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, 1996
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, 1997
Common Stock, $1 par value 20,379,669
Class B Stock, $1 par value 6,383,437
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
December 31 June 30
Assets 1996 1996
- ------------------------------------------------------------------------------
(in thousands, except share data)
Current assets:
Cash and cash equivalents $ 76,135 $ 13,801
Marketable securities 20,060 --
Receivables, net 97,530 89,448
Inventories 24,400 31,185
Supplies and prepayments 9,311 8,104
Film rental costs 13,130 10,321
Deferred income taxes 12,413 8,930
Subscription acquisition costs 51,056 48,887
---------- ----------
Total current assets 304,035 210,676
---------- ----------
Property, plant and equipment 189,564 182,855
Less accumulated depreciation (107,970) (102,856)
---------- ----------
Net property, plant and equipment 81,594 79,999
---------- ----------
Net assets of discontinued operation -- 88,051
Subscription acquisition costs 40,551 46,745
Film rental costs 8,453 6,816
Other assets 19,350 19,043
Goodwill and other intangibles
(at original cost less accumulated amortization) 277,277 282,443
---------- ----------
Total assets $731,260 $733,773
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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(Unaudited)
December 31 June 30
Liabilities and Stockholders' Equity 1996 1996
- ------------------------------------------------------------------------------
Current liabilities:
Current portion of long-term debt $ -- $ 15,000
Current portion of long-term film rental contracts 15,716 13,063
Accounts payable 33,445 42,085
Accrued taxes and expenses 74,391 68,958
Unearned subscription revenues 144,423 140,401
---------- ----------
Total current liabilities 267,975 279,507
---------- ----------
Long-term debt -- 35,000
Long-term film rental contracts 9,443 8,419
Unearned subscription revenues 92,715 97,811
Deferred income taxes 27,206 25,510
Other deferred items 28,897 25,962
---------- ----------
Total liabilities 426,236 472,209
---------- ----------
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 20,343,140 at December 31 and
20,380,437 at June 30 (net of treasury shares,
12,439,898 at December 31 and 12,207,776
at June 30.) 20,343 20,380
Class B stock, par value $1 per share,
convertible to common stock
Authorized 15,000,000 shares; issued and
outstanding 6,410,704 at December 31 and
6,568,583 at June 30. 6,411 6,569
Additional paid-in capital -- --
Retained earnings 281,420 236,903
Unearned compensation (3,150) (2,288)
---------- ----------
Total stockholders' equity 305,024 261,564
---------- ----------
Total liabilities and stockholders' equity $ 731,260 $ 733,773
========== ==========
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
1996 1995 1996 1995
- ------------------------------------------------------------------------------
(in thousands, except per share)
Revenues (less returns and allowances):
Advertising $111,766 $104,802 $216,100 $205,373
Circulation 64,161 69,557 126,803 136,258
Consumer books 10,988 23,262 20,786 41,253
All other 22,857 18,487 45,263 39,797
-------- -------- -------- --------
Total revenues 209,772 216,108 408,952 422,681
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 83,567 92,776 168,898 181,470
Selling, general and administrative 91,338 93,525 177,217 187,560
Depreciation and amortization 5,587 5,620 11,227 11,246
-------- -------- -------- --------
Total operating costs and expenses 180,492 191,921 357,342 380,276
-------- -------- -------- --------
Income from operations 29,280 24,187 51,610 42,405
Gain on dispositions -- 5,898 -- 5,898
Interest income 1,175 459 1,554 1,121
Interest expense (335) (1,711) (1,071) (3,470)
-------- -------- -------- --------
Earnings from continuing operations
before income taxes 30,120 28,833 52,093 45,954
Income taxes 13,044 12,755 22,556 20,367
-------- -------- -------- --------
Earnings from continuing operations 17,076 16,078 29,537 25,587
Discontinued operation:
Net loss from operations -- -- -- (717)
Net gain on disposition 27,693 -- 27,693 --
-------- -------- -------- --------
Net earnings $ 44,769 $ 16,078 $ 57,230 $ 24,870
======== ======== ======== ========
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Meredith Corporation and Subsidiaries
Consolidated Statements of Earnings (Unaudited) (continued)
Three Months Six Months
Ended December 31 Ended December 31
1996 1995 1996 1995
- ------------------------------------------------------------------------------
(in thousands, except per share)
Net earnings per share:
Earnings from continuing operations $ 0.61 $ 0.57 $ 1.06 $ 0.91
Discontinued operation 1.00 -- 1.00 (0.03)
-------- -------- -------- --------
Net earnings per share $ 1.61 $ 0.57 $ 2.06 $ 0.88
======== ======== ======== ========
Average shares outstanding 27,875 28,291 27,817 28,189
======== ======== ======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended December 31 1996 1995
- --------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 57,230 $ 24,870
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 11,227 11,246
Amortization of film contract rights 8,924 8,457
Gain on dispositions, net of taxes (27,693) (3,379)
Loss from discontinued operation -- 717
Changes in assets and liabilities:
Accounts receivable (4,653) (10,833)
Inventories 6,785 7,687
Supplies and prepayments (1,179) 5,076
Subscription acquisition costs 4,025 4,214
Accounts payable (8,640) (17,162)
Accruals (5,230) 11,303
Unearned subscription revenues (1,074) (12,044)
Deferred income taxes (1,787) 2,412
Other deferred items 2,935 (181)
--------- ---------
Net cash provided by operating activities 40,870 32,383
--------- ---------
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) (continued)
Six Months Ended December 31 1996 1995
- --------------------------------------------------------------------------
(in thousands)
Cash flows from investing activities:
Proceeds from dispositions 123,275 27,894
Additions to property, plant, and equipment (7,693) (19,237)
Purchases of marketable securities (20,060) --
Change in other assets (496) (212)
--------- ---------
Net cash provided by investing activities 95,026 8,445
--------- ---------
Cash flows from financing activities:
Long-term debt retired (50,000) (10,000)
Payments for film rental contracts (9,792) (7,906)
Proceeds from common stock issued 3,992 2,969
Purchase of Company stock (11,864) --
Dividends paid (5,898) (5,511)
--------- ---------
Net cash (used) by financing activities (73,562) (20,448)
--------- ---------
Net increase in cash and cash equivalents 62,334 20,380
Cash and cash equivalents at beginning of year 13,801 11,825
--------- ---------
Cash and cash equivalents at end of period $ 76,135 $ 32,205
========= =========
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.
2. Discontinued Operation
On October 25, 1996, Meredith Corporation, through its cable venture,
Meredith/New Heritage Partnership (MNH Partnership), completed the sale of its
ownership interest in Meredith/New Heritage Strategic Partners, L.P. (Strategic
Partners). Strategic Partners owned and operated cable television systems with
approximately 127,000 subscribers in the Minneapolis/St. Paul area. The MNH
Partnership, of which the Company indirectly owned 96 percent, sold its 73
percent ownership interest in Strategic Partners to Continental Cablevision of
Minnesota Subsidiary Corporation (Continental), an affiliate of MNH
Partnership's minority partner, Continental Cablevision of Minnesota, Inc.
The total value of the cable television systems was $262.5 million based on
estimated discounted future cash flows. Meredith Corporation's share of the
proceeds was $116.0 million in cash (net of taxes). Continental also paid
$84.3 million in Strategic Partners' debt. Meredith Corporation recorded a
gain in the quarter ended December 31, 1996 of $27.7 million, or $1.00 per
share, (net of $8.9 million in taxes) from the sale.
The cable segment was classified as a discontinued operation effective
September 30, 1995. Cable net losses subsequent to September 30, 1995 were
deferred since the Company expected to realize a net gain from the sale. Cable
operations reported revenues of $52.9 million, income from operations of $6.0
million and a net loss of $189,000 (including income tax expense of $89,000)
for the period October 1, 1995, through the effective date of the sale.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
3. Marketable Securities
Currently-owned marketable securities are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with unrealized gains
and losses, net of tax, reported in a separate component of shareholders'
equity. The amortized cost of debt securities in this category is adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization is included in investment income. Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in investment income.
At December 31, 1996, marketable securities consisted of one U. S. Treasury
Note with a fair value equal to its amortized cost. This security matures in
less than one year. No other marketable securities were purchased or sold
during the six months ended December 31, 1996.
4. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 85 and 67 percent respectively, are under the LIFO
method at December 31, 1996, and June 30, 1996.
(unaudited)
December 31 June 30
1996 1996
-------- --------
(in thousands)
Raw materials $19,186 $28,354
Work in process 11,276 11,907
Finished goods 5,990 4,276
-------- --------
36,452 44,537
Reserve for LIFO cost valuation (12,052) (13,352)
-------- --------
Total $24,400 $31,185
======== ========
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
5. Revenues, operating profit and depreciation and amortization by industry
segment are shown below:
(unaudited) (unaudited)
Three Months Six Months
Ended December 31 Ended December 31
------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
Revenues
Publishing $160,698 $171,436 $317,784 $337,999
Broadcasting 43,400 38,306 78,879 72,440
Real Estate 5,693 6,382 12,321 12,588
Less: Inter-segment revenues (19) (16) (32) (346)
-------- -------- -------- --------
Total revenues $209,772 $216,108 $408,952 $422,681
======== ======== ======== ========
Operating profit
Publishing $ 17,648 $ 13,533 $ 31,300 $ 22,603
Broadcasting 17,735 15,526 30,201 28,287
Real Estate 469 1,096 2,012 2,116
Unallocated corporate expense (6,572) (5,968) (11,903) (10,601)
-------- -------- -------- --------
Income from operations 29,280 24,187 51,610 42,405
Gain on disposition -- 5,898 -- 5,898
Interest income 1,175 459 1,554 1,121
Interest expense (335) (1,711) (1,071) (3,470)
-------- -------- -------- --------
Earnings from continuing
operations before income
taxes 30,120 28,833 52,093 45,954
Income taxes 13,044 12,755 22,556 20,367
-------- -------- -------- --------
Earnings from
continuing operations* $ 17,076 $ 16,078 $ 29,537 $ 25,587
======== ======== ======== ========
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
(unaudited) (unaudited)
Three Months Six Months
Ended December 31 Ended December 31
------------------- -------------------
1996 1995 1996 1995
-------- -------- -------- --------
Depreciation and amortization
Publishing $ 2,172 $ 2,476 $ 4,379 $ 4,996
Broadcasting 2,924 2,645 5,842 5,268
Real Estate 129 119 267 234
Unallocated corporate expense 362 380 739 748
-------- -------- -------- --------
Total depreciation
and amortization $ 5,587 $ 5,620 $ 11,227 $ 11,246
======== ======== ======== ========
*Note: Earnings for the quarter and six months ended December 31, 1995,
include $3,379,000 (12 cents per share) in post-tax income from a gain
on the disposition of book clubs.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
(Note: All per-share amounts are computed on a post-tax basis.)
