 5, 1995. This purchase is expected to
have a significant and favorable impact on Broadcast Group revenues and profits
on an annual basis. Interest expense on the debt incurred to purchase WSMV-TV
will reduce the favorable effect on net earnings of the Company.
- 20 -
<PAGE>
Real Estate: Higher transaction fee revenues and increased product and
publication sales volumes led to a 20 percent increase in Real Estate Group
revenues in the first six months of fiscal 1995. The increase in transaction
fees, which are generated by member's sales volume, reflected continued
strength in existing home sales. The revenue increases were also the primary
factor in a double-digit percentage profit increase for the Group.
Cable: Revenues in the Company's 70 percent owned cable systems increased
slightly compared to the prior year period. Subscriber growth at both systems
more than offset the negative effect of federally-mandated subscriber rate
rollbacks. Profits, before interest expense, were down from the prior year
period due to the impact of rate rollbacks on first quarter performance. After
interest expense, the cable television operations experienced a net loss for
the six months. The loss was greater than in the comparable prior year period
due to higher interest rates and lower operating profits.
Other: Interest income (excluding interest income from the IRS settlement)
increased due to additional cash available for investment and higher effective
yields. Interest expense, which related primarily to the cable operations
debt, increased slightly due to higher interest rates.
The Company's effective tax rate declined from 49 percent of revenues in the
six months ended December 31, 1993, to 48 percent in the current period despite
the favorable net effect of two special items in the prior year. The current
year provision benefited from increased operating earnings, compared to the
prior year period, which lessened the effect of non-deductible items on the
overall tax rate. The prior year provision benefited from a favorable
effective tax rate on the gain on the disposition of two television stations.
However, this benefit was partially offset in the prior year by the unfavorable
impact of the federal corporate tax rate increase on the Company's deferred tax
liabilities.
Liquidity and Capital Resources
Cash and cash equivalents increased by $11,269,000 in the six months ended
December 31, 1994, to $49,226,000. This compares to a decrease of $9,357,000
in the first six months of fiscal 1994. The difference was primarily the
result of increased cash provided by operating activities in the current
period. Higher earnings (before the change in accounting principle which had
no cash effect) and an increase in accounts payable and accruals led to the
increase in cash provided by operations. The increase in accounts payable and
accruals reflected additional paper purchases prior to a January 1995 price
increase. Accounts payable and accruals declined in the prior-year period due
to a large contribution made by the Company to a pension plan and payments for
paper purchased in June 1993 in anticipation of a July 1993 paper price
increase. The difference in unearned subscription revenues activity between
- 21 -
<PAGE>
periods reflected the timing of major promotional mailings. The reduction in
cash provided by investing activities was due to the prior year proceeds from
the dispositions of two television properties. The decrease in cash used by
financing activities in the current period reflected a lower number of Company
shares repurchased.
The decreases in subscription acquisition costs, deferred income taxes and
retained earnings, from June 30, 1994 to December 31, 1994, reflected the
cumulative effect of the change in accounting principle recorded in the current
period as of July 1, 1994. The increase in accounts receivable during the
period was due to higher advertising receivables in magazine and broadcast
operations and the remaining balance due from the IRS for the recent tax
settlement. The increase in the current portion of long-term indebtedness
compared to June 30, 1994, reflected an amendment to Strategic Partners' loan
agreement.
At September 30, 1994, Strategic Partners failed to meet certain financial
ratios related to operating cash flow as required by the loan agreement it has
with ten banks. In light of Strategic Partners' efforts to sell its assets in
part or in whole, the banks waived compliance with the affected covenants and
their rights and remedies under the loan agreement as a result of the defaults
for the fiscal year first quarter. On December 29, 1994, Strategic Partners
and the banks amended the aforementioned loan agreement. Significant amended
terms and provisions relate to the maturity date, repayment provisions,
required financial tests and capital expenditure limits. (See Note 6 to the
Interim Consolidated Financial Statements.) The required financial ratio
tests, as amended, were met by Strategic Partners at December 31, 1994.
Strategic Partners' debt is non-recourse to Meredith Corporation. Strategic
Partners continues to explore the disposition of its remaining cable television
systems in Minnesota.
On January 5, 1995, Meredith Corporation purchased the assets of WSMV-TV, a
television station located in Nashville, Tennessee. The purchase price for
WSMV-TV was $159 million. The acquisition was financed by cash from short-term
investments and lines of credit and $100 million in a term borrowing from a
group of four banks led by The Northern Trust Company as agent. The first
payment of $10 million is due under the loan agreement on June 1, 1995. The
final payment is scheduled to be made on December 31, 1998, the term loan
maturity date. Operating cash flows of the Company are expected to provide
adequate funds for debt and interest payments.
In the six months ended December 31, 1994, $3.8 million was spent for the
repurchase of 84,000 shares of Company common stock. This compares with
spending of $20.2 million for 563,000 shares in the prior year period. As of
December 31, 1994, approximately 194,000 shares may be repurchased under an
existing authorization by the Board of Directors. The status of the repurchase
program is reviewed at each quarterly Board of Directors meeting.
- 22 -
<PAGE>
On January 30, 1995, the Board of Directors increased the quarterly dividend by
11 percent, or two cents per share, to 20 cents per share with the dividends
payable on March 15, 1995. On an annual basis, the effect of this quarterly
dividend increase would be to increase dividends paid by approximately $1
million at the current number of shares outstanding. The Board of Directors
also approved a two-for-one stock split in the form of a share dividend payable
to shareholders of record on March 1, 1995.
Capital expenditures in fiscal 1995 are expected to increase by approximately
fifteen percent over fiscal 1994 levels. This growth will result primarily
from increased spending at the Company's television station in Phoenix to
facilitate increased news programming and upgrade other receiving and
transmission equipment related to becoming a CBS affiliate in September 1994.
Other planned spending includes equipment upgrades for the recently acquired
television station in Nashville and continued investment in new and upgraded
computer networks throughout Company operations. The Company also intends to
enter into a lease agreement for office space in New York City, which will
allow consolidation of all New York City employees in one location and reduce
future occupancy costs. This project is expected to cost approximately $10
million with spending to occur primarily in fiscal 1996. In addition, the
Company plans to spend approximately $36 million in fiscal 1996 through 1998
for a new office building and related improvements in Des Moines. The Company
has made no other material commitments for capital expenditures.
At this time, management expects that cash on hand, plus internally-generated
cash flow, will provide funds for capital expenditures, cash dividends,
scheduled debt payments and other operational cash needs for foreseeable
periods (excluding Strategic Partners' scheduled debt payments which are
expected to be funded by proceeds from the partial or total sale of its cable
television systems). Short-term lines of credit will continue to be used on an
as-needed basis for short-term working capital needs. At December 31, 1994,
Meredith Corporation had three unused committed lines of credit totaling $23
million. The Company does not expect the need for any long-term source of cash
to meet working capital requirements.
- 23 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part II, Item 1. Legal Proceedings of the Company's Form
10-Q for the period ended September 30, 1994.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on November 14, 1994 at the
Company's headquarters in Des Moines, Iowa.
(b) The name of each director elected at the Annual Meeting is shown under
Item 4.(c).
The other directors whose terms of office continued after the meeting
were: Robert A. Burnett, Pierson M. Grieve, Robert E. Lee, Richard S.
Levitt, E. T. Meredith III, Jack D. Rehm and Barbara S. Uehling.
(c) Four Class II directors for terms expiring in 1997 were elected at the
annual meeting. The following directors were elected at that meeting in
uncontested elections:
Number of shareholder votes*
----------------------------
For Withheld
---------- --------
Class II directors
Herbert M. Baum 39,659,962 297,057
Frederick B. Henry 39,663,681 293,338
William T. Kerr 39,667,882 289,137
Nicholas L. Reding 39,667,882 289,137
*As specified on the proxy card, if no vote For or Withhold was specified,
the shares were voted For the election of the named director.
In addition, the appointment by the Board of Directors of Joel W. Johnson,
President and Chief Executive Officer of Hormel Foods Corporation to serve
as a Class III director and to fill a vacancy created by the retirement of
Gerald D. Thornton was unanimously approved by shares present and voted at
the Meeting. Mr. Johnson will serve for a term to expire at the next
election of directors by the stockholders (November 13, 1995), pursuant
to Article III, Section 8 of the Company's Bylaws.
- 24 -
<PAGE>
Stockholders of the Company approved a supplement to the Company's Management
Incentive Plan (the "Plan") that specifies business criteria, classes of
eligible participants and maximum annual incentives to be awarded under the
Plan. The shareholder vote on the proposal was as follows:
# Broker
# For # Against # Abstain Non-Votes
---------- --------- --------- ---------
38,457,211 1,260,226 194,774 26,232
Stockholders of the Company also approved an amendment to the Company's
Restated Articles of Incorporation to increase the number of authorized shares
of class B stock to 15 million solely for issuance as share dividends on class
B stock, to increase the number of authorized shares of common stock from 50
million to 80 million and to modify certain rights of common stock and class B
stock with respect to share dividends. The shareholder vote on the proposal
was as follows:
# Broker
# For # Against # Abstain Non-Votes
---------- --------- --------- ---------
35,197,843 3,871,123 95,526 774,131
Lastly, stockholders of the Company approved an amendment to the Company's
Restated Articles of Incorporation to broaden the class of "Permitted
Transferees" of class B stock by defining the term "grandparent" as "an
ancestor in any degree born after January 1, 1876." The shareholder vote on
the proposal was as follows:
# Broker
# For # Against # Abstain Non-Votes
---------- --------- --------- ---------
37,643,140 1,315,678 171,709 808,159
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3a) Restated Articles of Incorporation
b) Restated Bylaws
- 25 -
<PAGE>
4) Instruments defining the rights of security holders, including
indentures: Loan agreement, as amended, between Meredith/New Heritage
Strategic Partners L.P. and ten banks, led by Toronto-Dominion Bank
10) Material contracts
a) Meredith Corporation Nonqualified Stock Option Award Agreement
with Jack D. Rehm, Chairman and Chief Executive Officer
b) Meredith Corporation Restricted Stock Agreement with Jack D. Rehm,
Chairman and Chief Executive Officer
c) Meredith Corporation Nonqualified Stock Option Award Agreement
with William T. Kerr, President and Chief Operating Officer
d) Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with its executive officers.
11) Statement re computation of per share earnings
27) Financial Data Schedule
(b) Reports on Form 8-K
No Form 8-K was filed for the quarter ended December 31, 1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEREDITH CORPORATION
Registrant
(Larry D. Hartsook)
Larry D. Hartsook
Vice President - Finance
(Principal Financial and
Accounting Officer)
Date: February 13, 1995
- 26 -
<PAGE>
Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
3a Restated Articles of Incorporation
3b Restated Bylaws
4 Loan agreement, as amended, between Meredith/New Heritage
Strategic Partners L.P. and ten banks, led by
Toronto-Dominion Bank*
10a Meredith Corporation Nonqualified Stock Option Award
Agreement with Jack D. Rehm, Chairman and Chief Executive
Officer
10b Meredith Corporation Restricted Stock Agreement with Jack D.
Rehm, Chairman and Chief Executive Officer
10c Meredith Corporation Nonqualified Stock Option Award
Agreement with William T. Kerr, President and Chief Operating
Officer
10d Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with its executive officers
11 Statement re computation of per share earnings
27 Financial Data Schedule
*Supplementary Exhibits and Schedules to the loan agreement as listed on pages
4 and 5 of Exhibit 4 are not included in this filing. Copies of any exhibits
and/or schedules to this loan agreement will be furnished upon request.
- 27 -
Exhibit 3a
----------
RESTATED ARTICLES OF INCORPORATION
OF
MEREDITH CORPORATION
I
The name of the corporation is MEREDITH CORPORATION.
II
The corporation is organized for the purpose of engaging in any lawful
business for which corporations may be organized under the Iowa Business
Corporation Act.
III
A. Capitalization. The total number of shares of stock of all classes
which the corporation shall have authority to issue is 21,000,000 shares, of
which 1,000,000 shares shall be preferred stock, par value $1.00 per share
(hereinafter called "series preferred stock"), and 20,000,000 shares of which
shall be common stock, par value $1.00 per share (hereinafter called "common
stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the shares of each
class are as follows:
1. The series preferred stock may be issued from time to time in one
or more series, the shares of each series to have the voting powers, full
or limited, and the designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof as are stated and expressed herein or in the
resolution or resolutions providing for the issuance of the series,
adopted by the board of directors as hereinafter provided.
2. Authority is hereby expressly granted to the board of directors
of the corporation, subject to the provisions of this Article III and to
the limitations prescribed by law, to authorize the issuance of one or
more series of series preferred stock and with respect to each series to
fix by resolution or resolutions providing for the issuance of the series
the voting powers, full or limited, if any, of the shares of the series
and the designations, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions
Page 1 of 34
<PAGE>
thereof. Each series shall consist of such number of shares as shall be
stated and expressed in the resolution or resolutions providing for the
issuance of the stock of the series together with such additional number
of shares as the board of directors by resolution or resolutions may from
time to time determine to issue as a part of the series. The board of
directors may from time to time decrease the number of shares of any
series of series preferred stock (but not below the number thereof then
outstanding) by providing that any unissued shares previously assigned to
the series shall no longer constitute part thereof and may assign the
unissued shares to an existing or newly created series.
The authority of the board of directors with respect to each series
shall include, but not be limited to, the determination or fixing of the
following:
(a) The designation of the series.
(b) The dividend rate of the series, the conditions and dates
upon which dividends shall be payable, the relation which the
dividends shall bear to the dividends payable on any other class or
classes of stock, and whether the dividends shall be cumulative or
non-cumulative.
(c) Whether the shares of the series shall be subject to
redemption by the corporation and, if made subject to redemption, the
times, prices and other terms and conditions of the redemption.
(d) The rights of the holders of the shares of the series upon
the dissolution of, or upon the distribution of assets of, the
corporation, and the amount payable on the shares in the event of
voluntary or involuntary liquidation.
(e) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of the series.
(f) Whether or not the shares of the series shall be
convertible into or exchangeable for shares of any other classes or
of any other series of any class or classes of stock of the
corporation and, if provision be made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and conditions of
the conversion or exchange.
(g) The extent, if any, to which the holders of the shares of
the series shall be entitled to vote with respect to the election of
directors or otherwise.
Page 2 of 34
<PAGE>
3. The holders of shares of each series of series preferred stock
shall be entitled to receive, when and as declared by the board of
directors, out of funds legally available for the payment of dividends,
dividends at the rates fixed by the board of directors for such series,
and no more, before any dividends, other than dividends payable in common
stock, shall be declared and paid, or set apart for payment, on the common
stock with respect to the same dividend period.
4. Whenever, at any time, dividends on the then outstanding series
preferred stock as may be required with respect to any series outstanding
shall have been paid or declared and set apart for payment and after
complying with respect to any retirement or sinking fund or funds for any
series of series preferred stock, the board of directors may, subject to
the provisions of the resolution or resolutions creating any series of
series preferred stock, declare and pay dividends on the common stock, and
the holders of shares of preferred stock shall not be entitled to share
therein.
5. The holders of shares of each series of series preferred stock
shall be entitled upon liquidation or dissolution or upon the distribution
of the assets of the corporation to such preferences as provided in the
resolution or resolutions creating the series, and no more, before any
distribution of the assets of the corporation shall be made to the holders
of shares of common stock. Whenever the holders of shares of series
preferred stock shall have been paid the full amounts to which they shall
be entitled, the holders of shares of the common stock shall be entitled
to share ratably in all the remaining assets of the corporation.
6. At all meetings of the stockholders of the corporation, the
holders of shares of the common stock shall be entitled to one vote for
each share of common stock held by them. Except as otherwise required by
law and except for such voting powers with respect to the election of
directors or other matters as may be stated in the resolution or
resolutions of the board of directors providing for the issuance of any
series of series preferred stock, the holders of the series shall have no
voting power whatsoever.
7. No holder of any share of any class of stock of the corporation
shall have any preemptive right to subscribe for or acquire additional
shares of stock of any class of the corporation or warrants or options to
purchase, or securities convertible into, shares of any class of stock of
the corporation.
Page 3 of 34
<PAGE>
B. Restrictions on Ownership, Transfer and Voting. So long as the
corporation or any of its subsidiaries is subject to any law of the United
States or any state therein which restricts ownership or voting of capital
stock by aliens (as defined by the bylaws), not more than one-fifth of the
shares outstanding shall be owned of record or voted by or for the account of
aliens or their representatives or affiliates. The board of directors may
issue share certificates representing not more than one-fifth of the shares of
the stock of the corporation at any time outstanding in special form which may
be owned or held by aliens, such certificates to be known as "Foreign Share
Certificates" and to be so marked, but under no circumstances shall the total
amount of voting stock of any class represented by Foreign Share Certificates,
plus the amount of voting stock of that class owned by or for the account of
aliens and represented by certificates not so marked, exceed one-fifth of the
aggregate number of outstanding shares of such class.
Shares of stock shall be transferable on the books of the corporation by
the holder thereof, in person or by duly authorized attorney, upon the
surrender of the certificate representing the shares to be transferred,
properly endorsed; provided, however, that shares of stock other than shares
represented by Foreign Share Certificates shall be transferable to aliens or
any person holding for the account thereof only when the aggregate number of
shares of stock owned by or for the account of aliens will not then be more
than one-fifth of the number of shares of stock outstanding. The board of
directors may direct that, before shares of stock shall be transferred on the
books of the corporation, the corporation may require information as to whether
the proposed transferee is an alien or will hold the stock for the account of
an alien.
If the stock records of the corporation shall at any time disclose alien
ownership of one-fifth or more of the voting stock of any class and it shall be
found by the corporation that any certificate for shares marked "Domestic Share
Certificate" is, in fact, held by or for the account of any alien, the holder
of the shares represented by that certificate shall not be entitled to vote, to
receive dividends or to have any other rights with respect to such shares,
except the right to transfer the shares to a non-alien (as defined in the
bylaws).
If the stock records of the corporation shall at any time disclose alien
ownership of one-fifth or more of the voting stock of any class and a request
is made by an alien to have shares registered in its name or for its account,
the corporation shall be under no obligation to effect the transfer or to issue
or reissue any stock certificates to or for the account of the alien. In
addition, if a proposed transferee of any shares is an alien, and the transfer
to such alien would result in alien ownership of one-fifth or more of the
voting stock of any class, the corporation shall be under no obligation to
Page 4 of 34
<PAGE>
effect the transfer or to issue or reissue any stock certificates to or for the
account of the alien. Further, if it is determined at any time that a transfer
has resulted in alien ownership of one-fifth or more of the voting stock of any
class, the holder of the shares which resulted in the alien ownership of one-
fifth or more of the voting stock shall not be entitled to vote, to receive
dividends or have any other rights with respect to such shares, except the
right to transfer those shares to a non-alien.
Amendment or deletion of these provisions covering restrictions on
ownership, transfer and voting shall require the affirmative vote of at least
80% of each class of outstanding shares of the corporation.
The board of directors shall establish rules, regulations and procedures
to assure compliance with the enforcement of this Article III B.
IV
The number of directors of the corporation shall be fixed from time to
time in the manner provided in the bylaws but shall not be fewer than three nor
more than fifteen. The directors shall be divided into three classes: Class
I, Class II, and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors. At the annual meeting
of stockholders on November 14, 1983, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term and Class III for a
three-year term. At each succeeding annual meeting of stockholders, beginning
in 1984, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case will a
decrease in the number of directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting for the year in which his
or her term expires and until a successor shall be elected and qualified,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office. Any vacancy occurring on the board of directors may be
filled by a majority of the directors in office, although less than a quorum,
or by a sole remaining director, and any vacancy on the board of directors that
results from an increase in the number of directors may be filled by a majority
of the board of directors in office. Any director elected to fill a vacancy
shall have the same remaining term as that of his or her predecessor.
A director may be removed only for cause and by the affirmative vote of
the holders of not less than 80 percent of the outstanding shares of voting
Page 5 of 34
<PAGE>
stock at a meeting of stockholders duly called for the consideration of such
removal. Cause shall mean conviction of a felony or adjudication of liability
for negligence or misconduct in the performance of a director's duty to the
company.
The affirmative vote of the holders of not less than 80 percent of the
outstanding shares of voting stock is required to amend this provision.
V
Notwithstanding any other provisions of the corporation's Restated
Articles of Incorporation or bylaws (and notwithstanding the fact that some
lesser percentage may be specified by law), any amendment of these Restated
Articles of Incorporation which would permit the holders of stock of the
corporation to amend, alter, change or repeal the bylaws or any part thereof,
shall require the affirmative vote of holders of not less than 80 percent of
the outstanding shares of voting stock of the corporation.
VI
No action required or permitted to be taken at any annual or special
meeting of the stockholders of the corporation may be taken without a meeting
and the power of stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.
Any amendment or deletion of the provisions of this Article VI shall
require the affirmative vote of the holders of not less than 80 percent of the
outstanding shares of voting stock of the corporation.
VII
The affirmative vote of the holders of not less than 80 percent of the
outstanding shares of "voting stock" (as hereinafter defined) of the
corporation shall be required for the approval or authorization of any
"business combination" (as hereinafter defined) of the corporation with any
"substantial stockholder" (as hereinafter defined); provided, however, that the
80 percent voting requirement shall not be applicable if:
1. The "continuing directors" of the corporation (as hereinafter
defined) by a two-thirds vote (a) have expressly approved in advance the
acquisition of outstanding shares of voting stock of the corporation that
caused the substantial stockholder to become a substantial stockholder or
(b) have approved the business combination prior to the substantial
stockholder involved in the business combination having become a
substantial stockholder;
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2. The business combination is solely between the corporation and
another corporation, 100 percent of the voting stock of which is owned
directly or indirectly by the corporation; or
3. The business combination is a merger or consolidation and the
cash or fair market value of the property, securities or other
consideration to be received per share by holders of common stock of the
corporation in the business combination is not less than the "fair price"
(as hereinafter defined) of the common stock.
For the purposes of this Article VII:
1. The term "business combination" shall mean (a) any merger or
consolidation of the corporation or a subsidiary with or into a
substantial stockholder, (b) any sale, lease, exchange, transfer or other
disposition, including without limitation a mortgage or any other security
device, of all or any "substantial part" (as hereinafter defined) of the
assets either of the corporation (including without limitation any voting
securities of a subsidiary) or of a subsidiary, to the substantial
stockholder, (c) any merger or consolidation of a substantial stockholder
with or into the corporation or a subsidiary of the corporation, (d) any
sale, lease, exchange, transfer or other disposition of all or any
substantial part of the assets of the substantial stockholder to the
corporation or a subsidiary of the corporation for consideration
aggregating $5,000,000 or more, (e) the issuance of any securities of the
corporation or a subsidiary of the corporation to a substantial
stockholder, (f) any reclassification or recapitalization (including any
reverse stock split) of the corporation or any of its subsidiaries or a
reorganization, in any case having the effect, directly or indirectly, of
increasing the percentage interest of a substantial stockholder in any
class of equity securities of the corporation or such subsidiary, and (g)
any agreement, contract or other arrangement providing for any of the
transactions described in this definition of business combination.
2. The term "substantial stockholder" shall mean and include any
individual, corporation, partnership or other person or entity which,
together with its "affiliates" and "associates" (as defined on September
1, 1983, in Rule 12b-2 under the Securities Exchange Act of 1934),
"beneficially owns" (as defined on September 1, 1983, in Rule 13d-3 under
the Securities Exchange Act of 1934) in the aggregate 20 percent or more
of the outstanding voting stock of the corporation, and any affiliate or
associate of any such individual, corporation, partnership or other person
or entity.
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<PAGE>
3. The term "substantial part" shall mean assets having a "fair
value" (as hereinafter defined) in excess of 10 percent of the fair market
value of the total consolidated assets of the corporation in question as
of the end of its most recent fiscal year ending prior to the time the
determination is being made.
4. Without limitation, any shares of common stock of the corporation
that any substantial stockholder has the right to acquire pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned by the substantial
stockholder.
5. For the purposes of this Article VII, the term "other
consideration to be received" shall include, without limitation, common
stock of the corporation retained by its existing public stockholders in
the event of a business combination in which the corporation is the
surviving corporation.
6. The term "voting stock" shall mean all outstanding shares of
capital stock of the corporation entitled to vote generally in the
election of directors and each reference to a proportion of shares of
voting stock shall refer to such proportion of the votes entitled to be
cast by such shares.
7. The term "continuing director" shall mean one elected as a
director at the 1983 annual stockholders' meeting or one elected or
appointed prior to the time the substantial stockholder in question
acquired such status, or one designated as a continuing director (prior to
his or her initial election or appointment) by a majority of the whole
board, but only if a majority of the whole board shall then consist of
continuing directors, or if a majority of the whole board does not then
consist of continuing directors, by a majority of the then continuing
directors.
8. The term "fair price" shall mean not less than the greater of (a)
the highest per share price paid by the substantial stockholder in
acquiring any of its shares of stock of the corporation or (b) an amount
which bears the same or greater percentage relationship to the market
price of the common stock of the corporation immediately prior to the
announcement of the business combination equal to the highest percentage
relationship that any per share price theretofore paid by the substantial
stockholder for any of its holdings of common stock of the corporation
immediately prior to commencement of the acquisition of the corporation's
common stock by the substantial stockholder.
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<PAGE>
9. The term "fair value" shall mean the fair market value thereof at
any time 90 days prior to the date of the consummation of any transaction,
which value and time shall be determined by a majority of the continuing
directors who may, if they wish, be advised on such value by an investment
banking firm selected by them. The fees of any such investment banking
firm shall be paid by the corporation.
The provisions set forth at this Article VII herein may not be repealed or
amended in any respect, unless such action is approved by the affirmative vote
of the holders of not less than 80 percent of the outstanding shares of voting
stock (as defined herein) of the corporation; provided, however, that this 80
percent vote requirement shall not apply if an amendment is recommended to
stockholders by two-thirds of the whole board of directors when a majority of
the members of the board of directors acting upon such matters are continuing
directors.
VIII
By the adoption of these Restated Articles of Incorporation, Articles I
through VII of the previously existing Restated Articles of Incorporation, as
amended, are hereby repealed, and substituted therefor are these Articles I
through VIII; these Restated Articles thus supersede the Restated Articles of
Incorporation and all amendments thereto. These Restated Articles of
Incorporation became effective upon their adoption by the shareholders on the
14th day of November, 1983.
MEREDITH CORPORATION
By:
Gerald D. Thornton
Vice President
By:
Betty Campbell Madden
Corporate Secretary
Page 9 of 34
<PAGE>
STATE OF IOWA )
) ss:
COUNTY OF POLK )
On this 14th day of November, A. D. 1983, before me, Lynelle D. Aller, a
notary public in and for said county, personally appeared Gerald D. Thornton,
to me personally known, who being by me duly sworn did say that he is a vice
president of said corporation, that the seal affixed to said instrument is the
seal of said corporation and that said Restated Articles of Incorporation were
signed and sealed on behalf of the said corporation by authority of its board
of directors and the said Gerald D. Thornton acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
Lynelle D. Aller
Notary Public in and for the
State of Iowa
Page 10 of 34
<PAGE>
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MEREDITH CORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 58 of the Iowa Business Corporation
Act, Chapter 496A, Code of Iowa, the undersigned corporation adopts the
following Articles of Amendment to its Articles of Incorporation:
I. The name of the corporation is Meredith Corporation. The effective
date of its incorporation was the 9th day of August, 1905. Its original name
was Meredith Publishing Company. On October 10, 1967, the corporate name was
changed to Meredith Corporation. The most recent Restated Articles of
Incorporation were filed November 14, 1983.
II. The following amendment to the Restated Articles of Incorporation was
adopted by the shareholders of the corporation on November 12, 1984, in the
manner prescribed by the Iowa Business Corporation Act:
RESOLVED that the first paragraph of Article III of the Restated
Articles of Incorporation be and hereby is changed and amended to
read as follows:
III. A. Capitalization. The total number of shares of stock of all
classes which the corporation shall have authority to issue is
40,000,000 shares, of which 5,000,000 shares shall be preferred
stock, par value $1.00 per share (hereinafter called "series
preferred stock"), and 35,000,000 shares of which shall be common
stock, par value $1.00 per share (hereinafter called "common stock").
III. The number of shares outstanding and entitled to vote at the time of
such adoption was 9,427,155.
IV. The number of shares voted for the increase in the number of
authorized shares of common stock was 7,659,954, the number of shares voted
against was 453,977, and the number of votes abstaining was 21,743.
V. The number of shares voted for the increase in the number of
authorized shares of series preferred stock was 6,661,069, the number of shares
voted against was 1,088,991, and the number of votes abstaining was 114,190.
Page 11 of 34
<PAGE>
VI. No exchange, reclassification, or cancellation of issued shares is
provided for in the amendment.
VII. Such amendment does not effect a change in the amount of stated
capital.
Dated: November 14, 1984.
Meredith Corporation
By __________________________
Gerald D. Thornton
Its Vice President
By __________________________
Betty Campbell Madden
Its Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 14th day of November, A.D., 1984, before me, Lynelle D. Kobe, a
Notary Public in and for said County, personally appeared Gerald D. Thornton,
to me personally known, who being by me duly sworn did say that he is vice
president of said corporation, that the seal affixed to said instrument is the
seal of said corporation and that said Articles of Amendment were signed and
sealed on behalf of the said corporation by authority of its board of directors
and the said Gerald D. Thornton and Betty Campbell Madden acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation by it voluntarily executed.
__________________________
Lynelle D. Kobe
Notary Public in and for the
State of Iowa
Page 12 of 34
<PAGE>
ARTICLES OF MERGER
OF
MEREDITH PUBLICATIONS, INC.
INTO
MEREDITH CORPORATION
- - - - - - - - - - - - - - - - - - - -
Pursuant to the provisions of the Iowa Business Corporation Act, the
undersigned hereby certifies:
FIRST: That the following Plan of Merger has been duly approved by
the Board of Directors of the surviving corporation:
(a) The name of the subsidiary corporation is Meredith Publications,
Inc., and the name of the surviving corporation is Meredith Corporation.
(b) The terms and conditions of the proposed merger are as follows:
All outstanding shares of the wholly-owned subsidiary will be
cancelled upon effect of the merger.
SECOND: That the designation and number of outstanding shares of
each class of the subsidiary corporation and the number of such shares of each
class owned by the surviving corporation, are as follows:
Number of Designation Number of Shares
Name of Shares of Owned by
Corporation Outstanding Class Surviving Corporation
___________ ___________ ___________ _____________________
Meredith Publi- 10,000 Common 10,000 (100%)
cations, Inc.
THIRD: That there are no holders of shares of the subsidiary
corporation (Meredith Publications, Inc.) not owned by the surviving
corporation (Meredith Corporation) and the surviving corporation waived the
mailing of a copy of the plan of merger.
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<PAGE>
IN WITNESS WHEREOF, this Certificate has been signed this 24th day of
June, 1986.
MEREDITH CORPORATION
By: ______________________________________
Gerald D. Thornton
Vice President-Administrative Services
By: ______________________________________
Betty Campbell Madden
Corporate Secretary
STATE OF IOWA )
) ss:
COUNTY OF POLK )
On this 24th day of June A.D., 1986, before me, Marna G. Ford, a
Notary Public in and for said county, personally appeared Gerald D. Thornton,
to me personnally known, who being by me duly sworn did say that he is Vice
President-Administrative Services of said corporation, that the seal affixed to
said instrument is the seal of said corporation and that said Articles of
Merger were signed and sealed on behalf of the said corporation by authority of
its Board of Directors and the said Gerald D. Thornton acknowledged the
execution of said instrument to be the voluntary act and deed of said
corporation by it voluntarily executed.
______________________________________
Notary Public in and for said county
Page 14 of 34
<PAGE>
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MEREDITH CORPORATION
__________________________________
To the Secretary of State
of the State of Iowa
Pursuant to the provisions of Section 496A.58 of the Iowa Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Restated Articles of Incorporation:
I. The name of the corporation is Meredith Corporation. The effective
date of its incorporation was the 9th day of August, 1905. Its original name
was Successful Farming Publishing Company.
II. The following amendment to the Restated Articles of Incorporation was
adopted by the shareholders of the corporation on December 15, 1986 in the
manner prescribed by the Iowa Business Corporation Act:
RESOLVED that Article IIIA of the Restated Articles of Incorporation
of the corporation be amended to read as follows:
III.
A. Capitalization. The total number of shares of stock of all classes
which the corporation shall have authority to issue is 65,000,000 shares, of
which 5,000,000 shares shall be preferred stock, par value $1.00 per share
(hereinafter called "series preferred stock"), 50,000,000 shares of which shall
be common stock, par value $1.00 per share (hereinafter called "common stock")
and 10,000,000 shares of which shall be class B common stock, par value $1.00
per share (hereinafter called "class B stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, of the shares of each
class are as follows:
1. The powers, preferences and rights of the common stock and class B
stock, and the qualifications, limitations or restrictions thereof, shall be in
all respects identical, except as otherwise required by law or expressly
provided in this Article IIIA.
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<PAGE>
2. (a) At each annual or special meeting of stockholders, each holder of
common stock shall be entitled to one (1) vote in person or by proxy for each
share of common stock standing in his name on the stock transfer records of the
corporation and (except as provided in subparagraph (b) of this subdivision 2)
each holder of class B stock shall be entitled to ten (10) votes in person or
by proxy for each share of class B stock standing in his name on the stock
transfer records of the corporation. Except as required pursuant to the
Business Corporation Act of the State of Iowa, all actions submitted to a vote
of stockholders shall be voted on by the holders of common stock and class B
stock voting together as a single class.
(b) Notwithstanding subparagraph (a) of this subdivision 2, each holder of
class B stock shall be entitled to only one (1) vote, in person or by proxy,
for each share of class B stock standing in his name on the stock transfer
records of the corporation with respect to the following matters:
(i) the removal of any director of the corporation pursuant to Article IV
of these Restated Articles of Incorporation:
(ii) Any amendment to these Restated Articles of Incorporation which would
permit the holders of stock of the corporation to amend, alter, change or
repeal the bylaws or any part thereof, pursuant to Article V of these
Restated Articles of Incorporation; and
(iii) Any repeal or amendment of Article IV or Article VI of these
Restated Articles of Incorporation.
3. If and when dividends on the common stock and class B stock are
declared payable from time to time by the board of directors from funds legally
available therefor, whether payable in cash, in property or in shares of stock
of the corporation, the holders of common stock and the holders of class B
stock shall be entitled to share equally, share for share, in such dividends.
4. (a) The holder of each outstanding share of class B stock shall have
the right at any time, or from time to time, at such holder's option to convert
such share into one fully paid and non-assessable share of common stock, on and
subject to the terms and conditions hereinafter set forth.
(b) In order to exercise the conversion privilege, the holder of any
shares of class B stock to be converted shall present and surrender the
certificate representing such shares during usual business hours at any office
or agency of the corporation maintained for the transfer of class B stock and
shall deliver a written notice of the election of the holder to convert the
shares represented by such certificate or any portion thereof specified in such
notice. Such notice shall also state the name or names (with address) in which
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<PAGE>
the certificate or certificates for shares of common stock which shall be
issuable on such conversion shall be issued. If so required by the
corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
corporation, duly executed by the holder of such shares or his duly authorized
representative. Except in the case of an automatic conversion pursuant to
clause (i) of subparagraph (a) of subdivision 5, subparagraph (d) of
subdivision 5 or subdivision 8, each conversion of shares of class B stock
shall be deemed to have been effected on the date (the "conversion date") on
which the certificate or certificates representing such shares shall have been
surrendered and such notice and any required instruments of transfer shall have
been received as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of common stock shall be issuable on
such conversion shall be deemed to have become immediately prior to the close
of business on the conversion date the holder or holders of record of the
shares of common stock represented thereby.
(c) As promptly as practicable after the presentation and surrender for
conversion, as herein provided, of any certificate for shares of class B stock,
the corporation shall issue and deliver at such office or agency, to or upon
the written order of the holder thereof, certificates for the number of shares
of common stock issuable upon such conversion. In case any certificate for
shares of class B stock shall be surrendered for conversion of a part only of
the shares represented thereby, the corporation shall deliver at such office or
agency, to or upon the written order of the holder thereof, a certificate or
certificates for the number of shares of class B stock represented by such
surrendered certificate, which are not being converted. The issuance of
certificates for shares of common stock issuable upon the conversion of shares
of class B stock shall be made without charge to the converting holder for any
tax imposed on the corporation in respect of the issue thereof. The
corporation shall not, however, be required to pay any tax which may be payable
with respect to any transfer involved in the issue and delivery of any
certificate in a name other than that of the holder of the shares being
converted, and the corporation shall not be required to issue or deliver any
such certificate unless and until the person requesting the issue thereof shall
have paid to the corporation the amount of such tax or has established to the
satisfaction of the corporation that such tax has been paid.
(d) Upon any conversion of shares of class B stock into shares of common
stock pursuant hereto, no adjustment with respect to dividends shall be made;
only those dividends shall be payable on the shares so converted as may be
declared and may be payable to holders of record of shares of class B stock on
a date prior to the conversion date with respect to the shares so converted;
and only those dividends shall be payable on shares of common stock issued upon
such conversion as may be declared and may be payable to holders of record of
shares of common stock on or after such conversion date.
Page 17 of 34
<PAGE>
(e) All shares of class B stock which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding, and
all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall thereupon cease and terminate, except only
the right of the holders thereof, subject to the provisions of subparagraph (c)
of this subdivision 4, to receive shares of common stock in exchange therefor.
All shares of class B stock surrendered for conversion shall be cancelled and
may not be reissued.
(f) Such number of shares of common stock as may from time to time be
required for such purpose shall be reserved for issuance upon conversion of
outstanding shares of class B stock.
5. (a) No person holding shares of class B stock (hereinafter called a
"class B holder") may transfer, and the corporation shall not register the
transfer of, such shares of class B stock, whether by sale, assignment, gift,
bequest, appointment or otherwise, except to a Permitted Transferee of such
class B holder, which term shall have the following meanings:
(i) In the case of a class B holder who is a natural person and the
holder of record and beneficial owner of the shares of class B stock
subject to said proposed transfer, "Permitted Transferee" means (A) the
spouse of such class B holder, (B) a lineal descendant of a grandparent of
such class B holder or a spouse of any such lineal descendant, (C) the
trustee of a trust (including a voting trust) for the benefit of one or
more class B holders, other lineal descendants of a grandparent of such
class B holder, the spouse of such class B holder, the spouses of such
other lineal descendants and an organization contributions to which are
deductible for federal income, estate or gift tax purposes (hereinafter
called a "Charitable Organization"), and for the benefit of no other
person, provided that such trust may grant a general or special power of
appointment to such class B holder, the spouse of such class B holder, any
lineal descendant of such class B holder or the spouse of any such lineal
descendant, and may permit trust assets to be used to pay taxes, legacies
and other obligations of the trust or the estate of such class B holder
payable by reason of the death of such class B holder and provided that
such trust prohibits transfer of shares of class B common stock to persons
other than Permitted Transferees, as defined in clause (ii) below, (D) the
estate of such deceased class B holder, (E) a Charitable Organization
established by such class B holder, such class B holder's spouse, a lineal
descendant or a grandparent of such class B holder, or a spouse of any
such lineal descendant, and (F) a corporation all the outstanding capital
stock of which is owned by, or a partnership all the partners of which
are, one or more of such class B holders, other lineal descendants of a
grandparent of such class B holder or a spouse of any such lineal
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<PAGE>
descendant, and the spouse of such class B holder; provided that if any
share of capital stock of such a corporation (or of any survivor or a
merger or consolidation of such a corporation), or any partnership
interest in such a partnership, is acquired by any person who is not
within such class of persons, all shares of class B stock then held by
such corporation or partnership, as the case may be, shall be deemed,
without further action, to be automatically converted into shares of
common stock, and stock certificates formerly representing such shares of
class B common stock shall thereupon and thereafter be deemed to represent
the like number of shares of common stock.
(ii) In the case of a class B holder holding the shares of class B
stock subject to said proposed transfer as trustee pursuant to a trust
other than a trust described in clause (iii) below, "Permitted Transferee"
means (A) the person who established such trust and (B) a Permitted
Transferee of such person determined pursuant to clause (i) above.
(iii) In the case of a class B holder holding the shares of class B
stock subject to said proposed transfer as trustee pursuant to a trust
which was irrevocable on the record date (or the initial distribution of
shares of class B stock ("Record Date"), "Permitted Transferee" means any
person to whom or for whose benefit principal may be distributed either
during or at the end of the term of such trust whether by power of
appointment or otherwise or any "Permitted Transferee" of such person
determined pursuant to clause (i), (ii), (iv), (v) or (vi) hereof, as the
case may be.
(iv) In the case of a class B holder who is the record (but not
beneficial) owner of the shares of class B stock subject to said proposed
transfer as nominee for the person who was the beneficial owner thereof
on the Record Date, "Permitted Transferee" means such beneficial owner and
a Permitted Transferee of such beneficial owner determined pursuant to
clause (i), (ii), (ii), (v) or (vi) hereof, as the case may be.
(v) In the case of a class B holder which is a partnership and the
holder of record and beneficial owner of the shares of class B stock
subject to said proposed transfer, "Permitted Transferee" means any
partner of such partnership or any "Permitted Transferee" of such partner
determined pursuant to clause (i), (ii), (iii), (iv) or (vi) hereof, as
the case may be.
(vi) In the case of a class B holder which is a corporation (other
than a Charitable Organization described in subclause (E) of clause (i)
above) and the holder of record and beneficial owner of the shares of
class B stock subject to said proposed transfer, "Permitted Transferee"
Page 19 of 34
<PAGE>
means any stockholder of such corporation receiving shares of class B
stock through a dividend or through a distribution made upon liquidation
of such corporation and the survivor of a merger or consolidation of such
corporation or any "Permitted Transferee" of such stockholder determined
pursuant to clause (i), (ii), (iii), (iv) or (v) hereof, as the case may
be.
(vii) In the case of a class B holder which is the estate of a
deceased class B holder, or which is the estate of a bankrupt or insolvent
class B holder, and provided such deceased, bankrupt or insolvent class B
holder, as the case may be, was the record and beneficial owner of the
shares of class B stock subject to said proposed transfer, "Permitted
Transferee" means a Permitted Transferee of such deceased, bankrupt or
insolvent class B holder as determined pursuant to clause (i), (v) or (vi)
above, as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any class
B holder may pledge such holder's shares of class B stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness
due to the pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to the
provisions of this subdivision 5. In the event of foreclosure or other similar
action by the pledgee, such pledged shares of class B stock may only be
transferred to a Permitted Transferee of the pledgor or converted into shares
of common stock, as the pledgee may elect.
(c) For purposes of this subdivision 5:
(i) the relationship of any person that is derived by or through
legal adoption shall be considered a natural one.
(ii) Each joint owner of shares of class B stock shall be considered
a "class B holder" of such shares.
(iii) A minor for whom shares of class B stock are held pursuant to
a Uniform Gifts to Minors Act or similar law shall be considered a class B
holder of such shares.
(iv) Unless otherwise specified, the term "person" means both
natural persons and legal entitles.
(d) Any purported transfer of shares of class B stock not permitted
hereunder shall result, without further action, in the automatic conversion of
the transferee's shares of class B stock into shares of common stock, effective
on the date of such purported transfer. The corporation may, as a condition to
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<PAGE>
the transfer or the registration of transfer of shares of class B stock to a
purported Permitted Transferee, require the furnishing of such affidavits or
other proof as it deems necessary to establish that such transferee is a
Permitted Transferee.
6. (a) Shares of class B stock shall be registered in the name(s) of the
beneficial owner(s) thereof (as hereafter defined) and not in "street" or
nominee" names; provided, however, certificates representing shares of class B
stock issued as a stock dividend on the corporation's then outstanding common
stock may be registered in the same name and manner as the certificates
representing the shares of common stock with respect to which the shares of
class B stock were issued. For the purposes of this subdivision 6, the term
"beneficial owner(s)"` of any shares of class B stock shall mean the person or
persons who possess the power to dispose, or to direct the disposition, of such
shares.
(b) The corporation shall note on the certificates representing the
shares of class B stock that there are restrictions on transfer and
registration of transfer imposed by subdivision 5 and this subdivision 6.
7. After the initial distribution of shares of class B stock, additional
shares of class B stock shall be issued by the corporation only pursuant to the
corporation's Incentive Stock Plan or Management Incentive Plan for which
shares of class B stock are duly reserved for issuance as of the Record Date.
8. If at any time following the initial issuance of shares of class B
stock the number of outstanding shares of class B stock as reflected on the
stock transfer books of the corporation is less than 9% of the aggregate number
of issued and outstanding shares of common stock and class B stock, then the
outstanding shares of class B stock shall be deemed, without further action, to
be automatically converted into shares of common stock, and stock certificates
formerly representing outstanding shares of class B stock shall thereupon and
thereafter be deemed to represent a like number of shares of common stock, and
any outstanding right to receive class B stock shall automatically become the
right to receive a like number of shares of common stock.