Consolidated
- ------------
Three Months Six Months
Ended December 31 Ended December 31
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands, except per share)
Total revenues $209,772 $216,108 $408,952 $422,681
======== ======== ======== ========
EBITDA $ 34,867 $ 29,807 $ 62,837 $ 53,651
======== ======== ======== ========
Income from operations $ 29,280 $ 24,187 $ 51,610 $ 42,405
======== ======== ======== ========
Operating profit margin 14.0% 11.2% 12.6% 10.0%
======== ======== ======== ========
Earnings from continuing
operations $ 17,076 $ 16,078 $ 29,537 $ 25,587
======== ======== ======== ========
Discontinued operations $ 27,693 $ -- $ 27,693 $ (717)
======== ======== ======== ========
Net earnings $ 44,769 $ 16,078 $ 57,230 $ 24,870
======== ======== ======== ========
Per Share:
Earnings from continuing
operations $ 0.61 $ 0.57 $ 1.06 $ 0.91
Discontinued operations $ 1.00 $ -- $ 1.00 $ (.03)
-------- -------- -------- --------
Net earnings $ 1.61 $ 0.57 $ 2.06 $ 0.88
======== ======== ======== ========
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EBITDA is earnings from continuing operations before interest, taxes,
depreciation and amortization.
Net earnings of $44.8 million, or $1.61 per share, were recorded in the quarter
ended December 31, 1996, compared to net earnings of $16.1 million, or 57 cents
per share, in the prior-year second quarter. For the six months ended December
31, 1996, net earnings were $57.2 million, or $2.06 per share, compared to net
earnings of $24.9 million, or 88 cents per share, in the prior-year period.
Net earnings for both the quarter and six months ended December 31, 1996,
included a post-tax gain of $27.7 million, or $1.00 per share, from the sale of
the discontinued cable operations. Net earnings in the first half of the prior
fiscal year included a net loss from discontinued cable operations of $.7
million, or 3 cents per share.
Earnings from continuing operations were $17.1 million, or 61 cents per share,
and $16.1 million, or 57 cents per share for the second quarters ended December
31, 1996 and 1995, respectively. Earnings from continuing operations for the
comparative six-month periods were $29.5 million, or $1.06 per share, in fiscal
1997 and $25.6 million, or 91 cents per share, in fiscal 1996. Earnings from
continuing operations in the prior-year periods included a post-tax gain of
$3.4 million, or 12 cents per share, from the December 1995 sale of three book
clubs. Excluding this non-recurring item from the prior-year periods, fiscal
1997 earnings per share from continuing operations increased 36 percent for the
second quarter and 34 percent for the six month period.
The Company's revenues declined 3 percent in both the quarter and six-month
periods due to lower publishing revenues. The decline in publishing revenues
reflected the elimination of most direct-response book sales due to the prior-
year sale of the Company's book clubs and the agreement granting The Reader's
Digest Association, Inc. rights for direct-response marketing of certain
Meredith-trademarked products. Also contributing to the revenue decline were
changes in magazine operations, including a rate base reduction at Ladies' Home
Journal magazine and discontinuing the publication of home garden magazine.
EBITDA increased 17 percent in both the quarter and six-month periods.
Operating costs and expenses declined 6 percent in both periods leading to
increased operating profit margins in the current-year periods. Lower
production, distribution and editorial expenses, both in total and as a
percentage of revenues, were the primary factor in the second quarter margin
improvement. Downsizing in the book operations and lower paper and
manufacturing costs in magazine operations, resulting from lower prices and
volumes, led to the decline. These same factors contributed to lower
production, distribution and editorial expenses, both in total and as a
percentage of revenues, in the current six-month period. Selling, general and
administrative costs also declined, in total and as a percentage of revenues,
for the six months. The downsizing of book operations and lower magazine
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subscription acquisition costs, due to the previously mentioned magazine
changes, were the primary factors in the decline.
In October 1996, the Company repaid its entire bank debt using a portion of the
proceeds from the sale of cable operations. This resulted in net interest
income in the current quarter and six-month periods versus net interest expense
in the comparable prior-year periods.
The Company's effective tax rate was 43.3 percent in the current quarter and
six month periods compared with approximately 44.3 percent in the prior-year
periods. The lower rate reflects an increase in currently estimated fiscal
year earnings, which lessens the effect of non-deductible items on the overall
tax rate.
Publishing
- ----------
Three Months Six Months
Ended December 31 Ended December 31
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
Revenues
---------
Magazine advertising $ 70,501 $ 68,246 $141,061 $136,733
Magazine circulation 64,161 69,557 126,803 136,258
Consumer book 10,988 23,262 20,786 41,253
Other 15,048 10,371 29,134 23,755
-------- -------- -------- --------
Total revenues $160,698 $171,436 $317,784 $337,999
======== ======== ======== ========
Operating profit $ 17,648 $ 13,533 $ 31,300 $ 22,603
======== ======== ======== ========
Publishing revenues decreased 6 percent compared to both the prior-year quarter
and six month periods primarily due to lower consumer book revenues. The
approximate 50 percent decline in consumer book revenues reflected the
elimination of most direct-response book sales due to the prior-year sale of
the Company's book clubs and formation of a strategic alliance with The
Reader's Digest Association, Inc. Revenues from ongoing retail book sales were
down for the quarter largely due to the timing of sales of the 11th edition of
the Better Homes and Gardens New Cook Book, introduced in August 1996. Retail
book revenues were down slightly for the six months ended December 31, 1996,
even with increased first quarter sales from the New Cook Book, due to the
introduction of fewer new titles in the current period.
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<PAGE>
Magazine circulation revenues declined 7 percent in the quarter and 8 percent
in the fiscal year-to-date primarily due to the effect of a 10 percent
advertising rate base reduction (effective with the February 1996 issue) at
Ladies' Home Journal magazine, the Company's second largest circulation title.
Closing home garden and Weekend Woodworking magazines also contributed to the
decline in circulation revenues, as did a reduction in the publication
frequency of Country America magazine from 10 to 6 times annually. Magazine
advertising revenues grew 3 percent in both the quarter and six-month periods
largely due to increased ad revenues at Better Homes and Gardens, the Company's
largest circulation title. Better Homes and Gardens magazine's ad revenue
growth primarily reflected an increased number of ad pages. Midwest Living,
Country Home and the Better Homes and Gardens' Special Interest Publications
also reported strong ad revenue growth in both periods due to a combination of
increased ad pages and higher average revenue per page. Advertising revenues
at Ladies' Home Journal declined in both the quarter and six-month period
primarily due to lower average revenue per page. The decline in average
revenue per page reflected the advertising rate base reduction. The increases
in other publishing revenues in the quarter and year-to-date periods reflected
higher sales volumes in the custom publishing operations and the addition of a
crafts licensing agreement with Wal-Mart Stores, Inc.
Publishing operating profit was up 30 percent in the fiscal 1997 second quarter
and 39 percent for the fiscal year-to-date. The improvements were largely a
result of increased operating profit from magazine publishing due to higher ad
revenues and lower paper prices. Increased revenues and operating profit from
licensing operations also contributed. Better Homes and Gardens, Country Home
and Midwest Living magazines, along with the Company's lineup of Special
Interest Publications, reported strong advertising revenues leading to
operating profit increases for the quarter and year-to-date periods. In spite
of lower revenues, Ladies' Home Journal also reported higher operating profit
in both periods due primarily to lower paper and printing costs (a result of
favorable pricing and reduced volumes). In addition, lower circulation
expenses, due to fewer new prospect subscription mailings resulting in part
from the rate base reduction, also contributed to Ladies' Home Journal's
improvement in the six month period. The elimination of an operating loss from
home garden magazine, which ceased publication in the spring of 1996, also was
a factor in Publishing's improved operating results. Book publishing reported
lower operating profit in the second quarter and for the fiscal year-to-date,
primarily due to the retail book revenue declines mentioned previously.
Paper is a significant expense of the Publishing segment. Paper prices, which
had been escalating in fiscal 1995 and early fiscal 1996, began to moderate in
the second half of fiscal 1996 and has continued to-date. As of December 31,
1996, the Company's average price paid for paper was approximately 14 percent
lower than the price paid at June 30, 1996. Declining prices to-date have
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resulted in favorable LIFO inventory reserve adjustments in the current period.
The price of paper is driven by overall market conditions and, therefore, is
difficult to predict. However, at this time, management does not anticipate
any increases in paper prices until possibly late this fiscal year or in early
fiscal 1998.
Broadcasting
- ------------
Three Months Six Months
Ended December 31 Ended December 31
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
Revenues
---------
Advertising $ 41,265 $ 36,556 $ 75,039 $ 68,640
Other 2,135 1,750 3,840 3,800
-------- -------- -------- --------
Total revenues $ 43,400 $ 38,306 $ 78,879 $ 72,440
======== ======== ======== ========
Operating profit $ 17,735 $ 15,526 $ 30,201 $ 28,287
======== ======== ======== ========
Revenues increased 13 percent in the fiscal 1997 second quarter and 9 percent
in the six months ended December 31, 1996, from the comparable prior-year
periods. Excluding revenues from WOGX-Ocala/Gainesville, acquired in January
1996, comparable revenues increased 10 percent for the quarter and 6 percent
for the six months. All stations reported higher advertising revenues in the
second quarter, in part due to fall 1996 political campaign advertising. For
the six-month period, ad revenues increased at all stations except WOFL-Orlando
and KPHO-Phoenix, where ad revenues were flat due to weak national ad sales,
particularly in the first quarter. Operating profit increased 14 percent in
the second quarter and 7 percent in the six-month period due primarily to the
advertising revenue increases.
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Real Estate
- -----------
Three Months Six Months
Ended December 31 Ended December 31
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
Total revenues $ 5,693 $ 6,382 $ 12,321 $ 12,588
======== ======== ======== ========
Operating profit $ 469 $ 1,096 $ 2,012 $ 2,116
======== ======== ======== ========
Revenues and operating profit declined in both the quarter and six months ended
December 31, 1996, largely due to the prior-year signing of a master franchise
agreement. Excluding the effects of this agreement, second quarter revenues
and operating profit were comparable to those in the prior-year quarter. On
the same basis, year-to-date revenues and operating profit increased largely
due to higher transaction fee revenues, resulting from an increase in the
number of member firms and continued strength in existing home sales.
Discontinued Operation
- ----------------------
The sale of the Company's ownership interest in cable television operations was
completed on October 25, 1996. The Meredith/New Heritage Partnership (MNH
Partnership), of which the Company indirectly owned 96 percent, sold its 73
percent ownership interest in Meredith/New Heritage Strategic Partners, L.P. to
Continental Cablevision of Minnesota Subsidiary Corporation, an affiliate of
MNH Partnership's minority partner, Continental Cablevision of Minnesota, Inc.
The total value of the systems was $262.5 million. Meredith Corporation
received $116.0 million in cash (net of taxes) and recorded a gain in the
fiscal second quarter of $27.7 million, or $1.00 per share, from the sale. The
gain is net of taxes and deferred cable losses from September 30, 1995, until
the effective date of the sale. The cable segment was classified as a
discontinued operation on September 30, 1995.
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<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents increased by $62.3 million in the first six months of
fiscal 1997 compared to an increase of $20.4 million in the prior-year period.
The larger increase in cash in the current period resulted from the sale of the
discontinued cable operation. Proceeds from the sale funded increased use of
cash in the current period for retirement of long-term debt, purchases of
marketable securities and purchases of Company stock. Cash provided by
operating activities increased 26 percent in the current period due to higher
operating income.
Company debt, which totaled $50 million at June 30, 1996, was repaid in its
entirety in October 1996, using a portion of the proceeds from the cable sale.
Interest expense associated with this debt totaled $909,000 (excluding $92,000
in capitalized interest) in the six months ended December 31, 1996.
In January 1997, the Company announced that, pending Federal Communications
Commission approval, it will acquire all four of the television stations of
First Media Television, L.P. The acquisition price for the purchased assets of
First Media is $435 million, which Meredith will pay through a combination of
bank debt and cash. The average term of the debt is expected to be
approximately four years. The transaction is expected to close in mid-calendar
1997. Funds for the payment of interest and principal on the debt are expected
to be provided by cash generated from future operating activities.
In the first half of fiscal 1997, the Company spent $11.9 million for the
repurchase of 267,000 shares of Meredith Corporation common stock on the open
market under an authorization by its Board of Directors. No shares were
repurchased in the first half of the prior year. As of December 31, 1996,
approximately 1,042,000 additional shares could be repurchased under existing
authorizations by the Board of Directors. The status of the repurchase program
is reviewed at each quarterly Board of Directors meeting. Future repurchases
of Company shares are expected to be reduced given the aforementioned proposed
broadcasting acquisition.
Dividends paid in the first six months of fiscal 1997 were $5.9 million (22
cents per share) compared with $5.5 million (20 cents per share) in the prior-
year period. On February 3, 1997, the Board of Directors increased the
quarterly dividend by 18 percent (two cents per share) to 13 cents per share
effective with the dividend payable on March 14, 1997. On an annual basis, the
effect of this quarterly dividend increase would be to increase dividends paid
by approximately $2.1 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 on March 17, 1997, to shareholders of record on
February 28, 1997.
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<PAGE>
Expenditures for property, plant and equipment were $7.7 million in the first
six months of fiscal 1997 compared to $19.2 million in the prior-year period.
The decrease reflected prior-year spending for new office facilities in New
York City and higher prior-year spending for broadcasting technical equipment.
Capital expenditures for fiscal 1997 are expected to be approximately $32
million, slightly higher than fiscal 1996 capital spending of nearly $30
million. This includes approximately $18 million in planned spending in fiscal
1997 for the construction of a new office building and related improvements in
Des Moines. Fiscal 1996 spending for this project totaled $7 million. Total
cost of the project is estimated at approximately $40 million. The balance of
the spending will occur in fiscal 1998. Funds for the new Des Moines building
and other capital expenditures are expected to be provided by available cash,
including cash from operating activities and short-term bank debt. The Company
has made no other material commitments for capital expenditures.
At this time, management expects that cash on hand, internally-generated cash
flow and short-term bank debt under existing bank lines of credit will provide
funds for any additional operating and recurring cash needs (e.g., working
capital, cash dividends) for foreseeable periods. As mentioned previously, the
proposed acquisition of the four First Media television stations will be funded
by cash and bank debt. At December 31, 1996, Meredith Corporation had unused
committed lines of credit totaling $30 million. The Company does not expect
the need for any long-term source of cash to meet working capital requirements.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on November 11, 1996, 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)(1). The other directors whose terms of office continued after
the meeting were: Herbert M. Baum, Robert A. Burnett, Frederick B. Henry,
Joel W. Johnson, William T. Kerr, Richard S. Levitt, E. T. Meredith III
and Nicholas L. Reding.
(c)(1) Proposal 1: Election of four Class I directors for terms expiring in
1999. Each nominee was elected in uncontested elections by the votes
cast as follows:
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<PAGE>
Number of shareholder votes*
----------------------------
For Withheld
Class I directors ---------- --------
Pierson M. Grieve 72,980,296 185,727
Robert E. Lee 72,994,138 171,885
Jack D. Rehm 72,809,411 356,612
Barbara S. Uehling 72,974,827 191,196
*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.
(c)(2) Proposal 2: Approval of an additional reserve of 75,000 shares of
Company common stock for issuance under the 1990 Restricted Stock Plan
for Non-Employee Directors. Proposal 2 was approved by the votes cast
as follows:
Broker
For Against Abstain Non-Votes
---------- --------- ------- ---------
69,144,016 1,533,050 264,492 2,224,465
(c)(3) Proposal 3: Approval of an additional reserve of 75,000 shares of
Company common stock for issuance under the 1993 Stock Option Plan for
Non-Employee Directors. Proposal 3 was approved by the votes cast as
follows:
Broker
For Against Abstain Non-Votes
---------- --------- ------- ---------
68,744,340 1,692,580 504,638 2,224,465
(c)(4) Proposal 4: Approval of the 1996 Stock Incentive Plan. Proposal 4 was
approved by the votes cast as follows:
Broker
For Against Abstain Non-Votes
---------- --------- ------- ---------
63,434,951 7,299,911 206,696 2,224,465
- 19 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3) Restated Bylaws, as amended
10.1) Employment agreement dated November 11, 1996 between Meredith
Corporation and William T. Kerr
10.2) Consultancy Agreement, Amendment to Employment Agreement and
Amendment to Restricted Stock Agreements dated November 11, 1996
between Meredith Corporation and Jack D. Rehm. (Reference is made
to an Employment Agreement filed with the Commission as Exhibit 10c
to the Company's Form 10-K for the year ended June 30, 1992 and
Restricted Stock Agreements filed with the Commission as Exhibits
10b(1) and 10b(2) to the Company's Form 10-Q for the quarter ended
September 30, 1992.)
10.3) 1992 Meredith Corporation Stock Incentive Plan Agreement dated
July 1, 1996, between Meredith Corporation and William T. Kerr
10.4) 1996 Meredith Corporation Stock Incentive Plan Agreement dated
August 14, 1996, between Meredith Corporation and William T. Kerr
10.5) Statement re: Meredith Corporation Nonqualified Stock Option Award
Agreements with William T. Kerr
11) Statement re computation of per share earnings
27) Financial Data Schedule
99) Additional financial information from the Company's second quarter
press release dated January 22, 1997
(b) Reports on Form 8-K
On October 25, 1996, Meredith Corporation, through its cable venture,
Meredith/New Heritage Partnership, reported the completion of the sale of
its ownership interest in Meredith/New Heritage Strategic Partners, L.P.
On November 11, 1996, Meredith Corporation's board of directors elected
William T. Kerr, the Company's president and chief operating officer, as
president and chief executive officer effective January 1, 1997.
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<PAGE>
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 11, 1997
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<PAGE>
Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
3 Restated Bylaws, as amended
10.1 Employment agreement dated November 11, 1996 between Meredith
Corporation and William T. Kerr
10.2 Consultancy Agreement, Amendment to Employment Agreement and
Amendment to Restricted Stock Agreements dated November 11,
1996 between Meredith Corporation and Jack D. Rehm.
10.3) 1992 Meredith Corporation Stock Incentive Plan Agreement
dated July 1, 1996, between Meredith Corporation and William
T. Kerr
10.4) 1996 Meredith Corporation Stock Incentive Plan Agreement
dated August 14, 1996, between Meredith Corporation and
William T. Kerr
10.5) Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with William T. Kerr
11 Statement re computation of per share earnings
27 Financial Data Schedule
99 Additional financial information from the Company's second
quarter press release dated January 22, 1997
Exhibit 3
---------
BYLAWS
OF
MEREDITH CORPORATION
Effective
November 11, 1996
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
date, time and place as may be fixed from time to time by resolution of the
Board of Directors and set forth in the notice of the meeting, for the purpose
of electing directors and transacting such other business as may properly come
before the meeting.