9. The common stock and class B stock are subject to all the powers,
rights, privileges, preferences and priorities of the series preferred stock as
may be stated herein and as shall be stated and expressed in any resolution or
resolutions adopted by the board of directors pursuant to authority expressly
granted to and vested in it by the provisions of this Article IIIA.
10. The series preferred stock may be issued from time to time in one or
more series, the shares of each series to have the voting powers, full or
limited, and the designations, preferences and relative, participating,
Page 21 of 34
<PAGE>
optional or other special rights, and qualifications, limitations or
restrictions thereof as are stated and expressed herein or in the resolution or
resolutions providing for the issuance of the series, adopted by the board of
directors as hereinafter provided.
11. Authority is hereby expressly granted to the board of directors of
the corporation, subject to the provisions of this Article IIIA and to the
limitations prescribed by law, to authorize the issuance of one or more series
of series preferred stock and with respect to each series to fix by resolution
or resolutions providing for the issuance of the series the voting powers, full
or limited, if any, of the shares of the series and the designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof. Each series shall
consist of such number of shares as shall be stated and expressed in the
resolution or resolutions providing for the issuance of the stock of the series
together with such additional number of shares as the board of directors by
resolution or resolutions may from time to time determine to issue as a part of
the series. The board of directors may from time to time decrease the number
of shares of any series of series preferred stock (but not below the number
thereof then outstanding) by providing that any unissued shares previously
assigned to the series shall no longer constitute a part thereof and may assign
the unissued shares to an existing or newly created series.
The authority of the board of directors with respect to each series shall
include, but not be limited to, the determination or fixing of the following:
(a) The designation of the series.
(b) The dividend rate of the series, the conditions and dates upon
which dividends shall be payable, the relation which the dividends shall
bear to the dividends payable on any other class or classes of stock, and
whether the dividends shall be cumulative or non-cumulative.
(c) Whether the shares of the series shall be subject to redemption
by the corporation and, if made subject to redemption, the times, prices
and other terms and conditions of the redemption.
(d) The rights of the holders of the shares of the series upon the
dissolution of, or upon the distribution of assets of, the corporation,
and the amount payable on the shares in the event of voluntary or
involuntary liquidation.
(e) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of the series.
Page 22 of 34
<PAGE>
(f) Whether or not the shares of the series shall be convertible
into or exchangeable for shares of any other classes or of any other
series of any class or classes of stock of the corporation and, if
provision be made for conversion or exchange, the times, prices, rates,
adjustments, and other terms and conditions of the conversion or exchange.
(g) The extent, if any, to which the holders of the shares of the
series shall be entitled to vote with respect to the election of directors
or otherwise.
12. The holders of shares of each series of series preferred stock shall
be entitled to receive, when and as declared by the board of directors, out of
funds legally available for the payment of dividends, dividends at the rates
fixed by the board of directors for such series, and no more, before any
dividends, other than dividends payable in common stock or class B common
stock, shall be declared and paid, or set apart for payment, on the common
stock or the class B common stock with respect to the same dividend period.
13. Whenever, at any time, dividends on the then outstanding series
preferred stock as may be required with respect to any series outstanding shall
have been paid or declared and set apart for payment and after complying with
respect to any retirement or sinking fund or funds for any series of series
preferred stock, the board of directors may, subject to the provisions of the
resolution or resolutions creating any series of series preferred stock,
declare and pay dividends on the common stock and the class B stock, and the
holders of shares of preferred stock shall not be entitled to share therein.
14. The holders of shares of such series of series preferred stock shall
be entitled upon liquidation or dissolution or upon the distribution of the
assets of the corporation to such references as provided in the resolution or
resolutions creating the series, and no more, before any distribution of the
assets of the corporation shall be made to the holders of shares of common
stock and class B stock. Whenever the holders of shares of series preferred
stock shall have been paid the full amounts to which they shall be entitled,
the holders of shares of the common stock and class B stock shall be entitled
to share ratably in all the remaining assets of the corporation.
15. Except as otherwise required by law and except for such voting powers
with respect to the election of directors or other matters as may be stated in
the resolution or resolutions of the board of directors providing for the
issuance of any series of series preferred stock, the holders of the series
shall have no voting power whatsoever.
16. No holder of any share of any class of stock of the corporation shall
have any preemptive right to subscribe for or acquire additional shares of
stock of any class of the corporation or warrants or options to purchase, or
securities convertible into, shares of any class of stock of the corporation.
Page 23 of 34
<PAGE>
17. No holder of any share of any class of stock of the corporation shall
sell the vote pertaining to such share or issue a proxy to vote such share in
consideration of any sum of money or anything of value.
III. The number of shares of the corporation outstanding at the time of
such adoption was 9,572,834, all of which are of one class and all of which
were entitled to vote on the aforesaid amendment.
IV. The number of outstanding shares which were voted for adoption of the
aforesaid amendment is 5,886,702, the number of said shares which voted against
the same is 1,832,526, and the number of said shares which abstained is 75,010.
V. The date on which the aforesaid amendment shall become effective is
the date on which the Iowa Secretary of State issues a Certificate of
Amendment.
Executed on December 15, 1986.
Meredith Corporation
By _________________________________
Robert A. Burnett, President
By _________________________________
Betty Campbell Madden, Secretary
STATE OF IOWA )
) SS.:
COUNTY OF POLK )
On this 15th day of December, A.D., 1986, before me, a Notary Public in
and for the State and County aforesaid, personally appeared Robert A. Burnett,
to me personally known, who, being by me duly sworn, did say that he is the
President of Meredith Corporation, the corporation which executed the foregoing
instrument; that he signed said instrument upon behalf of said corporation; and
that he acknowledged said instrument to be the voluntary act and deed of said
corporation by it voluntarily executed and his signing to be his voluntary act
and deed by him voluntarily signed.
IN WITNESS WHEREOF, I have placed my hand and seal on the date aforesaid.
________________________________
Marna G. Ford, Notary Public
Commission expires: May 15, 1989
Page 24 of 34
<PAGE>
STATEMENT OF CANCELLATION OF REACQUIRED SHARES
(OTHER THAN REDEEMABLE SHARES)
of
MEREDITH CORPORATION
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to the provisions of Section 65 of the Iowa Business Corporation Act,
Chapter 496A, Code of Iowa, the undersigned corporation submits the following
statement of cancellation by resolution of its Board of Directors of shares of
the corporation reacquired by it, other than redeemable shares redeemed or
purchased:
1. The name of the Corporation is Meredith Corporation.
2. The effective date of incorporation was August 9, 1905.
3. A resolution was duly adopted by the Board of Directors on February 9,
1987, authorizing the cancellation of 239,114 shares, itemized as follows:
Class Series Number of Shares
_____ ______ ________________
Common N/A 235,322
The amount of stated capital represented by the shares to be cancelled is
235,322 Dollars ($235,322).
4. The aggregate number of issued shares, itemized by classes and series and
par value, if any, after giving effect to such cancellation is 19,153,346,
itemized as follows:
Class Series Par Value Number of Shares
_____ ______ _________ ________________
Common N/A $1 10,255,942
Class B N/A $1 8,897,404
5. The amount of the stated capital of the corporation, after giving effect to
such cancellation, is $19,153,346
Dated: February 10, 1987
Page 25 of 34
<PAGE>
MEREDITH CORPORATION
By:_________________________
William H. Straw,
Its Vice President-Finance
And_________________________
Betty Campbell Madden,
Its Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 10th day of February, A.D. 1987, before me, Marna G. Ford, a
Notary Public in and for said County, personally appeared William H. Straw and
Betty Campbell Madden, to me personally known, who being by me duly sworn did
say that he is vice president of said corporation and that she is secretary of
said corporation and that said Statement of Cancellation was signed on behalf
of the said corporation by authority of its board of directors and the said
William H. Straw and Betty Campbell Madden acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
_________________________
Marna G. Ford
Notary Public in and for the
State of Iowa
Page 26 of 34
<PAGE>
STATEMENT OF CHANGE OF REGISTERED AGENT
OF
MEREDITH CORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 12 of the Iowa Business Corporation
Act, Chapter 496A, Code of Iowa, the undersigned corporation, organized under
the laws of the State of Iowa, submits the following statement for the purpose
of changing its registered office or its registered agent, or both, in the
State of Iowa:
I. The name of the corporation is Meredith Corporation.
II. The address of its present registered office is 1716 Locust Street,
Des Moines, in the County of Polk.
III. The name of its present registered agent, Gerald D. Thornton.
IV. The name of its successor registered agent, Thomas G. Fisher.
V. The address of its registered office and the address of the business
office of its registered agent as changed, will be identical.
VI. Such change was authorized by resolution duly adopted by its Board of
Directors.
Dated: May 18, 1987.
MEREDITH CORPORATION
__________________________
By: Robert A. Burnett
Its: President
STATE OF IOWA )
) SS.
COUNTY OF POLK )
I, Robert A. Burnett, being first duly sworn on oath depose and state that
I am the President of Meredith Corporation, and that I executed the foregoing
instrument as President of the corporation, and that the statements contained
therein are true.
Subscribed and sworn to before me this 18th day of May, A.D., 1987.
__________________________
Karen L. Hayes
Notary Public in and
for the State of Iowa
Page 27 of 34
<PAGE>
ARTICLES OF MERGER
OF
SAIL PUBLICATIONS, INC.
INTO
MEREDITH CORPORATION
Pursuant to the provisions of Section 496A.72 of the Code of Iowa,
Meredith Corporation, a corporation organized under the laws of the State of
Iowa, and owning at least ninety per cent of the shares of Sail Publications,
Inc., a corporation organized under the laws of the State of Massachusetts,
hereby executes the following articles of merger:
FIRST: The following plan of merger was approved by resolution of the
Board of Directors of Meredith Corporation adopted on May 13, 1987.
(a) The name of the subsidiary corporation is Sail Publications,
Inc., and the name of the surviving corporation owning at least ninety per cent
of its shares is Meredith Corporation.
(b) The terms and conditions of the proposed merger are as follows:
All outstanding shares of the wholly-owned subsidiary will be
cancelled upon effect of the merger.
SECOND: The number of outstanding shares of each class of the subsidiary
corporation and the number of shares of each class owned by the surviving
corporation are as follows:
No. of Shares No. of Shares
Class Outstanding Owned by Parent
_____ _____________ _______________
Common 500 500 (100%)
THIRD: There are no holders of shares of the subsidiary corporation (Sail
Publications, Inc.) not owned by the surviving corporation (Meredith
Corporation) and the surviving corporation waived the mailing of a copy of
the plan of merger.
Dated: June 9, 1987.
Page 28 of 34
<PAGE>
MEREDITH CORPORATION
By: __________________________
Gerald D. Thornton
Its Vice President-
Administrative Services
By: __________________________
Betty Campbell Madden,
Its Secretary
STATE OF IOWA )
) ss:
COUNTY OF POLK )
On this 9th day of June A.D., 1987, before me, Marna G. Ford, a Notary
Public in and for said county, personally appeared Gerald D. Thornton, to me
personally known, who being by me duly sworn did say that he is Vice President-
Administrative Services of said corporation, an Iowa corporation, that the seal
affixed to said instrument is the seal of said corporation and that said
Articles of Merger were signed and sealed on behalf of the said corporation by
authority of its Board of Directors and the said Gerald D. Thornton
acknowledged the execution of said instrument to be the voluntary act and deed
of said corporation by it voluntarily executed.
____________________________________
Marna G. Ford
Notary Public in and for said county
Page 29 of 34
<PAGE>
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MEREDITH CORPORATION
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to the provisions of Section 58 of the Iowa Business Corporation
Act, Chapter 496A, Code of Iowa, the undersigned corporation adopts the
following Articles of Amendment to its Restated Articles of Incorporation:
I. The name of the corporation is Meredith Corporation. The effective
date of its incorporation was the 9th day of August, 1905. Its original name
was Successful Farming Publishing Company.
II. The following amendment to the Restated Articles of Incorporation was
adopted by the shareholders of the corporation on November 14, 1988, in the
manner prescribed by the Iowa Business Corporation Act, providing for a new
Article IX to be added to the Restated Articles of Incorporation to be and read
as follows:
"IX
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in good faith or which involve the
intentional misconduct or a knowing violation of the law, (iii) for any
transaction from which the director derives an improper personal benefit,
or (iv) under Section 496A.44 of the Iowa Business Corporation Act.
Any repeal or modification of this Article shall not adversely affect any
right or protection of a director of the corporation existing at the time
of such repeal or modification."
III. The number of shares outstanding and entitled to vote at the time of
such adoption was 19,307,579, consisting of 14,171,381 shares of common stock,
each entitled to one vote and 5,136,198 shares of class B common stock, each
entitled to ten votes, voting together as a class.
IV. The number of shares voting, and votes cast, for, against and abstaining
on the proposal to amend the Restated Articles of Incorporation by adding
Article IX were as follows:
Page 30 of 34
<PAGE>
For Against Abstain
--- ------- -------
Common - Shares 10,409,982 485,589 70,098
Votes 10,409,982 485,589 70,998
Class B - Shares 3,958,428 52,676 7,869
Votes 39,584,280 526,760 78,690
Total - Shares 14,368,410 538,265 77,967
Votes 49,994,262 1,012,349 148,788
Executed December , 1988.
MEREDITH CORPORATION
By _________________________
Jack D. Rehm
Its President and
Chief Operating Officer
By _________________________
Thomas G. Fisher
Its Secretary
STATE OF IOWA )
) ss.
COUNTY OF POLK )
On this 13th day of December, A.D., 1988, before me, Marna G. Ford, a
Notary Public in and for said County, personally appeared Jack D. Rehm, to me
personally known, who being by me duly sworn did say that he is Vice President
of said corporation, that the seal affixed to said instrument is the seal of
said corporation and that said Articles of Amendment were signed and sealed on
behalf of said corporation by authority of its Board of Directors and the said
Gerald D. Thornton and Thomas G. Fisher acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by it
voluntarily executed.
_________________________
Marna G. Ford
Notary Public in and for the
State of Iowa
Commission expires May 15, 1989
Page 31 of 34
<PAGE>
ARTICLES OF AMENDMENT
TO THE
RESTATED ARTICLES OF INCORPORATION
OF
MEREDITH CORPORATION
To the Secretary of State of the State of Iowa
Pursuant to the provisions of Section 496A.58 of the Iowa Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Restated Articles of Incorporation:
I. The name of the corporation is Meredith Corporation. The effective
date of its incorporation was the 9th day of August, 1905. Its original name
was Successful Farming Publishing Company.
II. The following amendment to the Restated Articles of Incorporation
was adopted by the shareholders of the corporation on November 14, 1994, in the
manner prescribed by the Iowa Business Corporation Act:
RESOLVED, that the first unnumbered paragraph of Article III.A. of the
Company's Restated Articles of Incorporation is amended in its entirety
to read as follows:
A. Capitalization. The total number of shares of stock of all classes
which the corporation shall have authority to issue is 100,000,000
shares, of which 5,000,000 shares shall be preferred, par value $1.00
per share (hereinafter called "series preferred stock"), 80,000,000
shares of which shall be common stock, par value $1.00 per share
(hereinafter called "common stock)" and 15,000,000 shares of which
shall be class B common stock, par value $1.00 per share (hereinafter
called "class B stock").
RESOLVED FURTHER, Article III.A.3. of the Company's Restated Articles of
Incorporation is amended in its entirety to read as follows:
If and when dividends on the common stock and class B stock are
declared payable from time to time by the board of directors from
funds legally available therefor, whether payable in cash, in property
or in shares of stock of the corporation, the holders of common stock
and the holders of class B stock shall be entitled to share equally,
share for share, in such dividends, except that if a share dividend
of common stock is declared on the common stock, an equal share
Page 32 of 34
<PAGE>
dividend of class B stock shall be declared on the class B stock,
and if a share dividend of class B stock is declared on the class B
stock, an equal share dividend of common stock shall be declared on
the common stock. In no case may a share dividend of class B stock
be paid on common stock, nor may a share dividend of common stock be
paid on class B stock.
RESOLVED FURTHER, Article III.A.5.(c) of the Company's Restated Articles
of Incorporation is amended in its entirety to add the following as (v):
(v) The term "grandparent" means an ancestor in any degree born after
January 1, 1876.
RESOLVED FURTHER, Article III.A.7. of the Company's Restated Articles of
Incorporation is amended in its entirety to read as follows:
Notwithstanding any other provision of these Restated Articles of
Incorporation, the authorized shares of class B stock which may be
issued after the date of this amendment to the Restated Articles of
Incorporation may only be issued in the form of a share dividend on
class B stock.
III. The number of shares of the corporation outstanding at the time of
such adoption was 13,712,741, consisting of 10,149,073 shares of common stock,
each entitled to one vote and 3,563,668 shares of class B common stock, each
entitled to ten votes, voting together as a class.
IV. The number of shares voting, and votes cash, for, against, and
abstaining on the proposal to amend the first unnumbered paragraph of Article
III.A., Article III.A.3. and Article III.A.7. of the Restated Articles of
Incorporation to increase the authorized shares of class B stock solely for
issuance as share dividends on class B stock, to increase the authorized shares
of common stock and to modify provisions relating to the payment of share
dividends were as follows:
For Against Abstain
Common - Shares 3,970,846.0 3,644,885.0 26,348.0
Votes 3,970,846.0 3,644,885.0 26,348.0
Class B - Shares 3,122,699.7 22,623.8 6,917.8
Votes 31,226,997.0 226,238.0 69,178.0
Total Shares 7,093,545.7 3,667,508.8 33,265.8
Total Votes 35,197,843.0 3,871,123.0 95,526.0
------------ ----------- --------
Page 33 of 34
<PAGE>
V. The number of shares voting, and votes cast, for, against, and
abstaining on the proposal to amend Article III.A.5.(c) of the Restated
Articles of Incorporation to broaden the class of "permitted transferees" of
class B stock were as follows:
For Against Abstain
Common - Shares 6,455,712.0 1,121,586.0 30,816.0
Votes 6,455,712.0 1,121,586.0 30,816.0
Class B - Shares 3,118,742.8 19,409.2 14,089.3
Votes 31,187,428.0 194,092.0 140,893.0
Total Shares 9,574,454.8 1,140,995.2 44,905.3
Total Votes 37,643,140.0 1,315,678.0 171,709.0
------------ ----------- ---------
Executed: December 12, 1994
MEREDITH CORPORATION
By _______________________
William T. Kerr
President and
Chief Operating Officer
By _______________________
Thomas L. Slaughter
Its Secretary
STATE OF IOWA )
)ss:
COUNTY OF POLK )
On this 12th day of December, A.D., 1994, before me, Teresa T. Rinker, a
Notary Public in and for said County, personally appeared WILLIAM T. KERR and
THOMAS L. SLAUGHTER, to me personally known, who being by me duly sworn, did
say that they are the President & Chief Operating Officer and Corporate
Secretary respectively of said corporation, that the seal affixed to said
instrument is the seal of said corporation and that said Articles of Amendment
were signed and sealed on behalf of said corporation by authority of its Board
of Directors and that the said JACK D. REHM and THOMAS L. SLAUGHTER
acknowledged the execution of said instrument to be the voluntary act and deed
of said corporation by it voluntarily executed.
__________________________________________
Notary Public in and for the State of Iowa
Page 34 of 34
Exhibit 3b
----------
BYLAWS
OF
MEREDITH CORPORATION
Effective
November 14, 1994
ARTICLE I. OFFICES
The principal office of the corporation in the State of Iowa shall be
located in the City of Des Moines, County of Polk, or as otherwise or more
particularly identified in the most recently filed (at any time), annual report
of the corporation on file with the Iowa Secretary of State.
ARTICLE II. SHAREHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the second Monday in the month of November in each year, at the hour
of 10:00 A.M., at the principal office of the corporation or at such other
place as is stated in the notice of the meeting, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday,
such meeting shall be held on the next succeeding business day.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, may be called by the Chairman of the Board, the
President, the Secretary, or the Board of Directors. The holders of shares
having not less than one-tenth of the voting power of the corporation may
demand in writing stating the purpose or purposes, and signed, dated and
delivered to the Secretary of the corporation, that a special meeting of the
shareholders be held. The time, date and place of any such special meeting
shall be determined by the Board of Directors or at its direction, by the
Chairman.
Section 3. PLACE OF SHAREHOLDERS' MEETING. The Board of Directors may
designate any place, either within or without the State of Iowa as the place of
meeting for any annual meeting or for any special meeting of shareholders. If
no designation is made the place of meeting shall be the principal office of
the corporation in the State of Iowa.
Section 4. NOTICE OF MEETING. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
Page 1 of 25
<PAGE>
less than ten days, nor more than sixty days before the date of the meeting,
either personally or by mail, by or at the direction of the Chairman of the
Board, the President, the Secretary, or the Board of Directors, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at the address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 5. FIXING OF RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such date
in any case to be not more than seventy days and, in case of a meeting of
shareholders, not less than ten days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If no
record date is fixed for the determination of shareholders entitled to notice
of or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a dividend, the day before the first date on which notice of the
meeting is mailed or the day before the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. In order to
determine the shareholders entitled to demand a special meeting, the record
date shall be the sixtieth day preceding the date of receipt by the corporation
of written demands sufficient to require the calling of such meeting, unless
otherwise fixed by the Board of Directors. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the Board of Directors selects a new record date or unless a
new record date is required by law.
Section 6. VOTING LISTS. After the record date for a meeting has been
fixed, the officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged by voting group and within each
voting group, in alphabetical order, with the address of and the number and
class of shares held by each, which list, for a period beginning two business
days after notice of the meeting was first given for which the list was
prepared and continuing through the meeting, shall be kept on file at the
principal office of the corporation or at the place identified in the meeting
notice in the city where the meeting will be held. The list shall be subject
to inspection by any shareholder at any time during usual business hours. Such
Page 2 of 25
<PAGE>
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The list furnished to the corporation by its stock transfer
agent shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of shareholders.
Section 7. QUORUM. At any meeting of the shareholders, a majority of the
votes entitled to be cast on the matter by a voting group constitutes a quorum
of that voting group for action on that matter, unless the representation of a
different number is required by law, and in that case, the representation of
the number so required shall constitute a quorum. If a quorum shall fail to
attend any meeting, the chairman of the meeting or a majority of the votes
present may adjourn the meeting to another place, date or time. When a meeting
is adjourned to another place, date or time, notice need not be given of the
adjourned meeting if the place, date and time thereof are announced at the
meeting at which the adjournment is taken; provided, however, that if the date
of any adjourned meeting is more than one hundred twenty (120) days after the
date for which the meeting was originally noticed, or if a new record date is
fixed for the adjourned meeting, notice of the place, date and time of the
adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
Section 8. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by the shareholder's
duly authorized attorney in fact. Such proxy shall be filed with the Secretary
of the corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. No holder of any share of any class of stock of the
corporation shall sell the vote pertaining to such share or issue a proxy to
vote such share in consideration of any sum of money or anything of value.
Section 9. VOTING OF SHARES. Each outstanding share entitled to vote
shall be entitled to vote as follows:
(a) At each annual or special meeting of shareholders, each holder
of common stock shall be entitled to one [1] vote in person or by proxy
for each share of common stock standing in the holder's name on the stock
transfer records of the corporation, and (except as provided in subsection
[b] of this Section 9) each holder of class B stock shall be entitled to
ten [10] votes in person or by proxy for each share of class B stock
standing in the holder's name on the stock transfer records of the
corporation. Except as required pursuant to the Business Corporation Act
of the State of Iowa, all actions submitted to a vote of shareholders
shall be voted on by the holders of common stock and class B stock voting
together as a single class.
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b) Notwithstanding subsection [a] of this Section 9, each holder of
class B stock shall be entitled to only one [1] vote, in person or by
proxy, for each share of class B stock standing in the holder's name on
the stock transfer records of the corporation with respect to the
following matters:
(i) The removal of any director of the corporation pursuant to
Article IV of the Articles of Incorporation;
(ii) Any amendment to the Articles of Incorporation which would
permit the holders of stock of the corporation to amend, alter,
change or repeal the Bylaws or any part thereof, pursuant to Article
V of the Articles of Incorporation; and
(iii) Any repeal or amendment of Article IV or Article VI of the
Articles of Incorporation.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted, either in person or by proxy, without a transfer of such shares. Shares
standing in the name of a trustee may be voted by the trustee, either in person
or by proxy, but no trustee shall be entitled to vote shares so held without a
transfer of such shares into the name of the trustee.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof if authority so to do be contained in an
appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares nor, absent special circumstances, shares held by
another corporation if a majority of the shares entitled to vote for the
election of directors of such other corporation is held by the corporation,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time.
Section 11. VOTING BY BALLOT. Voting by shareholders on any question or
in any election may be viva voce unless the presiding officer shall order or
any shareholder shall demand that voting be by ballot.
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ARTICLE III. BOARD OF DIRECTORS
Section 1. GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. Within the limits set
forth in Article IV of the Articles of Incorporation, the number of directors
of the corporation shall be as fixed from time to time by resolution of the
Board of Directors. The directors shall be divided into classes, and hold
office for the terms as provided in Article IV of the Articles of
Incorporation. Directors need not be residents of the State of Iowa or
shareholders of the corporation.
Section 3. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Iowa, for the holding of additional regular meetings without other
notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President,
Secretary or any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place, either within or
without the State of Iowa, as the place for holding any special meeting of the
Board of Directors called by them.
Section 5. NOTICE. Notice of any special meeting of the Board of
Directors shall be given at least two days previously thereto by written notice
delivered personally or mailed to each director at the director's business
address, or by telephone, cable, telefax, wireless or telegram. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail so addressed, with postage thereon prepaid. If notice be given by
telegram such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any director may waive notice of any
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
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Section 6. QUORUM. A majority of the number of directors fixed pursuant
to Section 2 of this Article III shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 7. MANNER OF ACTING. Except as otherwise specified in these
Bylaws, the act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
Section 8. VACANCIES. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board of Directors. A director elected to
fill a vacancy shall be elected for a term which shall expire at the next
election of directors by the shareholders. A director elected by the
shareholders to fill a vacancy shall be elected for the unexpired term of the
director last elected by the shareholders with respect to the position being
filled. Any directorship to be filled by reason of any increase in the number
of directors by not more than thirty percent (30%) of the number of directors
last approved by the shareholders, may be filled by the Board of Directors for
a term of office continuing only until the next election of directors by the
shareholders.
Section 9. COMPENSATION. By resolution of the Board of Directors, those
directors who are not at the time active employees of the corporation may be
paid an annual retainer and a fixed sum for attendance at each meeting of the
Board of Directors. All directors may be reimbursed for expenses incurred in
connection with their services. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
the director's dissent shall be entered in the minutes of the meeting or unless
the director shall file a written dissent to such action with the person acting
as the Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered or certified mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 11. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of the directors, or any other action which may be taken at
a meeting of the directors, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof.
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Section 12. EXECUTIVE COMMITTEE. An Executive Committee consisting of
two or more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such other time as the Board
of Directors may determine. The chairman of said committee shall be the person
elected by the Board of Directors to the office of Chairman of the Executive
Committee, and such officer shall be designated a member of said committee. If
an Executive Committee is designated, it shall, during the intervals between
the meetings of the Board of Directors and so far as it lawfully may, possess
and exercise all of the authority of the Board of Directors in the management
of the business of the corporation, in all cases in which specific directions
shall not have been given by the Board of Directors, provided that
notwithstanding the foregoing, the Executive Committee shall not have
authority:
(1) to authorize dividends or other distributions;
(2) to approve or propose to shareholders actions or proposals required
by the Iowa Business Corporation Act to be approved by shareholders;
(3) to fill vacancies on the Board of Directors or any committee thereof;
(4) to amend the Articles of Incorporation of the corporation;
(5) to adopt, amend or repeal Bylaws;
(6) to approve a plan of merger not requiring shareholder approval;
(7) to authorize or approve the reacquisition of shares unless pursuant
to a general formula or method specified by the Board of Directors;
(8) to authorize or approve the issuance or sale of, or any contract for
sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares; except
that the Board of Directors may authorize a committee or senior
officer to do so within limits specifically prescribed by the Board
of Directors; or
(9) to remove the Chairman of the Board, Chairman of the Executive
Committee or the President, or to appoint any person to fill a
vacancy in any such office.
Section 13. FINANCE COMMITTEE. A Finance Committee consisting of two or
more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such time as the Board of
Directors may determine. If a Finance Committee is designated, said
committee's duties shall be to:
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(1) review corporate financial policies and procedures and make
recommendations to the Board of Directors or the Executive Committee
in regard thereto;
(2) provide financial advice and counsel to management;
(3) formulate dividend policy and make recommendations to the Board of
Directors in regard thereto;
(4) make provisions for the appointment of depositories of funds of the
corporation and the specification of conditions of deposit and
withdrawal of said funds;
(5) review specific corporate financing plans and advise the Board of
Directors or Executive Committee in regard thereto;
(6) supervise corporate investment portfolios;
(7) give consideration and approval or disapproval of capital expenditure
requests by management within limits established by the Board of
Directors; and
(8) review annual operating budgets and advise the Board of Directors or
Executive Committee regarding the financial implications thereof.
Section 14. COMPENSATION/NOMINATING COMMITTEE. A Compensation/Nominating
Committee consisting of two or more members of the Board of Directors who are
not aligned with the management of the corporation may be designated by the
Board of Directors at the time of the annual meeting, or at such other time as
the Board of Directors may determine. If a Compensation/Nominating Committee
is designated, said committee's duties shall be to:
(1) review and approve changes in corporate officers' salaries;
(2) review and approve salary administration plans and changes therein
which are recommended by management for adoption by the corporation
or product divisions thereof;
(3) annually review the corporation's salary administration programs and
make changes therein as may be required;
(4) approve prior to adoption any management incentive, bonus or stock
plans, or agreements, and administer and supervise such plans as the
language thereof may require;
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(5) review all employee benefit plans, including the levels and types of
benefits provided thereunder, and review and consider any
recommendations received from the Pension Committee with respect to
pension plans;
(6) recommend to the Board of Directors the appointment of such
management personnel or committees as it deems desirable for the
administration, detailed study, or recommendation of possible changes
in employee benefit plans; and
(7) act as a nominating committee to propose and recommend to
the Board of Directors nominees for election as directors.
Section 15. AUDIT COMMITTEE. An Audit Committee consisting of two or
more members of the Board of Directors shall be designated by the Board of
Directors at the time of the annual meeting, or at such other time as the board
may determine. The duties of said committee shall be to:
(1) meet prior to the start of any audit by outside auditors and review
the scope of the audit to be performed;
(2) meet prior to the publication of the annual report and review results
of the audit for the year;
(3) meet with and determine the responsibilities and scope of the
internal audit department; and
(4) carry on such other activities so as to give additional assurance
regarding the degree of financial information used by the Board of
Directors in making decisions and the degree of financial information
distributed to outsiders.
Section 16. PENSION COMMITTEE. A Pension Committee consisting of two or
more members of the Board of Directors may be designated by the Board of
Directors at the time of the annual meeting or at such time as the Board of
Directors may determine. If a Pension Committee is designated, said
committee's duties shall be to:
(1) review the corporation's pension plans and amendments thereto and
recommend their approval by the Board of Directors;
(2) review the levels and types of benefits provided under the pension
plans and other features thereof, including eligibility, vesting and
the form of payment of benefits, and make recommendations to the
Compensation Committee in regard thereto; and
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(3) recommend to the Board of Directors investment objectives for all
employee pension funds, review the investment performance of such
funds and recommend revision of the objectives as may be required;
and
(4) recommend to the Board of Directors the appointment of such
management personnel or committees as it deems desirable for the
administration, detailed study, or recommendation of possible changes
in the corporation's pension plans.
Section 17. LEGAL AFFAIRS COMMITTEE. A Legal Affairs Committee consisting
of two or more members of the Board of Directors may be designated by the Board
of Directors at the time of the annual meeting, or such other time as the board
may determine. If a Legal Affairs Committee is designated, said committee's
duties shall be to:
1. review the structure, functions and personnel of the corporation's
internal legal staff;
2. review the procedures established for the engagement of outside
counsel and the monitoring of their activities;
3. meet with the general counsel of the corporation, and outside counsel
engaged by the corporation, to review all significant threatened,
pending and settled litigation involving the corporation; including
the impact, or potential impact, of such matters upon the policies,
planning, operations or finances of the corporation;
4. receive reports from the general counsel and outside counsel, as to
changes in the law which have or could have an effect upon the
corporation or its policies, planning, operations or finances, and
assist in the development of strategies in response thereto; and
5. inquire into the existence, and encourage the development, of
practices and procedures, including legal audits, which could benefit
the corporation in avoiding litigation or other legal problems.
Section 18. COMMITTEE PROCEDURES. The chairman of each committee, other
than the Executive Committee, shall be selected by the Board of Directors or by
the Executive Committee. In the absence of the chairman of any committee, a
temporary chairman may be appointed from among the members of the committee.
Each committee shall keep minutes of the proceedings of its meetings which
shall be submitted to the Board of Directors at the next meeting of the Board
of Directors. A majority of members of any committee shall constitute a quorum
for the transaction of business. Meetings of any committee shall be called
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upon the request of any member of the committee or the Chairman of the Board or
the Secretary, and notice of such meetings shall in each instance be given to
each member of the committee at least twenty-four hours before the meeting
either orally or in writing. A fixed sum and expenses of attendance, if any,
may be allowed and paid for attendance at each meeting of any committee, the
amount of such sum to be designated by the Board of Directors. Each director
serving on a committee shall hold such office until the annual meeting held
next after such director's designation, or until such director's successor
shall have been designated.
ARTICLE IV. OFFICERS
Section 1. NUMBER. The officers of the corporation shall be a Chairman
of the Board, a Chairman of the Executive Committee, a President who, unless
otherwise determined by the Board, shall be the Chief Executive Officer of the
corporation, and the Chief Operating Officer of the corporation), one or more
Group Presidents, one or more Executive Vice Presidents, one or more Senior
Vice Presidents or one or more Vice Presidents (the number thereof to be
determined by the Board of Directors), a Secretary, a Treasurer, and a
Controller, and such other officers as the Board of Directors may from time to
time designate by resolution, each of whom shall be elected by the Board of
Directors. Any two or more offices may be held by the same person. In its
discretion, the Board of Directors may delegate the powers or duties of any
officer to any other officer or agents, notwithstanding any provision of these
Bylaws, and the Board of Directors may leave unfilled for any such period as it
may fix, any office except those of Chairman of the Board, President, Vice
President-Finance and Secretary.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until such officer's
successor shall have been duly elected or until death or until such officer
shall resign or shall have been removed in the manner hereinafter provided.
Section 3. REMOVAL. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Any officer or agent elected by the Board of Directors
except the Chairman of the Board, Chairman of the Executive Committee and
President, may be removed by the Executive Committee. Any officer or agent
elected by the Board of Directors except the Chairman of the Board and the
Chairman of the Executive Committee may be removed by the President.
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Section 4. VACANCIES. A vacancy in the office of Chairman of the Board,
Chairman of the Executive Committee or President because of death, resignation,
removal, disqualification or otherwise, may be filled only by the Board of
Directors for the unexpired portion of the term. A vacancy in any other office
may be filled either by the Executive Committee or by the Chairman of the Board
or, after consultation with the Chairman of the Board, by the President .
Section 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the
Chief Executive Officer of the corporation and shall in general supervise and
control all of the business, policies and affairs of the corporation and all
other officers of the corporation. The Chairman of the Board shall preside at
all meetings of the shareholders and of the Board of Directors and shall be a
member of the Executive Committee. The Chairman of the Board shall perform
such other duties as may be prescribed by the Board of Directors from time to
time and shall have the general powers and duties usually vested in the Chief
Executive Officer of a corporation.
Section 6. CHAIRMAN OF THE EXECUTIVE COMMITTEE. The Chairman of the
Executive Committee shall be a member of that committee and preside at all of
its meetings, and in the absence of the Chairman of the Board, shall preside at
all meetings of the shareholders and the Board of Directors. The Chairman of
the Executive Committee shall perform such other duties as from time to time
may be assigned by the Board of Directors.
Section 7. PRESIDENT. The President shall be the Chief Operating Officer
of the corporation and shall have the management of and exercise general
supervision over its operating groups and all its Group Presidents. The
President shall perform such other duties as may be prescribed by the Board of
Directors or the Chairman of the Board from time to time and shall have the
general powers and duties usually vested in the Chief Operating Officer of a
corporation.
Section 8. GROUP PRESIDENTS. Each Group President, within the
limitations placed by the policies adopted by the Board of Directors, or the
Chairman of the Board, and or the President, shall be a corporate officer and
shall be the Chief Operating Officer of the operating group assigned and shall
in general supervise and control such business and affairs of the group and
operations assigned thereto and perform such other duties as may be prescribed
from time to time by the Board of Directors, the Chairman of the Board and the
President.
Section 9. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE
PRESIDENTS. Each corporate Executive Vice President, Senior Vice President or
Vice President shall perform such duties as may be assigned by the Board of
Directors, or the Chairman of the Board or the President. An Executive Vice
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President, Senior Vice President or Vice President may be assigned the
operating authority for managing one or more operating units or service
operations of the company as established by the Board of Directors. Upon
assignment by the Board of Directors of operating authority for an operation or
service unit, such Executive Vice President, Senior Vice President or Vice
President shall in general supervise and control all of the business and
affairs of such operation or service unit, subject only to such supervision and
direction as the Board of Directors, the Chairman of the Board or the President
may provide. Each Executive Vice President, Senior Vice President and Vice
President shall be authorized to sign contracts and other documents related to
the corporation or to the operations under such officer's supervision and
control.
Section 10. VICE PRESIDENT FINANCE. The Vice President-Finance shall be
the principal and chief accounting and principal and chief finance officer of
the corporation. In that capacity, the Vice President-Finance shall keep and
maintain, or cause to be kept and maintained accurate, correct books and
records of accounts of the properties and business transactions of the
corporation, including accounts of the assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings, and shares. The Vice
President-Finance shall deposit all monies and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the Board of Directors or by the Finance Committee appointed by the Board of
Directors. The Vice President-Finance shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
Chairman of the Board, or President and or the Board of Directors, upon their
request, an account of the financial condition of the corporation, and shall
have such other powers and perform such other duties as may be prescribed from
time to time by the Board of Directors, or the Chairman of the Board or the
President.
Section 11. THE SECRETARY. The Secretary shall: (a) keep the minutes of
the shareholders, Board of Directors, and committees of the board meetings in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the corporation
and see that the seal of the corporation is affixed to all documents the
execution of which on behalf of the corporation under its seal is duly
authorized; (d) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder, unless such
register is maintained by the transfer agent or registrar of the corporation;
(e) have general charge of the stock transfer books of the corporation; and (f)
in general perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned by the Board of Directors, or
the Chairman of the Board or the President.
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Section 12. THE TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for monies due and payable to the corporation from
any source whatsoever, and deposit all such monies in the name of the
corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article VI of these Bylaws; (b)
be responsible for filing all required tax returns, and (c) in general perform
all of the duties incident to the office of treasurer and such other duties as
from time to time may be assigned by the Board of Directors, or the Chairman of
the Board, or the President or the Vice President-Finance.
Section 13. THE CONTROLLER. The Controller shall maintain adequate
records showing the financial condition of the corporation and the results of
its operations by established accounting periods, and see that adequate audits
thereof are regularly and currently made. The Controller shall perform such
other duties as from time to time may be assigned by the Board of Directors, or
the Chairman of the Board, or the President or the Vice President-Finance.
Section 14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the Chairman of the Board or the President or a Vice President certificates for
shares of the corporation, the issuance of which shall have been authorized by
a resolution of the Board of Directors. The Assistant Secretaries, in general,
shall perform such duties as shall be assigned to them by the Secretary, or by
the Chairman of the Board, the President, or the Board of Directors. The
Assistant Treasurers, in general, shall perform such duties as shall be
assigned to them by the Treasurer or by the Chairman of the Board, or the
President, or the Board of Directors or the Vice President-Finance.
Section 15. OTHER ASSISTANT AND ACTING OFFICERS. The Board of Directors
or the Chairman of the Board or, after consultation with the Chairman of the
Board, the President shall have the power to appoint any person to act as
assistant to any officer, or to perform the duties of such officer whenever for
any reason it is impracticable for such officer to act personally, and such
assistant or acting officer so appointed by the Chairman of the Board, the
Board of Directors or, after consultation with the Chairman of the Board, by
the President, shall have the power to perform all the duties of the office to
which the person is so appointed to be assistant, or as to which the person is
so appointed to act, except as such power may be otherwise defined or
restricted by the Board of Directors.
Section 16. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors or by such committee or superior officer
as may be designated by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of also being a director of the
corporation.
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ARTICLE V. GROUPS AND STAFF
Section 1. ESTABLISHMENT OF GROUPS. The Board of Directors, the Chairman
of the Board or, after consultation with the Chairman of the Board, the
President, may cause the business to be divided into one or more groups, based
upon product manufactured, geographical territory, character and type of
operations, or upon such other basis as the Board of Directors, or the Chairman
of the Board, or, after consultation with the Chairman of the Board, the
President, may from time to time determine to be advisable. The groups shall
operate under the authority and direction of a Group President and may operate
under trade names approved for such purpose as may be authorized by the Board
of Directors, or the Chairman of the Board, or the President.
Section 2. GROUP OFFICERS. The Group President of a group may appoint
any number of group officers (who shall not, by virtue of such appointment, be
corporate officers), and may remove any such group officer. Such officers
shall have such authority as may from time to time be assigned by the Group
President.
Section 3. STAFF OFFICERS. The Chairman of the Board or, after
consultation with the Chairman of the Board, the President may appoint any
number of staff officers (who shall not, by virtue of such appointment, be
corporate officers), and may remove any such staff officer as the Chairman of
the Board or, after consultation with the Chairman of the Board, the President,
may deem appropriate from time to time. Such officers shall have such
authority as may from time to time be assigned by the Chairman of the Board or
the President.
ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Chairman of the Board, the Chairman of the
Executive Committee or the President may at any time execute and deliver any
deeds, mortgages or bonds which the Board of Directors has authorized to be
executed and delivered and may at any time execute and deliver any lease, bid,
application, note, guarantee, consent, election, notice or other contract,
document or instrument as may be required in the ordinary course and scope of
the business of the corporation or as may be specifically authorized by the
Board of Directors. The Chairman of the Board or the President may in writing
delegate the foregoing authority, and may delegate authority to redelegate such
authority, to any other officer or officers, agent or agents, or other persons
and the authority so delegated may be general or confined to specific
instances. The Board of Directors may authorize any other officer or officers,
agent or agents or other persons to execute and deliver any other contracts,
documents or instruments and such authority may be general or confined to
specific instances.
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Section 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. EVIDENCES OF INDEBTEDNESS. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers, agent
or agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors or the
Finance Committee, or committees or officers to whom the Board of Directors or
the Finance Committee have delegated such authority may select.
ARTICLE VII. CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES FOR SHARES. Certificates for shares of capital
stock of the corporation shall be in such form as shall be determined by the
Board of Directors. They shall be issued in consecutive order and shall be
numbered in the order of their issue and shall be signed by the Chairman of the
Board or the President or a Vice President and the Secretary or an Assistant
Secretary, provided, however, that if any stock certificate is countersigned by
a transfer agent, other than the corporation or its employee, or by a
registrar, other than the corporation or its employee, any other signature,
including that of any such officer, on such certificate may be a facsimile,
engraved, stamped or printed. In case any officer or agent who has signed or
whose facsimile signature shall be used on any stock certificate shall cease to
be such officer or agent of the corporation because of death, resignation or
otherwise before such stock certificate shall have been delivered by the
corporation, such stock certificate may nevertheless be issued and delivered as
though the person or agent who signed the certificate or whose facsimile
signature shall have been used thereon had not ceased to be such officer or
agent of the corporation.
Section 2. TRANSFER OF SHARES. Upon surrender to the corporation or its
transfer agent of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction on its books.
Page 16 of 25
<PAGE>
Section 3. RESTRICTIONS ON OWNERSHIP, TRANSFER AND VOTING. So long as
the corporation or any of its subsidiaries is subject to any law of the United
States or any state therein which restricts ownership or voting of capital
stock by Aliens (as defined herein), not more than one-fifth of the shares
outstanding shall be owned of record or voted by or for the account of Aliens
or their representatives or affiliates. The Board of Directors may issue share
certificates representing not more than one-fifth of the shares of the stock of
the corporation at any time outstanding in special form which may be owned or
held by Aliens, such certificates to be known as "Foreign Share Certificates"
and to be so marked, but under no circumstances shall the total amount of
voting stock of any class represented by Foreign Share Certificates, plus the
amount of voting stock of that class owned by or for the account of Aliens and
represented by certificates not so marked, exceed one-fifth of the aggregate
number of outstanding shares of such class.