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before an annual meeting. To be
properly brought before an annual meeting, business must be (i) specified in
the notice of the meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (ii) otherwise properly brought before the
meeting by or at the direction of the Board of Directors or (iii) otherwise
properly brought before the meeting by a shareholder of the corporation who was
a shareholder of record at the time of giving of notice provided for in this
Section, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section. For business to be properly
brought before an annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the corporation at
the principal executive office of the corporation. To be timely, a
shareholder's notice shall be delivered not less than 90 days prior to the
first anniversary of the preceding year's meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
shareholder, to be timely, must be so delivered not later than the 90th day
prior to such annual meeting or the 10th day following the day on which public
announcement (as defined herein) of the date of such meeting is first made.
Page 1 of 28
<PAGE>
Such shareholder's notice shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (ii) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the proposal is made (A) the name and
address of such shareholder, as they appear on the corporation's books, and the
name and address of such beneficial owner and (B) the class and number of
shares of the corporation which are owned beneficially and of record by such
shareholder and such beneficial owner; and (iii) in the event that such
business includes a proposal to amend either the Articles of Incorporation or
the Bylaws of the corporation, the language of the proposed amendment.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with this paragraph, and
the Chairman of the Board or other person presiding at an annual meeting of
shareholders, may refuse to permit any business to be brought before an annual
meeting without compliance with the foregoing procedures. For the purposes of
this paragraph "public announcement" shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press or comparable national
news service or in a document publicly filed by the corporation with the
Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In addition
to the provisions of this paragraph, a shareholder shall also comply with all
applicable requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth herein. Nothing in these
Bylaws shall be deemed to affect any rights of shareholders to request
inclusion of proposals in the corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
Section 2. SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, may be called by the Chairman of the Board, the Chief
Executive Officer, 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. Business transacted at a special meeting of the shareholders shall
be confined to the purpose or purposes of the meeting described in the notice
of the meeting.
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.
Page 2 of 28
<PAGE>
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
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 Chief Executive Officer, 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. POSTPONEMENT OF MEETINGS. Any previously scheduled annual or
special meeting of shareholders may be postponed by resolution of the Board of
Directors upon public announcement (as defined in Article II, Section 1 of
these Bylaws) made on or prior to the date previously scheduled for such annual
or special meeting.
Section 6. 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 7. 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
Page 3 of 28
<PAGE>
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
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 8. 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 9. 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 10. 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
Page 4 of 28
<PAGE>
[b] of this Section 10) 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.
(b) Notwithstanding subsection [a] of this Section 10, 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 11. 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 to do so is 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.
Page 5 of 28
<PAGE>
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 12. 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.
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; NOMINATIONS. 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.
Nominations of persons for election as directors may be made by the Board
of Directors or by any shareholder entitled to vote for the election of
directors. Any shareholder entitled to vote for the election of directors may
nominate a person or persons for election as director only if written notice of
such shareholder's intent is delivered to the Secretary of the corporation at
the principal executive office of the corporation (i) with respect to an
election to be held at an annual meeting of shareholders, not later than 90
days prior to the first anniversary of the preceding year's annual meeting, or
as set out below, and (ii) with respect to an election to be held at a special
meeting of shareholders for the election of directors, not later than 10 days
following the date on which public announcement (as defined in Article II,
Section 1 of these Bylaws) of the date of such meeting is first made. In the
event that the date of the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date of the annual meeting,
notice by the shareholder must be delivered not less than 90 days prior to such
annual meeting or the 10th day following the day on which public announcement
of the date of such meeting is first made. Notwithstanding anything in the
foregoing sentence to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the corporation is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the corporation
at least 100 days prior to the first anniversary of the preceding year's annual
Page 6 of 28
<PAGE>
meeting, a shareholder's notice required by this Section shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary of the
corporation not later than the close of business on the 10th day following the
day on which such public announcement is first made.
Such shareholder's notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and the name, address, age, and
principal occupation or employment of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) the number and class of shares of the corporation which are owned
by such shareholder and the beneficial owner, if any, and the number and class
of shares, if any, beneficially owned by the nominee; (d) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (e) such other
information regarding each nominee that is required to be disclosed in
connection with the solicitation of proxies for the election of directors, or
as otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including, without limitation, such person's written consent to
being named in a proxy statement as a nominee and to serving as a director if
nominated). The Chairman of the Board or other person presiding at a meeting
of shareholders may refuse to acknowledge the nomination of any person not made
in accordance with the procedures prescribed by these Bylaws, and in that event
the defective nomination shall be disregarded.
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 Chief
Executive Officer, the 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,
Page 7 of 28
<PAGE>
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.
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. 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
Page 8 of 28
<PAGE>
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.
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
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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, Chief Executive Officer 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:
(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;
(8) review annual capital end operating budgets and advise the Board of
Directors or Executive Committee regarding the financial implications
thereof;
(9) monitor the corporation's financial condition and standing in the
financial and investment communities;
(10) review and make recommendations to the Board of Directors concerning
acquisitions and dispositions;
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(11) monitor the risk management activities of the corporation; and
(12) consider any other matters concerning the corporation's financial
structure, condition, financing plans and policies and make
recommendations to the Board of Directors on such matters.
Section 14. COMPENSATION/NOMINATING COMMITTEE. A Compensation/Nominating
Committee consisting of two or more members of the Board of Directors who are
non-employee directors as defined in Rule 16b-3(b)(3)(i) under the Exchange Act
and outside directors as defined in regulations under Section 162(m) of the
Internal Revenue Code 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' compensation;
(2) review and make recommendations to the Board of Directors on
directors' compensation;
(3) 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, all agreements related thereto, and administer and supervise
such plans as the language thereof may require;
(5) review and make recommendations to the Board of Directors on director
stock plans and all agreements related thereto;
(6) review all employee benefit plans, including the levels and types of
benefits provided thereunder, and propose amendments thereto for
approval by the Board of Directors;
(7) 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;
(8) act as a nominating committee to propose and recommend to the
Board of Directors nominees for election or appointment as directors;
and
(9) engage in such additional review and assessment as it may deem
necessary or appropriate to perform the foregoing duties.
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Section 15. AUDIT COMMITTEE. An Audit Committee consisting of two or
more members of the Board of Directors who are independent of management within
the meaning of the policy statement on audit committees issued by the New York
Stock Exchange 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) review and recommend annually to the Board of Directors the
engagement of independent public accountants to audit the books and
records of the corporation and its subsidiaries;
(2) meet prior to the start of any audit by the outside audit firm and
review the scope of the audit to be performed;
(3) meet prior to the publication of the annual report and review results
of the audit by the outside audit firm for the year;
(4) meet with and determine the responsibilities and scope of the
internal audit department and review internal audit reports;
(5) review the corporation's accounting principles and policies and
internal accounting controls;
(6) review the effect of changes in accounting principles or of other
developments emanating from the profession, its standard board or
any governmental authority;
(7) carry on such other activities so as to give additional assurance
regarding the financial information used by the Board of Directors
in making decisions;
(8) carry on such other activities so as to give additional assurance
regarding the financial information distributed to outsiders; and
(9) review the standards and policies of proper business conduct and
practices for the corporation and its employees and monitor the
implementation of, and the compliance with the standards and
policies.
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 propose amendments thereto
for approval by the Board of Directors;
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(2) review the levels and types of benefits provided under the
corporation's pension plans and other features thereof, including
eligibility, vesting and the form of payment of benefits;
(3) recommend to the Board of Directors investment policy and objectives
for all employee pension funds, review the investment performance of
such funds and recommend revision of the policy and objectives as may
be required;
(4) recommend to the Board of Directors the funding policies for all
employee pension funds;
(5) 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; and
(6) engage in such additional review and assessment as it may deem
necessary or appropriate to perform the bargaining duties.
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.
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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
upon the request of any member of the committee or the Chairman of the Board,
Chief Executive Officer 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. Expenses of attendance,
if any, shall be paid for attendance at each meeting of any committee. 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 Chief Executive Officer,
a President (who, unless otherwise determined by the Board, shall be 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, Chief Executive Officer, President (unless the duties of
President are performed by the Chief Executive Officer), 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 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.
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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, Chief
Executive Officer 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
Chief Executive Officer.
Section 4. VACANCIES. A vacancy in the office of Chairman of the Board,
Chairman of the Executive Committee, Chief Executive Officer 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 by the Executive Committee or the
Chief Executive Officer.
Section 5. CHAIRMAN OF THE BOARD. 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
Chairman of the Board.
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 may be prescribed by
the Board of Directors from time to time.
Section 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
the principal executive officer of the corporation and, in general shall,
subject to the authority of the Board of Directors, supervise and control all
of the business, policies and affairs of the corporation and all other officers
of the corporation except for the Chairman of the Board and the Chairman of the
Executive Committee. The Chief Executive Officer shall have the general powers
and duties usually vested in the principal executive officer of a corporation,
unless the Board of Directors shall elect another person as President and shall
delegate some or all of such powers and duties to the President. The Chief
Executive Officer shall perform such other duties as may be prescribed by the
Board of Directors from time to time.
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Section 8. PRESIDENT. The President shall be the Chief Operating Officer
of the corporation (unless otherwise determined by the Board of Directors). As
the Chief Operating Officer, the President shall have the management of and
exercise general supervision over the corporation's operating groups and all
its Group Presidents, subject to the control and supervision of the Chief
Executive Officer. The President shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the Chief
Executive Officer from time to time.
Section 9. GROUP PRESIDENTS. Each Group President, within the
limitations placed by the policies adopted by the Board of Directors or the
Chief Executive Officer, 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 or the Chief Executive Officer.
Section 10. 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 Chief Executive Officer. An Executive Vice 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 corporation
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 or the Chief Executive Officer 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 11. 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, the Chief Executive Officer, the President and the Board
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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 Chief
Executive Officer.
Section 12. THE SECRETARY. The Secretary shall: (a) prepare and keep
the minutes of the meetings of the shareholders, the Board of Directors, and
committees of the Board of Directors 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) authenticate the records of
the corporation; (f) have general charge of the stock transfer books of the
corporation; and (g) 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 Chief Executive Officer.
Section 13. THE TREASURER. Subject to the supervision of the Vice
President-Finance, 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, the Chief Executive Officer or the
Vice President-Finance.
Section 14. 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,
the Chief Executive Officer or the Vice President-Finance.
Section 15. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries, when authorized by the Board of Directors, may sign with
the Chairman of the Board, the Chief Executive Officer, 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
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assigned to them by the Secretary, the Chief Executive Officer or the Board of
Directors. The Assistant Treasurers, in general, shall perform such duties as
shall be assigned to them by the Treasurer, the Chief Executive Officer, the
Board of Directors or the Vice President-Finance.
Section 16. OTHER ASSISTANT AND ACTING OFFICERS. The Board of Directors
or the Chief Executive Officer 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 Board of Directors or
the Chief Executive Officer 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 17. SALARIES. The salaries of the officers shall be fixed from
time to time by the Compensation/Nominating Committee of the Board of Directors
and no officer shall be prevented from receiving such salary by reason of also
being a director of the corporation.
ARTICLE V. GROUPS AND STAFF
Section 1. ESTABLISHMENT OF GROUPS. The Board of Directors or the Chief
Executive Officer 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 Chief
Executive Officer 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 Chief Executive Officer.
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 Chief Executive Officer 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 Chief
Executive Officer may deem appropriate from time to time. Such officers shall
have such authority as may from time to time be assigned by the Chief Executive
Officer.
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ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Chairman of the Board, the Chairman of the
Executive Committee, the Chief Executive Officer 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, the Chairman of the Executive Committee, the Chief Executive Officer 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.
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, the Chief Executive Officer, the President or a Vice President and by
the Secretary or an Assistant Secretary, provided, however, that if any stock
certificate is countersigned by a transfer agent, other than the corporation or
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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.
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.
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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
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;
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(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:
(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
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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.
(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.
Page 23 of 28
<PAGE>
(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.
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.
(v) The term "grandparent" means an ancestor in any degree born after
January 1, 1976.
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.
Page 24 of 28
<PAGE>
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.
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.
Page 25 of 28
<PAGE>
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."
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
Page 26 of 28
<PAGE>
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.
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.
Page 27 of 28
<PAGE>
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.
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 28 of 28
EXHIBIT 10.1
------------
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of the 11th day of November, 1996, by and
between MEREDITH CORPORATION, an Iowa corporation (the "Company"), and WILLIAM
T. KERR ("Kerr").
W I T N E S S E T H:
WHEREAS, Kerr has been employed by the Company since September 10, 1991,
pursuant to an Employment Agreement of that same date;
WHEREAS, the Company wishes to continue to employ Kerr pursuant to the
terms and conditions hereof, and in order to induce Kerr to enter into this
agreement (the "Agreement") and to secure the benefits to accrue from his
performance hereunder is willing to undertake the obligations assigned to it
herein; and
WHEREAS, Kerr is willing to continue his employment with the Company under
the terms hereof and to enter into the Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Position; Duties; Responsibilities.
1.1 Kerr shall serve as Chief Executive Officer and President of the
Company, and, as contemplated by Section 9.6, in such other position as elected
by the Board of Directors of the Company. Kerr shall at all times report to
and be subject to the supervision, control and direction of the Board of
Directors of the Company. Kerr shall at all times be the most senior executive
officer of the Company and all other officers shall report to him, except for
Mr. Jack D. Rehm who shall remain as Chairman of the Board through December 31,
1997, and E. T. Meredith III. Kerr shall have such other responsibilities and
authorities consistent with the status, titles and reporting requirements set
forth herein as are appropriate to said positions, subject to change (other
than diminution in position, authority, duties or responsibilities) from time
to time by the Board of Directors of the Company. Anything to the contrary
above notwithstanding, the Board of Directors may elect another employee of the
Company to the office of President, which shall not constitute a breach by the
Company of its obligation to Kerr under this paragraph so long as the
compensation to be paid to Kerr under this Agreement is not reduced as a result
of such election.
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<PAGE>
1.2 During the course of his employment, Kerr agrees to devote his
full time and attention and give his best efforts and skills to furthering the
business and interests of the Company, which may include Kerr volunteering his
time and efforts on behalf of charitable, civic, professional organizations and
boards of other corporations.
2. Term.
The term of employment under this Agreement shall commence as of
January 1, 1997, and shall continue through December 31, 2001, unless sooner
terminated in accordance with this Agreement, and thereafter as herein
provided. Kerr's term of employment shall automatically renew for subsequent
one (1) year terms, the first of which would begin on January 1, 2002, subject
to the terms of this Agreement unless either party gives written notice ninety
(90) days or more prior to the expiration of the then existing term of its
decision not to renew.
3. Salary.
3.1 The Company shall pay Kerr a base salary during the term of
employment at the minimum annual rate of Five Hundred Fifty Thousand Dollars
($550,000) ("Base Salary"), payable in accordance with the standard payroll
practices of the Company.
3.2 It is understood that the Base Salary is to be Kerr's minimum
annual compensation during Kerr's employment with the Company. The Base Salary
may increase at the discretion of the Compensation/Nominating Committee of the
Company's Board of Directors ("Compensation Committee"). "Base Salary" shall
include all such increased amounts.
4. Long-Term Incentive Plans.
4.1 During the course of his employment, Kerr shall be eligible to
participate in all long-term incentive plans, including, without limitation,
stock incentive plans adopted by the Company and in effect (collectively,
"Long-Term Incentive Plans"), at levels of awards to be granted by the
Compensation Committee commensurate with the level of Kerr's responsibilities,
and performance thereof. In partial consideration for Kerr's future employment
with the Company, the Compensation Committee has granted and taken all other
necessary action to award the following grants of non-qualified stock options
under the Company's Stock Incentive Plans, which shall be in lieu of awards of
non-qualified stock options that otherwise would be granted to Kerr in 1996,
1997 and 1998:
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<PAGE>
FMV FMV
Exercise Exercise
Options Price Options Price + 25% Total
------- -------- ------- ------------ -------
July 1, 1996 58,300 $42.187 29,200 $52.734 87,500
August 14, 1996 58,300 $40.625 29,200 $50.781 87,500
January 2, 1997 116,700 TBD 58,300 TBD 175,000
------- ------- -------
TOTAL 233,300 116,700 350,000
======= ======= =======
All necessary action to grant the options listed above as January 2,
1997, grants has been taken by the Compensation Committee and the only
remaining action to be taken is the determination of the exercise price of the
options based on the fair market price of the Company stock on January 2, 1997
(average of the high and low selling prices).
The above-listed options will be exercisable on or after the fifth
anniversary of the date of grant. Retirement (as defined under the Company's
qualified retirement plans) will not accelerate the vesting of the above-listed
options. The general terms of the Company's stock incentive plans shall apply
to all grants of options under those plans except as otherwise provided herein
or in the stock option agreements between Kerr and the Company. Copies of all
stock incentive plans have been provided to Kerr.
4.2 In the event Kerr's employment with the Company is terminated
prior to January 2, 1997, by reason of death or disability (as provided in
Section 9.2), the non-qualified stock options to be granted to Kerr on January
2, 1997, pursuant to Section 4.1 shall be granted by the Company to Kerr's
estate or to Kerr or Kerr's personal representative, as the case may require,
provided that such stock options may not be granted from a Company stock
incentive plan and therefore will be subject to all applicable restrictions
under the regulations of the Securities and Exchange Commission.
4.3 Subject to the next sentence of this Section 4.3, should the non-
qualified stock options to be granted on January 2, 1997, in Section 4.1 not be
timely granted, Kerr shall have the right to terminate his services hereunder,
by written notice to the Company, effective as of the last day of the month of
receipt by the Company of any such notice but no later than March 31, 1997, and
Kerr shall have no further obligation of any kind under or arising out of this
Agreement (other than pursuant to Section 10). Should a circumstance or event
not within the reasonable contemplation of the parties at the date hereof arise
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<PAGE>
on or before January 2, 1997, that makes it inadvisable or undesirable in the
reasonable judgment of the Compensation Committee to grant to Kerr the non-
qualified stock options on January 2, 1997, and should the Compensation
Committee on or about such date, because of such intervening circumstance or
event, instead bestow upon Kerr benefits of reasonably equivalent value and
having comparable payment dates, Kerr shall thereupon forego his right of
termination under the preceding sentence. Termination of Kerr's services under
this Section 4.3 shall be treated as a termination of employment by the Company
other than for Due Cause and shall be governed by the provisions of Section
9.4.
5. Bonus.
5.1 During the course of his employment, Kerr shall be eligible to
participate in the Meredith Management Incentive Plan ("MIP"), for such period
as it continues in effect, subject to the terms of the MIP, and to the
discretion vested in the Compensation Committee under the MIP; provided,
however, that the percentage of Base Salary payable as a target bonus under the
MIP shall not be less than fifty percent (50%) (actual Company financial
results may result in an actual bonus paid to Kerr equal to less than or more
than fifty percent (50%) of Base Salary).
5.2 All bonuses pursuant to this Section 5 shall be paid to Kerr in
conformance with the Company's normal bonus pay policies following the end of
the respective fiscal year. For the purpose of this Section 5, the phrase
"paid with respect to the fiscal year" shall include payments made outside of
the fiscal year but for such fiscal year and shall exclude payments made in the
fiscal year that are for another fiscal year.