Shares of stock shall be transferable on the books of the corporation by
the holder thereof, in person or by duly authorized attorney, upon the
surrender of the certificate representing the shares to be transferred,
properly endorsed; provided, however, that shares of stock other than shares
represented by Foreign Share Certificates shall be transferable to Aliens or
any person holding for the account thereof only when the aggregate number of
shares of stock owned by or for the account of Aliens will not then be more
than one-fifth of the number of shares of stock outstanding. The Board of
Directors may direct that, before shares of stock shall be transferred on the
books of the corporation, the corporation may require information as to whether
the proposed transferee is an Alien or will hold the stock for the account of
an Alien.
If the stock records of the corporation shall at any time disclose Alien
ownership of one-fifth or more of the voting stock of any class and it shall be
found by the corporation that any certificate for shares marked "Domestic Share
Certificate" is, in fact, held by or for the account of any Alien, the holder
of the shares represented by that certificate shall not be entitled to vote, to
receive dividends or to have any other rights with respect to such shares,
except the right to transfer the shares to a Non-Alien (as defined herein).
If the stock records of the corporation shall at any time disclose Alien
ownership of one-fifth or more of the voting stock of any class and a request
is made by an Alien to have shares registered in its name or for its account,
the corporation shall be under no obligation to effect the transfer or to issue
or reissue any stock certificates to or for the account of the Alien. In
addition, if a proposed transferee of any shares is an Alien, and the transfer
to such Alien would result in Alien ownership of one-fifth or more of the
voting stock of any class, the corporation shall be under no obligation to
effect the transfer or to issue or reissue any stock certificates to or for the
Page 17 of 25
<PAGE>
account of the Alien. Further, if it is determined at any time that a transfer
has resulted in Alien ownership of one-fifth or more of the voting stock of any
class, the holder of the shares which resulted in the Alien ownership of one-
fifth or more of the voting stock shall not be entitled to vote, to receive
dividends or have any other rights with respect to such shares, except the
right to transfer those shares to a Non-Alien.
The Board of Directors shall establish rules, regulations and procedures
to assure compliance with and enforcement of this Article VII, Section 3.
The term "Alien" is defined to mean and include the following:
(1) Any person (including an individual, a partnership, a corporation or
an association or any other entity) who is not a United States
citizen or is the representative of or fiduciary for any person who
is not a United States citizen;
(2) Any foreign government or the representative thereof;
(3) Any corporation any officer of which is an Alien, or of which more
than 25% of its directors are Aliens;
(4) Any corporation or association organized under the laws of any
foreign government;
(5) Any corporation of which more than 20% of its stock is owned
beneficially or of record or may be voted by Aliens, or which by any
other means whatsoever direct or indirect control of the corporation
is held or permitted to be exercised by Aliens;
(6) Any partnership, association or other entity which is owned or
controlled by Aliens;
(7) Any other person, corporation, trust, partnership or association
deemed by the Board of Directors to be an Alien as to the United
States or the corporation (or any subsidiary of the corporation).
No person, holding shares of class B stock (hereinafter such class B stock
is called "class B stock" and such holder thereof is called a "class B holder")
may transfer, and the corporation shall not register the transfer of, such
shares of class B stock, whether by sale, assignment, gift, bequest,
appointment or otherwise, except to a Permitted Transferee of such class B
holder, which term shall have the following meanings:
Page 18 of 25
<PAGE>
(i) In the case of a class B holder who is a natural person and the
holder of record and beneficial owner of the shares of class B stock
subject to said proposed transfer, "Permitted Transferee" means (A)
the spouse of such class B holder, (B) a lineal descendant of a
grandparent of such class B holder or a spouse of any such lineal
descendant, (C) the trustee of a trust (including a voting trust) for
the benefit of one or more class B holders, other lineal descendants
of a grandparent of such class B holder, the spouse of such class B
holder the spouses of such other lineal descendants and an
organization contributions to which are deductible for federal
income, estate or gift tax purposes (hereinafter called a "Charitable
Organization"), and for the benefit of no other person, provided that
such trust may grant a general or special power of appointment to
such class B holder, the spouse of such class B holder, any lineal
descendant of such class B holder or the spouse of any such lineal
descendant, and may permit trust assets to be used to pay taxes,
legacies and other obligations of the trust or the estate of such
class B holder payable by reason of the death of such class B holder
and provided that such trust prohibits transfer of shares of class B
stock to persons other than Permitted Transferees, as defined in
clause (ii) below, (D) the estate of such deceased class B holder,
(E) a Charitable Organization established by such class B holder,
such class B holder's spouse, a lineal descendant of a grandparent of
such class B holder or a spouse of any such lineal descendant, and
(F) a corporation all the outstanding capital stock of which is owned
by, or a partnership all the partners of which are, one or more of
such class B holders, other lineal descendants of a grandparent of
such class B holder or a spouse of any such lineal descendant, and
the spouse of such class B holder provided that if any share of
capital stock of such a corporation (or of any survivor of a merger
or consolidation of such a corporation), or any partnership interest
in such a partnership, is acquired by any person who is not within
such class of persons, all shares of class B stock then held by such
corporation or partnership, as the case may be, shall be deemed,
without further action, to be automatically converted into shares of
common stock, and stock certificates formerly representing such
shares of class B stock shall thereupon and thereafter be deemed to
represent the like number of shares of common stock.
(ii) In the case of a class B holder holding the shares of class B stock
subject to said proposed transfer as trustee pursuant to a trust
other than a trust described in clause (iii) below, "Permitted
Transferee" means (A) the person who established such trust and (B) a
Permitted Transferee of such person determined pursuant to clause (i)
above.
Page 19 of 25
<PAGE>
(iii) In the case of a class B holder holding the shares of class B stock
subject to said proposed transfer as trustee pursuant to a trust
which was irrevocable on the record date for the initial distribution
of shares of class B stock ("Record Date"), "Permitted Transferee"
means any person to whom or for whose benefit principal may be
distributed either during or at the end of the term of such trust
whether by power of appointment or otherwise or any "Permitted
Transferee" of such person determined pursuant to clause (i), (ii),
(iv), (v) or (vi) hereof, as the case may be.
(iv) In the case of a class B holder who is the record (but not
beneficial) owner of the shares of class B stock subject to said
proposed transfer as nominee for the person who was the beneficial
owner thereof on the Record Date, "Permitted Transferee" means such
beneficial owner and a Permitted Transferee of such beneficial owner
determined pursuant to clause (i), (ii), (iii), (v) or (vi) hereof,
as the case may be.
(v) In the case of a class B holder which is a partnership and the holder
of record and beneficial owner of the shares of class B stock subject
to said proposed transfer, "Permitted Transferee" means any partner
of such partnership or any "Permitted Transferee" of such partner
determined pursuant to clause (i), (ii), (iii), (iv) or (vi) hereof,
as the case may be.
(vi) In the case of a class B holder which is a corporation (other than a
Charitable Organization described in subclause (E) of clause (i)
above and the holder of record and beneficial owner of the shares of
class B stock subject to said proposed transfer, "Permitted
Transferee" means any stockholder of such corporation receiving
shares of class B stock through a dividend or through a distribution
made upon liquidation of such corporation or any "Permitted
Transferee" of such stockholder determined pursuant to clause (i),
(ii), (iii), (iv) or (v) hereof, as the case may be.
(vii) In the case of a class B holder which is the estate of a deceased
class B holder, or which is the estate of a bankrupt or insolvent
class B holder, and provided such deceased, bankrupt or insolvent
class B holder, as the case may be, was the record and beneficial
owner of the shares of class B stock subject to said proposed
transfer, "Permitted Transferee" means a Permitted Transferee of such
deceased, bankrupt or insolvent class B holder as determined pursuant
to clause (i), (v) or (vi) above, as the case may be.
Page 20 of 25
<PAGE>
Notwithstanding anything to the contrary set forth herein, any class B
holder may pledge such holder's shares of class B stock to a pledgee pursuant
to a bona fide pledge of such shares as collateral security for indebtedness
due to the pledgee, provided that such shares shall not be transferred to or
registered in the name of the pledgee and shall remain subject to the
provisions of this Article VII, Section 3. In the event of foreclosure or
other similar action by the pledgee, such pledged shares of class B stock may
only be transferred to a Permitted Transferee of the pledgor or converted into
shares of common stock, as the pledgee may elect.
For purposes of this Article VII, Section 3:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of shares of class B stock shall be considered a
"class B holder" of such shares.
(iii) A minor for whom shares of class B stock are held pursuant to a
Uniform Gifts or Transfers to Minors Act or similar law shall be
considered a "class B holder" of such shares.
(iv) Unless otherwise specified, the term "person" means both natural
persons and legal entities.
Any purported transfer of shares of class B stock not permitted hereunder
shall result, without further action, in the automatic conversion of the
transferee's shares of class B stock into shares of common stock, effective on
the date of such purported transfer. The corporation may, as a condition to
the transfer or the registration of transfer of shares of class B stock to a
purported Permitted Transferee, require the furnishing of such affidavits or
other proof as it deems necessary to establish that such transferee is a
Permitted Transferee.
Shares of class B stock shall be registered in the name(s) of the
beneficial owner(s) thereof (as hereafter defined) and not in "street" or
"nominee" names; provided, however, certificates representing shares of class B
stock issued as a stock dividend on the corporation's then outstanding common
stock may be registered in the same name and manner as the certificates
representing the shares of common stock with respect to which the shares of
class B stock were issued. For the purposes of this Article VII, Section 3,
the term "beneficial owner(s)" of any shares of class B stock shall mean the
person or persons who possess the power to dispose, or to direct the
disposition, of such shares.
Page 21 of 25
<PAGE>
The corporation shall note on the certificates representing the shares of
class B stock that there are restrictions on transfer and registration of
transfer imposed by this Article VII, Section 3.
Section 4. REGISTERED SHAREHOLDERS. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable
claim or other interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Iowa.
Section 5. LOST CERTIFICATES. Upon the making of an affidavit that a
certificate has been lost or destroyed, the Board of Directors may direct that
a new certificate be issued to the person alleging the loss or destruction of
such certificate. When authorizing such issuance of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
such owner's legal representative to give the corporation a bond in such sums
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 6. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of Iowa as they may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
corporation.
ARTICLE VIII. FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of July
and end on the thirtieth day of June in each year.
ARTICLE IX. DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE X. SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words, "Corporate Seal."
Page 22 of 25
<PAGE>
ARTICLE XI. WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or director
of the corporation under the provisions of the Articles of Incorporation or
under the provisions of the Iowa Business Corporations Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE XII. INDEMNIFICATION OF DIRECTORS, OFFICERS OR EMPLOYEES
Section 1. RIGHT TO INDEMNIFICATION. Each person who was or is a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director,
officer or employee of the corporation or is or was serving at the request of
the corporation as director, officer or employee of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, shall be indemnified and held harmless by
the corporation to the fullest extent consistent with the laws of Iowa as the
same now or may hereafter exist (but, in the case of any change, only to the
extent that such change authorizes the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such change) against all costs, charges, expenses, liabilities and losses
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered
by such person in connection therewith and such indemnification shall continue
as to a person who has ceased to be a director, officer or employee and shall
inure to the benefit of the heirs, executors and administrators of such person;
provided, however, that the right to indemnification conferred in this Section
shall be conditioned upon the corporation being afforded the opportunity to
participate directly on behalf of such person in such proceeding and any
settlement discussions relating thereto. The right to indemnification
conferred in this Section shall be a contract right and shall, except with
respect to an action or proceeding against the corporation by an employee who
is neither a director nor an officer of the corporation, include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition upon receipt by the corporation
of an undertaking, by or on behalf of such director, officer or employee to
repay all amounts so advanced if it shall ultimately be determined that the
director, officer or employee is not entitled to be indemnified under this
Section or otherwise.
Page 23 of 25
<PAGE>
Section 2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section I
of this Article is not paid in full by the corporation within thirty days after
a written claim has been received by the corporation, the claimant may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense of prosecuting such claim. It shall be a
defense to any action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered to the
corporation) that the claimant has failed to meet a standard of conduct which
makes it permissible under Iowa law for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall
be on the corporation. Neither the failure of the corporation (including its
Board of Directors, independent legal counsel, or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because
such person has met such standard of conduct, nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel,
or its shareholders) that the claimant has not met such standard of conduct,
nor the termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall create a
presumption that the claimant has failed to meet the required standard of
conduct.
Section 3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Articles of Incorporation, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise.
Section 4. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under Iowa law.
Section 5. EXPENSES AS A WITNESS. To the extent that any director,
officer or employee of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in
any proceeding, such person shall be reimbursed for all costs and expenses
actually and reasonably incurred in connection therewith.
Page 24 of 25
<PAGE>
Section 6. EFFECT OF AMENDMENT. Any amendment, repeal or modification of
any provision of this Article by the shareholders or the directors of the
corporation shall not adversely affect any right or protection of a director,
officer or employee of the corporation existing at the time of such amendment,
repeal or modification.
Section 7. SEVERABILITY. In the event any one or more of the provisions
contained in this Article shall, for any reason, be held to be invalid, illegal
or unenforceable, such invalidity, illegality, or unenforceability shall not
affect any other provisions of this Article.
ARTICLE XIII. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the
Board of Directors.
Page 25 of 25
Exhibit 4
---------
LOAN AGREEMENT
AMONG
MEREDITH/NEW HERITAGE STRATEGIC PARTNERS L.P.,
A PARTNERSHIP AMONG
MEREDITH/NEW HERITAGE PARTNERSHIP,
CONTINENTAL CABLEVISION OF MINNESOTA, INC.,
AND NEW HERITAGE ASSOCIATES (THE "BORROWER"),
NORTH CENTRAL CABLE COMMUNICATIONS CORPORATION
("NORTH CENTRAL"), MEREDITH/NEW HERITAGE SUBSIDIARY, INC.
(THE "BUYER SUB" AND, COLLECTIVELY WITH THE
BORROWER AND NORTH CENTRAL, THE "BORROWERS"),
THE TORONTO-DOMINION BANK and
THE BANKS NAMED HEREIN WHOSE NAMES AND
SIGNATURES APPEAR ON THE SIGNATURE PAGES HEREOF
(COLLECTIVELY, THE "BANKS"),
THE BANK OF NEW YORK,
THE FIRST NATIONAL BANK OF CHICAGO,
AND NATIONSBANK OF TEXAS, N.A.
(COLLECTIVELY, THE "CO-AGENTS"), and
THE TORONTO-DOMINION BANK TRUST COMPANY,
AS AGENT FOR THE CO-AGENTS AND THE BANKS (THE "AGENT")
As of March 31, 1992
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2 The Loans . . . . . . . . . . . . . . . . . . . . . . . . 26
2.1 The Loans . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2 Manner of Borrowing and Disbursement . . . . . . . . . . 27
2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . 31
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.5 Optional Commitment Reduction . . . . . . . . . . . . . . 34
2.6 Prepayment . . . . . . . . . . . . . . . . . . . . . . . 34
2.7 Repayment . . . . . . . . . . . . . . . . . . . . . . . . 35
2.8 Notes; Loan Accounts . . . . . . . . . . . . . . . . . . 36
2.9 Manner of Payment . . . . . . . . . . . . . . . . . . . . 37
2.10 Reimbursement . . . . . . . . . . . . . . . . . . . . . . 38
2.11 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 39
2.12 Capital Adequacy . . . . . . . . . . . . . . . . . . . . 40
2.13 Option to Replace Banks . . . . . . . . . . . . . . . . . 40
Page 1 of 122
<PAGE>
ARTICLE 3 Conditions Precedent . . . . . . . . . . . . . . . . . . 41
3.1 Conditions Precedent to Closing . . . . . . . . . . . . . 41
3.2 Conditions Precedent to Initial Advance . . . . . . . . . 43
3.3 Conditions Precedent to Each Advance. . . . . . . . . . . 47
ARTICLE 4 Representations and Warranties . . . . . . . . . . . . . 47
4.1 Representations and Warranties . . . . . . . . . . . . . 47
4.2 Survival of Representations and Warranties, etc. . . . . 54
ARTICLE 5 General Covenants . . . . . . . . . . . . . . . . . . . . 54
5.1 Preservation of Existence and Similar Matters . . . . . . 55
5.2 Business; Compliance with Applicable Law . . . . . . . . 55
5.3 Maintenance of Properties . . . . . . . . . . . . . . . . 55
5.4 Accounting Methods and Financial Records . . . . . . . . 55
5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 55
5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . 56
5.7 Visits and Inspections . . . . . . . . . . . . . . . . . 57
5.8 Payment of Indebtedness and Other Liabilities . . . . . . 57
5.9 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 57
5.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 57
5.11 Payment of Wages . . . . . . . . . . . . . . . . . . . . 58
5.12 Management . . . . . . . . . . . . . . . . . . . . . . . 58
5.13 Interest Rate Hedging . . . . . . . . . . . . . . . . . . 58
5.14 Covenants Regarding Investments and Acquisitions . . . . 58
5.15 Merger Covenant . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 6 Information Covenants . . . . . . . . . . . . . . . . . . 59
6.1 Quarterly Financial Statements and Information . . . . . 59
6.2 Annual Financial Statements and Information;
Certificate of No default . . . . . . . . . . . . . . . . 60
6.3 Monthly Operating Reports . . . . . . . . . . . . . . . . 60
6.4 Performance Certificates . . . . . . . . . . . . . . . . 60
6.5 Copies of Other Reports . . . . . . . . . . . . . . . . . 61
6.6 Notice of Litigation and Other Matters . . . . . . . . . 61
ARTICLE 7 Negative Covenants . . . . . . . . . . . . . . . . . . . 62
7.1 Indebtedness of the Borrower . . . . . . . . . . . . . . 63
7.2 Limitation on Liens . . . . . . . . . . . . . . . . . . . 63
7.3 Amendment and Waiver . . . . . . . . . . . . . . . . . . 63
7.4 Liquidation, Change in Ownership, Disposition or
Acquisition of Assets . . . . . . . . . . . . . . . . . . 63
Page 2 of 122
<PAGE>
7.5 Limitation on Guaranties . . . . . . . . . . . . . . . . 66
7.6 Investments . . . . . . . . . . . . . . . . . . . . . . . 66
7.7 Restricted Payments and Purchases . . . . . . . . . . . . 66
7.8 Total Indebtedness to Annualized Operating Cash
Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . 67
7.9 Operating Cash Flow to Interest Expense Ratio . . . . . . 68
7.10 Capital Expenditures . . . . . . . . . . . . . . . . . . 68
7.11 Annualized Operating Cash Flow to Pro Forma Debt
Service Requirements Ratio . . . . . . . . . . . . . . . 68
7.12 Operating Cash Flow to Fixed Charges Ratio . . . . . . . 69
7.13 Affiliate Transactions . . . . . . . . . . . . . . . . . 69
7.14 Real Estate . . . . . . . . . . . . . . . . . . . . . . . 69
7.15 Limitation on Leases . . . . . . . . . . . . . . . . . . 69
7.16 ERISA Liabilities . . . . . . . . . . . . . . . . . . . . 69
ARTICLE 8 Default . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . 70
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 9 The Agent . . . . . . . . . . . . . . . . . . . . . . . . 74
9.1 Appointment and Authorization . . . . . . . . . . . . . . 75
9.2 Interest Holders . . . . . . . . . . . . . . . . . . . . 75
9.3 Consultation with Counsel . . . . . . . . . . . . . . . . 75
9.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . 75
9.5 Agent and Affiliates . . . . . . . . . . . . . . . . . . 75
9.6 Responsibility of the Agent . . . . . . . . . . . . . . . 75
9.7 Collateral . . . . . . . . . . . . . . . . . . . . . . . 76
9.8 Action by Agent . . . . . . . . . . . . . . . . . . . . . 76
9.9 Notice of Default or Event of Default . . . . . . . . . . 76
9.10 Responsibility Disclaimed . . . . . . . . . . . . . . . . 77
9.11 Indemnification . . . . . . . . . . . . . . . . . . . . . 77
9.12 Credit Decision . . . . . . . . . . . . . . . . . . . . . 78
9.13 Successor Agents . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 10 Change in Circumstances Affecting Fixed Rate Advances . . 78
10.1 Fixed Rate Basis Determination Inadequate or Unfair . . . 78
10.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . 79
10.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . 79
10.4 Effects on Other Advances . . . . . . . . . . . . . . . . 81
Page 3 of 122
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ARTICLE 11 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 81
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 83
11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.4 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . 85
11.6 Accounting Principles; Materiality . . . . . . . . . . . 86
11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . 86
11.8 Governing Law, Etc. . . . . . . . . . . . . . . . . . . . 86
11.9 Severability . . . . . . . . . . . . . . . . . . . . . . 87
11.10 Interest . . . . . . . . . . . . . . . . . . . . . . . . 87
11.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . 87
11.12 Amendment and Waiver . . . . . . . . . . . . . . . . . . 88
11.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . 88
11.14 Other Relationships . . . . . . . . . . . . . . . . . . 88
11.15 Exhibits and Schedules . . . . . . . . . . . . . . . . . 88
ARTICLE 12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 89
12.1 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . 89
EXHIBITS
Exhibit A - Form of Collateral Assignment of Leases
Exhibit B - Form of Collateral Assignment of Partnership Interests
Exhibit C - Form of Mortgage
Exhibit D - Form of Promissory Note
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Request for Advance
Exhibit G - Form of Security Agreement
Exhibit H - Form of Subordination of Management Fees Agreement
Exhibit I - Form of Subsidiary Collateral Assignment of Leases
Exhibit J - Form of Subsidiary Guaranty
Exhibit K - Form of Subsidiary Mortgage
Exhibit L - Form of Subsidiary Pledge Agreement
Exhibit M - Form of Subsidiary Security Agreement
Exhibit N - Form of Use of Proceeds Letter
Exhibit 0 - Form of Borrower's Loan Certificate
Exhibit P - Form of Legal Opinions to be Given on the Agreement Date
Exhibit Q - Form of Partner Loan Certificate
Exhibit R - Form of Legal Opinions to be Given on the Initial Funding Date
Exhibit S - Form of Certificate of Financial Condition
Exhibit T - Form of Subsidiary Loan Certificate
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Exhibit U - Form of Monthly Operating Report
Exhibit V - Form of Performance Certificate
Exhibit W - Form of Assignment and Assumption Agreement
Exhibit X - Form of Collateral Assignment of Intercompany Note
Exhibit Y - Form of Subordination Agreement
Exhibit Z - Form of Borrower Guaranty
SCHEDULES
Schedule 1 - List of Licenses
Schedule 2 - List of Liens
Schedule 3 - List of Pole Agreements
Schedule 4 - Ownership of the Borrower
Schedule 5 - Subsidiaries of the Borrower as of the Initial Funding Date
and as of Five (5) Business Days Thereafter
Schedule 6 - Overbuilding, Necessary Consents, Etc. as of the Initial
Funding Date
Schedule 7 - Lien Searches as of the Initial Funding Date
Schedule 8 - Real Estate as of the Initial Funding Date
Schedule 9 - Litigation
Schedule 10 - Agreements with Affiliates
LOAN AGREEMENT
MEREDITH/NEW HERITAGE STRATEGIC PARTNERS L.P.,
A PARTNERSHIP AMONG
MEREDITH/NEW HERITAGE PARTNERSHIP,
CONTINENTAL CABLEVISION OF MINNESOTA, INC.,
AND NEW HERITAGE ASSOCIATES (THE "BORROWER"), (on and
after the Initial Funding Date (as herein defined))
NORTH CENTRAL CABLE COMMUNICATIONS CORPORATION
("NORTH CENTRAL"), MEREDITH/NEW HERITAGE SUBSIDIARY, INC.
(THE "BUYER SUB" AND, COLLECTIVELY WITH THE
BORROWER AND NORTH CENTRAL, THE "BORROWERS"),
THE TORONTO-DOMINION BANK and
THE BANKS NAMED HEREIN WHOSE NAMES AND
SIGNATURES APPEAR ON THE SIGNATURE PAGES HEREOF
(COLLECTIVELY, THE "BANKS"),
THE BANK OF NEW YORK,
THE FIRST NATIONAL BANK OF CHICAGO,
AND NATIONSBANK OF TEXAS, N.A.
(COLLECTIVELY, THE "CO-AGENTS"), and
THE TORONTO-DOMINION BANK TRUST COMPANY,
AS AGENT FOR THE CO-AGENTS AND THE BANKS (THE "AGENT")
agree as
follows as of the 31st day of March, 1992:
Page 5 of 122
<PAGE>
ARTICLE 1
Definitions
For the purposes of this Agreement:
"Acquisition" shall mean (i) any acquisition by the Borrower or any
Subsidiary of the Borrower of any cable television system or SMATV System, or
(ii) any acquisition by the Borrower of any other Person which owns or operates
cable television systems or SMATV Systems, which Person shall then become a
Subsidiary of the Borrower whose financial statements are consolidated with the
Borrower in accordance with generally accepted accounting principles.
"Acquisition" shall not include the acquisitions of the Meyer Systems and of
North Central.
"Advance" or "Advances" shall mean amounts advanced by the Banks to the
Borrowers or any of them pursuant to Article 2 hereof on the occasion of any
borrowing.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under common control with, the Borrower. For purposes of
this definition, "control" when used with respect to any Person includes,
without limitation, the direct or indirect beneficial ownership of more than
ten percent (10%) of the voting securities or voting equity of such Person or
the power to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Agent" shall mean The Toronto-Dominion Bank Trust Company, acting as agent
for the Banks.
"Agent's Office" shall mean the office of the Agent located at The
Toronto-Dominion Bank Trust Company, 42 Wall Street, New York, New York 10005,
or such other office as may be designated pursuant to the provisions of Section
11.1 of this Agreement.
"Agreement" shall mean this Agreement.
"Agreement Date" shall mean the date as of which this Agreement is dated.
"Annualized Operating Cash Flow" shall mean an amount equal to Operating
Cash Flow of the Borrower and its Subsidiaries, on a consolidated basis, for
the calendar quarter specified, multiplied by four (4).
Page 6 of 122
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"Applicable Law" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person, including, without limiting
the foregoing, the Licenses, the Federal Communications Act of 1934 and Title
47 of the United States Code, all Environmental Laws, and all orders and
decrees of all courts and arbitrators in proceedings or actions to which the
Person in question is a party or by which it is bound.
"Assessment Rate" shall mean, for any Interest Period for a CD Rate
Advance, the current annual assessment rate (if any), rounded upward to the
nearest hundredth (1/100th of one percent), payable by insured banks to the
Federal Deposit Insurance Corporation (or any successor) for insuring time
deposits made in dollars at offices of banks in the United States as determined
by the Agent on the first day of such Interest Period.
"Authorized Signatory" shall mean such senior personnel of the Borrower or
either of its Partners as may be duly authorized and designated in writing by
the Borrower to execute documents, agreements and instruments on behalf of the
Borrower.
"Available Commitment" shall mean, at any time, the remainder of (a) the
amount of the Commitment, as such Commitment may be reduced and increased from
time to time in accordance with Section 2.1(b) hereof, less (b) the amount of
the Unavailable Commitment at such time.
"Banks" shall mean the Banks whose names and signatures as Banks appear on
the signature pages hereof, and any assignees of such Banks which hereafter
become parties hereto pursuant to and in accordance with Section 11.5 hereof;
and "Bank" shall mean any one of the foregoing Banks.
"Basic Subscribers" shall mean a dwelling unit, including an apartment
which is separately billed for cable television services within an apartment
building, in respect of which the Borrower or a Subsidiary of the Borrower has
in effect an agreement to provide one or more tiers of the cable television
subscription services offered by the Borrower or a Subsidiary of the Borrower
and for which the Borrower or a Subsidiary of the Borrower has received at
least one full month's payment at the rate customarily charged by the Borrower
or such Subsidiary of the Borrower within the applicable franchise area, except
for those dwelling units for which payment is more than sixty (60) days past
due, or for which notices of termination of service have been sent by the
Borrower or a Subsidiary of the Borrower, or have been sent by the customer and
received by the Borrower or a Subsidiary of the Borrower. As to bulk and
commercial subscribers, such as hotels, motels, and apartments, billed on a
bulk basis, the number of Basic Subscribers for the Borrower and its
Subsidiaries in respect of such bulk and commercial subscribers shall be
Page 7 of 122
<PAGE>
computed by dividing the monthly basic cable revenues received by the Borrower
and all of its Subsidiaries from any such bulk and commercial subscribers by
the average monthly revenue received by the Borrower and all of its
Subsidiaries from other Basic Subscribers within the System.
"Borrower" shall mean Meredith/New Heritage Strategic Partners L.P., a
limited partnership formed under the laws of the State of Iowa among the
General Partner and the Limited Partners pursuant to the Partnership Agreement.
"Borrowers" shall mean, collectively, the Borrower and Buyer Sub and, from
and after the Initial Funding Date, North Central.
"Business Day" shall mean a day on which banks and foreign exchange
markets are open for the transaction of business required for this Agreement in
New York and Dallas, as relevant to the determination to be made or the action
to be taken.
"Buyer Sub" shall mean Meredith/New Heritage Subsidiary, Inc., a Delaware
corporation.
"Capital Expenditures" shall mean, in respect of any Person, expenditures
for the purchase or construction of fixed assets, plant and equipment which are
capitalized in accordance with generally accepted accounting principles, less
any such expenditures for assets and equipment held in inventory. "Capital
Expenditures" shall not include the acquisition of the Meyer Systems by the
Borrower on the Initial Funding Date.
"Capitalized Lease Obligation" shall mean that portion of any obligation
of a Person as lessee under a lease which at the time would be required to be
capitalized on the balance sheet of such lessee in accordance with generally
accepted accounting principles.
"CCM" shall mean Continental Cablevision of Minnesota, Inc., a Minnesota
corporation and a Limited Partner of the Borrower.
"CD Rate" shall mean, for any Interest Period, the interest rate per annum
(rounded upwards to the nearest one-sixteenth (1/16th) of one percent)
determined by the Agent to be the average of the prevailing rate bids at 10:00
a.m. (New York time) or as soon thereafter as practicable, on the Business Day
on which the relevant Interest Period commences, by two or more New York
certificate of deposit dealers of recognized standing for the purchase at face
value from The Toronto-Dominion Bank, New York Branch, or, upon request of any
Borrower, from one of the Co-Agents (whichever rate is less), of its
certificates of deposit having a maturity comparable to the duration of the
Interest Period requested by such Borrower, and an amount equal to the amount
requested by such Borrower.
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<PAGE>
"CD Rate Advance" shall mean an Advance which any Borrower requests to be
made as a CD Rate Advance or which is reborrowed as a CD Rate Advance, in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $5,000,000 and in an integral multiple of
$1,000,000.
"CD Rate Basis" shall mean a simple per annum interest rate equal to the
sum of (a) the quotient (rounded upwards to the nearest one-hundredth (1/100th)
of one percent) of (i) the CD Rate divided by (ii) one minus the Domestic
Reserve Percentage, stated as a decimal, plus (b) the Assessment Rate, plus (c)
one and three-quarters percent (1-3/4%). The CD Rate Basis shall apply to
Interest Periods of thirty (30), sixty (60), ninety (90) days, one hundred
eighty (180), and three hundred sixty (360) days and, once determined, shall
remain unchanged during the applicable Interest Period, except for changes to
reflect adjustments in the Domestic Reserve Percentage. No Borrower may elect
an Interest Period of three hundred sixty (360) days unless the Agent has
notified such Borrower that the Banks have available to them funds for their
respective portions of the proposed Advance which are not required for other
purposes, that such funds are available to each of the Banks at a rate at or
below the CD Rate for such proposed Advance and Interest Period, and that each
of the Banks has agreed (each in its sole discretion) to fund their respective
portions of such Advance. Interest on CD Rate Advances shall also be subject
to adjustment as provided in Section 2.3(f) hereof.
"Co-Agents" shall mean The Bank of New York, The First National Bank of
Chicago, and NationsBank of Texas, N.A.; and "Co-Agent" shall mean any one of
them.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean any property of any kind constituting collateral
for the Obligations under this Agreement or any of the Security Documents..
"Collateral Assignment of Leases" shall mean any Collateral Assignment of
Leases given by the Borrower in favor of the Agent, on behalf of the Co-Agents
and the Banks, in substantially the form attached hereto as Exhibit A, pursuant
to which the Borrower assigns to the Agent (on behalf of the Co-Agents and the
Banks) its interests as lessee under its real property leases, whether now
owned or hereafter acquired.
"Collateral Assignment of Partnership Interests" shall mean that certain
Collateral Assignment of Partnership Interests given by each of the Partners in
favor of the Agent (on behalf of the Co-Agents and the Banks), dated as of the
Initial Funding Date and in substantially the form attached hereto as Exhibit
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B, pursuant to which each of the Partners pledges as collateral for the
Obligations its right to receive cash and other distributions from the Borrower
on account of its ownership interest in the Borrower.
"Commission" shall mean the Federal Communications Commission or any
successor thereto.
"Commitment" shall mean the several obligations of the Banks to advance to
the Borrowers, pursuant to the terms hereof, up to $205,000,000 at any time
prior to the Maturity Date, as such obligations may be reduced from time to
time pursuant to the terms hereof.
"Commitment Ratios" shall mean the percentages in which the Banks are
severally bound to satisfy the Commitment to make Advances to the Borrowers, as
set forth below, and as modified to reflect assignments by the Banks pursuant
to Section 11.5 hereof:
Bank Percentage Dollar Amount
--------------------- ---------- -------------
The Toronto-
Dominion Bank 14.634146341% $ 30,000,000
The Bank of New York 12.195121951% $ 25,000,000
The First National
Bank Of Chicago 12.195121951% $ 25,000,000
NationsBank of Texas,
N.A. 12.195121951% $ 25,000,000
Bank of Montreal 12.195121951% $ 25,000,000
CIBC, Inc. 12.195121951% $ 25,000,000
Credit Lyonnais
Cayman Island Branch 12.195121951% $ 25,000,000
Connecticut
National Bank 7.317073171% $ 15,000,000
Bank of Hawaii 4.878048780% $ 10,000,000
TOTAL 100% $205,000,000
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"Conversion Date" shall mean March 31, 1994.
"Default" shall mean any Event of Default, and any of the events specified
in Section 8.1 regardless of whether there shall have occurred any passage of
time or giving of notice or both that would be necessary for such event to be
an Event of Default.
"Default Rate" shall mean a simple per annum interest rate equal to the
sum of the otherwise applicable Interest Rate Basis hereof plus two percent
(2%) or, if there is no otherwise applicable Interest Rate Basis, the Prime
Rate Basis plus two percent (2%).
"Defaulting Bank" shall have the meaning set forth in Section 2.2(f)
hereof.
"Domestic Reserve-Percentage" shall mean, for any day, the percentage (if
any) which is in effect on such day, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any basic, supplemental,
emergency or marginal reserves) for a member bank of the Federal Reserve System
with deposits exceeding $5 billion United States dollars in respect of new non-
personal time deposits in dollars in the United States having a maturity
comparable to the duration of the Interest Period selected by the relevant
Borrower and in an amount of $250,000 or more. The CD Rate Basis shall be
adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Earn-Out Payments" for any fiscal year shall mean cash payments required
to be made by the Borrower to CCM and HCM pursuant to Section 11.2 of the North
Central Purchase Agreement, such cash payments to be payable simultaneously
with the repayments of the Loan pursuant to Section 2.7(c) hereof.
"Environmental Laws" shall mean all applicable federal, state or local
laws, statutes, rules, regulations or ordinances relating to public health,
safety or the environment, including, without limitation, those relating to
releases, discharges, emissions or disposals to air, water, land or ground
water, to the withdrawal or use of ground water, to the use, handling or
disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of hazardous substances (including,
without limitation, petroleum, crude oil or any fraction thereof, or other
hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous or
other controlled, prohibited, or regulated substances, including, without
limitation, any such provisions under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.), or the Resource Conservation and Recovery Act of 1976, as amended (42
U.S.C. Section 6901 et seq.).
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<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
in effect on the Agreement Date and as amended thereafter from time to time.
"Eurodollar Advance" shall mean an Advance which any Borrower requests to
be made as a Eurodollar Advance or which is reborrowed as a Eurodollar Advance,
in accordance with the provisions of Section 2.2 hereof, and which shall be in
a principal amount of at least $5,000,000 and in an integral multiple of
$1,000,000.
"Eurodollar Basis" shall mean a simple per annum interest rate equal to
the sum of (a) the quotient (rounded upwards to the nearest one-sixteenth of
one percent (1/16%)) of (i) the Eurodollar Rate divided by (ii) one minus the
Eurodollar Reserve Percentage, stated as a decimal, plus (b) one and five-
eights percent (1-5/8%). The Eurodollar Basis shall apply to Interest Periods
of one (1), two (2), three (3), six (6), and twelve (12) months, and, once
determined, shall remain unchanged during the applicable Interest Period,
except for changes to reflect adjustments in the Eurodollar Reserve Percentage.
No Borrower may elect an Interest Period of twelve (12) months unless the Agent
has notified such Borrower that the Banks have available to them funds for
their respective portions of the proposed Advance which are not required for
other purposes, that such funds are available to each of the Banks at a rate at
or below the Eurodollar Rate for such proposed Advance and Interest Period, and
that the Banks have agreed (each in its sole discretion) to fund their
respective portions of such Advance. Interest on Eurodollar Advances shall
also be subject to adjustment as provided in Section 2.3(f) hereof.
"Eurodollar Rate" shall mean, for any Interest Period, the average
(rounded upwards to the nearest one-sixteenth of one percent (1/16%)) of the
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to The Toronto-Dominion Bank, New York Branch, or,
upon the request of any Borrower, to one of the Co-Agents (whichever average is
less), in the eurodollar interbank borrowing market at approximately 11:00 a.m.
(New York time), two (2) Business Days before the first day of such Interest
Period, in an amount approximately equal to the principal amount of, and for a
length of time approximately equal to the Interest Period for, the Eurodollar
Advance sought by such Borrower.
"Eurodollar Reserve Percentage" shall mean the percentage (if any) which
is in effect from time to time under Regulation D of the Board of Governors of
the Federal Reserve System, as such regulation may be amended from time to
time, as the maximum reserve requirement applicable with respect to
Eurocurrency Liabilities (as that term is defined in Regulation D), whether or
not any Bank has any Eurocurrency Liabilities subject to such reserve
requirement at that time. The Eurodollar Basis for any Eurodollar Advance
shall be adjusted as of the effective date of any change in the Eurodollar
Reserve Percentage.
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"Event of Default" shall mean any of the events specified in Section 8.1
hereof, provided that any requirement for notice or lapse of time or both has
been satisfied.
"Excess Cash Flow" shall mean, as of the last day of any fiscal year of
the Borrower, Operating Cash Flow of the Borrower and its Subsidiaries on a
consolidated basis for such fiscal year, less the sum of each of the following
for the Borrower and its Subsidiaries on a consolidated basis for such fiscal
year: (i) Interest Expense, (ii) Management Fees paid or payable (excluding
any such fees which are accrued but not permitted to be paid under Section 7.7
hereof) to the Manager in accordance with the terms of the Partnership
Agreement, this Agreement and the Subordination of Management Fees Agreement,
(iii) all scheduled repayments (including those required pursuant to Section
2.7(a) hereof) for the Borrower and its Subsidiaries on a consolidated basis of
principal amounts of Indebtedness for Money Borrowed (other than payments out
of Excess Cash Flow required under Section 2.7(c) hereof), (iv) Capital
Expenditures of the Borrower and its Subsidiaries on a consolidated basis, (v)
cash payments of income tax liabilities of the Borrower or any of its
Subsidiaries (but excluding payments made by the Borrower to its Partners to
enable them to pay any tax liabilities incurred by them in respect of their
ownership interests in the Borrower), (vi) Earn-Out Payments made as permitted
under Section 7.7 hereof, (vii) repayments of the principal amount of the Loans
required pursuant to Section 2.7(b) hereof, and (viii) $500,000.
"Federal Funds Rate" shall mean, as of any date, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three (3) federal funds brokers of
recognized standing selected by the Agent.
"Fixed Charges" shall mean, for the Borrower and its Subsidiaries on a
consolidated basis for any fiscal period, the aggregate amount of principal,
interest, and associated fees (other than fees payable to the Agent, the Co-
Agents, and the Banks on the Agreement Date) paid or payable in connection with
Indebtedness for Money Borrowed (excluding repayments required under Section
2.7(b) and Section 2.7(c) hereof), cash payments of income tax liabilities,
Capital Expenditures and Management Fees whether paid or payable (but excluding
any such fees which are accrued but not permitted to be paid under Section 7.7
hereof) to the Manager in accordance with the terms of the Partnership
Agreement, this Agreement, and the Subordination of Management Fees Agreement.
"Fixed Rate advance" shall mean a CD Rate Advance of a Eurodollar Advance
or both, as appropriate.
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"General Partner" shall mean Meredith/New Heritage Partnership, an Iowa
partnership, which is the sole general partner of the Borrower.
"Guaranty" or "Guaranteed," as applied to an obligation, shall mean and
include (a) a guaranty, direct or indirect, in any manner, of any part of all
of such obligation or (b) any other agreement, direct or indirect, contingent
or otherwise, the practical effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of any
part or all of such obligation.
"HCM" shall mean Hauser Cable of Minnesota, Inc., a Delaware corporation
and a 'Seller' under the North Central Purchase Agreement.
"Indebtedness" shall mean, with respect to the Borrower and its
Subsidiaries on a consolidated basis, without duplication, (a) all items which
in accordance with generally accepted accounting principles would be included
in determining total liabilities as shown on the liability side of a balance
sheet, except (i) accounts payable and accrued liabilities, (ii) items of
partners' equity or capital stock or surplus or (iii) items of general
contingency or deferred tax reserves, (b) all direct or indirect obligations
secured by any Lien to which any property or asset owned by the Borrower or any
of its Subsidiaries is subject, whether or not the obligation secured thereby
shall have been assumed, (c) to the extent not otherwise included, all
Capitalized Lease Obligations and all obligations with respect to leases
constituting part of a sale and lease-back arrangement, and (d) all
reimbursement obligations with respect to outstanding letters of credit.
"Indebtedness for Money Borrowed" shall mean, with respect to the Borrower
and its Subsidiaries on a consolidated basis, money borrowed and Indebtedness
represented by notes payable and drafts accepted representing extensions of
credit, all obligations evidenced by bonds, debentures, notes or other similar
instruments, all Indebtedness upon which interest charges are customarily paid,
all reimbursement obligations as to amounts drawn down by beneficiaries of
letters of credit, and all Indebtedness issued or assumed as full or partial
payment for property or services. For purposes of this definition, interest
which is accrued but not paid on the original due date for such interest shall
be deemed Indebtedness for Money Borrowed. Where obligations are evidenced by
bonds, debentures, notes or other similar instruments whose face amount exceeds
the amount received by the Borrower with respect thereto, only the amount
received plus debt discount amortized as of the calculation date need be taken
into account as Indebtedness for Money Borrowed.
"Initial Funding Date" shall mean the date on which the initial Advance of
the Loans hereunder is funded by the Banks to the Borrower and the Buyer Sub,
which Advance shall be made, subject to the terms and conditions hereof, on the
date of the consummation of the North Central Purchase Agreement to permit the
acquisition of North Central and of the Meyer Systems by the Borrower.
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"Interest Expense" shall mean, for any quarter or year, as applicable, the
aggregate of all interest paid or payable (excluding any interest which has
accrued but is not payable) by the Borrower and its Subsidiaries on a
consolidated basis in respect of their Indebtedness for Money Borrowed.
"Interest Hedge Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, or any similar
arrangement designed to hedge the risk to the Borrowers of variable interest
rate volatility, arising at any time between any Borrower and one or more of
the Agent, the Co-Agents, and the Banks or any other Person, as such agreement
or arrangement may be modified, supplemented and in effect from time to time.
"Interest Period" shall mean, (a) in connection with any Prime Rate
Advance, the period beginning on the date such Advance is made and ending on
the last day of the calendar quarter in which such Advance is made, provided,
however, that if a Prime Rate Advance is made on the last day of any calendar
quarter, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar quarter; and (b) in connection with
any Fixed Rate Advance, the term of such Advance selected by any Borrower or
otherwise determined in accordance with this Agreement. Notwithstanding the
foregoing, however, (i) any applicable Interest Period, with respect to
Eurodollar Advances only, which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (ii) any applicable
Interest Period, with respect to Eurodollar Advances only, which begins on a
day for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall (subject to clause (i) above)
end on the last day of such calendar month, and (iii) no Interest Period shall
extend beyond the Maturity Date. Interest shall be due and payable with
respect to any Advance as provided in Section 2.3 hereof.
"Interest Rate Basis" shall mean the Prime Rate Basis, the Eurodollar
Basis, or the CD Rate Basis, as appropriate.