6. Short-Term Disability.
During any period of short-term disability, the Company will continue
to pay to Kerr the Base Salary throughout the period of short-term disability,
but in no event beyond April 30, 2006. In addition, Kerr will continue to
receive all rights and benefits under the benefit plans and programs of the
Company in which Kerr is a participant as determined in accordance with the
terms of such plans and programs, and Kerr shall be eligible to receive the
benefit of the bonus for the year or years in which the short-term disability
occurs without reduction for the period of short-term disability. In the event
of Kerr's death during a period of short-term disability, the provisions of
Section 9.1 shall apply. For the purposes of this Agreement, short-term
disability shall be defined as the incapacitation of Kerr by reason of
sickness, accident or other physical or mental disability which continues for a
period not to exceed the fifth month anniversary of the date of the cause or
onset of such incapacitation. In the event Kerr becomes permanently disabled
(as determined under Section 9.2), the provisions of Section 9.2 shall apply.
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<PAGE>
7. Employee Benefit Plans.
7.1 During Kerr's employment with the Company and subject to all
eligibility requirements, and to the extent permitted by law, Kerr will have
the opportunity to participate in all employee benefit plans and programs
generally available to the Company's employees in accordance with the
provisions thereof as in effect from time to time, including, without
limitation, medical coverage, group life insurance, holidays and vacations,
Meredith Savings and Investment Plan (401k) and the Meredith Employees'
Retirement Income Plan, but not including the Company's short-term and long-
term disability plans.
7.2 In addition to benefits described in Section 7.1, Kerr shall also
receive or participate in, to the extent permitted by law, the various
perquisites and plans generally available to officers of the Company in
accordance with the provisions thereof as in effect from time to time
including, without limitation, the following perquisites to the extent the
Company continues to offer them: an automobile or automobile allowance, country
club dues, dining club dues, tax and estate planning, supplemental medical plan
and executive life insurance (if insurable). In addition, Kerr shall
participate in the Meredith Replacement Benefit Plan and the Meredith
Supplemental Benefit Plan.
7.3 In addition to the other pension benefits, qualified and non-
qualified, to be provided Kerr under this Section 7, the Company agrees to
continue to provide a non-qualified retirement program for Kerr as described in
the attached Exhibit A ("SERP"); however, Kerr's entitlements to benefits under
such non-qualified retirement programs are subject to termination under the
provisions of Sections 9.3, 9.5 and 9.9 below. Except as provided in Section
9.3, 9.5 and 9.9, the SERP shall not be subject to termination or amendment by
the Company without the consent of Kerr, which may be withheld for any or no
reason.
If at any time the SERP cannot operate because of prohibitions of law
and Kerr is otherwise eligible to receive benefits under the terms of the SERP,
the Company agrees to make a payment or payments to Kerr or, if applicable, to
his estate to provide the economic equivalent (giving effect to the time use of
money) to him or his beneficiaries, provided that no such payments shall be
made if such payments would be prohibited by law. It is the intention of the
parties, should the circumstances contemplated by the preceding sentence occur,
that payments to Kerr in lieu of payments under the SERP shall be made at the
time and in the manner permissible that most nearly approximates the time and
manner in which payments would have been made under the SERP.
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<PAGE>
8. Expense Reimbursements.
During Kerr's employment with the Company, Kerr will be entitled to
receive reimbursement by the Company for all reasonable, out-of-pocket expenses
incurred by him (in accordance with policies and procedures established by the
Company), in connection with his performing services hereunder, provided Kerr
properly accounts therefor. In consideration of Kerr's use of his own
residence while conducting business in New York City, the Company agrees to pay
Kerr Two Hundred Twenty-five Dollars ($225) for each night Kerr is reasonably
required to spend in New York City on account of his attention to the Company's
business in New York City or environs.
9. Consequences of Termination of Employment.
9.1 Death. In the event of the death of Kerr during the term of this
Agreement or during the period when payments are being made pursuant to
Sections 6 or 9.2, this Agreement shall terminate and all obligations to Kerr
shall cease as of the date of death except that, (a) the Company will pay the
Base Salary until the end of the month of the first anniversary of Kerr's death
(but not beyond April 30, 2006), and (b) all rights and benefits of Kerr under
the benefit plans and programs of the Company including, without limitation,
the SERP in which Kerr is a participant, will be provided as determined in
accordance with the terms and provisions of such plans and programs. Any bonus
(or amounts in lieu thereof) pursuant to Section 5, payable for the fiscal year
in which Kerr's death occurs, shall be determined by the Compensation Committee
at its meeting following the end of such fiscal year pro rata to the date of
death and promptly paid to Kerr's estate. All awards of restricted stock,
stock options and any other benefits under the Long-Term Incentive Plans shall
be handled in accordance with the terms of the relevant plan and agreements
entered into between Kerr and the Company with respect to such awards.
9.2 Disability. If Kerr shall become permanently incapacitated by
reasons of sickness, accident or other physical or mental disability, as such
incapacitation is certified by a physician chosen by the Company and reasonably
acceptable to Kerr (if he is not then unable to exercise sound judgment), and
shall therefore be unable to perform his normal duties hereunder, then the
employment of Kerr hereunder and this Agreement may be terminated by Kerr or
the Company upon thirty (30) days' written notice to the other party following
such certification. Should Kerr not acquiesce (or should he be unable to
acquiesce) in the selection of the certifying doctor, a doctor chosen by Kerr
(or if he is not then able to exercise sound judgment, by his spouse or
personal representative) and reasonably acceptable to the Company shall be
required to concur in the medical determination of incapacitation, failing
which the two doctors shall designate a third doctor whose decision shall be
determinative as of the end of the calendar month in which such concurrence or
third-doctor decision, as the case may be, is made. The Company shall
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<PAGE>
thereafter pay to Kerr, at such times as Base Salary provided for in Section 3
of this Agreement would normally be paid, 100% of Base Salary for the first
twelve months following such termination, 75% of Base Salary for the next
twelve-month period and 50% of Base Salary for the remaining period of what
would have constituted the current term of employment but for termination by
reason of disability (but in no event beyond April 30, 2006). Following the
termination pursuant to this Section 9.2, the Company shall pay or provide to
Kerr such other rights and benefits of participation under the employee benefit
plans and programs of the Company including, without limitation, the SERP in
which Kerr is a participant, to the extent that such continued participation is
not otherwise prohibited by applicable law or by the express terms and
provisions of such plans and programs. All benefits provided under this
Section 9.2 shall be in replacement of and not in addition to benefits payable
under the Company's short-term and long-term disability plans. All awards of
restricted stock, stock options and any other benefits under the Long-Term
Incentive Plans shall be handled in accordance with the terms of the relevant
plan and agreements entered into between Kerr and the Company with respect to
such awards.
9.3 Due Cause. The Company may terminate Kerr's employment, remove
him as an officer and director of the Company and terminate this Agreement at
any time for Due Cause. In the event of such termination for Due Cause, Kerr
shall continue to receive Base Salary payments provided for in this Agreement
only through the date of such termination for Due Cause, and Kerr shall be
entitled to no further benefits under this Agreement, except that any rights
and benefits Kerr may have under the employee benefit plans and programs of the
Company, in which Kerr is a participant, shall be determined in accordance with
the terms and provisions of such plans and programs. Kerr understands and
agrees that in the event of the termination of employment, removal as an
officer and director and termination of this Agreement pursuant to this Section
9.3: (a) All awards of restricted stock, stock options and any other benefits
under the Long-Term Incentive Plans shall be handled in accordance with the
terms of the relevant plan and agreements entered into between Kerr and the
Company with respect to such awards; (b) the Company shall have no further
obligation to pay any bonus to Kerr under the terms of the MIP or this
Agreement; and (c) the Company shall have no obligation to provide benefits
under the SERP, but that the obligations of Kerr under Section 10 shall remain
in full force and effect. The term "Due Cause" shall mean repeated and gross
negligence in fulfillment of, or repeated failure of Kerr to fulfill his
material obligations under this Agreement, in either event after due written
notice thereof, or serious willful misconduct by Kerr in respect of his
obligations hereunder. Due Cause should not include, without limitation, (w)
refusal by Kerr of an assignment not consistent with the status, titles and
reporting requirements set forth herein or contemplated hereby, or (x) bad
judgment or negligence of Kerr, or (y) any act or omission (other than one
constituting a material breach of trust committed in willful or reckless
- 7 -
<PAGE>
disregard of the interests of the Company and undertaken for personal gain) in
respect of which a determination could properly have been made by the Board of
Directors of the Company that Kerr met the applicable standard of conduct
prescribed for indemnification or reimbursement under the Bylaws of the Company
or the laws of Iowa, in each case in effect at the time of such act or
omission, or (z) any act or omission with respect to which notice of
termination is given more than twelve (12) months after the earliest date on
which any non-employee director of the Company who was not a party to such act
or omission knew or should have known of such act or omission.