"Investment" shall mean any investment by the Borrower or any Subsidiary
of the Borrower in any other Person which, directly or indirectly, owns or
operates cable television systems or SMATV Systems, which Person's financial
statements, after giving effect to such investment, are not consolidated with
the Borrower in accordance with generally accepted accounting principles.
"Licenses" shall mean any rights, whether based upon any agreement,
statute, ordinance or otherwise, granted by any governmental authority to the
Borrower or any Subsidiary of the Borrower to own and operate cable television
systems, described on Schedule 1 attached hereto, and any other such rights
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subsequently obtained by the Borrower or any Subsidiary of the Borrower and
added to such Schedule 1 by supplement, together with any amendment,
modification or replacement with respect thereto.
"Lien" shall mean, with respect to any property, any mortgage, lien,
pledge, assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not choate, vested or perfected.
"Limited Partners" shall mean CCM and the Manager.
"Loans" shall mean, collectively, the amounts advanced by the Banks to the
Borrowers under the Commitment, not to exceed the amount of the Commitment, and
evidenced by the Notes.
"Loan Documents" shall mean, without limitation, this Agreement, the
Notes, the Security Agreement, the Mortgages, the Subordination of Management
Fees Agreement, the Pledge Agreement, the Collateral Assignment of Leases, all
Requests for Advances, all Use of Proceeds Letters, the Collateral Assignment
of Partnership Interests, the Subsidiary Guaranty, the Subsidiary Mortgage, the
Subsidiary Security Agreement, the Subsidiary Pledge Agreement, the Subsidiary
Collateral Assignment of Leases, all Interest Hedge Agreements to which any
Borrower and one or more of the Agent, the Co-Agents, and the Banks, or any of
them or their affiliates are party, any agreements referred to in Section
2.4(b) or Section 2.4(c) or otherwise and providing for the payment of a fee or
fees to the Agent, the Co-Agents, the Banks, or any of them, and all other
documents and agreements executed or delivered in connection with or
contemplated by this Agreement.
"Majority Banks" shall mean, at any time, Banks the total of whose
principal amount of the Loans outstanding equals or exceeds sixty-six and two-
thirds percent (66-2/3%) of the total principal amount of the Loans
outstanding, or, at any time when there are no Loans outstanding, Banks the
total of whose Commitment Ratios equals or exceeds sixty-six and two-thirds
percent (66-2/3%).
"Management Fees" shall mean all management fees and other amounts (other
than as set forth in the following sentence) due and payable to the Manager in
respect of its services in managing the Systems for the Borrower, pursuant to
the provisions of the Partnership Agreement. "Management Fees" shall not
include amounts owing to the Manager in respect of programming, equipment or
other assets obtained from third parties which are transferred to the Borrower
or any of its Subsidiaries, or services obtained from third parties solely for
the benefit of the Borrower or any of its Subsidiaries, provided that amounts
for all such items and services obtained by the Managers shall be passed
through to the Borrower at the Manager's cost therefor.
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"Manager" shall mean New Heritage Associates, an Iowa general partnership
and a Limited Partner of the Borrower, which has agreed to provide management
services to the Borrower and its Subsidiaries regarding the daily operation of
the System in return for certain Management Fees pursuant to the provisions of
the Partnership Agreement.
"Materially Adverse Effect" shall mean any materially adverse effect upon
the business, financial condition, results of operations or business prospects
of the Borrower and its Subsidiaries, taken as a whole, or upon the ability of
the Borrower and its Subsidiaries, taken as a whole, to construct, own, operate
and maintain the System, or to ensure performance under the Licenses, this
Agreement or any other Loan Document by the Borrower or any other obligor
thereunder, resulting from any act, omission, situation, status, event or
undertaking, either singly or taken together; provided, however, that no act,
omission, situation, status, event or undertaking, singly or taken together,
which affects only the business prospects (and not the business, financial
condition, or results of operations) of the Borrower and its Subsidiaries,
taken as a whole, shall constitute a Materially Adverse Effect unless or until
it has a present and direct effect upon the business or operations of the
Borrower or one or more of its Subsidiaries.
"Maturity Date" shall mean March 31, 2001, or such earlier date as payment
of the Loans under the Commitments shall be due (whether by acceleration or
otherwise).
"Merger Date" shall mean the date (which shall be not later than the fifth
Business Day after the Initial Funding Date) on which Buyer Sub shall merge
with North Central and North Central shall assume and be liable for the Advance
initially borrowed by the Buyer Sub pursuant to Section 2.1(c) hereof.
"Meyer Systems" shall mean those certain cable television systems of the
Borrower in and around Bismarck and Mandan, North Dakota, which were acquired
by the General Partner on December 31, 1991 from Meyer Broadcasting Company, a
North Dakota corporation, and which will be contributed on the Initial Funding
Date to the Borrower.
"Mortgages" shall mean any mortgage, deed to secure debt, deed of trust,
security deed, security agreement, or other instrument conveying a security
interest or other Lien in real property or interests in real property, whether
now owned or hereafter acquired, in substantially the form attached hereto as
Exhibit C, by the Borrower to the Agent (on behalf of the Co-Agents and the
Banks), as Collateral for the Obligations.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
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"Necessary Authorizations" shall mean all approvals and licenses from, and
all filings and registrations with, any governmental or other regulatory
authority, including, without limiting the foregoing, the Licenses and all
approvals, licenses, filings and registrations under the Federal Communications
Act of 1934, necessary in order to enable the Borrower and its Subsidiaries to
acquire, construct, own, maintain and operate the System.
"Net Income" shall mean, as applied to the Borrower for any fiscal period,
the aggregate amount of net income (or net loss) of the Borrower and its
Subsidiaries on a consolidated basis, after taxes, for such period as
determined in accordance with generally accepted accounting principles.
"Net Proceeds" shall mean, with respect to any sale of the assets of the
Borrower or any Subsidiary of the Borrower permitted hereunder, or with respect
to the sale of the stock or other ownership interests of any Subsidiary of the
Borrower, the gross sales price for the assets or stock or other ownership
interests being sold (including, without limitation, any payments received for
consulting agreements and non-competition covenants, and other similar payments
not included in the gross sales price), net of (i) amounts reserved, if any,
for taxes payable with respect to the sale, (ii) reasonable and customary
transaction costs payable by the Borrower or any Subsidiary of the Borrower,
(iii) contingencies with respect to such sale appropriately reserved for, and
(iv) until actually received by the Borrower or such Subsidiary of the Borrower
(at which time such amounts shall become "Net Proceeds"), any portion of the
sales price (x) held in escrow or (y) evidenced by a promissory note or other
instrument permitted under Section 7.4(a) hereof.
"Non Pro Rata Advance" shall have the meaning set forth in Section 2.2(f)
hereof.
"North Central" shall mean North Central Cable Communications Corporation,
a Delaware corporation which, as of the Initial Funding Date, shall become a
wholly-owned Subsidiary of the Borrower, and which, as of the Merger Date,
shall become one of the Borrowers hereunder.
"North Central Purchase Agreement" shall mean that certain Stock Purchase
Agreement for the purchase of the Borrower of all of the stock of North
Central, dated as of February 11, 1992, among the Borrower, the General
Partner, HCM, Hauser Cable Communications, Inc., a Delaware corporation, North
Central, CCM, and NCC Holding Co., Inc., a Massachusetts corporation, as
amended from time to time pursuant to any applicable provisions of Section 7.3
hereof.
"North Central Systems" shall mean those certain cable television systems
owned by North Central and its Subsidiaries in and around Columbia Heights,
Burnsville, Eagan, Roseville, Quad Cities, Blaine, and White Bear Lake,
Minnesota.
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"Notes" shall mean those certain promissory notes in the aggregate
principal amount of $205,000,000, one such Note issued to each of the Banks on
the Initial Funding Date by the Borrower, one such Note issued to each of the
Banks on the Initial Funding Date by the Buyer Sub, and one such Note issued to
each of the Banks on the Merger Date by North Central to replace and succeed
Notes executed by the Buyer Sub, each one in substantially the form of Exhibit
D attached hereto, any other promissory notes issued pursuant to this
Agreement, and any extensions, amendments, or renewals thereof.
"Obligations" shall mean (i) all payment and performance obligations of
the Borrowers to the Banks, the Co-Agents, and the Agent and their respective
affiliates under this Agreement and the other Loan Documents, as they may be
amended, modified, extended, or renewed from time to time, or as a result of
making the Loans, (ii) all payment and performance obligations of all
Subsidiaries of the Borrower and other obligors (other than the Borrowers) to
the Banks, the Co-Agents, and the Agent and their respective affiliates under
the Loan Documents, as they may be amended from time to time, and (iii) the
obligation to pay the Agent (for the benefit of the Co-Agents and the Banks) an
amount equal to the amount of any and all damage which the Banks, the Co-
Agents, and the Agent and their respective affiliates, or any of them, may
suffer by reason of a breach by the Borrower, any of its Subsidiaries, or any
other obligor of any obligation, covenant or undertaking with respect to this
Agreement or any other Loan Document.
"Operating Cash Flow" shall mean, for the Borrower and its Subsidiaries on
a consolidated basis in respect of any fiscal period, the sum of (i) Net
Income, plus (ii) Interest Expense, income taxes paid or payable (and not added
to Operating Cash Flow in a prior fiscal period), depreciation, amortization,
Management Fees whether paid or accrued, and other non-cash items, which sum
shall be adjusted, upward or downward, as applicable, for extraordinary items,
all as determined in accordance with generally accepted accounting principles.
If the Meyer Systems or the North Central systems are acquired during any
fiscal quarter being tested, or any other Acquisition is made hereunder,
Operating Cash Flow for the acquired portion of the System for that fiscal
quarter during which such transaction occurs shall be calculated by multiplying
(x) the Operating Cash Flow of the acquired portion of the Systems from the
purchase date through the last day of the fiscal quarter being tested, by (y) a
fraction, the numerator of which is three hundred sixty-five (365) and the
denominator of which is the number of days from the purchase date to the end of
the fiscal quarter being tested.
"Partners" shall mean the General Partner and the Limited Partners.
"Partnership Agreement" shall mean that certain Restated Agreement of
Limited Partnership of Meredith/New Heritage Strategic Partners L.P. among the
Partners of the Borrower dated as of December 30, 1991 and as in effect on the
Agreement Date.
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"Payment Date" shall mean the last day of any Interest Period.
"Permitted Liens" shall mean, as applied to any Person:
(a) any Lien in favor of the Agent (acting on behalf of the Co-Agents
and the Banks) given to secure the Obligations including without limitation,
the obligations of any Borrower under any Interest Hedge Agreement between such
Borrower on the one hand and any of the Agent, the Co-Agents, or the Banks or
their respective affiliates, on the other hand);
(b) (i) Liens on real estate for real estate taxes not yet delinquent
and (ii) Liens for taxes, assessments, judgments, governmental charges or
levies or claims the non-payment of which is being diligently contested in good
faith by appropriate proceedings and for which adequate reserves have been set
aside on such Person's books, but if any foreclosure, distraint, sale or
similar proceedings have been commenced with respect thereto and remain
unstayed for a period of thirty (30) days after their commencement, such Liens
shall no longer be deemed "Permitted Liens";
(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due or
being diligently contested in good faith, if such reserve or appropriate
provision, if any, as shall be required by generally accepted accounting
principles shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of assets imposed by any of the
Licenses as presently in effect or by the Federal Communications Act of 1934
and any regulations thereunder;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not in the aggregate
materially interfere with the ordinary conduct of the business of such Person,
or Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness or other extensions of credit and which do not in the aggregate
materially detract from the value of such properties or materially impair their
use in the operation of the business of such Person (including, without
limitation, Liens created under pole attachment agreements on cables and
property affixed to transmission poles);
(g) Purchase money security interests which are perfected by
operation of law only for a period not in excess of ten (10) days after the
inception thereof and limited to Liens on assets so purchased;
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(h) Other Liens of record (purchase money or otherwise) against the
assets of the Borrower or any of its Subsidiaries securing Indebtedness in an
amount not to exceed in the aggregate at any time $500,000; and
(i) Other Liens of record against the assets of the Borrower or any
of its Subsidiaries which are listed on Schedule 2 attached hereto, and any
other Liens of record as of the Initial Funding Date and added to such Schedule
2 by supplement, securing Indebtedness in an amount not to exceed in the
aggregate at any time $500,000.
"Person" shall mean an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"Plan" shall mean an employee benefit plan within the meaning of Section
3(3) of ERISA or any other plan maintained for employees of any Person or any
affiliate of such Person.
"Pledge Agreement" shall mean that certain stock pledge agreement, in
substantially the form attached hereto as Exhibit E, pursuant to which the
Borrower and certain of its Subsidiaries shall, on the Initial Funding Date,
pledge to the Agent (on behalf of the Co-Agents and the Banks) all of the
issued and outstanding stock of North Central, as additional Collateral for the
Obligations. "Pledge Agreement" shall also include any other stock pledge
agreement substantially in the form of Exhibit E attached hereto and given by
the Borrower or any Subsidiary of the Borrower to the Agent and pledging, as
additional Collateral for the Obligations, all of the issued and outstanding
stock of any other direct and subsequently-acquired Subsidiary of the Borrower.
"Pole Agreements" shall mean the agreements between the Borrower or any of
its Subsidiaries, on the one hand, and the parties referred to in Schedule 3 to
this Agreement, on the other hand, as more particularly described therein, and
any other agreement subsequently entered into by the Borrower or any of its
Subsidiaries and added to such Schedule 3 by supplement, permitting the
Borrower or any of its Subsidiaries to make use of transmission poles or other
conduits (above or below ground) of such parties in distributing cable
television signals.
"Prime Rate" shall mean, at any time, a simple per annum interest rate
equal to the rate of interest adopted by The Toronto-Dominion Bank, New York
Branch, as its reference rate for the determination of interest rates for loans
of varying maturities in United States dollars to United States residents of
varying degrees of creditworthiness and being quoted at such time by such bank
as its "prime rate." The "Prime Rate is not necessarily the lowest rate of
interest charged to borrowers of The Toronto-Dominion Bank, New York Branch.
In the event that, on any date, the Prime Rate, as described in the first
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sentence of this definition, is less than the sum of (a) the Federal Funds Rate
plus (b) five-eighths of one percent (5/8%) per annum, the Prime Rate for such
date shall mean a simple interest rate per annum equal to the sum of (x) the
Federal Funds Rate plus (y) five-eighths of one percent (5/8%) per annum.
"Prime Rate Advance" shall mean an Advance which any Borrower requests to
be made as a Prime Rate Advance or is reborrowed as a Prime Rate Advance in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $1,000,000 and in an integral multiple of
$500,000, except for a Prime Rate Advance which is in an amount equal to the
unused amount of the Commitment, which Advance may be in such amount.
"Prime Rate Basis" shall mean a simple per annum interest rate equal to
the sum of (a) the Prime Rate plus (b) five-eighths of one percent (5/8%). The
Prime Rate Basis shall be adjusted automatically as of the opening of business
on the effective date of each change in the Prime Rate to account for such
change. Interest on Prime Rate Advances shall also be subject to adjustment as
provided in Section 2.3(f) hereof.
"Pro Forma Debt Service Requirements" shall mean, when calculated as of
the last day of any fiscal quarter, the sum of Interest Expense, scheduled
repayments of principal required under Section 2.7(a), and Management Fees
reasonably projected by the Borrower to be paid (but excluding any such fees
which are accrued but not permitted to be paid under Section 7.7 hereof) to the
Manager in accordance with the terms of the Partnership Agreement, this
Agreement, and the Subordination of Management Fees Agreement, each for the
immediately succeeding four quarters. In calculating Interest Expense, it
shall be assumed that (i) the ratio of the Borrower tested in Section 2.3(f)
which adjusts the interest margin shall remain at the level prevailing on the
date of calculation for the succeeding four quarters, and (ii) as for Interest
Expense for any Indebtedness for Money Borrowed as to which the interest rate
is not fixed or otherwise calculable for the entire succeeding four quarters,
interest shall be calculated at the blended, weighted average interest rate on
the outstanding principal amount of the Loans on the data of calculation.
"Reportable Event" shall have the meaning set forth in Title IV of ERISA.
"Request for Advance" shall mean a certificate signed by an Authorized
Signatory of the Borrower or an officer of either of the other Borrowers who is
duly authorized requesting an Advance hereunder which will increase the
aggregate amount of the Loans outstanding hereunder, which certificate shall be
denominated a "Request for Advance," and shall be in substantially the form of
Exhibit F attached hereto. Each Request for Advance shall, among other things,
(i) specify which of the Borrowers is requesting the Advance, the date of the
Advance, which shall be a Business Day, the amount of the Advance, the type of
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Advance and, with respect to Fixed Rate Advances, the Interest Period selected
by such Borrower, and (ii) state that there shall not exist, on the date of the
requested Advance and after giving effect thereto, a Default hereunder.
"Restricted Payment" shall mean (a) any direct or indirect distribution,
dividend or other payment to any Person on account of any general or limited
partnership interest in, or shares of capital stock or other securities of, the
Borrower or any of its Subsidiaries; (b) any management, consulting or other
similar fees (other than items expressly excluded from the definition of
"Management Fees"), or any interest thereon, payable by the Borrower or any of
its Subsidiaries to any Affiliate, or to any other Person, including, without
limitation, payments to the Manager in accordance with the terms of the
Partnership Agreement; and (c) any payment of principal of or interest on, or
any defeasance, repurchase, redemption, or other acquisition of, any
Indebtedness for Money Borrowed of the Borrower or any of its Subsidiaries in
favor of any Affiliate.
"Restricted Purchase" shall mean any payment on account of the purchase,
redemption or other acquisition or retirement of any partner interests or other
securities of the Borrower or any of its Subsidiaries.
"Security Agreement" shall mean that certain Security Agreement dated as
of the Initial Funding Date between the Borrower and the Agent, on behalf of
the Co-Agents and the Banks, substantially in the form of Exhibit G attached
hereto, whereby the Borrower grants to the Agent a security interest in and
security title to all of its personal property as Collateral for the
Obligations.
"Security Documents" shall mean the Security Agreement, the Mortgages, the
Subordination of Management Fees Agreement, the Pledge Agreement, the
Collateral Assignment of Leases, the Collateral Assignment of Partnership
Interests, the Subsidiary Guaranty, the Subsidiary Mortgages, the Subsidiary
Security Agreement, the Subsidiary Pledge Agreement, the Subsidiary Collateral
Assignment of Leases, any other agreement or instrument providing Collateral
for the Obligations whether now or hereafter in existence, and any filings,
instruments, agreements, and documents related thereto or to this Agreement,
and providing collateral for the Obligations.
"Security Interest" shall mean all Liens in favor of the Agent, on behalf
of the Co-Agents and the Banks, created now or hereafter under this Agreement
or any of the Security Documents to secure the Obligations.
"Senior Advances" shall have the meaning set forth in Section 2.2(f)
hereof.
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"SMATV Systems" shall mean any satellite master antenna television
facilities used by the Borrower or any of its Subsidiaries in providing cable
television service to their customers.
"Subordination of Management Fees Agreement" shall mean that certain
Subordination of Management Fees Agreement of even date among the Manager, the
Borrower, and the Agent (on half of the Co-Agents and the Banks), substantially
in the form of Exhibit H attached hereto.
"Subsidiary" shall mean, as applied to any Person, (a) any corporation of
which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right
of the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or
any partnership of which fifty percent (50%) or more of the outstanding
partnership interests is at the time owned by such Person, or by one or more
Subsidiaries of such Person, or by such Person and one or more Subsidiaries of
such Person, and (b) any other entity which is controlled or susceptible to
being controlled by such Person, or by one or more Subsidiaries of such Person,
or by such Person and one or more Subsidiaries of such Person.
"Subsidiary Collateral Assignment of Leases" shall mean any collateral
assignment of leases given on the Initial Funding Date by North Central or by
any other Subsidiary of the Borrower in favor of the Agent (on behalf of the
Co-Agents and the Banks) in substantially the form of Exhibit I attached
hereto, pursuant to which North Central or such other Subsidiary of the
Borrower assigns as additional collateral for the Obligations its interests as
lessee under its real property leases. "Subsidiary Collateral Assignment of
Leases" shall also include any such subsidiary collateral assignment of leases
in substantially the form of Exhibit I attached hereto and given by a
Subsidiary of the Borrower to the Agent on or after the Initial Funding Date
pursuant to the terms hereof, pursuant to which such Subsidiary of the Borrower
assigns as additional Collateral for the Obligations its interests as lessee
under its real property leases.
"Subsidiary Guaranty" shall mean that certain Guaranty dated as of the
Initial Funding Date, in substantially the form of Exhibit J attached hereto,
and in favor of the Agent (for the benefit of the Co-Agents and the Banks)
pursuant to which North Central guarantees the Obligations. "Subsidiary
Guaranty" shall also include any other subsidiary guaranty substantially in the
form of Exhibit J attached hereto and given by a Subsidiary to the Agent on or
after the Initial Funding Date pursuant to the terms hereof, pursuant to which
such Subsidiary guarantees the Obligations.
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"Subsidiary Mortgage" shall mean any mortgage, deed to secure debt, deed
of trust, security deed, security agreement, or other instrument conveying a
security interest or other Lien in real property or interests in real property,
in substantially the form attached hereto as Exhibit K, given on the Initial
Funding Date by North Central or by any other Subsidiary of the Borrower to the
Agent (on behalf of the Co-Agents and the Banks), as Collateral for the
Obligations. "Subsidiary Mortgage" shall also include any such mortgage, deed
to secure debt, deed of trust, security deed, security agreement, or other
instrument conveying a security interest or other Lien in real property or
interests in real property, in substantially the form attached hereto as
Exhibit K, and given by a Subsidiary of the Borrower to the Agent on or after
the Initial Funding Date pursuant to the terms hereof, as additional Collateral
for the Obligations.
"Subsidiary Pledge Agreement" shall mean that certain stock pledge
agreement, in substantially the form attached hereto as Exhibit L, pursuant to
which North Central shall, on the Initial Funding Date, pledge to the Agent (on
behalf of the Co-Agents and the Banks) all of the issued and outstanding stock
of its Subsidiaries, as additional Collateral for the Obligations. "Subsidiary
Pledge Agreement" shall also include any other stock pledge agreement
substantially in the form of Exhibit L attached hereto and given by any
Subsidiary of the Borrower on or after the Initial Funding Date to the Agent
and pledging, as additional Collateral for the Obligations, all of the issued
and outstanding stock of any other direct and subsequently-acquired Subsidiary
of such Subsidiary of the Borrower.
"Subsidiary Security Agreement" shall mean a certain Security Agreement
to be given on the Initial Funding Date by North Central in favor of the Agent
(on behalf of the Co-Agents and the Banks), substantially in the form of
Exhibit M attached hereto, whereby North Central grants to the Agent a security
interest in and security title to all of its personal property as Collateral
for the Obligations, including the Subsidiary Guaranty. "Subsidiary Security
Agreement" shall also include any other subsidiary security agreement
substantially in the form of Exhibit M attached hereto and given by a
Subsidiary of the Borrower to the Agent on or after the Initial Funding Date
pursuant to the terms hereof, pursuant to which such Subsidiary grants to the
Agent a security interest in and security title to all of its personal property
as Collateral for the Obligations, including the Subsidiary Guaranty of such
Subsidiary.
"System" shall mean, collectively, the cable television systems and SMATV
Systems which are owned by the Borrower and its Subsidiaries, and which are
operated and maintained by the Borrower and its Subsidiaries pursuant to the
terms of the Licenses, including without limitation the Meyer Systems and the
North Central Systems, together with any other cable television systems and any
SMATV Systems now owned or hereafter acquired by the Borrower or any of its
Subsidiaries.
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"Total Indebtedness" shall mean, for the Borrower and its Subsidiaries on
a consolidated basis, as of any date, the sum of Indebtedness for Money
Borrowed, plus Capitalized Lease Obligations, plus contingent liabilities
(including, without limitation, obligations under Guaranties of the Borrower
and its Subsidiaries and obligations of such Persons in respect of letters of
credit), but excluding all accrued but unpaid Management Fees due the Manager
pursuant to the provisions of the Partnership Agreement.
"Unavailable Commitment" shall mean the amount, if any, by which the
Borrower has elected to reduce the Available Commitment pursuant to Section
2.1(b) hereof. The Unavailable Commitment shall be in the amount of either
$27,500,000 or $55,000,000.
"Use of Proceeds Letters" shall mean those certain Use of Proceeds
Letters, similar in form to Exhibit N attached hereto and in substance
satisfactory to the Agent, to be delivered to the Agent, the Co-Agents, and the
Banks pursuant to Sections 3.1 and 3.2 hereof.
Each definition of an agreement in this Article 1 shall include such
agreement as amended from time to time in accordance with the provisions of
this Agreement.
ARTICLE 2
The Loans
Section 2.1 The Loans
(a) The Commitment. The Banks agree, severally in accordance with
their respective Commitment Ratios and not jointly, upon the terms and subject
to the conditions of this Agreement (including without limitation the
applicable conditions set forth in Article 3 hereof), to lend to the Borrowers,
and to relend to the Borrower and to North Central, prior to the Maturity Date
amounts which in the aggregate at any one time outstanding do not exceed the
Available Commitment, as reduced from time to time. Subject to the terms
hereof, Advances under the Commitment may be repaid and then reborrowed as
provided in Sections 2.2(b)(ii), 2.2(c)(ii), and 2.2(d)(ii) hereof so as to
change the Interest Rate Bases or Interest Periods for Advances outstanding;
provided, however, that (i) after the Conversion Date, there shall be no
increase in the principal amount of the Loans outstanding as of the close of
business on the Conversion Date, and (ii) no Fixed Rate Advance may be borrowed
at a time when there has occurred and is continuing an Event of Default
hereunder.
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(b) Unavailable Commitment. On the Agreement Date, the Borrower may
elect to reduce the Available Commitment by the amount of either $55,000,000 or
$27,500,000, such amount to be the Unavailable Commitment. At any time
thereafter until the Conversion Date, the Borrower, subject at all times to the
aggregate limit of the Commitment, may elect to increase the Available
Commitment (and simultaneously decrease the amount of the Unavailable
Commitment) in the amount of either $27,500,000 or $55,000,000, and if in the
amount of $27,500,000, the Borrower may subsequently increase the Available
Commitment and reduce the Unavailable Commitment by an identical amount, by
giving the Agent, the Co-Agents, and the Banks not less than ten (10) Business
Days' prior written notice thereof. Any Unavailable Commitment remaining on
the Conversion Date shall expire and shall no longer constitute Commitment.
(c) North Central Advance. On the Initial Funding Date only, Buyer
Sub may borrow a single Prime Rate Advance in an amount of up to $126,000,000.
Within five (5) Business Days thereafter, on the Merger Date, Buyer Sub shall,
as provided in Section 5.15 hereof, merge with North Central, which shall
assume all of Buyer Sub's obligations including, without limitation, its
obligation to repay Buyer Sub's Prime Rate Advance. Thereafter, North Central
may exercise its rights with respect to Advances as set forth in Section 2.2
hereof, but may not at any time request an Advance at any time which increases
its principal amount of the Loans then outstanding.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Choice of Interest Rate, Etc. Any Advance under the Commitment
shall, at the option of the Borrower or North Central, be made as a Prime Rate
Advance, a Eurodollar Advance or a CD Rate Advance. Fixed Rate Advances shall
in all cases be subject to Section 2.3(g) and Article 10 hereof. Any notice
given to the Agent in connection with a requested Advance hereunder shall be
given prior to 12:00 noon (New York time) in order for such Business Day to
count toward the minimum number of Business Days required.
(b) Prime Rate Advances.
(i) Initial Advances. The Borrower or Buyer Sub shall give the
Agent in the case of Prime Rate Advances at least one (1) Business Day's
irrevocable written notice in the form of a Request for Advance, or
telephonic notice followed immediately by an original Request for
Advance; provided, however, that the Borrower's or Buyer Sub's failure to
confirm any telephonic notice with an original Request for Advance shall
not invalidate any notice so given.
(ii) Repayments and Reborrowings. The Borrower or North Central
may repay or prepay a Prime Rate Advance without regard to its Payment
Date and (i) upon at least one (1) Business Day's irrevocable prior
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written notice to the Agent, reborrow all or a portion of the principal
amount thereof as one or more Prime Rate Advances, (ii) upon at least
three (3) Business Days' irrevocable prior written notice to the Agent,
reborrow all or a portion of the principal thereof as one or more Fixed
Rate Advances, or (iii) not reborrow all or any portion of such Prime Rate
Advance. On the date indicated by the Borrower or North Central, such
Prime Rate Advance shall be so repaid and, as applicable, reborrowed.
(c) Eurodollar Advances.
(i) Initial Advances. The Borrower shall give the Agent in the
case of Eurodollar Advances at least three (3) Business Days' irrevocable
written notice in the form of a Request for Advance, or telephonic notice
followed immediately by an original Request for Advance; provided,
however, that the Borrower's failure to confirm any telephonic notice with
an original Request for Advance shall not invalidate any notice so given.
The Agent, whose determination shall be conclusive, shall determine the
available Eurodollar Bases and shall notify the Borrower or of such
Eurodollar Bases. The Borrower shall promptly notify the Agent by
telecopy or by telephone, and shall immediately confirm any such
telephonic notice with a telecopy, of its selection of a Eurodollar Basis
and Interest Period for such Advance.
(ii) Repayments and Reborrowings. At least three (3) Business
Days prior to each Payment Date for a Eurodollar Advance, the Borrower or
North Central may give the Agent written notice specifying whether all or
a portion of any Eurodollar Advance outstanding on the Payment Date (i) is
to be repaid and then reborrowed in whole or in part as a Eurodollar
Advance, (ii) is to be repaid and then reborrowed in whole or in part as
one or more Prime Rate Advances or CD Rate Advances, or (iii) is to be
repaid and not reborrowed. Upon such Payment Date such Eurodollar Advance
will, subject to the provisions hereof, be so repaid and, as applicable,
reborrowed.
(d) CD Rate Advances.
(i) Initial Advances. The Borrower shall give the Agent in the
case of CD Rate Advances at least two (2) Business Days' irrevocable
written notice in the form of a Request for Advance, or telephonic notice
followed immediately by an original Request for Advance; provided,
however, that the Borrower's failure to confirm any telephonic notice with
an original Request for Advance shall not invalidate any notice so given.
The Agent, whose determination shall be conclusive, shall determine the
available CD Rate Bases and shall notify the Borrower of such CD Rate
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Bases. The Borrower shall promptly notify the Agent by telecopy or by
telephone, and shall immediately confirm any such telephonic notice with a
telecopy, of its selection of a CD Rate Basis and Interest Period for such
Advance.
(ii) Repayments and Reborrowings. At least three (3) Business
Days prior to each Payment Date for a CD Rate Advance, the Borrower or
North Central may give the Agent written notice specifying whether all or
a portion of any CD Rate Advance outstanding on the Payment Date (i) is to
be repaid and then reborrowed in whole or in part as a CD Rate Advance,
(ii) is to be repaid and then reborrowed in whole or in part as a
Eurodollar Advance or a Prime Rate Advance, or (iii) is to be repaid and
not reborrowed. Upon such Payment Date such CD Rate Advance will, subject
to the provisions hereof, be so repaid and, as applicable, reborrowed.
(e) Notification of Banks. Upon receipt of a Request for Advance, or
a notice from the Borrower or North Central with respect to any outstanding
Advance prior to the Payment Date for such Advance, or a notice from the
Borrower or North Central of its selection of an Interest Rate Basis and
Interest Period with respect to a Fixed Rate Advance, the Agent shall promptly
notify each Co-Agent and Bank by telephone or telecopy of the contents thereof
and the amount of such Bank's portion of the Advance. Each Bank shall, not
later than 12:00 noon (New York time) on the date specified in such notice,
make available to the Agent at the Agent's Office, or at such account as the
Agent shall designate, the amount of its portion of the Advance in immediately
available funds.
(f) Disbursement.
(i) Prior to 2:00 p.m. (New York time) on the date of an Advance
hereunder, the Agent shall, subject to the satisfaction of the conditions
set forth in Article 3, disburse the amounts made available to the Agent
by the Banks (or as otherwise provided below) in like funds by (a)
transferring the amount so made available (or as otherwise provided below)
by wire transfer pursuant to the Borrower's or North Central's
instructions, or (b) in the absence of such instructions, crediting the
amounts so made available (or as otherwise provided below) to the account
of the Borrower or North Central maintained with the Agent. Unless the
Agent shall have received notice from a Bank prior to the date of any
borrowing that such Bank will not make available to the Agent such Bank's
ratable portion of such borrowing, the Agent may assume that such bank has
made such portion available to the Agent on the date of such borrowing and
the Agent may, in its sole discretion and in reliance upon such
assumption, make available to the Borrower or North Central on such date a
corresponding amount. If and to the extent such Bank shall not have so
made such ratable portion available to the Agent, such Bank agrees to
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repay to the Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made
available to the Borrower or North Central until the date such amount is
repaid to the Agent, at the Federal Funds Rate for the first ten (10)
Business Days and thereafter at the Prime Rate. If such Bank shall repay
to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan as part of such borrowing for purposes of this
Agreement. If such Bank does not repay such corresponding amount
immediately upon the Agent's demand therefor, the Agent shall notify the
Borrower or North Central and the Borrower or North Central shall
immediately pay such corresponding amount to the Agent. The failure of
any Bank to make the Loan to be made by it as part of any borrowing shall
not relieve any other Bank of its obligation, if any, hereunder to make
its Loan on the date of such borrowing, but no Bank shall be responsible
for any such failure of any other Bank to fund its portion of an Advance.
(ii) In the event that, at any time when there is no Default
hereunder, and the applicable conditions for funding set forth in Article
3 have been satisfied, a Bank for any reason fails or refuses to fund its
portion of an Advance (the funded portion of such Advance being
hereinafter referred to as a "Non Pro Rata Advance" and such Bank being
hereinafter referred to as a "Defaulting Bank"), then, until such time as
such Defaulting Bank has funded its portion of the Advance which was
previously a Non Pro Rata Advance, or all other Banks have received
payment in full (whether by repayment or prepayment) of the principal and
interest due in respect of such Non Pro Rata Advance, (x) the fee provided
for in Section 2.4(a) hereof shall not accrue in favor of the Defaulting
Bank, and (y) all of such Defaulting Bank's Advances, interest and fees
owing hereunder shall be subordinated in right of payment, as provided in
the following sentence, to the prior payment in full of all principal,
interest and fees in respect of all Non Pro Rata Advances in which the
Defaulting Bank has not funded its share (such principal, interest and
fees being referred to as "Senior Advances"). All amounts paid by the
Borrowers and otherwise due to be applied to the Defaulting Bank's
Advances, interest and fees pursuant to the terms hereof shall be
distributed by the Agent to the other Banks in accordance with their
respective Commitment Ratios (recalculated for purposes hereof to exclude
the Defaulting Bank's Commitment), until all Senior Advances have been
paid in full. This provision (other than clause (x) of the preceding
sentence) governs only the relationship among the Agent, the non-funding
Bank, and the other Banks; nothing hereunder shall limit the obligation of
the Borrower, Buyer Sub, or North Central to repay all Advances in
accordance with the terms of this Agreement. Notwithstanding anything in
this Agreement to the contrary:
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(A) the foregoing provisions of this subsection (ii) of this
Section 2.2(f) shall apply only with respect to Advances requested by the
Borrower or Buyer Sub prior to the Conversion Date which increase the
outstanding principal amount of the Loans; and
(B) the provisions of this subsection (ii) of this Section 2.2(f)
shall apply and be effective regardless of whether or not an Event of
Default has occurred and is continuing, and notwithstanding any
instruction of the Borrower or North Central as to its or their desired
application of payments.
Section 2.3 Interest.
(a) On Prime Rate Advances. Interest on each Prime Rate Advance
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable by the respective Borrower at the Prime
Rate Basis for such Advance in arrears on the applicable Payment Date.
Interest on Prime Rate Advances then outstanding shall also be due and payable
on the Maturity Date.
(b) On Eurodollar Advances. Interest on each Eurodollar Advance
shall be computed on the basis of a 360-day year for the actual number of days
elapsed and shall be payable by the respective Borrower at the Eurodollar Basis
for such Advance, in arrears, on the applicable Payment Date, and, in addition,
if the Interest Period for a Eurodollar Advance exceeds three (3) months,
interest on such Eurodollar Advance shall also be due and payable in arrears on
each three month anniversary of the making of such Advance. Interest on
Eurodollar Advances then outstanding shall also be due and payable on the
Maturity Date.
(c) On CD Rate Advances. Interest on each CD Rate Advance shall be
computed on the basis of a 360-day year for the actual number of days elapsed
and shall be payable by the respective Borrower at the CD Rate Basis for such
Advance in arrears on the applicable Payment Date, and, in addition, if the
Interest Period for a CD Rate Advance exceeds ninety (90) days, interest on
such CD Rate Advance shall also be due and payable in arrears on each ninety
day anniversary of the making of such Advance. Interest on CD Rate Advances
then outstanding shall also be due and payable on the Maturity Date.
(d) Interest if no Notice of Selection of Interest Rate Basis. If
the Borrower or North Central fail to give the Agent timely notice of its
selection of a Eurodollar Basis or a CD Rate Basis, or if for any reason a
determination of a Eurodollar Basis or a CD Rate Basis for any Advance is not
timely concluded, the Prime Rate Basis shall apply to such Advance.
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(e) Interest Upon Default. Upon the occurrence of an Event of
Default and at the request of the Majority Banks, the Banks shall have the
right to charge the Borrowers interest on Rate, commencing the date of the
request of the Majority Banks, provided, however, that in the event of the
occurrence of an Event of Default which is not disclosed to the Agent, the Co-
Agents, and the Banks by the Borrowers as required under Section 6.6(d) and
which Event of Default is the basis for the imposition of the Default Rate, the
Default Rate shall commence on the date on which the Event of Default should
have been disclosed to the Agent, the Co-Agents, and the Banks. The Agent, on
behalf of the Majority Banks, shall notify the Borrowers within five (5)
Business Days of any decision to charge interest on the Loans at the Default
Rate hereunder. In addition, upon the occurrence of any Event of Default under
Section 8.1(b) (with respect to principal or interest only), Section 8.1(f) or
Section 8.1(g), the outstanding principal balance of the Loans shall
automatically and without any need for notice to the Borrowers begin to accrue
interest at the Default Rate. Interest accruing at the Default Rate shall be
payable on the earlier of demand or the Maturity Date and shall accrue until
the earlier of (i) waiver or cure (to the satisfaction of the Banks or the
Majority Banks, as the case may be, depending upon the nature of the Event of
Default) of the applicable Event of Default, (ii) agreement by the Banks or the
Majority Banks (depending on the nature of the Event of Default) to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
obligations. The Banks shall not be required to (a) accelerate the maturity of
the Loans, or (b) exercise any other rights or remedies under the Loan
Documents, prior to or in conjunction with the effective date of the decision
to charge interest at the Default Rate.
(f) Interest Adjustment. The interest due and payable by the
Borrowers on the principal amount of the Loans outstanding hereunder shall be
subject to reduction of increase, as applicable and as set forth in the table
below, based upon the ratio of the Borrower's Total Indebtedness to its
Annualized Operating Cash Flow as of the end of any fiscal quarter. The
interest adjustment provided for in this Section 2.3(f) shall be effective as
of the first day of the fiscal quarter following the fiscal quarter for which
such financial statements and a performance certificate are delivered pursuant
to Section 6.1 and Section 6.4 hereof, respectively.
Then interest otherwise payable at
If the ratio of Total Indebtedness to the Prime Rate Basis, the Eurodollar
Annualized Operating Cash Flow as of Basis, or the CD Rate Basis, as the
the end of a quarter is case may be, shall ---
- ------------------------------------- -----------------------------------
A. Greater than 6.0:1 Remain unchanged from the Prime Rate
Basis, the Eurodollar Basis, or the CD
Rate Basis, as the case may be
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B. Greater than 5.0:1 but less than Be reduced by one-eighth of one percent
or equal to 6.0:1 (1/8%) per annum from the Prime Rate
Basis, the Eurodollar Basis, or the CD
Rate Basis, as the case may be
C. Greater than 4.5:1 but less than Be reduced by three-eighths of one
or equal to 5.0:1 percent (3/8%) per annum from the Prime
Rate Basis, the Eurodollar Basis, or
the CD Rate Basis, as the case may be
D. Less than or equal to 4.5:1 Be reduced by five-eighths of one
percent (5/8%) from the Prime Rate
Basis, the Eurodollar Basis, or the CD
Rate Basis, as the case may be
In the event that the Loans and the transactions evidenced by this Agreement
and the Loan Documents are, after the Agreement Date, classified by the Agent
as an "HLT" (as defined in Banking Circular BC-242, issued by the Comptroller
of the Currency on October 30, 1989, as supplemented or amended from time to
time), the interest rate on all outstanding Advances of the Loans shall be
increased by three-eighths of one percent (3/8%) from such date of
classification until the earlier of (i) de-classification of the Loans as an
"HLT," or (ii) the date on which banks are no longer required to report their
"HLT" exposure.
(g) Fixed Rate Advance Limitations. At no time may the number of
Fixed Rate Advances outstanding exceed five (5); nor may the Borrowers borrow
more than twenty (20) Fixed Rate Advances in the aggregate in any calendar
year.
Section 2.4 Fees.
(a) Line of Credit Fees. The Borrower agrees to pay to the Banks,
subject to Section 2.2(f) (ii) hereof, pro rata in accordance with their
respective Commitment Ratios, line of credit fees (i) on the unused portion of
the Available Commitment at the rate of one-half percent (1/2%) per annum, and
(ii) on the unused portion of the Unavailable Commitment at the rate of one-
quarter of one percent (1/4%) per annum, in each case for each day from the
earlier of the Agreement Date or March 1, 1992, until the Conversion Date. In
addition, if any Unavailable Commitment is converted to Available Commitment,
the Borrower agrees to pay the Banks, pro rata in accordance with their
respective Commitment Ratios, an additional one-quarter of one percent (1/4%)
on the amount so converted for a period equal to the lesser of (i) one hundred
eighty (180) days or (ii) the number of days from the earlier of (x) March 1,
1992 or (y) the Agreement Date, up to the date of the conversion of Unavailable
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Commitment to Available Commitment. Such line of credit fees shall be computed
on the basis of a year of 365/366 days for the actual number of days elapsed,
shall be payable quarterly in arrears on the last day of each calendar quarter,
commencing March 31, 1992, and shall be fully earned as they accrue and non-
refundable when paid.
(b) Facility Fees. The Borrower agrees to pay to each Bank a
mutually-agreed upon facility fee. Such fees shall be due and payable on the
Agreement Date, fully earned when due and non-refundable when paid.
(c) Other Fees. The Borrower agrees to pay the Agent and the Co-
Agents for their services in structuring and arranging the Loans, and the Agent
for its services with respect to the ongoing administration of the Loans, such
other fees as are agreed to in writing by the Borrower. Such fees shall be due
and payable in full on the Agreement Date (except for the Agent's fee, which
shall be due and payable quarterly in arrears), shall be fully earned as they
accrue or when due, as applicable, and non-refundable when paid.
Section 2.5 Optional Commitment Reduction. The Borrower may without
penalty at any time prior to the Maturity Date terminate or permanently reduce
the Available Commitment by giving the Agent and the Banks at least five (5)
Business Days' notice thereof; provided, however, that any reduction shall
reduce the Available Commitment in a principal amount of at least $5,000,000
and in an integral multiple of $1,000,000. The Borrower or North Central
shall, if necessary, make a repayment of the Loans outstanding under the
Commitment plus accrued interest on such outstanding Loans, together with any
costs incurred on account of such repayment under Section 2.10 hereof, on or
before the effective date of such reduction of the Commitment, such that the
principal amount of the Loans outstanding after such repayment does not exceed
the amount of the Commitment as so reduced. In addition, the Borrower may at
any time without penalty prior to the Conversion Date terminate or permanently
reduce the Unavailable Commitment by giving the Agent and the Banks at least
five (5) Business Days' notice thereof; provided, however, that any reduction
shall reduce the principal amount of the Unavailable Commitment in an increment
of $27,500,000. The Borrower shall not have the right to rescind any
termination or reduction pursuant to this Section 2.5 within the five (5)
Business Day period immediately preceding the effective date of the proposed
termination or reduction.
Section 2.6 Prepayment. The principal amount of any Prime Rate Advance
may be prepaid in full or in part at any time, without penalty and without
regard to the Payment Date for such Advance, upon one (1) Business Day's prior
written notice to the Agent of such prepayment. Fixed Rate Advances may be
prepaid prior to the applicable Payment Date, up three (3) Business Days' prior
written notice to the Agent, provided that the Borrower or North Central, as
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appropriate, shall reimburse the Banks and the Agent, on the earlier of demand
of the Maturity Date, for any loss or out-of-pocket expense incurred by the
Banks or the Agent in connection with such prepayment, as set forth in Section
2.10 hereof. Any notice of prepayment shall be irrevocable. All amounts
prepaid on the Loans shall be applied first to interest and fees and other
amounts due hereunder, and then to principal, on a pro rata basis against all
scheduled repayments of principal (as provided in Section 2.7(a) hereof) after
the Conversion Date. Partial prepayments shall be in a principal amount of at
least $1,000,000 and integral multiples of $1,000,000. Upon receipt of any
notice of prepayments, the Agent shall promptly notify each Co-Agent and each
Bank of the contents thereof by telephone or telecopy and of each Bank's
portion of the prepayment. After the Conversion Date, amounts prepaid may not
be reborrowed.
Section 2.7 Repayment.
(a) Scheduled Repayments. Commencing on June 30, 1994, the
principal balance of the Loans outstanding on the Conversion Date shall be
amortized by the Borrower and North Central, on a pro rata basis, in
consecutive quarterly installments on June 30, September 30, December 31, and
March 31 of each year until paid in full, in such amounts as follows:
Percent of Principal
Outstanding on the Conversion
Date Due on the Last Day of
Quarters Ended Each Quarter
- --------------------------------- ----------------------------
June 30, 1994, September 30, 1994
December 31, 1994, March 31, 1995 1.9%
June 30, 1995, September 30, 1995
December 31, 1995, March 31, 1996 2.4%
June 30, 1996, September 30, 1996
December 31, 1996, March 31, 1997 3.6%
June 30, 1997, September 30, 1997
December 31, 1997, March 31, 1998 4.0%
June 30, 1998, September 30, 1998
December 31, 1998, March 31, 1999 2.95%
June 30, 1999, September 30, 1999
December 31, 1999, March 31, 2000 5.1%
June 30, 2000, September 30, 2000
December 31, 2000, March 31, 2001 5.05%
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A final payment of all principal amounts and other Obligations hereunder then
outstanding shall be due and payable in full on the Maturity Date.
(b) Repayment in Connection with Commitment Reduction or from Asset
Sales. The Borrowers shall repay outstanding principal of the Loans from time
to time as necessary in order to comply with Section 2.5 hereof and, in the
event of the sale of assets or the stock or other ownership interests of a
Subsidiary of the Borrower permitted under Section 7.4 hereof (other than sales
of immaterial assets, or sales of assets in the ordinary course of business),
the Borrower or North Central, as appropriate, shall, on the date of such sale,
make a repayment of the principal of the Loans then outstanding in an amount
equal to the Net Proceeds of such sale. Such repayments from the Net Proceeds
of asset sales shall permanently reduce the outstanding principal balance of
the Loans, in inverse order of maturity after the Conversion Date. Any Net
Proceeds which constitute a portion of the sales price which was previously
held in escrow or which is paid pursuant to a promissory note or other
instrument constituting a portion of the purchase price for any such sale shall
be paid by the Borrower or North Central, as appropriate, to the Agent for the
benefit of the Banks as a repayment of principal within two (2) Business Days
from the date such Net Proceeds are received by the Borrower or North Central.
(c) Repayment from Annual Excess Cash Flow. In addition, not later
than August 31 of each year after the Conversion Date, commencing August 31,
1995, the Borrower shall make a repayment of the principal amount of the Loans
then outstanding in an amount equal to the Excess Cash Flow of the Borrower and
its Subsidiaries on a consolidated basis for the immediately preceding fiscal
year. Such repayment shall permanently reduce the Commitment in an equal
amount, and shall be applied in inverse order of maturity.
(d) Allocation. After the Conversion Date, repayment of the Loans
pursuant to this Section 2.7 shall be applied on a pro rata basis to the Loans
owing by the Borrower and North Central as of the Conversion Date, except for
repayments made from Net Proceeds, which shall be applied to the Loans of North
Central if derived form it or its Subsidiaries, or to the Loans of the Borrower
if derived from it or its Subsidiaries (other than North Central and the
Subsidiaries of North Central).
Section 2.8 Notes; Loan Accounts.
(a) The Loans shall be repayable in accordance with the terms and
provisions set forth herein, and shall be evidenced by the Notes. Notes shall
be payable to the order of each Bank in accordance with the respective
Commitment Ratios of the Banks. Each Note of the Borrower shall be duly
executed and delivered by one or more of the Authorized Signatories; Notes
issued by the other Borrowers shall be duly executed and delivered by one or
more officers authorized to do so.
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(b) Each Bank may open and maintain on its books in the name of each
of the Borrowers a loan account with respect to the Loans and interest thereon.
Each Bank which opens such loan account shall debit such loan account for the
principal amount of each Advance extended by it to each Borrower and accrued
interest thereon, and shall credit such loan account for each payment on
account of principal of or interest on its Loans. The records of a Bank with
respect to the loan account maintained by it shall be prima facie evidence of
the Loans and accrued interest thereon.
Section 2.9 Manner of Payment.
(a) Each payment (including any prepayment) by the Borrowers on
account of the principal of or interest on the Loans, line of credit fees,
facility fees, agent's fees, extension fees, waiver fees, and any other amount
owed to the Banks, the Agent or the Co-Agents under this Agreement or the other
Loan Documents shall be made not later than 12:00 p.m. (New York time) on the
date specified for payment under this Agreement to the Agent at the Agent's
Office, for the account of the Banks, the Agent, or the Co-Agents or any of
them, as the case may be, in lawful money of the United States of America in
immediately available funds. Any payment or prepayment received by the Agent
after 12:00 p.m. (New York time) shall be deemed received on the next Business
Day. Receipt by the Agent of any payment or prepayment intended for any Bank
or Banks hereunder prior to 12:00 p.m. (New York time) on any Business Day
shall be deemed to constitute receipt by such Bank or Banks (as appropriate) on
such Business Day. In the case of a payment or prepayment for the account of a
Bank, the Agent will promptly thereafter distribute the amount so received in
like funds to such Bank. If the Agent shall not have received any payment or
prepayment from any Borrower as and when due, the Agent will promptly notify
the Co-Agents and the Banks accordingly.
(b) Each Borrower agrees to pay principal, interest, fees and all
other amounts due hereunder or under the Notes or the other Loan Documents
without set-off or counterclaim or any deduction whatsoever.
(c) Prior to the acceleration of the Loans under Section 8.2 hereof,
if some but less than all amounts due from the Borrowers are received by the
Agent, the Agent shall distribute such amounts in the following order of
priority, all in accordance where applicable with the respective Commitment
Ratios of the Banks: (i) to the costs and expenses, if any, incurred by the
Agent in the collection of such amounts under this Agreement or any of the
Security Documents; (ii) to the payment of all fees then due and payable
hereunder or under the other Loan Documents; (iii) to the payment of interest
then due and payable on the Loans; (iv) to the payment of all other amounts not
otherwise referred to in this Section 2.9(c) then due and payable hereunder or
under the Notes or the other Loan Documents; and (v) to the payment of
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principal then due on the Loans, in inverse order of maturity, which payment
shall be applied against outstanding Advances in the following order of
priority (unless, due to the operation of Article 10 hereof, the Banks do not
have corresponding Fixed Rate and Prime Rate Advances, in which case such
amounts shall be applied against principal on a pro rata basis according to the
outstanding principal amount of the Loans held by each Bank): (A) Advances,
the Interest Period for which is expiring concurrently with such payment, (B)
Prime Rate Advances, (C) Eurodollar Advances, and (D) CD Rate Advances.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, all
amounts received from any source whatsoever by the Agent or any of the Co-
Agents or the Banks with respect to the Borrowers shall be paid to and
distributed by the Agent in the manner provided in Section 2.11(c) hereof.
(d) Subject to any contrary provisions in the definition of Interest
Period, if any payment under this Agreement or any of the other Loan Documents
is specified to be made on a day which is not a Business Day, it shall be made
on the next Business Day, and such extension of time shall in such case be
included in computing interest and fees, if any, in connection with such
payment.
Section 2.10 Reimbursement.
(a) Whenever any Bank shall sustain or incur any losses or
reasonable out-of-pocket expenses in connection with (i) failure by any
Borrower to borrow any Fixed Rate Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason of
such Borrower's election not to proceed or the non-fulfillment of any of the
conditions set forth in Article 3), or (ii) prepayment or repayment of any
Fixed Rate Advance in whole or in part (including a payment required pursuant
to Sections 10.2 and 10.3(b) hereof) prior to its Payment Date, such Borrower
agrees to pay to such Bank, upon the earlier of such Bank's demand or the
Maturity Date, an amount sufficient to compensate such Bank for all such losses
and out-of-pocket expenses. Such Bank's good faith determination of the amount
of such losses or out-of-pocket expenses, absent demonstrable error, shall be
binding and conclusive.
(b) Loss subject to reimbursement hereunder shall be any loss
incurred by any Bank in connection with the re-employment of funds prepaid,
repaid, not borrowed, or paid, as the case may be, and the amount of such loss
shall be calculated as the excess, if any, of (i) interest or other costs to
such Bank of the deposit or other sources of funding used to make any such
Fixed Rate Advance for the remainder of its Interest Period over (ii) the
interest earned, to be earned, or which could have been earned by such Bank
upon the re-lending or other redeployment of the amount of such Fixed Rate
Advance for the remainder of its putative Interest Period.
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Section 2.11 Pro Rata Treatment.
(a) Advances. Each Advance from the Banks under this Agreement
shall be made pro rata on the basis of their respective Commitment Ratios.
(b) Payments Prior to Declaration of Event of Default. Prior to the
acceleration of the Loans under Section 8.2 hereof, each payment and prepayment
of the Loans, and, except as provided in Article 10 hereof, each payment of
interest on the Loans, shall, except as provided in Section 2.2(f) (ii), be
made to the Banks pro rata on the basis of their respective unpaid principal
amounts outstanding immediately prior to such payment or prepayment. If any
Bank shall obtain any payment (whether involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Loans made by it in excess of
its ratable share of the Loans under its Commitment Ratio, such Bank shall
forthwith purchase from the other Banks such participations in the Loans made
by them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall
repay to the purchasing Bank the purchase price to the extent of such recovery.
The Borrowers agree that any Bank so purchasing a participation from another
Bank pursuant to this Section may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Bank were the direct creditor
of the Borrowers in the amount of such participation.
(c) Payments Subsequent to Declaration of Event of Default.
Subsequent to the acceleration of the Loans under Section 8.2 hereof, payments
and prepayments made to any of the Agent, the Co-Agents, and the Banks or
otherwise received by the Agent or any Co-Agent or Bank (from realization on
Collateral for the Obligations or otherwise) shall be paid over to the Agent if
necessary and distributed by the Agent as follows: first, to the Agent's and
Banks' costs and expenses, if any, incurred in connection with the collection
of such payment or prepayment, including, without limitation, any reasonable
costs incurred by the Agent in connection with the sale or disposition of any
Collateral for the Obligations; second, to the payment of any fees hereunder or
under any of the other Loan Documents then due and payable; third, to damages
incurred by the Agent or any Co-Agent or Bank by reason of any breach hereof or
of any other Loan Document; fourth, to the Banks pro rata on the basis of their
respective unpaid principal amounts (except as provided in Section 2.2(f), to
the payment of any unpaid interest which may have accrued on the Obligations;
fifth, to the Banks (other than any Defaulting Bank) in accordance with their
respective Commitment Ratios (recalculated for this purpose to exclude the
Defaulting Bank's Commitment), until all Senior Advances have been paid in
full; sixth, to the Banks pro rata on the basis of their respective unpaid
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principal amounts, to the payment of any unpaid principal or other amount of
the Obligations; and seventh, upon satisfaction in full of all Obligations, to
the Borrowers or as otherwise required by law.
Section 2.12 Capital Adequacy. If any Bank shall determine that any
Applicable Law regarding the capital adequacy of banks or bank holding
companies, or any change therein or in any other Applicable Law, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such governmental authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's capital as
a consequence of its Commitment to fund or to maintain Advances hereunder to a
level below that which it could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy immediately before such adoption, change or compliance and
assuming that such Bank's capital was fully utilized prior to such adoption,
change or compliance) by an amount deemed by such Bank in good faith to be
material, then, upon the earlier of demand by such Bank or the Maturity Date,
if such Bank is making similar demands for payment on its similarly-situated
customers, the Borrowers shall immediately pay to such Bank, such additional
amounts as shall be sufficient to compensate such Bank for such reduced return,
together with interest on such amount from the fourth (4th) day after the date
of demand or the Maturity Date, as applicable, until payment in full thereof at
the Prime Rate. A certificate of such Bank setting forth the amount to be paid
to such Bank by the Borrowers as a result of any event referred to in this
paragraph shall, absent demonstrable error, be conclusive, and, at the
Borrower's request, such Bank shall demonstrate the basis for such
determination.
Section 2.13 Option to Replace Banks. If any Bank shall:
(i) fail or refuse to fund its portion of any Advance for any reason
other than the failure of any of the Borrowers to satisfy the conditions
precedent to such Advance hereunder;
(ii) fail or refuse, for any reason, to approve any amendment,
waiver or consent hereunder which, pursuant to the terms hereof, may be
approved by the Majority Banks, if such amendment, waiver or consent has
been approved by Banks the sum of whose Commitment Ratios exceed 60% (or,
if Loans are outstanding, Banks the total of whose outstanding Loans
exceeds 60% of the total principal amount of the Loans outstanding
hereunder);
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(iii) fail or refuse, for any reason, to approve any amendment,
waiver or consent hereunder which, pursuant to the terms hereof, must be
approved by all of the Banks, if such amendment, waiver or consent has
been approved by Banks the sum of whose Commitment Ratios exceed 85% in
the aggregate (or, if there are Loans outstanding, Banks the total of
whose outstanding Loans exceeds 85% of the total principal amount of the
Loans outstanding hereunder);
(iv) be the only Bank which makes any demand for payment or
reimbursement pursuant to Section 10.3;
(v) be the only Bank, which for any reason (other than the failure
to fund twelve-month Eurodollar Advances or three hundred sixty (360) day
CD Rate Advances), becomes subject to the provisions of Section 10.1 or
10.2; or
(vi) make any demand for payment or reimbursement pursuant to
Section 2.12 thereof;
then, in any of the foregoing cases, provided there does not then exist
any Default, the Borrowers may terminate the Commitment of such Bank, in
whole but not in part, by (i) giving such Bank and the Agent not less than
ten (10) Business Days' prior written notice thereof, which notice shall
be irrevocable and effective only upon receipt thereof by such Bank and
the Agent and shall specify the effective date of such termination, (ii)
paying to such Bank (and there shall become due and payable) on such date
the outstanding principal amount of all Loans made by such Bank, all
interest thereon, and all other Obligations owed to such Bank, including,
without limitation, amounts owing under Sections 2.10, 2.12 and 10.3, if
any, and (iii) pursuant to the provisions of Section 11.5(b), bringing in
a new Bank, or obtaining the agreement of one or more existing Banks, to
assume the entire amount of the Commitment of the Bank whose Commitment is
being terminated, on the effective date of such termination. Upon the
fulfillment of such conditions, such Bank shall cease to be a "Bank" for
purposes of this Agreement; provided, however, that the Borrowers'
obligations to such Bank under Section 5.10 shall survive such
termination.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to Closing. The obligation of the Banks
to undertake the Commitment is subject to the prior fulfillment of each of the
following conditions:
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(a) The Agent, on behalf of each of the Co-Agents and the Banks,
shall have received each of the following, in form and substance satisfactory
to each of them:
(i) the loan certificate of the Borrower, in substantially the
form attached hereto as Exhibit O, including a certificate of incumbency
with respect to each Authorized Signatory, together with appropriate
attachments which shall include, without limitation, the following items:
(A) a copy of the certificate of limited partnership of the Borrower,
certified to be true, complete and correct by the Secretary of State for
the State of Iowa, (B) a true, complete and correct copy of the
Partnership Agreement of the Borrower, as amended and as in effect on the
date hereof, (C) certificates of good standing for the Borrower from Iowa
and each other jurisdiction in which it is required to qualify to do
business, (D) true, complete and correct copies of any Licenses and Pole
Agreements of the Borrower and its Subsidiaries, together with all
amendments thereto through the Agreement Date and certified by an
Authorized Signatory to be in full force and effect, and (E) a true,
complete and correct copy of any other material contract or agreement
involving one or more of the Partners of the Borrower and affecting, in
any material way, the business of the Borrower or the rights of the
Partners or other Persons with respect to ownership of the Borrower;
(ii) opinion of Nyemaster, Goode, McLaughlin, Voights, West,
Hansell & O'Brien, and of Sidley & Austin, counsel to the Borrower,
addressed to each Bank, each Co-Agent, and the Agent and satisfactory to
the Agent and its special counsel and each of the Co-Agents and the Banks,
dated the Agreement Date, and in substantially the forms attached hereto
as Exhibit P;
(iii) receipt of all fees due (under this Agreement or any
other agreement) from the Borrower or any other party to the Agent, the
Co-Agents, and the Banks on the Agreement Date;
(iv) duly executed Partner Loan Certificate, in substantially
the form attached hereto as Exhibit Q, given by each of the Partners
(other than CCM) of the Borrower;
(v) copies of all documents delivered at closing related to the
acquisition by the General Partner of the Meyer Systems;
(vi) financial statements, audited and unaudited, and
projections through the Maturity Date, for the Borrower, the North Central
Systems, and the Meyer Systems, as requested by the Agent or any Bank or
Co-Agent; and
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(vii) all such other documents as the Agent or any Co-Agent or
Bank may reasonably request, certified by an appropriate governmental
official or any Authorized Signatory if so requested.
(b) The Agent, the Co-Agents and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations required in
connection with the closing of this Agreement have been obtained or made, are
in full force and effect and are not subject to any pending or threatened
reversal or cancellation, and the Agent, the Co-Agents, and the Banks shall
have received a certificate of an Authorized Signatory so stating.
Section 3.2 Conditions Precedent to Initial Advance. The obligation of
the Banks to make the initial Advance hereunder is subject to the fulfillment
prior to the Initial Funding Date of each of the following conditions:
(a) The Agent, on behalf of each of the Co-Agents and the Banks,
shall have received each of the following (other than items (viii), (ix), (xxi)
and (xxvi)) in draft form not less than ten (10) days prior to the requested
Initial Funding Date, and on or prior to the Initial Funding Date, each of the
following items in form and substance satisfactory to each of them:
(i) the loan certificate of the Borrower, in substantially the
form attached hereto as Exhibit O, including a certificate of incumbency
with respect to each Authorized Signatory, together with appropriate
attachments which shall include, without limitation, each of the
following: (A) any changes to the certificate of limited partnership of
the Borrower made after the Agreement Date, certified to be true, complete
and correct by the Secretary of State for the State of Iowa, (B) a true,
complete and correct copy of the Partnership Agreement of the Borrower, as
amended and as in effect on the Initial Funding Date, (C) certificates of
good standing for the Borrower from Iowa, North Dakota, Minnesota and each
other jurisdiction in which it is required to qualify to do business, (D)
true, complete and correct copies of all Licenses and Pole Agreements of
the Borrower and its Subsidiaries, together with all amendments thereto
through the Initial Funding Date, and certified by an Authorized Signatory
to be in full force and effect, and (E) a true, complete and correct copy
of any other material contract or agreement involving one or more of the
Partners of the Borrower and affecting, in any material way, the business
of the Borrower or the rights of the Partners or other Persons with
respect to ownership of the Borrower;
(ii) opinion of Nyemaster, Goode, McLaughlin, Voigts, West,
Hansell & O'Brien, and of Sidley & Austin, counsel to the Borrower and its
Subsidiaries, together with appropriate local (Minnesota and North Dakota)
and federal communications law counsel opinions, addressed to each Bank,
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each Co-Agent, and the Agent and satisfactory to the Agent and its special
counsel and each of the Co-Agents and the Banks, dated the Initial Funding
Date, and in substantially the form attached hereto as Exhibit R;
(iii) not later than 10:00 a.m. (New York time) on the Business
Day prior to the date which is to be the Initial Funding Date, a duly
executed Request for Advance from the Borrower and the Buyer Sub for the
initial Advances of the Loans;
(iv) duly executed Use of Proceeds Letter in connection with
the initial Advance of the Loans;
(v) duly executed Pledge Agreement, together with appropriate
stock certificates and stock powers;
(vi) Lien search results for the Borrower and each of it
Subsidiaries from each jurisdiction in which they do business;
(vii) copies of insurance binders or certificates covering the
assets of the Borrower and its Subsidiaries, and otherwise meeting the
requirements of Section 5.5;
(viii) receipt of any fees due (under this Agreement or any
other agreement) from the Borrower or any other party to the Agent, the
Co-Agents, and the Banks on the Initial Funding Date;
(ix) duly executed releases, UCC-3 termination statements and
pay-off letters with respect to any Liens other than Permitted Liens on
the assets of the Borrower, North Central, and any other Subsidiary of the
Borrower;
(x) duly executed Collateral Assignment of Leases, in
appropriate form for recordation;
(xi) duly executed Subsidiary Collateral Assignment of Leases,
in appropriate form for recordation;
(xii) duly executed Mortgage or Subsidiary Mortgage with
respect to any parcel or tract of real estate owned by the Borrower or any
of its Subsidiaries having a fair market value in excess of $250,000,
together with evidence of due filing and recordation, and appropriate
mortgagee title insurance policies or commitments therefor;
(xiii) duly executed Subsidiary Guaranties from Buyer Sub,
North Central and each other Subsidiary of the Borrower;
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(xiv) duly executed Subsidiary Security Agreement, together
with evidence of the due filing of appropriate UCC-1 financing statements,
from North Central and each other Subsidiary of the Borrower;
(xv) duly executed Subsidiary Pledge Agreement from North
Central, together with appropriate stock certificates and stock powers;
(xvi) duly executed Collateral Assignment of Partnership
Interests, together with evidence of the due filing of appropriate UCC-1
financing statements or other evidence of the perfection of the Security
Interest created thereby;
(xvii) duly executed Notes issued by the Borrower and the Buyer
Sub;
(xviii) duly executed Security Agreement, together with
evidence of the due filing of appropriate UCC-1 financing statements;
(xix) a Certificate of Financial Condition given by the
Borrower on behalf of itself and its Subsidiaries on a consolidated basis,
in substantially the form of Exhibit S hereto;
(xx) duly executed Subsidiary Loan Certificate, in
substantially the form attached hereto as Exhibit T, given by North
Central and each other Subsidiary of the Borrower, including a certificate
of incumbency and together with appropriate attachments which shall
include, without limitation, the following items: (A) a copy of the
Certificate or Articles of Incorporation of North Central or such
Subsidiary, certified to be true, complete and correct by the Secretary of
State for the state in which North Central or such Subsidiary was
incorporated, (B) a true, complete and correct copy of the By-Laws of
North Central or such Subsidiary, (C) certificates of good standing for
North Central or such Subsidiary from its jurisdiction of incorporation
and from each other jurisdiction in which it is required to qualify to do
business, and (D) a true, complete and correct copy of the resolutions of
North Central or such Subsidiary authorizing it to execute, deliver and
perform each Loan Document to which it is a party;
(xxi) copies of all documents delivered at closing related to
the acquisition by the Borrower of North Central and the North Central
Systems, and of the Meyer Systems;
(xxii) to the extent not previously provided, any financial
statements, audited and unaudited, and including, without limitation, a
pro forma balance sheet as of the Merger Date for the Borrower and its
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Subsidiaries, and projections through the Maturity Date, for the Borrower,
its Subsidiaries, the Meyer Systems and the North Central Systems, and as
otherwise requested by the Agent or any Bank or Co-Agent;
(xxiii) duly executed Borrower Guaranty of the Obligations of
North Central, in substantially the form attached hereto as Exhibit Z;
(xxiv) duly executed Collateral Assignment of Intercompany
Notes from the Borrower and each of its Subsidiaries;
(xxv) duly executed Subordination of Management Fees Agreement;
and
(xxvi) all such other documents as the Agent or any Co-Agent or
Bank may reasonably request, certified by an appropriate governmental
official or an Authorized Signatory if so requested.
(b) The Agent, the Co-Agents and the Banks shall have received
evidence satisfactory to them that all Necessary Authorizations, including,
without limitation, all Necessary Authorizations required in connection with
the initial Advance, the acquisition of the North Central Systems and the Meyer
Systems, and the grant of the Security Interest, and including, without
limitation, any necessary approvals from the grantors of the Licenses, have
been obtained or made, are in full force and effect and are not subject to any
pending or threatened reversal or cancellation, and the Agent, the Co-Agents,
and the Banks shall have received a certificate of an Authorized Signatory so
stating.
(c) The Borrower shall have provided the Agent, the Co-Agents and
the Banks with (i) evidence satisfactory to them that the Borrower has received
not less than $72,000,000 in cash equity contributions from the Partners, and
not less than $68,250,000 in value of non-cash equity contributions from the
Partners, as shown on the Borrower's unaudited pro forma balance sheet dated as
of the Initial Funding Date, after giving effect to the closing of this
Agreement, the initial Advance hereunder, and the closing of the transactions
contemplated hereby, and (ii) a certificate from the chief financial officer of
the Borrower stating that as of the Initial Funding Date, and after giving
effect to the initial Advance hereunder, the acquisition of North Central and
of the Meyer Systems by the Borrower, and the closing of the transactions
contemplated hereby, there exists no Default hereunder, and providing as a
schedule thereto arithmetical calculations showing the Borrower's compliance
with the financial covenants contained in Sections 7.8, 7.10 and 7.11 of
Article VII hereof.
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Section 3.3 Conditions Precedent to Each Advance. The obligation of the
Banks to make each Advance, including the initial Advance under Section 3.2, is
subject to the fulfillment of each of the following conditions immediately
prior to or contemporaneously with such Advance:
(a) (i) As to the Advances which increase the aggregate principal
amount of the Loans outstanding, all of the representations and warranties of
the Borrowers under this Agreement which, pursuant to Section 4.2 hereof, are
made at and as of the time of such Advance shall be true and correct at such
time in all material respects, both before and after giving effect to the
application of the proceeds of the Advance; or (ii) as to Advances which do not
increase the aggregate principal amount of the Loans outstanding, all of the
material representations of the Borrowers under this Agreement which, pursuant
to Section 4.2 hereof, are made at and as of the time of such Advance (except
for representations and warranties set forth in (1) the fourth sentence of
Section 4.1(f), (2) Section 4.1(p), (3) the last sentence of Section 4.1(q),
and (4) Section 4.1(u)), shall be true and correct in all material respects;
(b) The incumbency of the Authorized Signatories shall be as stated
in the certificate of incumbency contained in the Borrower's loan certificate
delivered pursuant to Section 3.1(a) hereof or as subsequently modified and
reflected in a certificate of incumbency delivered to the Agent and the Banks;
(c) With respect to Advances requested prior to the Conversion Date
which, if funded, would increase the aggregate principal amount of the Loans
outstanding hereunder, the Agent shall have received a duly executed Request
for Advance and a duly executed Use of Proceeds Letter;
(d) The Agent, the Co-Agents, and each of the Banks shall have
received all such other certificates, reports, statements, opinions of counsel,
Security Documents or other items reasonably requested by any of them, together
with any items which may be required under Section 5.14 hereof; and
(e) There shall not exist, on the date of the making of the Advance
and after giving effect thereto, a Default hereunder.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrowers hereby agree,
represent and warrant that:
(a) Organization; Ownership; Power; Qualification; Capitalization.
The Borrower is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Iowa, having the General Partner
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as its sole general partner and the Limited Partners as its sole limited
partners. Their respective ownership interests in the Borrower are set forth
as of the Initial funding Date on Schedule 4 attached hereto. The Borrower has
the partnership power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted. The Borrower is
in good standing and authorized to do business in each jurisdiction in which
the character of its properties or the nature of its businesses requires such
qualification or authorization.
(b) Authorization; Enforceability. The Borrower has the power and
it and its Partners have taken all necessary action to authorize the Borrower
to borrow hereunder, to execute, deliver and perform this Agreement and each of
the other Loan Documents to which the Borrower is a party in accordance with
their respective terms, and to consummate the transactions contemplated hereby
and thereby. This Agreement has been duly executed and delivered by the
Borrower and is, and each of the other Loan Documents to which the Borrower is
party is, a legal, valid and binding obligation of the Borrower enforceable in
accordance with its terms, subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement
may be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors'
rights generally (insofar as any such law relates to the bankruptcy, insolvency
or similar event of the Borrower).
(c) Subsidiaries. As of the Agreement Date, the Borrower has no
Subsidiaries; not later than the Merger Date, the Borrower shall have one
direct Subsidiary, North Central, which shall be a wholly-owned Subsidiary, and
such other indirect Subsidiaries as are shown on Schedule 5 attached hereto.
Each Subsidiary of the Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the corporate power and authority to own its properties and to carry on
its business as now being and hereafter proposed to be conducted. Each
Subsidiary of the Borrower is duly qualified, in good standing and authorized
to do business in each jurisdiction in which the character of its properties or
the nature of its business requires such qualification or authorization. Each
Subsidiary of the Borrower has the corporate power and has taken all necessary
corporate action to authorize it to execute, deliver and perform each of the
Loan Documents to which it is a party in accordance with their respective terms
and to consummate the transactions contemplated by this Agreement and by such
Loan Documents. Each of the Loan Documents to which any Subsidiary of the
Borrower is party (including, without limitation, this Agreement and their
respective Notes, as to North Central and the Buyer Sub) is a legal, valid and
binding obligation of such Subsidiary enforceable against such Subsidiary in
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accordance with its terms, subject, as to enforcement of remedies, to the
following qualifications: (i) an order of specific performance and an
injunction are discretionary remedies and, in particular, may not be available
where damages are considered an adequate remedy at law, and (ii) enforcement
may be limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors'
rights generally (insofar as any such law relates to the bankruptcy, insolvency
or similar event of any such Subsidiary).
(d) Compliance with Other Loan Documents and Contemplated
Transactions. Except as shown on Schedule 6 attached hereto, the execution,
delivery and performance, in accordance with their respective terms, by the
Borrower of this Agreement and the other Loan Documents to which it is party,
and by any Subsidiary of the Borrower of any Loan Document to which it is
party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not (i) require any consent or approval not timely
obtained, (ii) violate any Applicable Law respecting the Borrower or any of its
Subsidiaries, (iii) conflict with, result in a breach of, or constitute a
default under the certificate of limited partnership or the Partnership
Agreement of the Borrower, under the articles or certificate of incorporation
or by-laws, as amended, of any Subsidiary of the Borrower, under the Licenses,
the Pole Agreements, or under any other material indenture, agreement, or other
instrument to which the Borrower or any of its Subsidiaries is a party or by
which it or any of its respective properties may by bound, or (iv) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower or any of its
Subsidiaries except Permitted Liens.
(e) Business. The Borrower and its Subsidiaries are engaged solely
in the business of acquiring, constructing, developing, operating, expanding
and maintaining the System, obtaining additional Licenses therefor, investing
in other cable television systems and SMATV Systems, producing and making
investments in cable television programming and engaging in other activities
closely related to the cable television industry.
(f) Licenses, etc. The Licenses have been issued by the grantors
thereof and are in full force and effect. The Borrower and its Subsidiaries
are in compliance in all material respects with all of the provisions thereof.
The Borrower and its Subsidiaries have secured all material Necessary
Authorizations and all such Necessary Authorizations (including all Licenses)
are in full force and effect. Neither any License nor any material Necessary
Authorization is the subject of any pending or, to the best of the Borrower's
knowledge, threatened attack or revocation. Except as described on Schedule 6
attached hereto, as of the Initial Funding Date, there is no competitor of the
Borrower or any of its Subsidiaries which is currently overbuilding any
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territory within the System, and no other License or franchise agreement with
respect to the territory covered by any License has been granted, nor is any
application for such a License or franchise agreement pending. Any SMATV
System owned and operated by the Borrower or any of its Subsidiaries is being
operated pursuant to a valid and binding agreement for the operation of such
SMATV System, and in accordance with Applicable Law.
(g) Compliance with Law. The Borrower and its Subsidiaries are in
substantial compliance with all material Applicable Laws.
(h) Title to Assets. The Borrower and its Subsidiaries have good,
legal and marketable title to, or a valid leasehold interest in, all of their
respective assets. To the best knowledge of the Borrower, and based in part on
Lien searches which are described as of the Initial Funding Date on Schedule 7
hereto, none of such properties or assets is subject to any Liens, except for
Permitted Liens. To the best knowledge of the Borrower, based in part on Lien
searches which are described on Schedule 7 attached hereto, and except for
financing statements evidencing Permitted Liens, no financing statement under
the Uniform Commercial Code of any jurisdiction and no other filing which names
the Borrower or any of its Subsidiaries as debtor (other than UCC-1 financing
statements filed by lessors to reflect their ownership of equipment or other
personal property leased by the Borrower or any of its Subsidiaries) or which
covers or purports to cover any of the assets of the Borrower or any of its
Subsidiaries is on file in any state or other jurisdiction, and neither the
Borrower nor any of its Subsidiaries have signed any such financing statement
or filing or any security agreement authorizing any secured party thereunder to
file any such financing statement or filing. All real estate owned by the
Borrower or any of its Subsidiaries is described as of the Initial Funding Date
on Schedule 8 attached hereto.
(i) Litigation. Except as described on Schedule 9 attached hereto
which shall include all litigation as of the Initial Funding Date, or as
subsequently notified by the Borrower in writing to the Agent and the Banks,
there is no material action, suit, proceeding or investigation pending against,
or, to the best of the Borrower's knowledge, threatened against or in any other
manner relating directly and materially adversely to, the Borrower or any of
its Subsidiaries or any of their respective properties, including, without
limitation, the Licenses, in any court or before any arbitrator of any kind or
before or by any governmental body. No such action, suit, proceeding or
investigation (i) calls into question the validity of this Agreement or any
other Loan Document, or (ii) could, if determined adversely to the Borrower or
any affected Subsidiary, reasonably be expected to have a Materially Adverse
Effect.
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(j) Taxes. All federal, state and other tax returns of the Borrower
and its Subsidiaries required by law to be filed have been duly filed and all
federal, state and other taxes, including, without limitation, withholding
taxes, assessments and other governmental charges or levies required to be paid
by the Borrower or any of its Subsidiaries or imposed upon the Borrower or any
of its Subsidiaries or any of their respective properties, income, profits or
assets, which are due and payable, have been paid, except any such taxes (x)
the payment of which is being diligently contested in good faith by appropriate
proceedings, (y) for which adequate reserves have been provided on the books of
the Borrower or the affected Subsidiary, and (z) as to which no Lien other than
a Permitted Lien has attached and no foreclosure, distraint, sale or similar
proceedings have been commenced. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of taxes are, in the
judgement of the Borrower, adequate.
(k) Financial Statements. When furnished to the Agent, the Co-
Agents, and the Banks in accordance with Sections 3.1, 6.1 and 6.2 hereof, all
copies of the balance sheets, statements of income and other financial
statements for the Borrower and its Subsidiaries shall present fairly, in
accordance with generally accepted accounting principles consistently applied,
the financial position of the Borrower and its Subsidiaries on and as of the
date thereof and the results of operations for the periods then ended. The
Borrower and its Subsidiaries have or shall have no material liabilities,
contingent or otherwise, required to be disclosed by generally accepted
accounting principles, other than as disclosed in the financial statements
referred to in the preceding sentence for the most recently ended fiscal year
or quarter, as appropriate, or as arise in the ordinary course of business and
are not required to be reported before the next financial statements are due
under Section 6.1 or Section 6.2 hereof, and there shall be and are no material
unrealized losses of the Borrower and its Subsidiaries and no material
anticipated losses of the Borrower and its Subsidiaries other than those which
have been previously disclosed in writing to the Agent, the Co-Agents, and the
Banks and identified to the Agent, the Co-Agents, and the Banks as such.
(l) ERISA. The Borrower and its Subsidiaries and each of their
respective Plans, if any, are in compliance with ERISA and the Code and the
Borrower and its Subsidiaries have not incurred any accumulated funding
deficiency with respect to any such Plan within the meaning of ERISA or the
Code. The Borrower and its Subsidiaries and each other Person which is
affiliated with the Borrower within the meaning of Section 414 of the Code have
complied with all requirements of ERISA Sections 601 through 608 and Code
Section 4980B. The Borrower and its Subsidiaries have not made any promises of
retirement or other benefits to employees, except as set forth in any Plan or
other writing. The Borrower and its Subsidiaries have not incurred any
material liability to the Pension Benefit Guaranty Corporation in connection
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with any such Plan. The assets of each such Plan which is subject to Title IV
of ERISA are sufficient to provide the benefits under such Plan payment of
which the Pension Benefit Guaranty Corporation would guarantee if such Plan
were terminated, and such assets are also sufficient to provide all other
"benefit liabilities" (as defined in ERISA Section 4001(a)(1b)) due under the
Plan upon termination. No Reportable Event has occurred and is continuing with
respect to any such Plan. No such Plan or trust created thereunder, or party
in interest (as defined in Section 3(14) of ERISA), or any fiduciary (as
defined in Section 3(21) of ERISA), has engaged in a "prohibited transaction"
(as such term is defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject such Plan or any other Plan of the Borrower or any of its
Subsidiaries, any trust created thereunder, or any such party in interest or
fiduciary, or any party dealing with any such Plan or any such trust to the
penalty or tax on "prohibited transactions" imposed by Section 502 of ERISA or
Section 4975 of the Code. Neither the Borrower nor any of its Subsidiaries is
a participant in, or is obligated to make any payment to, any Multiemployer
Plan.
(m) Compliance with Regulations G, T, U and X. Neither the Borrower
nor any of its Subsidiaries is engaged principally in, nor has as one of its
important activities, the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulations G, T,
U, and X of the Board of Governors of the Federal Reserve System. None of the
proceeds of the Loans shall be used to purchase or carry margin stock within
the meaning of such Regulations, nor is any of the Collateral margin stock
within the meaning of such regulations.
(n) Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is required to register under the provisions of the Investment
Company Act of 1940, as amended, and neither the entering into or performance
by the Borrower of this Agreement nor the issuance of the Notes nor the entry
into any of the Loan Documents by any Subsidiary of the Borrower violates any
provision of such Act or requires any consent, approval or authorization of, or
registration with, the Securities and Exchange Commission or any other
governmental or public body or authority pursuant to any provisions of such
Act.
(o) Government Regulation. Other than as set forth on Schedule 6
attached hereto, neither the Borrower nor any of its Subsidiaries is required
to obtain any consent, approval, authorization, permit or license which has not
timely been obtained from, or effect any filing or registration which has not
timely been effected with, any federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement or any other Loan
Document, and in connection with the consummation of the transactions
contemplated by this Agreement. Other than as set forth on Schedule 6 attached
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hereto, neither the Borrower not any of its Subsidiaries is required to obtain
any consent, approval, authorization, permit or license which has not already
been obtained from, or effect any filing or registration which has not already
been effected with, any federal, state or local regulatory authority in
connection with the performance, in accordance with their respective terms, of
this Agreement or any other Loan Document, or the borrowing hereunder.
(p) Absence of Default. The Borrower is in compliance in all
respects with all of the provisions of its certificate of limited partnership
and its limited partnership agreement, and each Subsidiary of the Borrower is
currently in compliance in all material respects with all of the provisions of
its certificate or articles of incorporation and its by-laws, and no event has
occurred or failed to occur (including, without limitation, any matter which
could create a Default hereunder by cross-default) which has not been remedied
or waived, the occurrence or non-occurrence of which constitutes, or with the
passage of time or giving of notice or both would constitute, (i) a Default or
(ii) a default in any material respect by the Borrower or any of its
Subsidiaries under any indenture, or other material agreement or instrument,
including without limiting the foregoing, the Licenses, or any material
judgment, decree or order to which the Borrower or any of its Subsidiaries is a
party or by which the Borrower or any of its Subsidiaries or any of their
respective properties may be bound or affected.
(q) Accuracy and Completeness of Information. All information,
reports, prospectuses and other papers and data relating to the Borrower or any
of its Subsidiaries and furnished by or on behalf of the Borrower to any of the
Agent, the Co-Agents, and the Banks were, at the time furnished and taken as a
whole, complete and correct in all material respects to the extent necessary to
give the Agent, the Co-Agents, and the Banks true and accurate knowledge of the
subject matter. Notwithstanding the foregoing, with respect to projections of
the future performance of the Borrower and its Subsidiaries, such
representations and warranties are made in good faith and to the best judgment
of the Borrower. No fact or situation is currently known to the Borrower which
has had or which could reasonably be expected to have a Materially Adverse
Effect.
(r) Agreements with Affiliates and Management Agreements. Except as
set forth on Schedule 10 attached hereto, neither the Borrower nor any of its
Subsidiaries has (i) any agreements or binding arrangements of any kind with
any Affiliates or (ii) any management or consulting agreements of any kind with
any third party (including Affiliates).
(s) Payment of Wages. The Borrower and its Subsidiaries are in
compliance in all material respects with the Fair Labor Standards Act, as
amended, and the Borrower and its Subsidiaries have paid all minimum and
overtime wages required by law to be paid to its employees.
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(t) Priority. On and after the Initial Funding Date, the Security
Interest is a valid security interest in the Collateral, which Security
Interest has been perfected (as to Collateral for which an appropriate method
of perfection is the filing of UCC-1 financing statements, upon the due filing
of UCC-1 financing statements, as to Collateral covered by any Mortgages or any
Subsidiary Mortgages, upon the due filing thereof, and as to capital stock
pledged pursuant to the Pledge Agreement or otherwise, upon the taking of
possession of stock certificates and stock powers therefor by the Agent),
securing, in accordance with the terms of the Security Documents, the
Obligations, and the Security Interest is subject to no Liens that are prior
to, on a parity with or junior to the Security Interest other than certain of
the Permitted Liens, and the Security Documents are enforceable as security for
the Obligations in accordance with their terms with respect to the Collateral
against the Borrower and its Subsidiaries, as applicable, and all other third
parties, other than holders of the Permitted Liens, subject, as to enforcement
of remedies, to the following qualifications: (i) an order of specific
performance and an injunction are discretionary remedies and, in particular,
may not be available where damages are considered an adequate remedy at law,
and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower or any of its Subsidiaries).
(u) No Adverse Changes. Since December 31, 1991, there has occurred
no event which has had or could reasonably be expected to have a Materially
Adverse Effect.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, at and as of the Agreement Date, and, to
the extent set forth in Article 3, on the date of each Advance, except to the
extent previously fulfilled in accordance with the terms hereof. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution hereof by the Agent, the Co-Agents, and the Banks,
any investigation or inquiry by any of the Agent, the Co-Agents, and the Banks,
or the making of any Advance.
ARTICLE 5
General Covenants
So long as any of the Obligations is outstanding and unpaid or any
Borrower shall have the right to borrow hereunder (whether or not the
conditions to borrowing have been or can be fulfilled), and unless the Majority
Banks shall otherwise consent in writing:
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Section 5.1 Preservation of Existence and Similar Matters. Subject to
Section 7.4(a), the Borrower will, and will cause each of its Subsidiaries to:
(a) preserve and maintain its existence in the state of its
formation, and all material rights, franchises, licenses and privileges
necessary for the conduct of its business including, without limiting the
foregoing, the Licenses (to the extent that failure to do so would result in a
Default or an Event of Default under Section 8.1(1)) and all other material
Necessary Authorizations, and
(b) qualify and remain qualified and authorized to do business in
each jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization.
Section 5.2 Business; Compliance with Applicable Law. The Borrower will,
and will cause each of its Subsidiaries to engage solely in the business of
acquiring, constructing, developing, maintaining, expanding, owning and
operating the System, obtaining additional Licenses therefor, investing in
other cable television systems and SMATV Systems, producing and making
investments in cable television programming, and engaging in other activities
closely related to the cable television industry. The Borrower will, and will
cause each of its Subsidiaries to, substantially comply with all material
Applicable Laws.
Section 5.3 Maintenance of Properties. The Borrower will, and will cause
each of its Subsidiaries to, maintain or cause to be maintained in the ordinary
course of business in good repair, working order and condition (reasonable ware
and tear excepted) all material properties used in their businesses (whether
owned or held under lease), and from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements, additions, betterments
and improvements thereto.
Section 5.4 Accounting Methods and Financial Records. The Borrower will,
and will cause each of its Subsidiaries to, maintain a system of accounting
established and administered in accordance with United States generally
accepted accounting principles consistently applied, keep adequate records and
books of account in which complete entries will be made in accordance with such
accounting principles consistently applied and reflecting all transactions
required to be reflected by such accounting principles, and keep accurate and
complete records of their respective properties and assets. The Borrower will,
and will cause each of its Subsidiaries to, maintain a fiscal year ending on
June 30.
Section 5.5 Insurance. The Borrower will, and will cause each of its
Subsidiaries to:
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(a) Maintain insurance including, but not limited to, public
liability coverage insurance from responsible companies in such amounts and
against such risks as shall be standard in the cable television industry for
cable television companies similar in size and location to the Borrower and its
Subsidiaries, and such other coverage as may be reasonably requested by the
Majority Banks.