9.4 At Will. The other provisions of this Agreement notwithstanding,
the Company may terminate Kerr's employment, remove him as an officer and
director and terminate this Agreement at any time for whatever reason it deems
appropriate, with or without cause and with or without prior notice. In the
event of such a termination of Kerr's employment and this Agreement, Kerr shall
have no further obligations of any kind under or arising out of the Agreement
(except for the obligations of Kerr under Section 10) and the Company shall be
obligated only to pay Kerr the following: (a) Base Salary and the bonus amounts
provided in Section 5 of this Agreement through the end of the then current
term of employment as provided in Section 2 of this Agreement, but no less than
a total of twelve (12) months of Base Salary and target bonus under the MIP or
successor plans; (b) an additional amount equal to Twelve Dollars and Fifty
Cents ($12.50) per share for each share of restricted Company stock awarded to
Kerr in 1991 for which the restriction period has not lapsed on the date of the
termination of employment pursuant to this Section 9.4 (which per share amount
shall be adjusted in the event of a stock split); and (c) any other amounts due
and owing not then paid. Kerr agrees that the payments described in this
Section 9.4 shall be full and adequate compensation to Kerr for all damages
Kerr may suffer as a result of the termination of his employment pursuant to
this Section 9.4 or Sections 4.3, 9.6, 9.7, 9.8 or 9.10 and hereby waives and
releases the Company from any and all obligations or liabilities to Kerr
arising from or in connection with Kerr's employment with the Company or the
termination of his employment including, without limitation, all rights and
claims Kerr may have under federal, state or local statutes, regulations or
ordinances or under any common law principles of breach of contract or the
covenant of good faith and fair dealing, defamation, wrongful discharge,
intentional infliction of emotional distress or promissory estoppel; provided,
however, that any rights and benefits Kerr may have under the employee benefit
plans and programs of the Company, including, without limitation, the SERP, in
which Kerr is a participant, shall be determined in accordance with the terms
and provisions of such plans and programs. After the date of termination under
this Section 9.4 or Sections 4.3, 9.6, 9.7, 9.8 or 9.10, Kerr shall not be
treated as an employee for purposes of the Company's employee benefit plans or
programs even though he may continue to receive payments as provided in this
Section 9.4. All awards of restricted stock, stock options and any other
benefits under the Long-Term Incentive Plans shall be handled in accordance
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<PAGE>
with the terms of the relevant plan and agreements entered into between Kerr
and the Company with respect to such awards.
9.5 Employee Voluntary. In the event Kerr terminates his employment
of his own volition prior to the end of the term of this Agreement, except for
a termination as described in Sections 4.3, 9.6, 9.7, 9.8 or 9.10, such
termination shall constitute a voluntary termination and in such event the
Company's only obligation to Kerr shall be to make Base Salary payments
provided for in this Agreement through the period ending with the date of such
voluntary termination. Except as may be otherwise expressly provided in
Section 4.3, 6, 7.3, and 9.2, but subject to the following provisions of this
Section 9.5, any rights and benefits Kerr may have under the employee benefit
plans and programs of the Company, in which he is a participant, shall be
determined in accordance with the terms and provision of such plans and
programs. Kerr understands and agrees that in the event of the termination of
employment pursuant to this Section 9.5: (a) All awards of restricted stock,
stock options and any other benefits under the Long-Term Incentive Plans shall
be handled in accordance with the terms of the relevant plan and agreements
entered into between Kerr and the Company with respect to such awards;(b) the
Company shall have no further obligation to pay any bonus to Kerr under the
terms of the MIP or this Agreement; and (c) the Company shall have no
obligation to provide benefits under the SERP, but that the obligations of Kerr
under Section 10 shall remain in full force and effect.
9.6 Failure to Elect or Re-elect as Chairman of the Board of
Directors. In the event Kerr is not elected to the position of Chairman of the
Board of Directors of the Company effective on or about January 1, 1998, Kerr
shall have the right to terminate his employment with the Company within ninety
(90) days of being notified that such election will not occur by said date or,
if not so notified, on or at any time after January 2, 1998, but before April
1, 1998, and in any such case, such termination shall be deemed to be
termination by the Company without "Due Cause". In the event Kerr is not
re-elected to or is removed from the position of Chairman of the Board (for
reasons other than for Due Cause), Kerr shall have the right to terminate his
employment with the Company within ninety (90) days of being notified of such
action, and such termination shall be deemed to be termination by the Company
without "Due Cause," and such termination shall be treated in accordance with
the terms of Section 9.4 above.
If Kerr shall terminate his employment and such termination is deemed
to be termination by the Company without Due Cause pursuant to this Section or
Sections 4.3, 9.7, 9.8 or 9.10, Kerr shall be entitled to the same rights and
benefits, and free of all further obligations of any kind under or arising out
of this Agreement (except for obligations under Section 10), all as provided in
connection with a termination pursuant to Section 9.4 above. Kerr agrees that
the payments described in Section 9.4 shall be full and adequate compensation
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<PAGE>
to Kerr for all damages he may suffer as a result of the termination of his
employment pursuant to this Section or Sections 4.3, 9.7, 9.8 or 9.10, and
hereby waives and releases the Company from any and all obligations or
liabilities to Kerr arising from or in connection with Kerr's employment with
the Company or the termination of his employment including, without limitation,
all rights and claims Kerr may have under federal, state or local statutes,
regulations or ordinances or under any common law principles of breach of
contract or the covenant of good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress or promissory estoppel;
provided, however, that any rights and benefits Kerr may have under the
employment benefit plans and programs of the Company, including, without
limitation, the SERP, in which Kerr is a participant, shall be determined in
accordance with the terms and provisions of such plans and programs. All
awards of restricted stock, stock options and any other benefits under the
Long-Term Incentive Plans shall be handled in accordance with the terms of the
relevant plan and agreements entered into between Kerr and the Company with
respect to such awards.
9.7 Failure to Re-elect as Chief Executive Officer, Director or
Member of Executive Committee. If at any time Kerr is not re-elected to or is
removed from the office of Chief Executive Officer, or as a Director of the
Company or as a member of the Executive Committee of the Company's Board of
Directors (for reasons other than for Due Cause), Kerr shall have the right to
terminate his employment with the Company by giving written notice within
ninety (90) days after the date of such action, and such termination shall be
deemed to be termination by the Company without "Due Cause," and such
termination shall be treated in accordance with the terms of Section 9.4 above.
9.8 Effect of Non-Renewal. If at any time the Company gives notice
pursuant to Section 2 of its decision not to renew this Agreement, Kerr shall
have the right to terminate his employment with the Company, as of such date or
at any time thereafter, in which case, such termination shall be deemed to be
termination by the Company without "Due Cause," and such termination shall be
treated in accordance with the terms of Section 9.4 above.
9.9 Retirement Before Age 65. In the event Kerr elects to retire
from employment with the Company and commence the available benefits under
certain of the Company's benefit plans and programs prior to attaining age 65,
Kerr shall receive retirement benefits under the SERP only to the extent and in
the amounts as determined by the Board of Directors of the Company.
Termination of employment pursuant to Section 9.4, 9.6, 9.7, 9.8 or 9.10, shall
not be deemed to be retirement within the meaning of this Section and Kerr
shall be entitled to retirement benefits under the SERP. All awards of
restricted stock, stock options and any other benefits under the Long-Term
Incentive Plans shall be handled in accordance with the terms of the relevant
plan and agreements entered into between Kerr and the Company with respect to
such awards.
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<PAGE>
9.10 Change in Control. In the event of a "Change in Control," as
that term is defined in the Severance Agreement by and between Kerr and the
Company dated September 10, 1991 ("Severance Agreement"), and Kerr's employment
is not terminated by the Company and Kerr is not entitled to terminate his
employment with the Company for "Good Reason" or otherwise under terms of the
Severance Agreement, Kerr may nonetheless terminate this Agreement and his
employment with the Company and such termination shall be deemed to be
termination by the Company without "Due Cause" if the Company remains in
existence following the Change in Control as a subsidiary of the controlling
party with Kerr as Chief Executive Officer of the Company, and such termination
shall be treated in accordance with the terms of Section 9.4 above.
10. Covenants of Kerr.
10.1 Kerr acknowledges that as a result of the services to be
rendered to the Company hereunder, Kerr will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. Kerr further acknowledges that the services
to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
national in scope; that its goods and services are marketed throughout the
United States; and that the Company competes with other organizations that are
or could be located in nearly any part of the United States.
10.2 In recognition of the foregoing, Kerr covenants and agrees that,
except as is necessary in providing services under this Agreement or to the
extent necessary to comply with law or the valid order of a court or government
agency of competent jurisdiction, Kerr will not knowingly use for his own
benefit nor knowingly divulge any Confidential Information and Trade Secrets of
the Company, its subsidiaries and affiliated entities, which are not otherwise
in the public domain and, so long as they remain Confidential Information and
Trade Secrets not in the public domain, will not intentionally disclose them to
anyone outside of the Company either during or after his employment. For the
purposes of this Agreement, "Confidential Information and Trade Secrets" of the
Company means information which is secret to the Company, its subsidiaries and
affiliated entities. It may include, but is not limited to, information
relating to the magazines, books, publications, products, services, television
stations, real estate franchise operations, new and future concepts and
business of the Company, its subsidiaries and affiliates, in the form of
memoranda, reports, computer software and data banks, customer lists, employee
lists, books, records, financial statements, manuals, papers, contracts and
strategic plans. As a guide, Kerr is to consider information originated,
owned, controlled or possessed by the Company, its subsidiaries or affiliated
entities which is not disclosed in printed publications stated to be available
for distribution outside the Company, its subsidiaries and affiliated entities
as being secret and confidential. In instances where doubt does or should
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reasonably be understood to exist in Kerr's mind as to whether information is
secret and confidential to the Company, its subsidiaries and affiliated
entities, Kerr agrees to request an opinion, in writing, from the Company.
10.3 Anything to the contrary in this Section 10 notwithstanding,
Kerr shall disclose to the public and discuss such information as is customary
or legally required to be disclosed by a Company whose stock is publicly
traded, or that is in the best interests of the Company to do so.
10.4 Kerr will deliver promptly to the Company on the termination of
his employment with the Company, or at any other time the Company may so
request, all memoranda, notes, records, reports and other documents relating to
the Company, its subsidiaries and affiliated entities, and all property owned
by the Company, its subsidiaries and affiliated entities, which Kerr obtained
while employed by the Company, and which Kerr may then possess or have under
his control.