(b) Keep their respective assets insured by insurers on terms and in
a manner acceptable to the Majority Banks against loss or damage by fire,
theft, burglary, loss in transit, explosions and hazards insured against by
extended coverage, in amounts which are standard in the cable television
industry for cable television companies similar in size and location to the
Borrower and its Subsidiaries, all premiums thereon to be paid by the Borrower
and its Subsidiaries.
(c) Require that each insurance policy provide for at least thirty
(30) days' prior written notice to the Agent of any termination of or proposed
cancellation or nonrenewal of such policy, and that each insurance policy
insuring assets pledged to the Agent (on behalf of the Co-Agents and the Banks)
as Collateral for the Obligations name the Agent as additional insured and
named loss payee to the extent of the Obligations secured by such assets; and
to the extent of any single payment or series of related payments equal to or
greater than $1,000,000, such payments shall by made to the Agent. All amounts
paid in respect of any such policy directly to the Agent shall, provided no
Default then exists, be applied to the prepayment of the Obligations or the
rebuilding or repairing of the portion of the System giving rise to the payment
of insurance benefits, as the Borrower may elect; otherwise, such amounts shall
be applied by the Agent, (i) prior to the acceleration of the Loans, as
provided in Section 2.9 (c) hereof or, if the Majority Banks so elect, to the
prepayment of the Obligations or to the rebuilding or repairing of the portion
of the System giving rise to the payment of insurance benefits, and any balance
thereof remaining after payment in full of the Obligations shall be paid to the
Borrower or as otherwise required by law, and (ii) after the acceleration of
the Loans, as provided under Section 2.11 (c) hereof.
Section 5.6 Payment of Taxes and Claims. The Borrower will, and will
cause each of its Subsidiaries to, pay and discharge all taxes, including,
without limitation, withholding taxes, assessments and governmental charges or
levies required to be paid by it or imposed upon it or any of its income or
profits or upon any properties belonging to it prior to the date on which
penalties attach thereto, and all lawful claims for labor, materials and
supplies which, if unpaid, might become a Lien or charge upon any of its
properties; except that no such tax, assessment, charge, levy or claim need be
paid which is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
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appropriate books, but only so long as such tax, assessment, charge, levy or
claim does not become a Lien or charge other than a Permitted Lien and no
foreclosure, distraint, sale or similar proceedings shall have been commenced.
The Borrower will, and will cause each of its Subsidiaries to, timely file all
information returns required by federal, state or local tax authorities.
Section 5.7 Visits and Inspections. The Borrower will, and will cause
each of its Subsidiaries to, permit representatives of the Agent and any of the
Co-Agents or the Banks, upon one (1) day's prior notice, to (a) visit and
inspect its properties at all reasonable times, (b) inspect and make extracts
from and copies of its books and records, and (c) discuss with its principal
officers and accountants, its business, assets, liabilities, financial
position, results of operations and business prospects.
Section 5.8 Payment of Indebtedness and Other Liabilities. Subject to
any provisions regarding subordination herein or in any other Loan Document,
the Borrower will, and will cause each of its Subsidiaries to, (i) pay any and
all of its Indebtedness when and as it becomes due, other than amounts
diligently disputed in good faith, and (ii) pay all of its accounts payable and
accrued liabilities in the ordinary course of business.
Section 5.9 Use of Proceeds. The Borrowers will use the proceeds of the
Loans to finance the acquisition of the Meyer Systems and the North Central
Systems, to fund ongoing working capital and Capital Expenditure requirements
permitted hereunder, and to make Acquisitions and Investments as permitted
hereunder.
Section 5.10 Indemnity. The Borrowers will indemnify and hold harmless
each Bank and Co-Agent and the Agent and each of their respective employees,
representatives, officers and directors from and against any and all claims,
liabilities, losses, damages, actions, attorneys' fees and demands by any party
against the Banks, the Co-Agents, the Agent, or any of them (a) resulting from
any breach or alleged breach by any of the Borrowers or any Subsidiary of the
Borrower of any representation or warranty made hereunder or any other Loan
Document, or (b) arising out of (i) the making or administration of the Loans
or the use of the proceeds thereof, including the making of Acquisitions and
Investments permitted hereunder, or the exercise or enforcement of rights,
remedies, powers or privileges under the Loan Documents, (ii) allegations of
any participation by the Banks, the Co-Agents, the Agent or any of them, in the
affairs of the Borrower and its Subsidiaries, or allegations that the Banks,
the Co-Agents, the Agent or any of them, has any joint liability with the
Borrowers or any of them for any reason, or (iii) any claims against the Banks,
the Co-Agents, the Agent, or any of them, by any investor in or lender to the
Borrower or any of its Subsidiaries for any reason whatsoever in connection
with the transactions contemplated by this Loan Agreement; unless, in any case
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referred to above, the Person seeking indemnification hereunder is determined
to have acted or failed to act with gross negligence or willful misconduct by a
non-appealable judicial order. This Section 5.10 shall survive the termination
of this Agreement and the satisfaction in full of the Obligations.
Section 5.11 Payment of Wages. The Borrower will, and will cause each of
its Subsidiaries to, at all times comply in all material respects with the Fair
Labor Standards Act, as amended, including, without limitation, the provisions
of such Act relating to the payment of minimum and overtime wages as they may
become due from time to time.
Section 5.12 Management. The Borrower will, and will cause each of its
Subsidiaries to, obtain management services for the operation of the System
from the Manager pursuant to the terms of the Partnership Agreement.
Section 5.13 Interest Rate Hedging. The Borrowers shall enter into one
or more Interest Hedge Agreements which fix or place a limit on the interest
obligations of the Borrowers hereunder and under the Notes in a manner
reasonably acceptable to the Majority Banks in an aggregate principal amount of
not less than fifty percent (50%) of the principal amount of all then
outstanding Loans within six (6) months of the Initial Funding Date, such
Interest Hedge Agreements to provide such interest rate protection for a period
of not less than three (3) years from the date of such Interest Hedge
Agreement. All obligations of the Borrowers to the Agent or any of the Co-
Agents or the Banks or any affiliate of any of them, pursuant to any Interest
Hedge Agreement, shall rank pari passu with the other Obligations.
Section 5.14 Covenants Regarding Investments and Acquisitions. At the
time of any Acquisition or Investment permitted hereunder, the Borrower shall,
and shall cause each affected Subsidiary to, (a) in the case of the Acquisition
of a Subsidiary, provide to the Agent, the Co-Agents and the Banks a Guaranty
of the Obligations executed by such Subsidiary in favor of the Agent and the
Banks, which shall be substantially identical to the form of Subsidiary
Guaranty attached hereto as Exhibit J, and a security agreement substantially
identical to the form of Subsidiary Security Agreement attached hereto as
Exhibit M, and such other Security Documents as may be requested by the Agent,
each of which shall be a "Security Document" for purposes of this Agreement;
(b) in the case of any Acquisition of a Subsidiary or any Investment (which
shall not involve "margin stock" (as such term is defined under Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System)), pledge to
the Agent (on behalf of the Co-Agents, and the Banks) all of the stock (or
other instruments or securities evidencing ownership) of such Subsidiary or
Person in which an Investment is made, beneficially owned by the Borrower or
its affected Subsidiary, as additional Collateral for the Obligations, to be
held by the Agent in accordance with the terms of a pledge agreement
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substantially identical to the Pledge Agreement attached hereto as Exhibit E,
or to the Subsidiary Pledge Agreement attached hereto as Exhibit M, and execute
and deliver to the Agent all such documentation for such pledge as, in the
opinion of the Agent, is appropriate, each of which shall also be a "Security
Document" hereunder; and (c) in any case, provide all other documentation,
including one or more opinions of counsel satisfactory to the Agent (including,
without limitation, opinions of counsel as to compliance with the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended) which in the reasonable
opinion of the Agent is appropriate with respect to such Acquisition or
Investment. In the case of any real estate owned or acquired in connection
with any Acquisition, a Mortgage or a Subsidiary Mortgage shall only be
requested by the Agent in connection with a parcel of real property having a
fair market value in excess of $250,000. Any such document, agreement or
instrument executed or issued pursuant to this Section shall be a "Loan
Document" for purposes of this Agreement.
Section 5.15 Merger Covenant. The Borrower covenants that it will, not
later than the fifth (5th) Business Day after the Initial Funding Date, merge
Buyer Sub and North Central, the latter to be the surviving entity. The
Borrower further covenants and agrees that it shall cooperate fully with the
Agent and the Banks in preparing and executing appropriate documents to ensure
that all Collateral for the Obligations remains in place both before and after
the Merger Date.
ARTICLE 6
Information Covenants
So long as any of the Obligations is outstanding and unpaid or any
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise consent in writing, the Borrower will furnish or cause to be
furnished to the Agent and each Bank and Co-Agent at their respective offices:
Section 6.1 Quarterly Financial Statements and Information. Within
thirty (30) days after the last day of each quarter in each fiscal year, the
balance sheet of the Borrower and its Subsidiaries on a consolidated basis as
at the end of such quarter and the related statement of income of the Borrower
and its Subsidiaries for such quarter and for the elapsed portion of the year
ended with the last day of such quarter, which shall be certified by the chief
financial officer of the Borrower, to be, in his or her opinion, complete and
correct in all material respects and to present fairly, in accordance with
generally accepted accounting principles consistently applied, the financial
position of the Borrower and its Subsidiaries as at the end of such period and
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the results of operations for such period, and for the elapsed portion of the
year ended with the last day of such period, subject only to normal year-end
adjustments.
Section 6.2 Annual Financial Statements and Information; Certificate of
No Default. Within ninety (90) days after the end of each fiscal year of the
Borrower, the balance sheet of the Borrower and its Subsidiaries on a
consolidated basis at the end of such fiscal year and the related statement of
income and retained earnings and related statement of changes in cash of the
Borrower and its Subsidiaries on a consolidated basis for such fiscal year,
which financial statements shall set forth in comparative form such figures as
at the end of and for the previous fiscal year, as applicable, and shall be
accompanied by an opinion of KMPG Peat Marwick or other independent certified
public accountants of recognized standing satisfactory to the Majority Banks,
together with a statement of such accountants (A) to the effect that their
audit examination has included a review of the terms of this Agreement and the
Notes as they relate to accounting matters, (B) as to whether, in connection
with their audit examination, any Default of any provisions under Articles 2,
5, 6 or 7 hereof has come to their attention and if such a Default has come to
their attention, specifying the nature and period of existence thereof, and (C)
that such accountants have authorized the Borrower to deliver such financial
statements and opinion thereon to the Agent, the Co-Agents, and the Banks
pursuant to this Agreement.
Section 6.3 Monthly Operating Reports. Within thirty (30) days from the
last day of each month, a monthly operating report of the Borrower and its
Subsidiaries, on a system by system basis, in substantially the form attached
hereto as Exhibit U.
Section 6.4 Performance Certificates. At the time the financial
statements are furnished pursuant to Sections 6.1 and 6.2, a certificate of an
Authorized Signatory in substantially the form attached hereto as Exhibit V,
and:
(a) setting forth as at the end of such quarterly period or fiscal
year, as the case may be, the arithmetical calculations required to establish
(i) any interest rate adjustment, as provided for in Section 2.3 (f), and (ii)
whether or not the Borrower was in compliance with the requirements of Sections
7.8, 7.9, 7.10, 7.11, 7.12 (after the Conversion Date), and 7.15 hereof; and
(b) stating that, to the best of his or her knowledge, no Default or
Event of Default has occurred during or as at the end of such quarterly period
or year, as the case my be, or, if a Default or an Event of Default has
occurred, disclosing each such Default or Event of Default and its nature, when
it occurred, whether it is continuing and the steps being taken by the Borrower
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with respect to such Default or Event of Default. For purposes of
demonstrating the Borrower's compliance with Section 7.11 hereof, such
certificate shall separately itemize the amount of Management Fees to be
included in the Borrower's calculation of Pro Forma Debt Service Requirements
for the following four-quarter period.
Section 6.5 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower in connection with an audit of the Borrower by the
Borrower's independent public accountants, including, without limitation, any
management report prepared in connection with the annual audit referred to in
Section 6.2.
(b) Not later than June 30 of each year, a copy of the annual budget
for the Borrower and its Subsidiaries on a consolidated basis for the following
fiscal year.
(c) Promptly upon receipt thereof, copies of any material notice or
report regarding any License from the grantor of such License or regarding the
System or any License from the Commission with respect to (i) the suspension,
revocation or modification of any License, (ii) a denial of a request for a
rate change, (iii) disciplinary proceedings involving the Borrower, (iv) notice
of default or other non-compliance by the Borrower under any License, or (v)
any similar event or occurrence.
(d) Promptly upon transmission of or receipt by the Borrower, (i) a
copy of any material notice or mailing sent by the Borrower or by any of the
Partners under the Partnership Agreement, and (ii) a copy of any notice sent or
received by the Borrower pertaining to a material default under any material
contract to which the Borrower or any of its Subsidiaries is party.
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, opinions of counsel, financial statements,
projections, documents or further information regarding the business, assets,
liabilities, financial position, projections, results of operations or business
prospects of the Borrower or any of its Subsidiaries, as the Agent or any Co-
Agent or Bank reasonably may request.
Section 6.6 Notice of Litigation and Other Matters. Prompt notice of the
following events after the Borrower has received notice or otherwise become
aware thereof:
(a) the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings in any court or
before any arbitrator against or to the extent known to the Borrower in any
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other way relating directly and materially adversely to the Borrower or any of
its Subsidiaries, or any of their respective properties, assets or businesses,
or any License;
(b) any material adverse change with respect to the business,
assets, liabilities, financial position, results of operations or business
prospects of the Borrower or any of its Subsidiaries, other than changes in the
ordinary course of business which have not had and could not reasonably be
expected to have a Materially Adverse Effect;
(c) any material amendment or change to any budget submitted under
Section 6.5(b) hereof for the operation of the System;
(d) any Default or the occurrence or non-occurrence of any event (i)
which constitutes, or which with the passage of time or giving of notice or
both would constitute a material default by the Borrower under any material
agreement other than this Agreement to which the Borrower is party or by which
any of its properties may be bound, (ii) which constitutes, or which with the
passage of time or giving of notice or both would constitute a material default
by any Subsidiary of the Borrower under any material agreement to which such
Subsidiary is party or by which any of its properties may be bound, or (iii)
which could reasonably be expected to have a Materially Adverse Effect, giving
in each case the details thereof and specifying the action proposed to be taken
with respect thereto;
(e) the Occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975
of the Code) with respect to any Plan of the Borrower or any of its
Subsidiaries or the institution or threatened institution by the Pension
Benefit Guaranty Corporation of proceedings under ERISA to terminate or to
partially terminate any such Plan or the commencement or threatened
commencement of any litigation regarding any such Plan or naming it or the
trustee of any such Plan with respect to such Plan; and
(f) the occurrence of any event subsequent to the Agreement Date
which, if such event had occurred prior to the Agreement Date, would have
constituted an exception to the representation and warranty in Section 4.1 (1)
of this Agreement.
ARTICLE 7
Negative Covenants
So long as any of the Obligations is outstanding and unpaid or any
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise give their prior consent in writing:
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Section 7.1 Indebtedness of the Borrower. The Borrower shall not, and
shall not permit any of its Subsidiaries to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, any
Indebtedness except:
(a) Indebtedness under this Agreement and the Notes;
(b) Accounts payable, subscriber deposits, accrued expenses and
customer advance payments incurred and paid in the ordinary course of business;
(c) Capitalized Lease Obligations in an amount not in excess of
$2,250,000;
(d) Accrued but unpaid Management Fees and any interest thereon due
pursuant to the Partnership Agreement, subject to the terms of the
Subordination of Management Fees Agreement;
(e) Indebtedness secured by Permitted Liens;
(f) Obligations under Interest Hedge Agreements;
(g) Indebtedness falling within the definition of Guaranty but which
is permitted under Section 7.5 hereof;
(h) Indebtedness arising under payment and performance bonds and
letters of credit issued for the account of the Borrower and its Subsidiaries
in the ordinary course of business in favor of the grantors of the Licenses and
the Pole Agreements in respect of the System, in an aggregate amount not to
exceed $1,750,000 in the aggregate;
(i) intercompany loans among the Borrower and its Subsidiaries,
provided that any such loan is evidenced by a revolving promissory note which
is subject to an appropriate Collateral Assignment of Intercompany Note in
substantially the form attached hereto as Exhibit X;
(j) Unsecured Indebtedness for Money Borrowed having no financial
covenants issued by the Borrower in unlimited amounts in favor of its
Affiliates, provided that (x) interest on such Indebtedness for Money Borrowed
does not at any time accrue at a rate higher than the blended interest rate
payable on the Loans, (y) no principal or interest is paid or repaid in respect
of such Indebtedness for Money Borrowed until after the satisfaction in full of
all Obligations and the termination of the Commitment and (z) such Indebtedness
for Money Borrowed is subject to a Subordination Agreement in substantially the
form attached hereto as Exhibit Y; and
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(k) $1,000,000 in additional unsecured Indebtedness for Money
Borrowed, which may be borrowed from an Affiliate or any other Person, provided
that interest on such Indebtedness for Money Borrowed if owed to an Affiliate
shall not accrue or be payable at a rate higher than the blended interest rate
payable on the Loans.
Section 7.2 Limitation on Liens. The Borrower shall not, and shall not
permit any of its subsidiaries to, create, assume, incur or permit to exist or
to be created, assumed, incurred or permitted to exist, directly or indirectly,
any Lien on any of their respective properties or assets, whether now owned or
hereafter acquired, except for Permitted Liens, and the Borrower shall not, and
shall not permit any of its Subsidiaries to, undertake, covenant or agree with
any third party that it will not create, assume, incur or permit to exist or to
be created, assumed, incurred or permitted to exist any Lien on any of its
assets or properties.
Section 7.3 Amendment and Waiver. The Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any amendment of, or agree to or
accept or consent to any waiver of any of the provisions of, (i) its
certificate of limited partnership or Partnership Agreement, (ii) any Loan
Document (except as provided in Section 11.12 hereof), (iii) the portions of
the North Central Purchases Agreement dealing with the Earn-out Payments, or
(iv) any License. The foregoing notwithstanding, such certificate of limited
partnership, Partnership Agreement, or any License may be amended or modified
without the prior written consent of the Majority Banks provided (i) each such
amendment or modification is of a purely administrative nature or is required
by law, (ii) no such amendment or modification adversely affects the rights or
reduces the benefits in any material respect of any of the Agent, the Co-
Agents, and the Banks under the Loan Documents, and (iii) copies of all
documents evidencing or related to such amendment or modification are furnished
to the Agent, the Co-Agents, and the Banks within five (5) days of their
effective date.
Section 7.4 Liquidation, Change in Ownership, Disposition or Acquisition
of Assets. (a) Except as set forth on Schedule 5 attached hereto, the
Borrower shall not, and shall not permit any of its Subsidiaries to, at any
time (i) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, (ii) enter into any merger (except that the
Borrower may merge with any of its wholly-owned Subsidiaries so long as the
Borrower remains the surviving entity and that wholly-owned Subsidiaries of the
Borrower may merge with each other), or (iii) create any Subsidiary (other than
in connection with or as a result of an Acquisition, as set forth below), or
(iv) sell, lease, abandon, transfer or otherwise dispose of (other than in the
ordinary course of business) all or any material part of any of its assets,
property or business, provided that so long as no Default then exists or would
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be caused thereby, the Borrower and its Subsidiaries may sell or otherwise
dispose of its assets, if (x) such sales in the aggregate do not reduce the
aggregate number of Basic Subscribers by more than 5,000 over the term of this
Agreement, and (y) all Net Proceeds received by the Borrower and its
Subsidiaries from sales permitted under this proviso shall be used to repay or
prepay on the closing date of such sale an identical amount of the outstanding
principal amount of the Loans. Such repayments of principal shall be applied
as provided in Section 2.7 (b) hereof. Any Net Proceeds which constitute a
portion of the sales price which was previously held in escrow or which is paid
under a promissory note or other instrument constituting a portion of the
purchase price shall be paid to the Agent, on behalf of the Banks, as a
repayment of principal at such time as such Net Proceeds are received by the
Borrower or the selling Subsidiary. During the term of this Agreement, neither
the Borrower nor any of its Subsidiaries shall accept promissory notes or other
instruments unless such notes or instruments are endorsed to the order of the
Agent and pledged (together with any collateral for such notes) to the Agent
and the Banks as additional Collateral for the Obligations, and do not
aggregate more than $1,000,000 in principal amount in respect of the purchase
price for assets sold by the Borrower and its Subsidiaries hereunder.
(b) Neither the Borrower nor any of its Subsidiaries shall at any
time acquire any assets, property or business of any other Person, or acquire
stock, partnership or other ownership interests in any other Person, provided,
however, that so long as no Default then exists or would be caused thereby, and
provided that the Borrower complies with Section 5.14 hereof, the Borrower may
acquire assets and property in the ordinary course of business and may also
make Acquisitions and Investments for a cumulative amount of purchase prices
not to exceed in the aggregate $10,000,000 during the term of this Agreement
and may make Acquisitions and Investments in excess of such amount with the
prior written consent of the Majority Banks, such consent not to be
unreasonably withheld. In the event the Borrower makes an Acquisition of a
Person which becomes a Subsidiary, such Subsidiary shall be subject to
covenants and obligations contained herein as fully as if it were a Subsidiary
of the Borrower on the date hereof. All of the Borrower's financial statements
and financial covenants described or set forth herein shall be on a
consolidated basis with its Subsidiaries. The Banks shall not be required or
requested to give their consent, or the consent of the Majority Banks, to any
Acquisition or Investment sought to be made by the Borrower hereunder until a
reasonable time has elapsed after the receipt by the Banks of a certificate
from the Borrower, which shall set forth material information regarding the
proposed Acquisition or Investment, including but not limited to the following:
(i) the Acquisition or Investment particulars, including a description of the
assets, number of Basic Subscribers, proposed purchase price, draft purchase or
investment agreement, etc.; (ii) recent, financial statements (audited, if
available) for the proposed Acquisition or Person in whom an Investment is
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proposed to be made, including cash flow numbers for the most recent fiscal
periods; (iii) pro forma projections for the Borrower and its Subsidiaries on a
consolidated basis assuming consummation of the Investment or Acquisition and
demonstrating, through the Maturity Date, compliance with the financial
covenant ratios set forth in Sections 7.8, 7.9, 7.10, 7.11, 7.12 and 7.15
hereof; and (iv) such other information as may reasonably be requested by the
Agent, the Co-Agents, the Banks, or any of them.
Section 7.5 Limitation on Guaranties. The Borrower shall not, and shall
not permit any of its Subsidiaries to, at any time guaranty, assume, be
obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person other than (a) Guaranties by endorsement of
negotiable instruments for collection in the ordinary course of business, (b)
Guaranties by the Borrower and of its Subsidiaries of obligations of other
Subsidiaries of the Borrower under Licenses and under other agreements entered
into in connection with the acquisition of services, supplies and equipment and
real estate leases in the ordinary course of business of the Subsidiaries of
the Borrower, (c) the Subsidiary Guaranties, and (d) other Guaranties with
respect to Indebtedness in an aggregate principal amount not to exceed
$500,000.
Section 7.6 Investments. The Borrower shall not, and shall not permit
any of its Subsidiaries to, make any loan or advance, or otherwise acquire for
a consideration evidences of Indebtedness, capital stock or other securities of
any Person, except that so long as no Default then exists or would be caused
thereby, the Borrower and its Subsidiaries may (i) purchase marketable, direct
obligations of the United States of America maturing within three hundred
sixty-five (365) days of the date of purchase, (ii) purchase commercial paper
issued by corporations, each of which conducts a substantial part of its
business in the United States of America, maturing within one hundred and
eighty (180) days from the date of the original issue thereof, and rated "P-1"
or better by Moody's Investors Service or "A-1" or better by Standard and
Poor's Corporation, (iii) purchase repurchase agreements and certificates of
deposit maturing within three hundred sixty-five (365) days of the date of
purchase which are issued by the Agent or any Co-Agent or Bank or by a United
States national or state bank having capital, surplus and undivided profits
totaling more than $250,000,000 and rated "A" or better by Moody's Investors
Service, (iv) make intercompany investments in each other, and (v) make
Investments as permitted under Section 7.4 (b) hereof.
Section 7.7 Restricted Payments and Purchases. The Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly declare
or make any Restricted Payment or Restricted Purchase, except that (i) the
Borrower may (x) make the Earn-Out Payments, (y) accrue Management Fees in an
amount not to exceed five percent (5%) of the gross revenues of the Borrower
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and its Subsidiaries on a consolidated basis, and (z) make and permit
intercompany transfers to, from, and among its Subsidiaries, and (ii) so long
as (x) no Default hereunder then exists or would be caused thereby, and (y) the
ratio of Operating Cash Flow (less Management Fees paid or payable) to Interest
Expense, for the most recent quarter ended, prior to the proposed date of
payment, for which financial statements are available, is greater than 1.25:1,
the Borrower (1) may pay Management Fees then due and payable to the Manager
under the Partnership Agreement on a monthly basis in an aggregate amount not
to exceed (A) three percent (3%) of the gross revenues of the Borrower and its
Subsidiaries on a consolidated basis for each fiscal quarter for the period
from the Agreement Date through March 31, 1995, (B) two and one-half percent
(2-1/2%) of the gross revenues of the Borrower and its Subsidiaries on a
consolidated basis for the period from April 1, 1995 through March 31, 1997,
and (C) two percent (2%) of the gross revenues of the Borrower and its
Subsidiaries on a consolidated basis for the period from April 1, 1997 through
the Maturity Date, and (2) may borrow, repay and reborrow Indebtedness for
Money Borrowed permitted under Section 7.1(k) hereof.
Section 7.8 Total Indebtedness to Annualized Operating Cash Flow Ratio.
As of (a) the Initial Funding Date, and (b) the end of each fiscal quarter
thereafter, the Borrower shall not permit the ratio of its Total Indebtedness
to its Annualized Operating Cash Flow for the fiscal quarter end being tested
to exceed the ratios set forth below for fiscal quarters ending on the dates
shown below:
Dates Ratio
----- -----
Initial Funding Date, June 30, 6.50:1
1992, and September 30, 1992
December 31, 1992 6.25:1
March 31, 1993 6.00:1
June 30, 1993 and 5.75:1
September 30, 1993
December 31, 1993 5.50:1
March 31, 1994 5.25:1
June 30, 1994 and 5.00:1
September 30, 1994
December 31, 1994 4.75:1
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March 31, 1995 and 4.50:1
June 30, 1995
September 30, 1995 and 4.00:1
thereafter
For purposes of this Section 7.8, "Annualized Operating Cash Flow" shall not
include any portion of Operating Cash Flow which would have otherwise been
included in respect of any Subsidiary of the Borrower or portion of the System
of which has been sold, for the fiscal period in which the sale occurs.
Section 7.9 Operating Cash Flow to Interest Expense Ratio. The Borrower
shall not as of the end of any fiscal quarter after the Initial Funding Date
permit the ratio of its Operating Cash Flow for such fiscal quarter to its
Interest Expense for such period to be less than 1.50:1 for quarters ending on
and after March 31, 1992.
Section 7.10 Capital Expenditures. During the periods set forth below,
the Borrower shall not permit the aggregate amount of the Capital Expenditures
of it and its Subsidiaries to exceed the sum of (a) the limit for such year, as
set forth below, plus (b) any unexpended portion of the Capital Expenditures
limit set forth below for the preceding years, plus (c) the amount of net
proceeds received by the Borrower and its Subsidiaries pursuant to any sale of
assets made in the ordinary course of business.
Capital
Year Expenditure Limit
---- -----------------
From January 1, 1992 through $2,500,000
June 30, 1992
From July 1, 1992 through $10,500,000
June 30, 1993
From July 1, 1993 through $9,500,000
June 30, 1994
Section 7.11 Annualized Operating Cash Flow to Pro Forma Debt Service
Requirements Ratio. The Borrower shall not permit the ratio of its Annualized
Operating Cash Flow to its Pro Forma Debt Service Requirements as of the end of
any calendar quarter occurring after the Initial Funding Date to fall below 1.1
to 1. For purposes of this Section 7.11, "Annualized Operating Cash Flow"
shall not include any portion of Operating Cash Flow which would have otherwise
been included in respect of any Subsidiary of the Borrower or portion of the
System which has been sold, for the fiscal period in which the sale occurs.
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Section 7.12 Operating Cash Flow to Fixed Charges Ratio. As of the end
of each fiscal quarter ending after the Conversion Date, the Borrower shall not
permit the ratio of its Operating Cash Flow for the immediately preceding four
fiscal quarters to its Fixed Charges for such period to be less than 1.0 to 1.
Section 7.13 Affiliate Transactions. The Borrower shall not, and shall
not permit any of its Subsidiaries to, at any time engage in any transaction
with an Affiliate, or make an assignment or other transfer of any of its
properties or assets to any Affiliate, on terms less advantageous to the
Borrower than would be the case if such transaction had been effected with a
non-Affiliate. In addition, the Borrower and its Subsidiaries shall receive
the benefit of any discounts, rebates or special payment terms for cable
television programming available to either of the Partners which such Partner
is permitted and has agreed to pass through to the Borrower and its
Subsidiaries.
Section 7.14 Real Estate. The Borrower shall not, and shall not permit
any of its Subsidiaries to, purchase or become obligated to purchase real
estate (other than easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property), other than purchases in the ordinary
course of business of owning, acquiring, maintaining and constructing the
System, and real estate acquired in connection with an Acquisition permitted
hereunder.
Section 7.15 Limitation on Leases. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or be or become obligated to make any
payment in respect of any obligations as lessee under a lease, except for (x)
payments under leases to be used in connection with the operation of the System
which, when aggregated with all other payments under such leases by the
Borrower and its Subsidiaries would not exceed in the aggregate during any one
fiscal year of the Borrower, $200,000 and during the term of this Agreement,
$1,800,000, and (y) payments relating to Capitalized Lease Obligations.
Section 7.16 ERISA Liabilities. The Borrower shall not, and shall not
permit any of its Subsidiaries to, allow the assets of any of its Plans subject
to ERISA to be less than the amount necessary to provide all accrued benefits
under such Plans. The Borrower shall not, and shall not permit any of its
Subsidiaries to, become a participant in any Multiemployer Plan.
ARTICLE 8
Default
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Section 8.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to be
made pursuant to Section 4.2 hereof;
(b) Any Borrower shall default in the payment of (i) any interest
under the Notes, or any of them, or fees, or amounts payable under Section 2.10
hereof due the Agent, the Co-Agents and the Banks or any of them and payable
hereunder, or under any other Loan Document, when due, which Default is not
cured by payment in full within three (3) days from the date such payment shall
become due, or (ii) any principal under the Notes, or any of them, when due;
(c) The Borrower shall default (i) in the performance or observance
of any agreement or covenant contained in Section 5.9, Section 5.14, Section
5.15, or Article 7 hereof, or (ii) in providing any financial statement or
report under Article 6 which would permit the Agent, the Co-Agent, and the
Banks to determine whether the Borrower was in Default under Article 7;
(d) Any Borrower shall default in the performance or observance of
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such default shall not be cured
to the Majority Banks' satisfaction within a period of thirty (30) days from
the earlier of the date on which any officer of the Borrower becomes aware of,
or receives notice of, or in the exercise of reasonable diligence should have
learned of, the occurrence of such default;
(e) There shall occur any default in the performance or observance
of any agreement or covenant or breach of any representation or warranty
contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in Section 8.1 of this Agreement), which shall not be cured
to the Majority Banks' satisfaction within a period of thirty (30) days from
the earlier of the date on which any officer of the Borrower or any of its
Subsidiaries becomes aware of, or receives notice of, or in the exercise of
reasonable diligence should have learned of, the occurrence of such default;
(f) There shall be entered a decree or order for relief in respect
of the Borrower or any of its Subsidiaries under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official of
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the Borrower or any of its Subsidiaries or of any substantial part of their
respective properties, or ordering the winding-up or liquidation of the affairs
of the Borrower or any of its Subsidiaries or an involuntary petition shall be
filed against the Borrower or any of its Subsidiaries and a temporary stay
entered, and (i) such petition and stay shall not be diligently contested, or
(ii) any such petition and stay shall continue undismissed for a period of
thirty (30) consecutive days;
(g) The Borrower or any of its Subsidiaries shall file a petition,
answer or consent seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable Federal or state
bankruptcy law or other similar law, or the Borrower or any of its Subsidiaries
shall consent to the institution of proceedings thereunder or to the filing of
any such petition or to the appointment or taking of possession of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Borrower or any of its Subsidiaries or of any substantial part
of their respective properties, or the Borrower or any of its Subsidiaries
shall fail generally to pay their respective debts as they become due, or the
Borrower or any of its Subsidiaries shall take any action in furtherance of any
such action;
(h) A final judgment or a warrant of attachment shall be entered by
any court against the Borrower or any of its Subsidiaries for the payment of
money which exceeds any insurance coverage which is uncontested by the
insurance carrier by $3,000,000 or more in the aggregate, or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of its Subsidiaries which, together with all
other such property of the Borrower and its Subsidiaries subject to other such
process, exceeds in value any insurance coverage which is uncontested by the
insurance carrier by $3,000,000 or more in the aggregate, and if, within thirty
(30) days after the entry, issue or levy thereof, such judgment, warrant or
process shall not have been paid or discharged or stayed pending appeal, or if,
after the expiration of any such stay, such judgment, warrant or process shall
not have been paid or discharged;
(i) There shall be at any time any "accumulated funding deficiency,"
as defined in ERISA or in Section 412 of the Code, with respect to any Plan
maintained by the borrower or any of its Subsidiaries, or to which the Borrower
or any of its Subsidiaries has any liabilities, or any trust created
thereunder; or a trustee shall be appointed by a United States District Court
to administer any such Plan; or the Pension Benefit Guaranty Corporation shall
institute proceedings to terminate any such Plan; or the Borrower or any of its
Subsidiaries shall incur any liability to the Pension Benefit Guaranty
Corporation in connection with the termination of any such Plan; or any Plan or
trust created under any Plan of the Borrower or any of its Subsidiaries shall
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engage in a "prohibited transaction" (as such term is defined in Section 406 of
ERISA or Section 4975 of the Code) which would subject any such Plan, any trust
created thereunder, any trustee or administrator thereof, or any party dealing
with any such Plan or trust to the tax or penalty on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code; or the Borrower or
any of its Subsidiaries shall enter into or become obligated to contribute to a
Multiemployer Plan;
(j) Any event shall occur which has a Materially Adverse Effect;
(k) There shall occur any default which entitles the holders to
accelerate the maturity thereof under any agreement or instrument evidencing
Indebtedness of the Borrower or any of its Subsidiaries in an aggregate
principal amount exceeding $1,000,000 or there shall occur any material default
on the part of any of the Borrowers permitting the Counterpart to exercise
early termination rights under any Interest Hedge Agreement having a notional
principal amount of $1,000,000, or more;
(l) Any License shall be revoked and such revocation shall not be
waived or stayed, or there shall occur a material default under any License
which shall not have been waived within thirty (30) days of the occurrence
thereof, or any proceedings shall in any way be brought to challenge (and shall
continue uncontested for a period of thirty (30) days), the validity or
enforceability of any License, or a proceeding for the renewal of any License
shall not be commenced at least nine (9) months prior to its expiration, or any
License shall expire due to termination, nonrenewal or for any other reason,
which, together with any other such Licenses described in this Section 8.1(1),
account for five percent (5%) or more of the Basic Subscribers during the term
of this Agreement;
(m) Any Loan Document shall at any time and for any reason be
declared to be null and void, or a proceeding shall be commenced by the
Borrower or any of its Subsidiaries or by any governmental authority (other
than the grantor of any License in a proceeding pertaining to such License)
having jurisdiction over the Borrower or any of its Subsidiaries seeking to
establish the invalidity or unenforceability thereof (exclusive of questions of
interpretation of any provision thereof), or the Borrower or any of its
Subsidiaries shall deny that it has any liability or obligation for the payment
of principal or interest or fees purported to be created under any Loan
Document;
(n) Any Security Document shall for any reason fail or cease to
create a valid and perfected and, except to the extent permitted by the terms
hereof or thereof, first priority lien on or security interest in any material
portion of the Collateral purported to be covered thereby;
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(o) The Manager shall for any reason cease providing management to
the Borrower and its Subsidiaries or there shall be a material default, other
than a payment default required by the Subordination of Management Fees
Agreement, under the Partnership Agreement provisions pertaining to the
Manager, or there shall occur any event which could have a Materially Adverse
Effect upon the ability of the Manager to fulfill its obligations under the
Partnership Agreement;
(p) The Borrower shall lose prior to the stated expiration date of
the contract the programming discounts it presently has by virtue of a contract
with the parent company of its Partner, Continental Cablevision of Minnesota,
Inc., and shall fail to otherwise obtain programming discounts at least as
favorable to the Borrower as those in effect on the Agreement Date; or
(q) The Borrower shall fail to maintain its existence, or there
shall be a material default by one of the Partners under the Partnership
Agreement which shall not be cured or permanently waived during any available
period of cure.
Section 8.2 Remedies. If an Event of Default shall have occurred and
shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g), the Agent, with the concurrence of the Majority Banks, shall (i)
terminate the Commitment, or (ii) declare the principal of and interest on the
Loans and the Notes and all other amounts owed under this Agreement, the Notes
and the other Loan Documents to be forthwith due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, anything in this Agreement, the Notes, or the other Loan
Documents to the contrary notwithstanding (and in which case, any Fixed Rate
Advances outstanding may be terminated), or (iii) perform both (i) and (ii).
(b) Upon the occurrence and continuance of an Event of Default
specified in Section 8.1(f) or Section 8.1(g), such principal, interest and
other amounts outstanding shall thereupon and concurrently therewith become due
and payable and the Commitment shall forthwith terminate, all without any
action by any of the Agent, the Co-Agents and the Banks or the Majority Banks
or the holders of the Notes and without presentment, demand, protest or other
notice of any kind, all of which are expressly waived, anything in this
Agreement, the Notes or the other Loan Documents to the contrary
notwithstanding.
(c) The Agent, with the concurrence of the Majority Banks, may
exercise all other post-default rights granted to it and to them under the Loan
Documents or under Applicable Law.
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(d) The Agent shall have the right (but not the obligation) upon the
request of the Majority Banks to operate the System in accordance with the
terms of the Licenses and pursuant to the terms and subject to any limitations
contained in the Security Documents and, within guidelines established by the
Majority Banks, to make any and all payments and expenditures necessary or
desirable in connection therewith, including, without limitation, payment of
wages as required under the Fair Labor Standards Act, as amended, and of any
necessary withholding taxes to state or federal authorities. In the event the
Majority Banks fail to agree upon the guidelines referred to in the preceding
sentence within six (6) Business Days' after the Agent has begun to operate the
System, the Agent may, after giving three (3) days' prior written notice to the
Banks of its intention to do so, make such payments and expenditures as it
deems reasonable and advisable in its sole discretion to maintain the normal
day-to-day operation of the System. Such payments and expenditures in excess
of receipts shall constitute Advances under the Commitment, notwithstanding any
limitation that might otherwise be imposed on Advances by the amount of the
Commitment. Advances made pursuant to this Section 8.2(d) shall bear interest
as provided in Section 2.3(e) and shall be payable on the earlier of demand or
the Maturity Date. The making of one or more Advances under this Section
8.2(d) shall not create any obligation on the part of the Banks to make any
additional Advances hereunder. No exercise by the Agent of the rights granted
to it under this Section 8.2(d) shall constitute a waiver of any other rights
and remedies granted to the Agent and the Banks, or any of them, under this
Agreement or at law. The Borrower hereby irrevocably appoints the Agent, as
agent for the Banks, the true and lawful attorney of the Borrower, in its name
and stead and on its behalf, to execute, receipt for or otherwise act in
connection with any and all contracts, instruments or other documents in
connection with the completion and operation of the System in the exercise of
the Agent's and the Banks' rights under this Section 8.2(d). Such power of
attorney is coupled with an interest and is irrevocable.
(e) In addition, the Agent, upon request of the Majority Banks,
shall have the right to the appointment of a receiver for the properties and
assets of the Borrower and its Subsidiaries, and the Borrower, for itself and
on behalf of its Subsidiaries, hereby consents to such rights and such
appointment and hereby waives any objection the Borrower may have thereto or
the right to have a bond or other security posted by the Agent (on behalf of
the Co-Agents and the Banks), in connection therewith.
(f) The rights and remedies of the Agent and the Banks hereunder
shall be cumulative, and not exclusive.
ARTICLE 9
The Agent
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Section 9.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes, and hereby agrees that it will require any transferee
of any of its interest in its Loans and in its Notes irrevocably to appoint and
authorize, the Agent to take such actions as its agent on its behalf and to
exercise such powers hereunder as are delegated by the terms hereof, together
with such powers as are reasonably incidental thereto. Neither the Agent nor
any of its directors, officers, employees or agents shall be liable for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
Section 9.2 Interest Holders. The Agent may treat each Bank, or the
Person designated in the last notice filed with the Agent under this Section,
as the holder of all of the interests of such Bank in its Loans and in its
Notes until written notice of transfer, signed by such Bank (or the Person
designated in the last notice filed with the Agent) and by the Person
designated in such written notice of transfer, in the form of a duly executed
Assignment and Assumption Agreement substantially in the form of Exhibit W
hereto, shall have been filed with the Agent.
Section 9.3 Consultation with Counsel. The Agent may consult with such
legal counsel selected by it and shall not be liable for any action taken or
suffered by it in good faith in reliance upon advice rendered by such counsel.
Section 9.4 Documents. The Agent shall be under no duty to examine,
inquire into, or pass upon the validity, effectiveness or genuineness of this
Agreement, any Note or any instrument, document or communication furnished
pursuant hereto or in connection herewith, and the Agent shall be entitled to
assume that they are valid, effective and genuine, have been signed or sent by
the proper parties and are what they purport to be.
Section 9.5 Agent and Affiliates. With respect to the Commitments and the
Loans, The Toronto-Dominion Bank shall have the same rights and powers
hereunder as any other Bank and the Agent and its other affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower, any Affliates of, or Persons doing business with, the Borrower,
as if it were not the Agent or affiliated with the Agent and without any
obligation to account therefor. The Banks acknowledge that The Toronto-
Dominion Bank and its affiliates may have other lending and investment
relationships with the Borrower and its Affiliates and in the future may enter
into additional such relationships.
Section 9.6 Responsibility of the Agent. The duties and obligations of
the Agent under this Agreement and the other Loan Documents are only those
expressly set forth in this Agreement and the other Loan Documents. The Agent
shall be entitled to assume that no Default or Event of Default has occurred
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and is continuing unless it has actual knowledge, or has been notified by the
Borrower or any Co-Agent or Bank, of such fact, or has been notified by a Co-
Agent or Bank that such Co-Agent or Bank considers that a Default or an Event
of Default has occurred and is continuing, and such Co-Agent or Bank shall
specify in detail the nature thereof in writing. The Agent shall not be liable
hereunder for any action taken or omitted to be taken except for its own gross
negligence or willful misconduct. The Agent shall provide each Co-Agent and
Bank with copies of such documents received from the Borrower as such Co-Agent
or Bank may reasonably request.
Section 9.7 Collateral. The Agent is hereby authorized to act on behalf
of the Co-Agents and the Banks, in its own capacity and through other agents
and sub-agents appointed by it, under the Security Documents, provided that the
Agent shall not agree to the release of any Collateral, or any property
encumbered by any Security Document except in compliance with Section 11.12
hereof.
Section 9.8 Action by Agent.
(a) The Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested in
it by, and with respect to taking or refraining from taking any action or
actions which it may be able to take under or in respect of, this Agreement,
unless the Agent shall have been instructed by the Majority Banks to exercise
or refrain from exercising such rights or to take or refrain from taking such
action; provided that the Agent shall not exercise any rights under Section
8.2(a), 8.2(c), 8.2(d), or 8.2(e) of this Agreement without the request of the
Majority Banks. The Agent shall not incur any liability under or in respect of
this Agreement with respect to anything which it may do or refrain from doing
in the reasonable exercise of its judgment or which may seem to it to be
necessary or desirable in the circumstances, except for its gross negligence or
willful misconduct.
(b) The Agent shall not be liable to the Co-Agents or the Banks or
to any of them in acting or refraining from acting under this Agreement in
accordance with the instructions of the Majority Banks and any action taken or
failure to act pursuant to such instructions shall be binding on each of the
Co-Agents and the Banks.
Section 9.9 Notice of Default or Event of Default. In the event that the
Agent or any Co-Agent or Bank shall acquire actual knowledge, or shall have
been notified, of any Default or Event of Default, the Agent or such Co-Agent
or Bank shall promptly notify the Banks, the Co-Agents, and the Agent, and the
Agent shall take such action and assert such rights under this Agreement as the
Majority Banks shall request in writing, and the Agent shall not be subject to
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any liability by reason of its action pursuant to any such request. If the
Majority Banks shall fail to request the Agent to take action or to assert
rights under this Agreement in respect of any Default or Event of Default
within ten (10) days after their receipt of the notice of any Default or Event
of Default from the Agent, or Banks not constituting Majority Banks shall
request inconsistent action with respect to such Default or Event of Default,
the Agent may, but shall not be required to, take such action and assert such
rights (other than rights under Article 8 hereof) as it deems in its discretion
to be advisable for the protection of the Banks, except that, if the Majority
Banks have instructed the Agent not to take such action or assert such right,
in no event shall the Agent act contrary to such instructions.
Section 9.10 Responsibility Disclaimed. The Agent shall be under no
liability or responsibility whatsoever as Agent:
(a) To any Borrower or any other Person as a consequence of any
failure or delay in performance by or any breach by, any Bank or Banks or Co-
Agents or Majority Banks of any of its or their obligations under this
Agreement;
(b) To any Bank or Banks or Co-Agent or Co-Agents, as a consequence
of any failure or delay in performance by, or any breach by, any Borrower of
any of its Obligations under this Agreement or its Notes or any other Loan
Document; or
(c) To any Bank or Banks or Co-Agent or Co-Agents, for any
statements, representations or warranties in this Agreement, or any other
document contemplated by this Agreement, or any information provided pursuant
to this Agreement, any other Loan Document, or any other document contemplated
by this Agreement, or for the validity, effectiveness, enforceability or
sufficiency of this Agreement, the Notes, any other Loan Document, or any other
document contemplated by this Agreement.
Section 9.11 Indemnification. The Banks agree to indemnify the Agent (to
the extent not reimbursed by the Borrower) pro rata according to their
respective Commitment Ratios, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including fees and expenses of experts, agents, consultants and
counsel), or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement, any other Loan Document, or any other document
contemplated by this Agreement or any action taken or omitted by the Agent
under this Agreement, any other Loan Document, or any other document
contemplated by this Agreement, except that no Bank shall be liable to the
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements
resulting from the gross negligence or willful misconduct of the Agent.
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Section 9.12 Credit Decision. Each Bank represents and warrants to each
other and to the Agent that:
(a) In making its decision to enter into this Agreement and to make
its Advances it has independently taken whatever steps it considers necessary
to evaluate the financial condition and affairs of the Borrower and its
Subsidiaries (including the other Borrowers), and that it has made an
independent credit judgment, and that it has not relied upon information
provided by the Agent or the Co-Agents, including, without limitation, with
respect to the determination as to whether to classify the transactions
evidenced by the Loan Documents as an "HLT" (as defined in Banking Circular BC-
242, issued by the Comptroller of the Currency on October 30, 1989, as
supplemented from time to time); and
(b) So long as any portion of the Loans remains outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Borrower and its Subsidiaries.
Section 9.13 Successor Agents. The Agent may resign at any time by giving
written notice thereof to the Co-Agents, the Banks, and the Borrower, and may
be removed at any time for cause by the Majority Banks. Upon any such
resignation or removal, the Majority Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation or the Majority
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent which shall be any Co-Agent or Bank or a
commercial bank organized under the laws of the United States of America or any
political subdivision thereof which has combined capital and reserves in excess
of $250,000,000. Such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article 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 an Agent.
ARTICLE 10
Change in Circumstances
Affecting Fixed Rate Advances
Section l0.1 Fixed Rate Basis Determination Inadequate or Unfair. If with
respect to any proposed Fixed Rate Advance for any Interest Period, the Agent
determines after consultation with the Banks that deposits in dollars (in the
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applicable amount) are not being offered to each of the Banks in the relevant
market for such Interest Period, the Agent shall forthwith give notice thereof
to the Borrower and the Banks, whereupon until the Agent notifies the Borrower
that the circumstances giving rise to such situation no longer exist, the
obligations of the Banks to make such type of Fixed Rate Advances shall be
suspended.
Section 10.2 Illegality. If any applicable law, rule or regulation, or
any change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency, shall
make it unlawful or impossible for any Bank to make, maintain or fund its Fixed
Rate Advances (whether Eurodollar Advance, or CD Rate Advance, or any of them),
such Bank shall notify the Agent, and the Agent shall forthwith give notice
thereof to the Banks and the Borrower. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different lending office
if such designation will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. Upon
receipt of such notice, notwithstanding anything contained in Article 2 hereof,
the affected Borrower shall repay in full the then outstanding principal amount
of each Fixed Rate Advance of such Bank so affected, together with accrued
interest thereon, either (a) on the last day of the then current Interest
Period applicable to such Advance if such Bank may lawfully continue to
maintain and fund such Advance to such day or (b) immediately if such Bank may
not lawfully continue to fund and maintain such Advance to such day.
Concurrently with repaying each Fixed Rate Advance of such Bank so affected,
notwithstanding anything contained in Article 2 hereof, the affected Borrower
shall borrow a Prime Rate Advance (or the other type of Fixed Rate Advance, if
available) from such Bank, and such Bank shall make such Advance in an amount
such that the outstanding principal amount of the applicable Note held by such
Bank shall equal the outstanding principal amount of such Note immediately
prior to such repayment.
Section 10.3 Increased Costs.
(a) If any applicable law, rule or regulation adopted or promulgated
after the Agreement Date, or any change therein or in any law, rule or
regulation existing as of the Agreement Date, or any interpretation or change
in interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by any Bank with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:
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(1) shall subject any Bank to any tax, duty or other charge
with respect to its obligation to make Fixed Rate Advances, or its Fixed
Rate Advances, or shall change the basis of taxation of payments to any
Bank of the principal of or interest on its Fixed Rate Advances or in
respect of any other amounts due under this Agreement, in respect of its
Fixed Rate Advances, or any of them, or its obligation to make Fixed Rate
Advances, or any of them (except for changes in the rate of tax on the
overall net income of such Bank imposed by the jurisdiction in which such
Bank's principal executive office is located); or
(2) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage or Assessment Rate) special deposit, capital
adequacy, assessment or other requirement or condition against assets of,
deposits with or for the account of, or commitments or credit extended by,
any Bank or shall impose on any Bank or the London Interbank Borrowing
Market any other condition affecting its obligation to make such Fixed
Rate Advances or its Fixed Rate Eurodollar Advances, or any of them;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any such Fixed Rate Advances, or to reduce the amount of
any sum received or receivable by the Bank under this Agreement or under its
Notes, or either of them, with respect thereto, then, on the earlier of a date
within ten (10) days after demand by such Bank or the Maturity Date, the
Borrower agrees to pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased costs. Each Bank will promptly notify
the Borrower and the Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation pursuant to
this Section 10.3 and will designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole judgment of such Bank made in good faith, be
otherwise disadvantageous to such Bank.
(b) A certificate of any Bank claiming compensation under this
Section 10.3 and setting forth the additional amount or amounts to be paid to
it hereunder and calculations therefor shall be conclusive in the absence of
demonstrable error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. If any Bank demands compensation
under this Section 10.3, the affected Borrower may at any time, upon at least
five (5) Business Days' prior notice to such Bank, prepay in full the then
outstanding affected Fixed Rate Advances of such Bank, together with accrued
interest thereon to the date of prepayment, along with any reimbursement
required under Section 2.10 hereof. Concurrently with prepaying such Fixed
Rate Advances the affected Borrower shall borrow a Prime Rate Advance (or the
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other type of Fixed Rate Advance, if available) from such Bank, and such Bank
shall make such Advance in an amount such that the outstanding principal amount
of the applicable Note held by such Bank shall equal the outstanding principal
amount of such Note immediately prior to such prepayment.
Section 10.4 Effects on Other Advances. If notice has been given pursuant
to Sections 10.1, 10.2 or 10.3 suspending the obligation of any Bank to make
any type of Fixed Rate Advance, or requiring or permitting Fixed Rate Advances
of any Bank to be repaid or prepaid, then, unless and until such Bank notifies
the Borrower and the Agent that the circumstances giving rise to such
suspension or repayment no longer apply, all Advances which would otherwise be
made by such Bank as the type of Fixed Rate Advances affected shall be made
instead as Prime Rate Advances, or, if available, the other type of Fixed Rate
Advance, as specified by the affected Borrower.
ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement shall
be in writing and shall be deemed to have been given three (3) days after
deposit in the mail, designated as certified mail, return receipt requested,
post-prepaid, or one (1) day after being entrusted to a reputable commercial
overnight delivery service, or when sent out by telecopy addressed to the party
to which such notice is directed at its address determined as provided in this
Section 11.1. All notices and other communications under this Agreement shall
be given to the parties hereto at the following addresses:
(i) If to any Borrower, to it at:
Meredith/New Heritage Strategies Partners L.P.
c/o New Heritage Associates
2600 Grand Avenue
Third Floor
Des Moines, Iowa 50312
Attn: Mr. David Lundquist, Vice Chairman
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: John J. Sabl, Esq.
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(ii) If to the Agent, to it at:
The Toronto-Dominion Bank Trust Company
42 Wall Street
New York, New York 10005
Attn: Vice President and Secretary
with a copy to:
The Toronto-Dominion Bank
USA Division
31 West 52nd Street
New York, New York 10019-6101
Attn: Emil D.Y. Fung
(iii) If to the Banks, to them at:
The Toronto-Dominion Bank
Three First National Plaza, 19th Floor
70 West Madison Street
Chicago, Illinois 60602
Attn: Manager Credit Administration
The Bank of New York
One Wall Street
16th Floor
New York, New York 10286
Attn: Vince Pacilio
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attn: Douglas Roper
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Sarah W. Rathjen, Senior Vice President
Bank of Montreal
430 Park Avenue, 16th Floor
New York, New York 10022
Attn: Toshie Davis
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CIBC, Inc.
200 West Madison, Suite 2300
Chicago, Illinois 60606
Attn: Rob Sabo
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Joseph P. Duggan
Connecticut National Bank
777 Main Street
MSN 397
Hartford, Connecticut 06115
Attn: Robert West
Bank of Hawaii
130 Merchant Street
Bancorp Tower, 20th Floor
Honolulu, Hawaii 96813
Attn: Buddy Montgomery
Copies shall be provided to Persons other than parties hereto only in the case
of notices under Article 8 hereof.
(b) Any party hereto may change the address to which notices shall
be directed under this Section 11.1 by giving ten (10) days' written notice of
such change to other parties.
Section 11.2 Expenses. The Borrowers will promptly pay:
(a) all reasonable out-of-pocket expenses of the Agent in connection
with the preparation, negotiation, execution and delivery of this Agreement and
other Loan Documents, and the transactions contemplated hereunder and
thereunder, and the making of the initial Advance hereunder on the Initial
Funding Date whether or not such Advance is made, including, but not limited
to, the reasonable fees and costs of Powell, Goldstein, Frazer & Murphy,
special counsel for the Agent;
(b) all reasonable out-of-pocket expenses of the Agent in connection
with the administration of the transactions contemplated in this Agreement or
the other Loan Documents, and the preparation, negotiation, execution and
delivery of any waiver, amendment or consent (other than those done in
connection with actions taken under subsection (c), below) by the Banks
relating to this Agreement or the other Loan Documents, including, but not
limited to, the reasonable fees and costs of any experts, agents or consultants
and of counsel for the Agent; and
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(c) all reasonable out-of-pocket costs and expenses of the Agent and
the Banks in obtaining performance under this Agreement or the other Loan
Documents and in connection with any restructuring, refinancing, or "work out"
of the transactions contemplated hereby and thereby, and all reasonable out-of-
pocket costs and expenses of collection if default is made in the payment of
the obligations, which in each case shall include reasonable fees and out-of-
pocket expenses and costs of any experts, agents, consultants and counsel for
the Agent and each Bank.
Section 11.3 Waivers. The rights and remedies of the Agent, the Co-
Agents, and the Banks under this Agreement and the other Loan Documents shall
be cumulative and not exclusive of any rights or remedies which they would
otherwise have. No failure or delay by the Agent, the Majority Banks or the
Banks, or any of them, in exercising any right shall operate as a waiver of
such right. The Agent and the Banks expressly reserve the right to require
strict compliance with the terms of this Agreement in connection with any
funding of a request for an Advance. In the event the Banks decide to fund a
request for an Advance at a time when the Borrower is not in strict compliance
with the terms of this Agreement, such decision by the Banks shall not be
deemed to constitute an undertaking by the Banks to fund any further requests
for Advances or preclude the Banks from exercising any rights available to the
Banks under the Loan Documents or at law or equity. Any waiver or indulgence
granted by the Banks or by the Majority Banks shall not constitute a
modification of this Agreement, except to the extent expressly provided in such
waiver or indulgence, or constitute a course of dealing by the Banks at
variance with the terms of the Agreement such as to require further notice by
the Banks of the Banks' intent to require strict adherence to the terms of this
Agreement and the Loan Documents in the future. Any such actions shall not in
any way affect the ability of the Agent and the Banks, in their discretion, to
exercise any rights available to them under this Agreement and the Loan
Documents or under any other agreement relating to the Borrower and its
Subsidiaries, whether or not the Agent and the Banks are party.
Section 11.4 Set-Off. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, upon the
occurrence of an Event of Default and during the continuation thereof, each of
the Agent, the Co-Agents and the Banks and any subsequent holder or holders of
the Notes are hereby authorized by each of the Borrowers at any time or from
time to time, without notice to any Borrower or to any other Person, any such
notice being hereby expressly waived, to set-off, appropriate and apply any and
all deposits (general or special, time or demand, including, but not limited
to, Indebtedness evidenced by certificates of deposit, in each case whether
matured or unmatured) and any other Indebtedness at any time held or owing by
any of the Agent, the Co-Agents, or the Banks or such holder to or for the
credit or the account of any Borrower, against and on account of the
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obligations and liabilities of such Borrower, to any of the Agent, the Co-
Agents, or the Banks or such holder under this Agreement, the Notes and any
other Loan Document, including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the Notes or any
other Loan Document, irrespective of whether or not (a) the Agent, on behalf of
the Co-Agents and the Banks, or the holder of the Notes, shall have made any
demand hereunder or (b) the Agent, on behalf of the Co-Agents and the Banks,
shall have declared the principal of and interest on the Loans and Notes and
other amounts due hereunder to be due and payable as permitted by Section 8.2
and although such obligations and liabilities, or any of them, shall be
contingent or unmatured. Any sums obtained by any Co-Agent or Bank or by any
subsequent holder of the Notes shall be subject to the application of payment
provisions of Section 2.11 hereof. The Agent will notify such Borrower within
three (3) Business Days after the exercise of set-off rights under this
Section.
Section 11.5 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder, under the Notes or under the other Loan Documents
without the prior written consent of each Bank.
(b) Each Bank may enter freely into participation agreements with
respect to or otherwise grant participations in the Loans to one or more banks
or other financial institutions organized under the laws of the United States
of America or a state thereof, or which have a branch located in the United
States of America; provided, however, that (i) such Bank's obligations
hereunder shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall not be entitled by the benefit of its
participation to vote or otherwise take action under this Agreement or any
other Loan Document, except with respect to items (b), (c), (d) and (e) of
Section 11.12 hereof, (iv) the Borrower shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and obligations
hereunder, (v) such Bank shall not sell more than forty-nine percent (49%) of
its interest in the Loans through participations, and (vi) each participation
shall be in a principal amount of not less than $5,000,000. In addition, each
Bank (x) may also sell or assign up to one hundred percent (100%) of its rights
hereunder to any of its affiliates or any Federal Reserve Bank without
limitation, and (y) may sell or assign up to forty-nine percent (49%) of its
rights hereunder and under the other Loan Documents on an assignment basis,
provided that (A) the Borrower has given prior written consent to the identity
of any proposed assignee of a Bank hereunder, which consent shall not be
unreasonably delayed or withheld, (B) the assignee assumes a pro rata share of
the assignor Bank's obligations hereunder determined by the percentage of the
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Commitment assigned, for the period from the date of the assignment through the
Maturity Date, and (C) each such assignment shall be in a principal amount of
not less than $10,000,000. Each Bank who sells or assigns a portion of its
Loans pursuant hereto shall pay to the Agent an assignment fee of $2,500 with
respect to each assignment, such fee to be paid to the Agent not later than the
effective date of the assignment of the Loans relating thereto. Each Bank
agrees to provide the Agent and the Borrower with written notice of the
assignment of all or any part of its rights hereunder, and the Agent shall keep
a record of all such assignments in order to be able to calculate the
Commitment Ratios of the Banks as of any time. All assignments by any of the
Banks of any interests hereunder shall be made pursuant to an Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit W.
Each Bank may provide any proposed participant or assignee with confidential
information provided to such Bank regarding the Borrower and its Subsidiaries
on a confidential basis, and such participant or assignee shall agree to
maintain such confidentiality. Further, each permitted assignee of any portion
of the Loans shall be entitled to the benefits of Sections 2.10, 2.12 and
Article 10 hereof and all other provisions hereof and of the other Loan
Documents as a 'Bank' hereunder.
(c) Nothing in this Agreement, the Notes or the other Loan
Documents, expressed or implied, is intended to or shall confer on any Person
other than the respective parties hereto and thereto and their successors and
assignees permitted hereunder and thereunder any benefit or any legal or
equitable right, remedy or other claim under this Agreement, the Notes or the
other Loan Documents.
Section 11.6 Accounting Principles; Materiality. All references in this
Agreement to generally accepted accounting principles shall be to such
principles as in effect from time to time in the United States. All accounting
terms used herein without definition shall be used as defined under generally
accepted accounting principles. Unless otherwise indicated, all defined terms
of an accounting or financial nature referring to the Borrower shall include
the Borrower and its Subsidiaries on a consolidated basis. Unless otherwise
expressly indicated, the word 'material' when used in reference to the Borrower
or its Subsidiaries, is intended to mean, 'material to the Borrower and its
Subsidiaries, taken as a whole.'
Section 11.7 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Governing Law, Etc. This Agreement and the other Loan
Documents shall be construed in accordance with and governed by the law of the
State of New York. The Borrower hereby irrevocably consents to personal
Page 86 of 122
<PAGE>
jurisdiction and venue in the trial courts of New York County, New York or the
United States District Court for the Southern District of New York over any
suit, action or proceeding arising out of or relating to this Agreement or any
Loan Document, or arising out of the obligations, and the Borrower hereby
irrevocably agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in such courts. The Borrower hereby
agrees that service of the summons and complaint and all other process which
may be served in any such suit, action or proceeding may be effected by mailing
by registered mail a copy of such process in care of CT Corporation System,
1633 Broadway, New York, New York 10009, and that personal service of process
shall not be required. Nothing herein shall be construed to prohibit service
of process by any other method permitted by law, or the bringing of any suit,
action or proceeding in any other jurisdiction. The Borrower agrees that final
judgment in such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
Section 11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 11.10 Interest.
(a) In no event shall the amount of interest due or payable
hereunder or under the Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by any
Borrower or inadvertently received by any Bank, then such excess sum shall be
credited as a payment of principal, unless such Borrower shall notify such Bank
in writing that it elects to have such excess sum returned forthwith. It is
the express intent hereof that the Borrowers not pay and the Banks not receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may legally be paid by any Borrower under Applicable Law.
(b) Notwithstanding the use by the Banks of the Prime Rate, the
Eurodollar Rate, the CD Rate and the Federal Funds Rate as reference rates for
the determination of interest on the Loans, the Banks shall be under no
obligation to obtain funds from any particular source in order to charge
interest to the Borrowers at interest rates tied to such reference rates.
Section 11.11 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
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<PAGE>
Section 11.12 Amendment and Waiver. Neither this Agreement nor any term
hereof may be amended orally, nor may any provision hereof be waived orally but
only by an instrument in writing signed by the Majority Banks and, in the case
of an amendment, by the Borrowers, except that in the event of (a) any increase
in the amount of the Commitments, (b) any change (by waiver or otherwise) in
the terms of repayment of the Loans provided in Section 2.7 hereof (waiver of a
prepayment provision being deemed not to constitute an extension of the date on
which principal repayment is due), (c) any forgiveness of principal, or any
reduction of the stated rate of interest or fees due hereunder, (d) any delay
in the timing of payments of principal, interest and fees due hereunder, (e)
the release or impairment of Collateral (other than releases of Collateral
permitted or consented to under Section 7.4 hereof) or the impairment of the
value of any Collateral for the Loans, in either case having a value in excess
of $5,000,000 in the aggregate during the term of this Agreement, or the
release of any guarantor under any Guaranty of all or any part of the
Obligations, or (f) any amendment of this Section 11.12 or of the definition of
Majority Banks, any amendment or waiver may be made only by an instrument in
writing signed by the Agent, each Co-Agent, and each of the Banks, and, in the
case of an amendment, by the Borrower. Notwithstanding the foregoing, any
amendment hereto required by the exercise of the rights of the Borrower under
Section 2.13 hereof may be effected by a writing signed only by the Borrowers,
the Agent, acting on behalf of the Co-Agents and the Banks, and the new Bank or
the Bank or Banks assuming additional Commitment.
Section 11.13 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement and the other documents described or contemplated herein
embody the entire Agreement and understanding among the parties hereto and
thereto and supersede all prior agreements and understandings relating to the
subject matter hereof and thereof.
Section 11.14 Other Relationships. No relationship created hereunder or
under any other Loan Document shall in any way affect the ability of the Agent
and each Co-Agent and Bank to enter into or maintain business relationships
with the Borrower or any of its Affiliates beyond the relationships
specifically contemplated by this Agreement and the other Loan Documents.
Section 11.15 Exhibits and Schedules. This Agreement is being executed
and delivered by the parties hereto prior to the Initial Funding Date, which is
the date on which the initial Advance of the Loans shall be made, the Security
Interest created, and North Central and the Meyer Systems acquired by the
Borrower. Accordingly, the Schedules reflect the Borrower's best judgment on
the Agreement Date as to their likely form on the Initial Funding Date, after
giving effect to the acquisition by the Borrower of the Meyer Systems and North
Central. The Borrower agrees to update the Schedules prior to the Initial
Funding Date in form and substance reasonably acceptable to all parties
Page 88 of 122
<PAGE>
hereto. In addition, the form of certain of the various Exhibits to the Loan
Agreement has not yet been finalized. The parties hereto agree to negotiate in
good faith forms of the Exhibits to be executed on the Initial Funding Date or
thereafter (with respect to future Acquisitions and Investments) which are
reasonably acceptable to all parties hereto.
ARTICLE 12
Waiver of Jury Trial
Section 12.1 Waiver of Jury Trial. THE BORROWER HEREBY AGREES TO WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF
ANY TYPE IN WHICH THE BORROWER OR ANY OF ITS SUBSIDIARIES AND ANY OF THE AGENT
AND THE BANKS, OR ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS
TO ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT,
ANY OF THE NOTES OR THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE
PARTIES LISTED IN THIS SECTION 12.1.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: MEREDITH/NEW HERITAGE STRATEGIC
PARTNERS L.P., an Iowa limited
partnership
By its General Partner:
MEREDITH/NEW HERITAGE PARTNERSHIP
By a General Partner:
NEW HERITAGE ASSOCIATES, an Iowa
general partnership
By its General Partner:
INGERSOLL GROUP, INC., an Iowa
corporation
By:______________________________
Its:________________________
Page 89 of 122
<PAGE>
BUYER SUB: MEREDITH/NEW HERITAGE SUBSIDIARY,
INC., a Delaware corporation
By:______________________________
Its:________________________
AGENT: THE TORONTO-DOMINION BANK TRUST
COMPANY
By:______________________________
Its: 122___________________
CO-AGENTS THE BANK OF NEW YORK
By:______________________________
Its: 122___________________
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________________
Its: 122___________________
NATIONSBANK OF TEXAS, N.A.
By:______________________________
Its: 122___________________
BANKS: THE TORONTO-DOMINION BANK
By:______________________________
Its: 122___________________
THE BANK OF NEW YORK
By:______________________________
Its: 122___________________
THE FIRST NATIONAL BANK OF CHICAGO
By:______________________________
Its: 122___________________
NATIONSBANK OF TEXAS, N.A.
By:______________________________
Its: 122___________________
Page 90 of 122
<PAGE>
BANK OF MONTREAL
By:______________________________
Its: 122___________________
CIBC, INC.
By:______________________________
Its: 122___________________
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:______________________________
Its:________________________
CONNECTICUT NATIONAL BANK
By:______________________________
Its: 122___________________
BANK OF HAWAII
By:______________________________
Its: 122___________________
Page 91 of 122
<PAGE>
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), made as of this
1st day of September, 1992 among Meredith/New Heritage Strategic Partners L.P.,
a partnership among Meredith/New Heritage Partnership, Continental Cablevision
of Minnesota, Inc., and New Heritage Associates (the "Borrower"), North Central
Cable Communications Corporation ("North Central"), Meredith/New Heritage
Subsidiary, Inc. (the "Buyer Sub" and, collectively with the Borrower and North
Central, the "Borrowers"), The Toronto-Dominion Bank and the Banks named herein
whose names and signatures appear on the signature pages hereof (collectively,
the "Banks"), The Bank of New York, The First National Bank of Chicago, and
NationsBank of Texas, N.A. (collectively, the "Co-Agents"), and The Toronto-
Dominion Bank Trust Company, as agent for the Co-Agents and the Banks (the
"Agent"),
W I T N E S S E T H:
WHEREAS, the Agent, the Co-Agents, and the Banks are parties to that
certain Loan Agreement dated as of March 31, 1992 (the "Loan Agreement"); and
WHEREAS, the parties to the Loan Agreement wish to amend the Loan
Agreement by adding a new Bank, correcting certain definitions, making certain
other technical corrections, naming North Central as a Borrower under the Loan
Agreement, and changing the notices section, and the Banks, at the request of
the Borrower, wish to give their consent to an amendment to the North Central
Purchase Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree that all
capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Agreement, and further agree as follows:
1. Amendment to Article 1.
(a) New Definitions. Article 1 of the Loan Agreement, Definitions,
is hereby amended by adding the following definitions:
"Borrower Guaranty" shall mean that certain Borrower Guaranty
issued as of the Initial Funding Date by the Borrower in favor of the
Agent (on behalf of the Co-Agents and the Banks), in substantially the
form attached hereto as Exhibit Z, pursuant to which the Borrower
shall guaranty the Obligations of North Central under this Agreement.
Page 92 of 122
<PAGE>
"Collateral Assignment of Intercompany Notes" shall mean any
Collateral Assignment of Intercompany Notes issued by the Borrower or
any of its Subsidiaries in favor of the Agent (on behalf of the Co-
Agents and the Banks) dated, with respect to the Collateral Assignment
of Intercompany Notes given by the Borrower, as of the Initial Funding
Date, each in substantially the form attached hereto as Exhibit X.
(b) Amendments to Existing Definitions. (i) The definition of "Pledge
Agreement" shall be amended by the deletion of the second sentence
thereof.
(ii) In addition, the definition of "Commitment Ratios" shall be
changed by the deletion of the existing table therein and the substitution
of the following table therefor:
Bank Percentage Dollar Amount
The Toronto-Dominion
Bank 14.634146341% $ 30,000,000
The Bank of New York 12.195121951% $ 25,000,000
NationsBank of Texas, 12.195121951% $ 25,000,000
N.A.
Bank of Montreal 12.195121951% $ 25,000,000
CIBC, Inc. 12.195121951% $ 25,000,000
Credit Lyonnais
Cayman Island Branch 12.195121951% $ 25,000,000
Connecticut
National Bank 7.317073171% $ 15,000,000
The First National
Bank of Chicago 6.219512195% $ 12,750,000
Union Bank of
California 5.975609756% $ 12,250,000
Bank of Hawaii 4.878048780% $ 10,000,000
TOTAL 100% $205,000,000
Page 93 of 122
<PAGE>
2. Amendment to Section 5.15. Section 5.15 of the Loan Agreement, Merger
Covenant, is hereby amended by deleting the first sentence thereof in its
entirety and by substituting the following therefor:
"The Borrower covenants that it will, not later than the fifth (5th)
Business Day after the Initial Funding Date, merge the Buyer Sub and NCC
Holding Co., Inc. with North Central, after which mergers North Central
shall be the surviving entity."
3. Amendment to Section 7.7. Section 7.7 of the Loan Agreement,
Restricted Payments and Purchases, is hereby amended by deleting clause (2)
appearing therein in its entirety and by substituting the following therefor:
"(2) may repay Indebtedness for Money Borrowed permitted under Section
7.1(k) hereof."
4. Amendment to Section 11.1. Section 11.1 of the Loan Agreement,
Notices, is hereby amended by deleting clauses (ii) and (iii) of subsection (a)
appearing therein and by substituting the following therefor:
"(ii) If to the Agent, to it at:
The Toronto-Dominion Bank Trust Company
42 Wall Street
New York, New York 10005
Attn: Vice President and Secretary
with a copy to:
The Toronto-Dominion Bank
USA Division
31 West 52nd Street
New York, New York 10019-6101
Attn: Melissa Glass
and to:
The Toronto-Dominion Bank Trust Company
c/o The Toronto-Dominion Bank
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attn: Martha L. Gariepy
Page 94 of 122
<PAGE>
(iii) If to the Banks, to them at:
The Toronto-Dominion Bank
Three First National Plaza, 19th Floor
70 West Madison Street
Chicago, Illinois 60602
Attn: Manager Credit Administration
The Bank of New York
One Wall Street
16th Floor
New York, New York 10286
Attn: Vince Pacillio
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Attn: Richard Elmendorf
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Sarah W. Rathjen, Senior Vice President
Bank of Montreal
430 Park Avenue, 16th Floor
New York, New York 10022
Attn: Gretchen Shugart
CIBC, Inc.
425 Lexington Avenue
New York, New York 10017
Attn: Lelia Kelly
Credit Lyonnais Cayman Island Branch
1301 Avenue of the Americas
New York, New York 10019
Attn: Joseph P. Duggan
Connecticut National Bank
777 Main Street
MSN 397
Hartford, Connecticut 06115
Attn: Robert West
Page 95 of 122
<PAGE>
Bank of Hawaii
130 Merchant Street
Bancorp Tower, 20th Floor
Honolulu, Hawaii 96813
Attn: Buddy Montgomery
Union Bank of California
445 South Figueroa Street
15th Floor
Los Angeles, California 90071"
5. Consent. The Agent, the Co-Agents, and the Banks hereby consent to
the amendment of the North Central Purchase Agreement substantially in the form
attached hereto as Schedule 1.
6. No other Amendment or Waiver. Except for the amendments and consent
set forth above, the text of the Loan Agreement and all other Loan Documents
shall remain unchanged and in full force and effect. The amendments and waiver
agreed to herein shall not constitute a modification of the Loan Agreement or a
course of dealing with the Agent and the Banks, or any of them, at variance
with the Loan Agreement such as to require further notice by the Agent, the Co-
Agents, the Banks, the Majority Banks, or any of them, to require strict
compliance with the terms of the Loan Agreement, as amended by this Amendment,
and the other Loan Documents in the future.
7. Representations and Warranties. The Borrowers hereby represent and
warrant in favor of the Agent, the Co-Agents, and the Banks as follows:
(a) Each representation and warranty set forth in Article 4 of the Loan
Agreement is hereby restated and affirmed as true and correct as of the date
hereof;
(b) Each of the Borrowers has the corporate power and authority (i) to
enter into this Amendment, and (ii) to do all acts and things as are required
or contemplated hereunder to be done, observed and performed by it;
(c) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories, and constitutes the legal,
valid and binding obligation of the Borrowers, enforceable against them in
accordance with its terms; and
(d) The execution and delivery of this Amendment and performance by the
Borrowers under the Loan Agreement, as amended hereby, do not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over any Borrower which has not already
been obtained, nor be in contravention of or in conflict with the Certificate
Page 96 of 122
<PAGE>
or Articles of Incorporation, or By-Laws or Partnership Agreement of any
Borrower, or the provision of any statute, judgment, order, indenture,
instrument, agreement, or undertaking, to which any Borrower is party or by
which any Borrower's assets or properties are or may become bound.
8. Conditions Precedent to Effectiveness of Amendment. The effectiveness
of this Amendment is subject to receipt of any other documents that the Agent,
the Co-Agents, the Banks, or any of them, may reasonably request, certified by
an officer of any Borrower if so requested, and the execution and delivery
hereof by the Borrowers, the Agent and the Majority Banks.
9. Counterparts. This Amendment may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement.
10. Law of Contract. This Amendment shall be deemed to be made pursuant
to the laws of the State of New York with respect to agreements made and to be
performed wholly in the State of New York and shall be construed, interpreted,
performed and enforced in accordance therewith.
11. Effective Date. Upon satisfaction of the conditions precedent
referred to in Section 8 above, this Amendment shall be effective as of
September 1, 1992.
12. Loan Document. This Amendment shall be deemed to be a Loan Document
for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: MEREDITH/NEW HERITAGE STRATEGIC
PARTNERS L.P., an Iowa limited
partnership
By its General Partner:
MEREDITH/NEW HERITAGE PARTNERSHIP
By a General Partner:
NEW HERITAGE ASSOCIATES, an Iowa
general partnership
By its General Partner:
Page 97 of 122
<PAGE>
INGERSOLL GROUP, INC., an Iowa
corporation
By:
Its:
BUYER SUB: MEREDITH/NEW HERITAGE SUBSIDIARY,
INC., a Delaware corporation
By:
Its:
NORTH CENTRAL: NORTH CENTRAL CABLE COMMUNICATIONS
CORPORATION, a Delaware corporation
By:
Its:
AGENT: THE TORONTO-DOMINION BANK TRUST
COMPANY
BY:
Its:
CO-AGENTS: THE BANK OF NEW YORK
By:
Its:
Page 98 of 122
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:
Its:
NATIONSBANK OF TEXAS, N.A.
By:
Its:
BANKS: THE TORONTO-DOMINION BANK
By:
Its:
THE BANK OF NEW YORK
By:
Its:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Its:
NATIONSBANK OF TEXAS, N.A.
By:
Its:
Page 99 of 122
<PAGE>
BANK OF MONTREAL
By:
Its:
CIBC, INC.
By:
Its:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
Its:
CONNECTICUT NATIONAL BANK
By:
Its:
BANK OF HAWAII
By:
Its:
UNION BANK OF CALIFORNIA
By:
Its:
(Supplementary Exhibits and Schedules to this amendment to the loan agreement
are not included in this filing. Copies of any exhibits and/or schedules to
this amendment will be furnished upon request.)
Page 100 of 122
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (the "Amendment"), made as of this
31st day of December, 1993 among Meredith/New Heritage Strategic Partners L.P.,
a partnership among Meredith/New Heritage Partnership, Continental Cablevision
of Minnesota, Inc., and New Heritage Associates (the "Borrower"), and North
Central Cable Communications Corporation ("North Central" and, collectively
with the Borrower, the "Borrowers"), The Toronto-Dominion Bank and the Banks
named herein whose names and signatures appear on the signature pages hereof
(collectively, the "Banks"), The Bank of New York, The First National Bank of
Chicago, and NationsBank of Texas, N.A. as co-agents (collectively, the "Co-
Agents"), and Toronto Dominion (Texas), Inc., as agent for the Co-Agents and
the Banks (the "Agent"),
W I T N E S S E T H:
WHEREAS, the Borrowers and the Agent, the Co-Agents, and the Banks are
parties to that certain Loan Agreement dated as of March 31, 1992, as amended
by that certain First Amendment to Loan Agreement dated as of September 1, 1992
(the "Loan Agreement"); and
WHEREAS, the parties to the Loan Agreement wish to amend the Loan
Agreement by amending the financial covenants contained in Sections 7.7, 7.8,
7.11 and 7.12 and the Banks, the Co-Agents and the Agent are willing to consent
to such amendments as are provided herein, in consideration of the Amendment
Fee (as hereinafter defined);
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree that all
capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Agreement, and further agree as follows:
1. Amendment to Section 7.7. Section 7.7 of the Loan Agreement,
Restricted Payments and Purchases, is hereby amended by deleting existing
Section 7.7 in its entirety and by inserting in lieu thereof the following as a
new Section 7.7:
"Section 7.7 Restricted Payments and Purchases. The Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly declare or make any Restricted Payment or Restricted Purchase,
Page 101 of 122
<PAGE>
except that (i) the Borrower may (x) make the Earn-Out Payments, (y)
accrue Management Fees in an amount not to exceed five percent (5%) of the
gross revenues of the Borrower and its Subsidiaries on a consolidated
basis, and (z) make and permit intercompany transfers to, from, and among
its Subsidiaries, and (ii) so long as (x) no Default hereunder then exists
or would be caused thereby, and (y) the ratio of Operating Cash Flow (less
Management Fees paid or payable) to Interest Expense, for the most recent
quarter ended, prior to the proposed date of payment, for which financial
statements are available, is greater than 1.25:1, the Borrower (1) may pay
Management Fees then due and payable to the Manager under the Partnership
Agreement on a monthly basis in an aggregate amount not to exceed (A)
$420,000, in the aggregate during any fiscal quarter of the Borrower, for
the period from October 1, 1993 through June 30, 1994, (B) three percent
(3%) of the gross revenues of the Borrower and its Subsidiaries on a
consolidated basis for each fiscal quarter for the period from July 1,
1994 through March 31, 1995, (C) two and one-half percent (2-1/2%) of the
gross revenues of the Borrower and its Subsidiaries on a consolidated
basis for the period from April 1, 1995 through March 31, 1997, and (D)
two percent (2%) of the gross revenues of the Borrower and its
Subsidiaries on a consolidated basis for the period from April 1, 1997
through the Maturity Date, and (2) may repay Indebtedness for Money
Borrowed permitted under Section 7.1(k) hereof."
2. Amendment to Section 7.8. Section 7.8 of the Loan Agreement, Total
Indebtedness to Annualized Operating Cash Flow Ratio, is hereby amended by
deleting the last six periods in the table contained therein and the
corresponding ratios, and by substituting the following periods and
corresponding ratios in lieu thereof:
"Period Ratio
December 31, 1993 5.95:1
March 31, 1994 5.90:1
June 30, 1994 5.75:1
September 30, 1994 5.00:1
December 31, 1994 4.75:1
March 31, 1995 and 4.50:1
June 30, 1995
September 30, 1995 and 4.00:1
thereafter"
Page 102 of 122
<PAGE>
3. Amendment to Section 7.11. Section 7.11 of the Loan Agreement,
Annualized Operating Cash Flow to Pro Forma Debt Service Requirements Ratio,
shall be amended by adding thereto at the end of the existing text the
following sentence:
"Notwithstanding anything in this Section 7.11 which may be construed to
impose any other requirement, for the calendar quarters of the Borrower
ending March 31, 1994 and June 30, 1994, the Borrower shall not permit the
ratio of its Annualized Operating Cash Flow to its Pro Forma Debt Service
Requirements to be less than 1.0 to l."
4. Amendment to Section 7.12. Section 7.12 of the Loan Agreement,
Operating Cash Flow to Fixed Charges Ratio, shall be amended by deleting
existing Section 7.12 in its entirety and by substituting in lieu thereof the
following as a new Section 7.12:
"Section 7.12 Operating Cash Flow to Fixed Charges Ratio. As of the
end of each fiscal quarter of the Borrower (a) ending on June 30, 1994,
the Borrower shall not permit the ratio of its Operating Cash Flow for the
immediately preceding four fiscal quarters to its Fixed Charges for such
period to be less than 0.9 to 1 and (b) ending on or after July 1, 1994,
the Borrower shall not permit the ratio of its Operating Cash Flow for the
immediately preceding four fiscal quarters to its Fixed Charges for such
period to be less than 1.0 to l."
5. Reduction in Commitment. The Borrower hereby gives irrevocable notice
to the Banks, the Co-Agents and the Agent, pursuant to Section 2.5 of the Loan
Agreement, that the Commitment shall be permanently reduced by $7,000,000 to
$138,000,000 as of December 13, 1993. The foregoing notice and reduction in
Commitment shall be irrevocable.
6. Representations and Warranties. The Borrowers hereby represent and
warrant in favor of the Agent, the Co-Agents and the Banks as follows:
(a) The Borrowers have the partnership and corporate power and
authority, as the case may be, (i) to enter into this Amendment and (ii)
to do all other acts and things as are required or contemplated hereunder
to be done, observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrowers and
constitutes the legal, valid and binding obligations of the Borrowers,
enforceable against them in accordance with its terms;
Page 103 of 122
<PAGE>
(c) The execution and delivery of this Amendment and the performance
by the Borrowers under the Loan Agreement and the other Loan Documents to
which it is a party, as amended hereby, do not and will not require the
consent or approval of any regulatory authority or governmental authority
or agency having jurisdiction over either Borrower which has not already
been obtained, nor contravene or conflict with, the partnership agreement
or other similar agreement of the Borrower, or the articles of
incorporation or by-laws of North Central, or the provision of any
statute, judgment, order, indenture, instrument, agreement, or
undertaking, to which either Borrower is a party or by which any of their
respective assets or properties are or may become bound; and
(d) As of the effective date of this Amendment, (i) no Default or
Event of Default exists or is caused by this Amendment, and (ii) each
representation and warranty set forth in Article 4 of the Loan Agreement
is hereby restated and affirmed as true and correct in all material
respects as of the date hereof, except to the extent previously
fulfilled in accordance with the terms of the Loan Agreement, as amended
hereby, and to the extent relating specifically to the Agreement Date.
7. Conditions Precedent. The effectiveness of this Amendment is subject
to the prior fulfillment of each of the following conditions:
(a) The Agent shall have received such documents, instruments,
consents or items as the Agent shall deem appropriate; and
(b) The Agent, for the account of each of the Banks, shall have
received from the Borrower an amendment fee (the "Amendment Fee") by wire
transfer of immediately available funds equal to the product of (i) each
Bank's pro rata portion of the Commitment as of the date of this
Amendment, times (ii) 0.00125.
8. No Other Amendment or Waiver. Except for the amendments set forth or
referred to above, the text of the Loan Agreement and all other Loan Documents
shall remain unchanged and in full force and effect. The Borrower acknowledges
and expressly agrees that the Agent, the Co-Agents, and the Banks reserve the
right to, and do in fact, require strict compliance with all terms and
provisions of the Loan Agreement.
9. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
Page 104 of 122
<PAGE>
10. Law of Contract. This Amendment shall be deemed to be made pursuant
to the laws of the State of New York with respect to agreements made and to be
performed wholly in the State of New York and shall be construed, interpreted,
performed and enforced in accordance therewith.
11. Effective Date. Upon satisfaction of the conditions precedent
referred to in Section 7 above, this Amendment shall be effective as of
December 31, 1993.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment or caused
it to be executed under seal by their duly authorized officers, all as of the
day and year first above written.
BORROWER: MEREDITH/NEW HERITAGE
STRATEGIC PARTNERS L.P., an Iowa
limited partnership
By its General Partner:
MEREDITH/NEW HERITAGE
PARTNERSHIP
By a General Partner:
NEW HERITAGE ASSOCIATES, an Iowa
general partnership
By its General Partner:
INGERSOLL GROUP, INC., an Iowa
corporation
By:
Its:
NORTH CENTRAL: NORTH CENTRAL CABLE
COMMUNICATIONS CORPORATIONS,
a Delaware corporation
By:
Its:
Page 105 of 122
<PAGE>
AGENT: THE TORONTO-DOMINION BANK TRUST
COMPANY
By:
Its:
CO-AGENTS: THE BANK OF NEW YORK
By:
Its:
THE FIRST NATIONAL BANK OF CHICAGO
By:
Its:
NATIONSBANK OF TEXAS, N.A.
By:
Its:
BANKS: THE TORONTO-DOMINION BANK
By:
Its:
THE BANK OF NEW YORK
By:
Its:
Page 106 of 122
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By:
Its:
NATIONSBANK OF TEXAS, N.A.
By:
Its:
BANK OF MONTREAL
By:
Its:
CIBC, INC.
By:
Its:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
Its:
CONNECTICUT NATIONAL BANK
By:
Its:
Page 107 of 122
<PAGE>
BANK OF HAWAII
By:
Its:
UNION BANK
By:
Its:
THIRD AMENDMENT TO LOAN AGREEMENT
AND AMENDMENT TO NOTES
THIS THIRD AMENDMENT TO LOAN AGREEMENT AND AMENDMENT TO NOTES (the
"Amendment"), made as of this 31st day of March, 1994, among Meredith/New
Heritage Strategic Partners L.P., a partnership among Meredith/New Heritage
Partnership, Continental Cablevision of Minnesota, Inc., and New Heritage
Associates (the "Borrower"), North Central Cable Communications Corporation
("North Central" and, collectively with the Borrower, the "Borrowers"), The
Toronto-Dominion Bank and the Banks named herein whose names and signatures
appear on the signature pages hereof (collectively, the "Banks"), The Bank of
New York, The First National Bank of Chicago, and NationsBank of Texas, N.A.
(collectively, the "Co-Agents"), and Toronto Dominion (Texas), Inc., as agent
for the Co-Agents and the Banks (the "Agent"),
W I T N E S S E T H:
WHEREAS, the Borrowers, the Agent, the Co-Agents, and the Banks are
parties to that certain Loan Agreement dated as of March 31, 1992, as amended
by that certain First Amendment to Loan Agreement dated as of September 1,
1992, and as further amended by that certain Second Amendment to Loan Agreement
dated as of December 31, 1993 (collectively, the "Loan Agreement"); and
WHEREAS, the parties to the Loan Agreement wish to amend the Loan
Agreement and the Notes (a) to extend the Conversion Date, (b) to amend the
loan amortization schedule, and (c) as otherwise set forth herein;
Page 108 of 122
<PAGE>
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties agree that all
capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Agreement, and further agree as follows:
1. Amendment to Article 1. Article 1 of the Loan Agreement,
Definitions, is hereby amended by deleting the existing definition of
"Conversion Date" in its entirety and by substituting in lieu thereof the
following:
"'Conversion Date' shall mean June 30, 1994."
2. Amendment to Section 2.7. Section 2.7 of the Loan Agreement,
Repayment, is hereby amended by deleting existing Section 2.7(a) in its
entirety and by substituting in lieu thereof the following:
"(a) Scheduled Repayments. Commencing on September 30, 1994,
the principal balance of the Loans outstanding on the Conversion Date
shall be amortized by the Borrower and North Central, on a pro rata
basis, in consecutive quarterly installments on September 30,
December 31, March 31, and June 30 of each year until paid in full,
in such amounts as follows:
Percent of
Principal
Outstanding on
the Conversion
Date Due on the
Last Day of
Ouarters Ended Each Ouarter
September 30, 1994
December 31, 1994, March 31, 1995 1.9%
June 30, 1995, September 30, 1995,
December 31, 1995, March 31, 1996 2.4%
June 30, 1996, September 30, 1996,
December 31, 1996, March 31, 1997 3.6%
June 30, 1997, September 30, l997,
December 31, 1997, March 31, 1998 4.0%
June 30, 1998, September 30, 1998,
December 31, 1998, March 31, 1999 2.95%
Page 109 of 122
<PAGE>
June 30, 1999, September 30, 1999,
December 31, 1999, March 31, 2000 5.1%
June 30, 2000, September 30, 2000,
December 31, 2000, March 31, 2001 5.525%"
3. Amendment to Notes. Each of the Notes is hereby amended to conform
to the amendments made in the foregoing Section 1 and Section 2 hereof.
4. No Other Amendment or Waiver. Except for the amendments set forth
above, the text of the Loan Agreement and all other Loan Documents shall remain
unchanged and in full force and effect. The Borrower acknowledges and
expressly agrees that the Agent, the Co-Agents, and the Banks reserve the right
to, and do in fact, require strict compliance with all terms and provisions of
the Loan Agreement.
5. Representations and Warranties. The Borrowers hereby represent and
warrant in favor of the Agent, the Co-Agents, and the Banks as follows:
(a) The Borrowers have the partnership and corporate power and
authority, as the case may be, (i) to enter into this Amendment, and (ii) to do
all acts and things as are required or contemplated hereunder to be done,
observed and performed by it;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrowers, and
constitutes the legal, valid and binding obligation of the Borrowers,
enforceable against them in accordance with its terms;
(c) The execution and delivery of this Amendment and performance by
the Borrowers under the Loan Agreement, as amended hereby, do not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over any Borrower which has not already
been obtained, nor contravene or conflict with the partnership agreement or
other similar agreement of the Borrower, or the articles of incorporation or
by-laws of North Central, or the provision of any statute, judgment, order,
indenture, instrument, agreement, or undertaking, to which either Borrower is
party or by which any of their respective assets or properties are or may
become bound; and
(d) As of the effective date of this Amendment, (i) no Default or
Event of Default exists or is caused by this Amendment, and (ii) each
representation and warranty set forth in Article 4 of the Loan Agreement is
hereby restated and affirmed as true and correct in all material respects as of
the date hereof, except to the extent previously fulfilled in accordance with
the terms of the Loan Agreement, as amended hereby, and to the extent relating
specifically to the Agreement Date.
Page 110 of 122
<PAGE>
6. Conditions Precedent to Effectiveness of Amendment. The
effectiveness of this Amendment is subject to receipt of any documents that the
Agent may reasonably request, and the execution and delivery hereof by the
Borrowers, the Agent, the Co-Agents and the Majority Banks.
7. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
8. Law of Contract. This Amendment shall be deemed to be made pursuant
to the laws of the State of New York with respect to agreements made and to be
performed wholly in the State of new York and shall be construed, interpreted,
performed and enforced in accordance therewith.
9. Effective Date. Upon satisfaction of the conditions precedent
referred to in Section 6, above, this Amendment shall be effective as of March
31, 1994.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: MEREDITH/NEW HERITAGE STRATEGIC
PARTNERS L.P., an Iowa limited
partnership
By its General Partner:
MEREDITH/NEW HERITAGE PARTNERSHIP
By a General Partner:
NEW HERITAGE ASSOCIATES, an Iowa
general partnership
By its General Partner:
INGERSOLL GROUP, INC., an Iowa
corporation
By:______________________________
Its:__________________________
Page 111 of 122
<PAGE>
NORTH CENTRAL: NORTH CENTRAL CABLE COMMUNICATIONS
CORPORATION, a Delaware corporation
By:_______________________________
Its:___________________________
AGENT: TORONTO DOMINION (TEXAS), INC.
By:_______________________________
Its:___________________________
CO-AGENTS: THE BANK OF NEW YORK
By:_______________________________
Its:___________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________
Its:___________________________
NATIONSBANK OF TEXAS, N.A.
By:_______________________________
Its:___________________________
BANKS: THE TORONTO-DOMINION BANK
By:_______________________________
Its:___________________________
Page 112 of 122
<PAGE>
THE BANK OF NEW YORK
By:_______________________________
Its:___________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________
Its:___________________________
NATIONSBANK OF TEXAS, N.A.
By:_______________________________
Its:___________________________
BANK OF MONTREAL
By:_______________________________
Its:___________________________
CIBC, INC.
By:_______________________________
Its:___________________________
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:_______________________________
Its:___________________________
Page 113 of 122
<PAGE>
SHAWMUT BANK, N.A.
By:_______________________________
Its:___________________________
BANK OF HAWAII
By:_______________________________
Its:___________________________
UNION BANK OF CALIFORNIA
By:_______________________________
Its:___________________________
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
GRAND CAYMAN BRANCH
By:_______________________________
Its:___________________________
FOURTH AMENDMENT TO LOAN AGREEMENT
AND AMENDMENT TO NOTES
THIS FOURTH AMENDMENT TO LOAN AGREEMENT AND AMENDMENT TO NOTES (the
"Amendment"), made as of this 29th day of December, 1994, among Meredith/New
Heritage Strategic Partners L.P., a partnership among Meredith/New Heritage
Partnership, Continental Cablevision of Minnesota, Inc., and New Heritage
Associates (the "Borrower"), North Central Cable Communications Corporation
("North Central" and, collectively with the Borrower, the "Borrowers"), The
Toronto-Dominion Bank and the Banks named herein whose names and signatures
appear on the signature pages hereof (collectively, the "Banks"), The Bank of
Page 114 of 122
<PAGE>
New York, The First National Bank of Chicago, and NationsBank of Texas, N.A.
(collectively, the "Co-Agents"), and Toronto Dominion (Texas), Inc., as agent
for the Co-Agents and the Banks (the "Agent"),
W I T N E S S E T H:
WHEREAS, the Borrowers, the Agent, the Co-Agents, and the Banks are
parties to that certain Loan Agreement dated as of March 31, 1992, as amended
by that certain First Amendment to Loan Agreement dated as of September 1,
1992, by that certain Second Amendment to Loan Agreement dated as of December
31, 1993, and by that Third Amendment to Loan Agreement and Amendment to Notes
dated as of March 31, 1994 (collectively, the "Loan Agreement"); and
WHEREAS, the Borrower has entered into a letter of intent with Sioux Falls
Cable, a general partnership of which Midco of South Dakota, Inc. and Liberty
of South Dakota, Inc. are general partners (the "Purchaser"), to sell the Meyer
Systems to the Purchasers on or before March 31, 1995; and
WHEREAS, the Borrowers intend to locate a purchaser for the North Central
Systems and to complete the sale of the North Central Systems no later than
March 31, 1996; and
WHEREAS, the Borrowers have requested that the Loan Agreement be amended
so as to accommodate the Borrowers in completing the above-referenced sales;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree that
all capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement, and further agree as follows:
1. Amendment to Article 1. Article 1 of the Loan Agreement, Definitions,
is hereby amended by deleting the existing definition of "Maturity Date" in its
entirety and by substituting in lieu thereof the following:
"'Maturity Date' shall mean the earliest of (i) March 31, 1996,
(ii) the date of the sale of all or the remaining portion of the Systems,
or (iii) any earlier date on which payment of the Loans under the
Commitments shall be due (whether by acceleration or otherwise)."
2. Amendment to Section 2.7. Section 2.7 of the Loan Agreement,
Repayment, is hereby amended by deleting existing Sections 2.7(a) and 2.7(b) in
the entirety and by substituting in lieu thereof the following:
Page 115 of 122
<PAGE>
"(a) Repayments From Contemplated Sales of Systems. The principal
balance of the Loans outstanding shall be paid by the Borrowers as
follows:
"(l) Upon the earlier of (i) June 30, 1995, and (ii) the sale of
the Meyer Systems, the Borrowers shall pay an amount equal to the
greater of (y) the Net Proceeds from the sale of the Meyer Systems,
if any or (z) $44,250,000.
"(2) A final payment of all principal amounts and other
obligations hereunder then outstanding shall be due and payable in
full on the Maturity Date.
"(b) Repayment in Connection with Commitment Reduction or From Other
Asset Sales. In addition to payments required under Section 2.7(a)
hereof, the Borrowers shall repay outstanding principal of the Loans from
time to time as necessary in order to comply with Section 2.5 hereof and,
in the event of the sale of assets or the stock or other ownership
interests of a Subsidiary of the Borrower permitted under Section 7.4
hereof (other than sales of immaterial assets, or sales of assets in the
ordinary course of business, other than the sale of certain stock owned by
North Central in QVC Network, Inc., any proceeds of the sale of which may
be applied to pay any required refunds to Basic Subscribers or to working
capital), the Borrower or North Central, as appropriate, shall, on the
date of such sale, make a repayment of the principal of the Loans then
outstanding in an amount equal to the Net Proceeds of such sale. Such
repayments from the Net Proceeds of asset sales shall permanently reduce
the outstanding principal balance of the Loans. Any Net Proceeds which
constitute a portion of the sales price which was previously held in
escrow or which is paid pursuant to a promissory note or other instrument
constituting a portion of the purchase price for any such sale shall be
paid by the Borrower or North Central, as appropriate, to the Agent for
the benefit of the Banks as a repayment of principal within two (2)
Business Days from the date such Net Proceeds are received by the Borrower
or North Central."
3. Amendment to Section 7.8 Section 7.8 of the Loan Agreement, Total
Indebtedness to Annualized Operating Cash Flow Ratio, is hereby amended by
deleting existing Section 7.8 in its entirety and by substituting in lieu
thereof the following:
"Section 7.8 Total Indebtedness to Annualized Operating Cash Flow
Ratio. The Borrower shall not permit the ratio of its Total Indebtedness
to its Annualized Operating Cash Flow to exceed the ratio set forth below
for each fiscal quarter ending on the dates shown below:
Page 116 of 122
<PAGE>
Dates Ratio
December 31, 1994 5.85:1
March 31, 1995 5.85:1
June 30, 1995 5.20:1
September 30, 1995 and thereafter 4.50:1
For purposes of this Section 7.8, "Annualized Operating Cash flow" shall
not include any portion of Operating Cash Flow which would have otherwise
been included in respect of any Subsidiary of the Borrower or portion of
the System which has been sold, for the fiscal period in which the sale
occurs."
4. Amendment to Section 7.10. Section 7.10 of the Loan Agreement,
Capital Expenditures, is hereby amended by deleting existing Section 7.10 in
its entirety and by substituting in lieu therefor the following:
"Section 7.10 Capital Expenditures. During the period set forth
below, the Borrower shall not permit the aggregate amount of Capital
Expenditures of the Borrower and its Subsidiaries to exceed the sum of
(a) the limit set forth below for such quarter, plus (b) any unexpended
portion of the Capital Expenditures limit for the immediately preceding
quarter.
Capital
Quarter Expenditure Limit
December 31, 1994 $4,000,000
March 31, 1995 $2,350,000
June 30, 1995 $2,550,000
September 30, 1995 $2,985,000
December 31, 1995 $3,450,000
March 31, 1996 $2,400,000"
5. Deletion of Section 7.11. Section 7.11 of the Loan Agreement,
Annualized Operating Cash Flow to Pro Forma Debt Service Requirements Ratio, is
hereby deleted in its entirety.
6. Deletion of Section 7.12. Section 7.12 of the Loan Agreement,
Operating Cash Flow to Fixed Charges Ratio, is hereby deleted in its entirety.
Page 117 of 122
<PAGE>
7. Amendment to Notes. Each of the Notes is hereby amended to conform
to the amendments made in the foregoing Section 1 and Section 2 hereof.
8. Waiver. The Agent, the Co-Agents, and each of the Banks hereby waive
the Default and Event of Default that occurred and has been in existence, as a
result of North Central's failure to pledge the QVC stock owned by it and
referenced in Section 2.7(b) of the Loan Agreement, as amended by this
Amendment.
9. No Other Amendment or Waiver. Except for the amendments expressly
set forth above, the text of the Loan Agreement and all other Loan Documents
shall remain unchanged and in full force and effect. The Borrowers
acknowledges and expressly agree that the Agent, the Co-Agents, and the Banks
reserve the right to, and do in fact, require strict compliance with all terms
and provisions of the Loan Agreement.
10. Representations and Warranties. The Borrowers hereby represent and
warrant in favor of the Agent, the Co-Agents, and the Banks as follows:
(a) The Borrowers have the partnership and corporate power and
authority, as the case may be, (i) to enter into this Amendment, and (ii) to do
all acts and things as are required or contemplated hereunder to be done,
observed and performed by them;
(b) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrowers, and
constitutes the legal, valid and binding obligation of the Borrowers,
enforceable against them in accordance with its terms;
(c) The execution and delivery of this Amendment and performance by
the Borrowers under the Loan Agreement, as amended hereby, do not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over either Borrower which has not
already been obtained, nor contravene or conflict with the charter documents of
either Borrower, or the provision of any statute, judgment, order, indenture,
instrument, agreement, or undertaking, to which either Borrower is party or by
which any of their respective assets or properties are or may become bound; and
(d) As of the Effective Date of, and after giving effect to this
Amendment, (i) no Default or Event of Default exists or is caused by this
Amendment, and (ii) each representation and warranty set forth in Article 4 of
the Loan Agreement is hereby restated and affirmed as true and correct in all
material respects as of such date hereof, except to the extent previously
fulfilled in accordance with the terms of the Loan Agreement, as amended
hereby, and to the extent relating specifically to the Agreement Date.
Page 118 of 122
<PAGE>
11. Conditions Precedent to Effectiveness of Amendment. This Amendment
shall be effective on the date (the "Effective Date") on which the following
conditions precedent have been satisfied:
(a) The Borrower shall have paid to the Agent, for the account of
the banks, an amendment fee in the amount of .25% of the principal balance of
the Loans outstanding as of the date of this Amendment;
(b) The Borrowers, Banks, Agent and Co-Agent shall have executed and
delivered this Amendment; and
(c) The Borrowers shall execute and deliver such other documents
that the Agent may reasonably request.
12. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement.
13. Law of Contract. This Amendment shall be deemed to be made pursuant
to the laws of the State of New York with respect to agreements made and to be
performed wholly in the State of new York and shall be construed, interpreted,
performed and enforced in accordance therewith.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as
of the day and year first above written.
BORROWER: MEREDITH/NEW HERITAGE STRATEGIC
PARTNERS L.P., an Iowa limited
partnership
By its General Partner:
MEREDITH/NEW HERITAGE PARTNERSHIP
By a General Partner:
NEW HERITAGE ASSOCIATES, an Iowa
general partnership
By its General Partner:
INGERSOLL GROUP, INC., an Iowa
corporation
By:___________________________________
Its:_______________________________
Page 119 of 122
<PAGE>
NORTH CENTRAL: NORTH CENTRAL CABLE COMMUNICATIONS
CORPORATION, a Delaware corporation
By:__________________________________
Its:______________________________
AGENT: TORONTO DOMINION (TEXAS), INC.
By:__________________________________
Its:______________________________
CO-AGENTS: THE BANK OF NEW YORK
By:__________________________________
Its:______________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________________
Its:______________________________
NATIONSBANK OF TEXAS, N.A.
By:__________________________________
Its:______________________________
BANKS: THE TORONTO-DOMINION BANK
By:__________________________________
Its:______________________________
Page 120 of 122
<PAGE>
THE BANK OF NEW YORK
By:__________________________________
Its:______________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:__________________________________
Its:______________________________
NATIONSBANK OF TEXAS, N.A.
By:__________________________________
Its:______________________________
BANK OF MONTREAL
By:__________________________________
Its:______________________________
CIBC INC.
By:__________________________________
Its:______________________________
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:__________________________________
Its:______________________________
Page 121 of 122
<PAGE>
SHAWMUT BANK, N.A.
By:__________________________________
Its:______________________________
UNION BANK OF CALIFORNIA
By:__________________________________
Its:______________________________
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR GRAND CAYMAN BRANCH
By:__________________________________
Its:______________________________
Page 122 of 122
Exhibit 10a
-----------
MEREDITH CORPORATION
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the 1992 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: Jack D. Rehm
DATE OF GRANT: August 10, 1994
DATE OF EXPIRATION: August 10, 2004
NUMBER OF SHARES COVERED BY THIS AWARD: 16,014
OPTION PRICE: $46.25
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between Meredith Corporation, an Iowa corporation (the "Company") and the
Optionee named above pursuant to the provisions of the Plan. The parties
hereto agree as follows:
1. Grant of Stock Option. The Company hereby grants to Optionee the
Option to purchase the number of shares of Common Stock of the Company, $1.00
par value ("Common Stock") set forth above at the stated Option Price, which is
100% of the Fair Market Value on the Date of Grant, subject to the terms and
conditions of the Plan and this Agreement.
2. Exercise of Stock Option. As long as the vesting requirements
provided herein are met and the Option has not otherwise terminated or expired,
the Optionee may exercise in whole or in part this Option at any time after the
passage of six months from the Date of Grant. The Option shall vest with
respect to all shares covered by this award on February 10, 2004, provided,
however, that the Option will vest prior to such date with respect to all or a
portion of the shares covered by this Grant in accordance with the attached
Exhibit A.
3. Procedure for Exercise of Options. This Option may be exercised by
giving written notice to the Company at its executive offices, addressed to the
attention of its Secretary. Such notice (a) shall be signed by the Optionee or
his legal representative; (b) shall specify the number of full shares then
elected to be purchased with respect to the Option; (c) unless a Registration
Statement under the Securities Act of 1933 is in effect with respect to the
Page 1 of 6
<PAGE>
shares to be purchased, shall contain a representation of Optionee that the
shares of Common Stock are being acquired by him or her for investment and with
no present intention of selling or transferring them, and that he or she will
not sell or otherwise transfer the shares except in compliance with all
applicable securities laws and requirements of any stock exchange upon which
the shares of Common Stock may then be listed; and (d) shall be accompanied by
payment in full of the Option Price of the shares to be purchased and
Optionee's copy of this Agreement.
The Option Price upon exercise of this Option shall be payable to the
Company in full either (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); (b)
by tendering previously acquired shares having an aggregate Fair Market Value
at the time of exercise equal to the total price of the shares for which the
Option is being exercised; (c) by a combination of (a) and (b); (d) by delivery
of a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale proceeds from
the option shares or loan proceeds to pay the exercise price and withholding
taxes due to Company; or (e) by such other methods of payment as the Committee
at its discretion deems appropriate.
As promptly as practicable after receipt of such notice and payment, the
Company shall cause to be issued and delivered to the Optionee or his or her
legal representative, as the case may be, certificates for the shares so
purchased. The Company shall maintain a record of all information pertaining
to Optionee's rights under this Agreement, including the number of shares for
which this Option is exercisable. If the Option shall have been exercised in
full, this Agreement shall be returned to the Company and canceled.
4. Termination of Employment by Death. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of death, then Optionee's rights under this Option shall terminate.
However, if at the date of Optionee's death, this Option is exercisable, then
Optionee's beneficiary (or such persons that have acquired Optionee's rights
under the Option by will or by the laws of descent and distribution) shall have
the same right to exercise this Option as Optionee had during his or her
lifetime, for a period ending on the earlier of (i) the Date of Expiration set
forth above, or (ii) one year following the date of death.
5. Termination of Employment by Disability. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Disability (as defined in the Plan), then Optionee's rights under
this Option shall terminate. However, if at the effective date of Optionee's
Disability this Option is exercisable, then Optionee shall have the same right
to exercise this Option as Optionee had during his or her employment for a
period ending on the earlier of (i) the Date of Expiration set forth above, or
(ii) one year following the date of the termination of employment.
Page 2 of 6
<PAGE>
6. Termination of Employment by Retirement. In the event Optionee's
employment with the Company is terminated by reason of Retirement (as defined
under the then-established rules of the Company's tax-qualified retirement
plans) prior to August 10, 1998, this Option shall continue to be subject to
the vesting schedule described in Exhibit A, notwithstanding the termination of
employment. Optionee shall have the right to exercise this Option following
Retirement for a period ending on the earlier of (i) the Date of Expiration set
forth above or (ii) four years following the Retirement date.
7. Termination of Employment for Other Reasons. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated for
reasons other than his or her death, Disability or Retirement then Optionee's
rights under this Option shall terminate. However, the Committee, in its sole
discretion, shall have the right to allow for an exercise period of up to 30
days after the date of such termination, provided that, in no event shall this
extension period continue beyond the Date of Expiration set forth above. In
addition, any such extension shall be applicable only to the extent that this
Option is exercisable at the date of termination of employment.
8. Restrictions on Transfer. This Option may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Further, this Option shall be
exercisable during Optionee's lifetime only by Optionee or Optionee's legal
representative.
9. Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company affecting the shares, such adjustment shall be made in
the number and class of shares subject to this Option, as may be determined to
be appropriate and equitable by the Committee in its sole discretion, to
prevent dilution or enlargement of rights; and provided that the number of
Shares subject to this Option shall always be rounded to the nearest whole
number.
10. Rights as a Stockholder. Optionee shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to this Agreement until such time as the purchase price has been paid and the
shares have been issued and delivered to him or her.
11. Continuation of Employment. This Agreement shall not confer upon
Optionee any right to continuation of employment by the Company, nor shall this
Agreement interfere in any way with the Company's right to terminate his or her
employment at any time.
Page 3 of 6
<PAGE>
12. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject
to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. The Committee shall
have the right to impose such restrictions on any shares acquired pursuant
to the exercise of this Option, as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities laws,
under the requirements of any stock exchange or market upon which such
shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such shares.
It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or appropriate
to the administration of the Plan and this Agreement, all of which shall
be binding upon Optionee. Any inconsistency between this Agreement and
the Plan shall be resolved in favor of the Plan. All terms used herein
shall have the same meaning as in the Plan document.
(b) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way adversely affect
Optionee's rights under this Agreement.
(c) The Company shall have the authority to deduct or withhold, or
require Optionee to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes (including Optionee's FICA obligation)
required by law to be withheld with respect to any exercise of Optionee's
rights under this Agreement without Optionee's written consent.
Optionee may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the
Company withhold shares of Common Stock having an aggregate Fair Market
Value, on the date the tax is to be determined, equal to the amount
required to be withheld. All elections shall be irrevocable and in
writing, and shall be signed by Optionee in advance of the day that the
transaction becomes taxable.
(d) Optionee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Optionee's rights under this Agreement.
(e) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
Page 4 of 6
<PAGE>
(f) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(g) To the extent not preempted by Federal law, this Agreement shall
be governed by, and construed in accordance with the laws of the State of
Iowa.
IN WITNESS WHEREOF, the partes have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By:______________________
Thomas L. Slaughter
Its: Vice President-General Counsel
& Secretary
______________________
Optionee, Jack D. Rehm
3131 Fleur Drive, #1001
Des Moines, IA 50321
Social Security number: ###-##-####
Page 5 of 6
<PAGE>
EXHIBIT A
FISCAL YEAR 1997(1) FISCAL YEAR 1998(2) TOTAL
--------------------- --------------------- NUMBER
NUMBER OF NUMBER OF OF VESTED
VESTED VESTED SHARES(5)
ROE(3) SHARES(4) ROE(3) SHARES(4)
---------- --------- ---------- --------- ----------
0-14.49 0 15 4,000 4,000
14.5-14.59 4,000 15 4,000 8,000
14.6-14.69 5,600 15 4,000 9,600
14.7-14.79 7,200 15 4,000 11,200
14.8-14.89 8,800 15 4,000 12,800
14.9-14.99 10,400 15 4,000 14,400
15.0- 12,014 15 4,000 16,014
(1) Fiscal Year ending June 30, 1997, with the Option with respect to the
applicable number of shares, if any, to become exercisable on August 10, 1997.
(2) Fiscal Year ending June 30, 1998, with the Option with respect to the
applicable number of shares, if any, to become exercisable on August 10, 1998.
(3) The Company's Return on Equity for the applicable year represented by a
percentage calculated as follows:
Company's Earnings for the fiscal year
--------------------------------------
Shareholders' Equity (amount of = Return on Equity (ROE)
shareholders' investment in Company
as of the applicable June 30)
(4) The number of shares of Company stock represented by the Option granted
under this Agreement that may be exercised if the Company achieves the listed
ROE in the applicable fiscal year.
(5) The total number of shares with respect to which the Option may be
exercised, if any, as a result of early vesting in 1997 and 1998 as provided in
columns 1 and 2.
Page 6 of 6
Exhibit 10b
-----------
MEREDITH CORPORATION
RESTRICTED STOCK AGREEMENT
You have been selected to be a Participant in the 1992 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
GRANTEE: Jack D. Rehm
DATE OF GRANT: September 1, 1994
NUMBER OF SHARES OF RESTRICTED STOCK GRANTED: 12,500
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between Meredith Corporation, an Iowa corporation (the "Company") and the
Grantee named above (the "Grantee"), covering a grant by the Company to the
Grantee of shares of Restricted Stock under the Plan.
1. Grant of Shares. Pursuant to action of the Compensation Committee of
the Board of Directors of the Company (the "Committee"), and in consideration
of valuable service heretofore rendered by the Grantee to the Company and of
the agreements hereinafter set forth, the Company hereby grants to the Grantee
the shares of Restricted Stock set forth above, $1.00 par value, of the Company
(the "Shares") subject to the Restrictions set forth in Section 2 and the other
terms and conditions of the Plan and this Agreement. The Shares shall be
recorded in the books of the Company and the Company's transfer agent in the
Grantee's name. The Grantee shall have all the rights of a stockholder with
respect to the Shares, including the right to vote and to receive all dividends
or other distributions paid or made with respect to the Shares. However, any
securities of the Company which may be issued with respect to such Shares by
virtue of any stock split, combination, stock dividend or recapitalization
shall be deemed to be "Shares" hereunder and shall be subject to all the terms
and conditions of the Plan and this Agreement.
2. Restrictions. Until and to the extent that the restrictions (the
"Restrictions") imposed by this Section 2 have lapsed, the Shares shall not be
sold, exchanged, assigned, transferred, pledged or otherwise disposed of, and
shall be subject to forfeiture as set forth in Section 4 below. The
Restrictions on the Shares shall lapse according to the schedule described in
the attached Exhibit A. If the lapse of the Restrictions on the Shares
Page 1 of 5
<PAGE>
pursuant to Exhibit A in a fiscal year would result in part or all of the value
of the Shares not being deductible by the Company pursuant to Section 162(m) of
the Internal Revenue Code, then the Restrictions shall lapse only with respect
to the largest number of whole Shares which would result in no part of the
value of those Shares being subject to the limit on deductibility in Section
162(m) in that year. The Restrictions on the remaining Shares which would
otherwise lapse during that year pursuant to Exhibit A will lapse on the
earlier of (a) the first day of the last month of the fiscal year of the
Company in which the Company's deduction for the value of the Shares would not
be subject to the limitations of Section 162(m), or (b) the date of Grantee's
death. Shares awarded for which the Restrictions have not lapsed (or been
deferred as provided by the immediately preceding sentence) in accordance with
the foregoing terms of this Section 2 shall be forfeited to the Company by
Grantee, without consideration to the Grantee or his/her executor,
administrator, personal representative or heirs ("Representative") on September
2, 1998.
3. Retirement. In the event of the termination of Grantee's employment
by reason of Retirement (as defined under the then established rules of the
Company's tax-qualified retirement plans) prior to September 2, 1998, any
Shares for which the Restrictions have not lapsed as of the date of termination
may lapse thereafter as provided in Exhibit A notwithstanding the termination
of employment.
4. Forfeiture of Shares. In the event of the termination of the
Grantee's employment by the Company for any reason (including resignation,
death, Disability or discharge with or without cause), other than Retirement,
all of the Shares then subject to the Restrictions shall be forfeited to the
Company by the Grantee, without consideration to the Grantee or his/her
Representative.
5. Delivery of Certificates. Certificates representing Shares as to
which the Restrictions have lapsed shall be issued in the name of the Grantee
and delivered by the Company to the Grantee or his/her Representative.
6. Withholding Taxes. The lapse of the Restrictions on any Shares
pursuant to Sections 2 or 3 above shall be conditioned on the Grantee or the
Representative having made appropriate arrangements with the Company to provide
for the payment of any taxes required to be withheld by Federal, State or local
law in respect of such lapse.
7. Notices. All notices hereunder shall be in writing and shall be
deemed to be given when delivered in person or upon the second day after the
same are deposited in the U.S. Mail, postage prepaid by certified mail,
addressed as follows:
Page 2 of 5
<PAGE>
To the Company: Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
Attn: Corporate Secretary
To the Grantee or his/her Representative at the address of the Grantee at
the time appearing in the employment records of the Company, which currently is
as follows:
Jack D. Rehm
3131 Fleur Drive, #1001
Des Moines, Iowa 50321
or at such other address as either party may designate by notice given to the
other in accordance with these provisions.
8. Term of Agreement. This Agreement shall terminate on the date the
Shares are forfeited pursuant to Section 4, or the date the Restrictions have
lapsed.
9. Succession. This Agreement shall be binding upon and operate for the
benefit of the Company and its successors and assigns and the Grantee and his
or her Representative.
10. Continuation of Employment. This Agreement shall not confer upon
Grantee any right to continuation of employment by the Company, nor shall this
Agreement interfere in any way with the Company's right to terminate his or her
employment at any time.
11. Miscellaneous.
(a) This Agreement and the rights of Grantee hereunder are subject to
all the terms and conditions of the Plan, as the same may be amended from
time to time, as well as to such rules and regulations as the Committee may
adopt for administration of the Plan.
It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or appropriate
to the administration of the Plan and this Agreement, all of which shall be
binding upon Grantee. Any inconsistency between this Agreement and the
Plan shall be resolved in favor of the Plan. All terms used herein shall
have the same meaning as in the Plan.
(b) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way adversely affect
Grantee's rights under this Agreement.
Page 3 of 5
<PAGE>
(c) Grantee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Grantee's rights under this Agreement.
(d) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
(e) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(f) To the extent not preempted by Federal law, this Agreement shall
be governed by, and construed in accordance with the laws of the State of
Iowa.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Date of Grant.
MEREDITH CORPORATION
By:___________________________
Thomas L. Slaughter
Vice President-General
Counsel & Secretary
Grantee:___________________
Jack D. Rehm
Social Security number: ###-##-####
Page 4 of 5
<PAGE>
EXHIBIT A
FISCAL YEAR 1997(1) FISCAL YEAR 1998(2) TOTAL
--------------------- --------------------- NUMBER
NUMBER OF NUMBER OF OF VESTED
VESTED VESTED SHARES(5)
ROE(3) SHARES(4) ROE(3) SHARES(4)
---------- --------- ---------- --------- ----------
0-14.49 0 15 3,125 3,125
14.5-14.59 3,125 15 3,125 6,250
14.6-14.69 4,375 15 3,125 7,500
14.7-14.79 5,625 15 3,125 8,750
14.8-14.89 6,875 15 3,125 10,000
14.9-14.99 8,125 15 3,125 11,250
15.0- 9,375 15 3,125 12,500
(1) Fiscal Year ending June 30, 1997, with the restrictions lapsing with
respect to the applicable number of shares, if any, on September 1, 1997.
(2) Fiscal Year ending June 30, 1998, with the restrictions lapsing with
respect to the applicable number of shares, if any, on September 1, 1998.
(3) The Company's Return on Equity for the applicable year represented by a
percentage calculated as follows:
Company's Earnings for the fiscal year
--------------------------------------
Shareholders' Equity (amount of = Return on Equity (ROE)
shareholders' investment in Company
as of the applicable June 30)
(4) The number of shares of restricted Company stock awarded under this
Agreement for which the restrictions will lapse if the Company achieves the
listed ROE in the applicable years.
(5) The total number of shares awarded for which the restrictions have lapsed,
if any, as a result of the vesting in 1997 and 1998 as provided in column 1 and
2.
Page 5 of 5
Exhibit 10c
-----------
MEREDITH CORPORATION
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the 1992 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: William T. Kerr
DATE OF GRANT: August 10, 1994
DATE OF EXPIRATION: August 10, 2004
NUMBER OF SHARES COVERED BY THIS AWARD: 38,942
OPTION PRICE: $46.25
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between Meredith Corporation, an Iowa corporation (the "Company") and the
Optionee named above pursuant to the provisions of the Plan. The parties
hereto agree as follows:
1. Grant of Stock Option. The Company hereby grants to Optionee the
Option to purchase the number of shares of Common Stock of the Company, $1.00
par value ("Common Stock") set forth above at the stated Option Price, which is
100% of the Fair Market Value on the Date of Grant, subject to the terms and
conditions of the Plan and this Agreement.
2. Exercise of Stock Option. As long as the vesting requirements
provided herein are met and the Option has not otherwise terminated or expired,
the Optionee may exercise in whole or in part this Option at any time after the
passage of six months from the Date of Grant. The Option shall vest with
respect to all shares covered by this award on February 10, 2004, provided,
however, that the Option will vest prior to such date with respect to all or a
portion of the shares covered by this Grant in accordance with the attached
Exhibit A.
3. Procedure for Exercise of Options. This Option may be exercised by
giving written notice to the Company at its executive offices, addressed to the
attention of its Secretary. Such notice (a) shall be signed by the Optionee or
his legal representative; (b) shall specify the number of full shares then
Page 1 of 6
<PAGE>
elected to be purchased with respect to the Option; (c) unless a Registration
Statement under the Securities Act of 1933 is in effect with respect to the
shares to be purchased, shall contain a representation of Optionee that the
shares of Common Stock are being acquired by him or her for investment and with
no present intention of selling or transferring them, and that he or she will
not sell or otherwise transfer the shares except in compliance with all
applicable securities laws and requirements of any stock exchange upon which
the shares of Common Stock may then be listed; and (d) shall be accompanied by
payment in full of the Option Price of the shares to be purchased and
Optionee's copy of this Agreement.
The Option Price upon exercise of this Option shall be payable to the
Company in full either (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); (b)
by tendering previously acquired shares having an aggregate Fair Market Value
at the time of exercise equal to the total price of the shares for which the
Option is being exercised; (c) by a combination of (a) and (b); (d) by delivery
of a properly executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company the amount of sale proceeds from
the option shares or loan proceeds to pay the exercise price and withholding
taxes due to Company; or (e) by such other methods of payment as the Committee
at its discretion deems appropriate.
As promptly as practicable after receipt of such notice and payment, the
Company shall cause to be issued and delivered to the Optionee or his or her
legal representative, as the case may be, certificates for the shares so
purchased. The Company shall maintain a record of all information pertaining
to Optionee's rights under this Agreement, including the number of shares for
which this Option is exercisable. If the Option shall have been exercised in
full, this Agreement shall be returned to the Company and canceled.
4. Termination of Employment by Death. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of death, then Optionee's rights under this Option shall terminate.
However, if at the date of Optionee's death, this Option is exercisable, then
Optionee's beneficiary (or such persons that have acquired Optionee's rights
under the Option by will or by the laws of descent and distribution) shall have
the same right to exercise this Option as Optionee had during his or her
lifetime, for a period ending on the earlier of (i) the Date of Expiration set
forth above, or (ii) one year following the date of death.
5. Termination of Employment by Disability. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Disability (as defined in the Plan), then Optionee's rights under
this Option shall terminate. However, if at the effective date of Optionee's
Page 2 of 6
<PAGE>
Disability this Option is exercisable, then Optionee shall have the same right
to exercise this Option as Optionee had during his or her employment for a
period ending on the earlier of (i) the Date of Expiration set forth above, or
(ii) one year following the date of the termination of employment.
6. Termination of Employment by Retirement. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
reason of Retirement (as defined under the then established rules of the
Company's tax-qualified retirement plans), then Optionee's rights under this
Option shall terminate. However, if at the effective date of Optionee's
Retirement this Option is exercisable, then Optionee shall have the same right
to exercise this Option as Optionee had during his or her employment for a
period ending on the earlier of (i) the Date of Expiration set forth above, or
(ii) three years following the Retirement date.
7. Termination of Employment for Other Reasons. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated for
reasons other than his or her death, Disability or Retirement then Optionee's
rights under this Option shall terminate. However, the Committee, in its sole
discretion, shall have the right to allow for an exercise period of up to 30
days after the date of such termination, provided that, in no event shall this
extension period continue beyond the Date of Expiration set forth above. In
addition, any such extension shall be applicable only to the extent that this
Option is exercisable at the date of termination of employment.
8. Restrictions on Transfer. This Option may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. Further, this Option shall be
exercisable during Optionee's lifetime only by Optionee or Optionee's legal
representative.
9. Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company affecting the shares, such adjustment shall be made in
the number and class of shares subject to this Option, as may be determined to
be appropriate and equitable by the Committee in its sole discretion, to
prevent dilution or enlargement of rights; and provided that the number of
shares subject to this Option shall always be rounded to the nearest whole
number.
10. Rights as a Stockholder. Optionee shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock subject
to this Agreement until such time as the purchase price has been paid and the
shares have been issued and delivered to him or her.
Page 3 of 6
<PAGE>
11. Continuation of Employment. This Agreement shall not confer upon
Optionee any right to continuation of employment by the Company, nor shall this
Agreement interfere in any way with the Company's right to terminate his or her
employment at any time.
12. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject
to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. The Committee shall
have the right to impose such restrictions on any shares acquired pursuant
to the exercise of this Option, as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities
laws, under the requirements of any stock exchange or market upon which
such shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such shares.
It is expressly understood that the Committee is authorized to
administer, construe, and make all determinations necessary or appropriate
to the administration of the Plan and this Agreement, all of which shall
be binding upon Optionee. Any inconsistency between this Agreement and
the Plan shall be resolved in favor of the Plan. All terms used herein
shall have the same meaning as in the Plan document.
(b) With the approval of the Board, the Committee may terminate,
amend, or modify the Plan; provided, however, that no such termination,
amendment, or modification of the Plan may in any way adversely affect
Optionee's rights under this Agreement.
(c) The Company shall have the authority to deduct or withhold, or
require Optionee to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes (including Optionee's FICA obligation)
required by law to be withheld with respect to any exercise of Optionee's
rights under this Agreement without Optionee's written consent.
Optionee may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the
Company withhold shares of Common Stock having an aggregate Fair Market
Value, on the date the tax is to be determined, equal to the amount
required to be withheld. All elections shall be irrevocable and in
writing, and shall be signed by Optionee in advance of the day that the
transaction becomes taxable.
Page 4 of 6
<PAGE>
(d) Optionee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Optionee's rights under this Agreement.
(e) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
(f) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(g) To the extent not preempted by Federal law, this Agreement shall
be governed by, and construed in accordance with the laws of the State of
Iowa.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By: _________________
Jack D. Rehm
Its: Chairman and Chief
Executive Officer
__________________________
Optionee, William T. Kerr
3200 Elmwood Drive
Des Moines, IA 50312
Social Security number: ###-##-####
Page 5 of 6
<PAGE>
EXHIBIT A
FISCAL YEAR 1997(1) FISCAL YEAR 1998(2) TOTAL
--------------------- --------------------- NUMBER
NUMBER OF NUMBER OF OF VESTED
VESTED VESTED SHARES(5)
ROE(3) SHARES(4) ROE(3) SHARES(4)
---------- --------- ---------- --------- ----------
0-14.49 0 15 9,736 9,736
14.5-14.59 9,736 15 9,736 19,472
14.6-14.69 13,630 15 9,736 23,366
14.7-14.79 17,524 15 9,736 27,260
14.8-14.89 21,418 15 9,736 31,154
14.9-14.99 25,312 15 9,736 35,048
15.0- 29,206 15 9,736 38,942
(1) Fiscal Year ending June 30, 1997, with the Option with respect to the
applicable number of shares, if any, to become exercisable on August 10, 1997.
(2) Fiscal Year ending June 30, 1998, with the Option with respect to the
applicable number of shares, if any, to become exercisable on August 10, 1998.
(3) The Company's Return on Equity for the applicable year represented by a
percentage calculated as follows:
Company's Earnings for the fiscal year
--------------------------------------
Shareholders' Equity (amount of = Return on Equity (ROE)
shareholders' investment in Company
as of the applicable June 30)
(4) The number of shares of Company stock represented by the Option granted
under this Agreement that may be exercised if the Company achieves the listed
ROE in the applicable fiscal year.
(5) The total number of shares with respect to which the Option may be
exercised, if any, as a result of early vesting in 1997 and 1998 as provided in
columns 1 and 2.
Page 6 of 6
Exhibit 10d
-----------
Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with its executive officers
Meredith Corporation has certain nonqualified stock option award agreements
with its executive officers. Such agreements are not filed herewith pursuant
to Instruction 2. to Item 601 of Regulation S-K as they are substantially
identical in all material respects, except as to the parties thereto and the
number of stock options awarded, to the agreement filed as Exhibit 10c in this
Form 10-Q for the period ended December 31, 1994. The executive officers and
the number of stock options awarded in the agreements not filed with the
Commission are as follows:
Executive Officer # Stock Options Awarded
--------------------- -----------------------
Larry D. Hartsook 15,680
Philip A. Jones 25,807
Christopher M. Little 29,664
Allen L. Sabbag 15,381
Joseph J. Ward 21,619
Page 1 of 1
Exhibit 11
----------
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Six Months Ended December 31, 1994 and 1993
(Unaudited)
Weighted average number of shares
1994 1993
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 13,696 13,696 14,427 14,427
Dilutive effect of unexercised
stock options in thousands 149 147 90 110
------ ------ ------ ------
Total 13,845 13,843 14,517 14,537
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1994 1993
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Earnings per share before
cumulative effect of change
in accounting principle $1.41 $1.41 $1.03* $1.03*
Cumulative effect of change in
accounting principle (3.33) (3.33) - -
----- ----- ----- -----
Net (loss) earnings per share ($1.92) ($1.92) $1.03* $1.03*
===== ===== ===== =====
Note: Primary - Based on average market prices.
Fully Diluted - Based on the higher of the average market price
or the market price at December 31 of each year.
*Dilution less than three percent from earnings per common share
outstanding
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at December 31, 1994, and the Consolidated Statement
of Earnings for the six months ended December 31, 1994, of Meredith Corporation
and Subsidiaries AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000065011
<NAME> MEREDITH CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-30-1994
<CASH> 49,226
<SECURITIES> 3,004
<RECEIVABLES> 121,203
<ALLOWANCES> 16,966
<INVENTORY> 35,482
<CURRENT-ASSETS> 277,435
<PP&E> 241,707
<DEPRECIATION> 115,080
<TOTAL-ASSETS> 808,291
<CURRENT-LIABILITIES> 300,550
<BONDS> 91,052
<COMMON> 13,715
0
0
<OTHER-SE> 210,577
<TOTAL-LIABILITY-AND-EQUITY> 808,291
<SALES> 415,031
<TOTAL-REVENUES> 415,031
<CGS> 167,543
<TOTAL-COSTS> 167,543
<OTHER-EXPENSES> 17,124
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,861
<INCOME-PRETAX> 37,945
<INCOME-TAX> 18,354
<INCOME-CONTINUING> 19,591
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (46,160)
<NET-INCOME> (26,569)
<EPS-PRIMARY> (1.92)
<EPS-DILUTED> (1.92)
</TABLE>