10.5 During and for a period of one (1) year after the termination of
employment with the Company (except that the time period of such restrictions
shall be extended by any period during which Kerr is in violation of this
Section 10.5), Kerr will not: (a) knowingly interfere with, disrupt or attempt
to disrupt, any then existing relationship, contractual or otherwise between
the Company, its subsidiaries or affiliated entities, and any customer, client,
supplier, or agent, it being understood that the right to seek or enter into
contractual arrangements with independent contractors, including, without
limitation, consultants, professionals, authors, advertisers and the like,
shall not be abridged by reason of this Section 10; or (b) solicit, or assist
any other entity in soliciting for employment, any person known to Kerr to be
an agent or executive employee of the Company, its subsidiaries or affiliated
entities.
10.6 Kerr will promptly disclose to the Company all inventions,
processes, original works of authorship, trademarks, patents, improvements and
discoveries related to the business of the Company, its subsidiaries and
affiliated entities (collectively "Developments"), conceived or developed
during Kerr's employment with the Company and based upon information to which
he had access during the term of employment, whether or not conceived during
regular working hours, through the use of the Company time, material or
facilities or otherwise. All such Developments shall be the sole and exclusive
property of the Company, and upon request Kerr shall deliver to the Company all
outlines, descriptions and other data and records relating to such
Developments, and shall execute any documents deemed necessary by the Company
to protect the Company's rights hereunder. Kerr agrees upon request to assist
the Company to obtain United States or foreign letters patent and copyright
registrations covering inventions and original works of authorship belonging to
the Company hereunder. If the Company is unable because of Kerr's mental or
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physical incapacity to secure Kerr's signature to apply for or to pursue any
application for any United States or foreign letters patent or copyright
registrations covering inventions and original works of authorship belonging to
the Company hereunder, then Kerr hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as his agent and attorney
in fact, to act for and in his behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by him. Kerr hereby waives
and quitclaims to the Company any and all claims, of any nature whatsoever,
that he may hereafter have for infringement of any patents or copyright
resulting from any such application for letters patent or copyright
registrations belonging to the Company hereunder.
10.7 Kerr agrees that the remedy at law for any breach or threatened
breach of any covenant contained in this Section 10 will be inadequate and that
the Company, in addition to such other remedies as may be available to it, in
law or in equity, shall be entitled to injunctive relief without bond or other
security.
10.8 Although the restrictions contained in Section 10.1, 10.2, 10.4
and 10.5 above are considered by the parties hereto to be fair and reasonable
in the circumstances, it is recognized that restrictions of such nature may
fail for technical reasons, and accordingly it is hereby agreed that if any of
such restrictions shall be adjudged to be void or unenforceable for whatever
reason, but would be valid if part of the wording thereof were deleted, or the
period thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Section 10.1, 10.2, 10.4 and 10.5 shall be enforced
to the maximum extend permitted by law, and the parties consent and agree that
such scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
10.9 Notwithstanding that Kerr's employment hereunder may expire or
be terminated as provided in Sections 2, 4.3 or 9 above, this Agreement shall
continue in full force and effect insofar as is necessary to enforce the
covenants and agreements of Kerr contained in this Section 10.
11. Arbitration.
The parties shall use their best efforts and good will to settle all
disputes by amicable negotiations. The Company and Kerr agree that, with the
express exception of any dispute or controversy arising under Section 9.2 or
Section 10 of this Agreement or as may be required under Section 3(g) of the
Severance Agreement, any controversy or claim arising out of or in any way
relating to Kerr's employment with the Company, including, without limitation,
any and all disputes concerning this Agreement and the termination of this
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<PAGE>
Agreement that are not amicably resolved by negotiation, shall be settled by
arbitration in Des Moines, Iowa, or such other place agreed to by the parties,
as follows:
(a) Any such arbitration shall be heard before a panel consisting of
one (1) to three (3) arbitrators, each of whom shall be impartial. Except as
the parties may otherwise agree, all arbitrators shall be appointed in the
first instance by the President of the Iowa State Bar Association or, in the
event of his unavailability by reason of disqualification or otherwise, by the
Chairman of the Executive Committee of said Bar Association. In determining
the number and appropriate background of the arbitrators, the appointing
authority shall give due consideration to the issues to be resolved, but his
decision as to the number of arbitrators and their identity shall be final.
(b) An arbitration may be commenced by any party to this Agreement by
the service of a written Request for Arbitration upon the other affected party.
Such Request for Arbitration shall summarize the controversy or claim to be
arbitrated, and shall be referred by the complaining party to the appointing
authority for appointment of arbitrators ten (10) days following such service
or thereafter. If the panel of arbitrators is not appointed by the appointing
authority within thirty (30) days following such reference, any party may apply
to any court within the State of Iowa for an order appointing arbitrators
qualified as set forth below. No Request for Arbitration shall be valid if it
relates to a claim, dispute, disagreement or controversy that would have been
time barred under the applicable statute of limitations had such claim,
dispute, disagreement or controversy been submitted to the courts of the State
of Iowa.
(c) All attorneys' fees and costs of the arbitration shall in the
first instance be borne by the respective party incurring such costs and fees,
but the arbitrators shall have the discretion to award costs and/or attorneys'
fees as they deem appropriate under the circumstances. The parties hereby
expressly waive punitive damages, and under no circumstances shall an award
contain any amount that in any way reflects punitive damages.
(d) Judgment on the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
(e) It is intended that controversies or claims submitted to
arbitration under this Section 11 shall remain confidential, and to that end it
is agreed by the parties that neither the facts disclosed in the arbitration,
the issues arbitrated, nor the views or opinions of any persons concerning
them, shall be disclosed by third persons at any time, except to
the extent necessary to enforce an award or judgment or as required by law or
in response to legal process or in connection with such arbitration.
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<PAGE>
12. Successors and Assigns.
12.1 Assignment by the Company. This Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the Company,
subject, however, to the right of Kerr to terminate this Agreement under
Section 9.10.
12.2 Assignment by Kerr. Kerr may not assign this Agreement or any
part thereof; provided, however, that nothing herein shall preclude one or more
beneficiaries of Kerr from receiving any amount that may be payable following
the occurrence of his legal incompetency or his death and shall not preclude
the legal representative of his estate from receiving such amount or from
assigning any right hereunder to the person or persons entitled thereto under
his will or, in the case of intestacy, to the person or persons entitled
thereto under the laws of the intestacy applicable to his estate.
13. Governing Law.
This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of Iowa
without reference to the principles of conflict of laws.
14. Entire Agreement.
This Agreement and the attached Exhibits contain all the
understandings and representations between the parties hereto pertaining to the
subject of the employment of Kerr by the Company and supersedes all
undertakings and agreements, whether oral or in writing, if any there be,
previously entered into by them with respect thereto other than those
agreements listed on the attached Exhibit B.
15. Amendment or Modification; Waiver.
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing, signed by Kerr and by a duly
authorized officer of the Company and approved in advance by the Compensation
Committee. Except as otherwise specifically provided in this Agreement, no
wavier by either party hereto of any breach by the other party of any condition
or provision of the Agreement to be performed by such other party shall be
deemed a waiver of a similar or dissimilar provision or condition at the same
or any prior or subsequent time.
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<PAGE>
16. Notices.
Any notice to be given hereunder shall be in writing and delivered
personally or sent by overnight mail, such as Federal Express, addressed to the
party concerned at the address indicated below or to such other address as such
party may subsequently give notice of hereunder in writing:
If to Company:
Chairman of the Compensation/Nominating Committee
Board of Directors
Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
with a copy to:
Thomas L. Slaughter, Esquire
Vice President-General Counsel & Secretary
Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
If to Kerr:
P.O. Box 1545
Litchfield, Connecticut 06759
with a copy to:
Edward Rover, Esquire
White & Case
1155 Avenue of the Americas
New York, N.Y. 10036
17. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions or portions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
18. Withholding.
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to Kerr or his beneficiaries, including his
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<PAGE>
estate, shall be subject to withholding and deductions as the Company may
reasonably determine it should withhold or deduct pursuant to any applicable
law or regulation. In lieu of withholding or deducting, such amounts, in whole
or in part, the Company may, in its sole discretion, accept other provision for
payment as permitted by law, provided it is satisfied in its sole discretion
that all requirements of law affecting its responsibilities to withhold such
taxes have been satisfied.
19. Deferred Payments.
Any amounts required under this Agreement to be paid to Kerr that Kerr
can and does elect to defer under any Company benefit plan or program shall be
deemed to have been paid to him for purposes of this Agreement.
20. Survivorship.
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Headings.
Headings of the sections of this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed by reference
to the title of any section.
22. Knowledge and Representation.
Kerr acknowledges that the terms of this Agreement have been fully
explained to him, that Kerr understands the nature and extent of the rights and
obligations provided under this Agreement, and that Kerr has been represented
by legal counsel in the negotiation and preparation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
MEREDITH CORPORATION
/s/ William T. Kerr /s/ E. T. Meredith III
- ------------------- By -------------------------
William T. Kerr E. T. Meredith III
Chairman of the Executive
Committee
Dated: 11-11-96 Dated: 11-11-96
------------------ ------------------
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The following supplemental exhibits to the Employment Agreement dated November
11, 1996, between Meredith Corporation and William T. Kerr have been omitted in
this Form 10-Q filing. The Company agrees to provide these exhibits to the
Commission upon request.
Exhibit A Minimum Supplemental Retirement Benefit
Program
Exhibit A-1 Worksheet regarding Minimum Supplemental
Retirement Benefit
Exhibit B Listing of agreements pertaining to the
subject of the employment of William T.
Kerr by the Company
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Exhibit 10.2
------------
CONSULTANCY AGREEMENT,
AMENDMENT TO EMPLOYMENT AGREEMENT
AND
AMENDMENT TO RESTRICTED STOCK AGREEMENTS
This Agreement is entered into as of the 11th day of November, 1996, by and
between Meredith Corporation (the "Company"), an Iowa corporation, and Jack D.
Rehm ("Rehm").
WHEREAS, Rehm is currently employed by the Company as its Chairman and Chief
Executive Officer pursuant to an Employment Contract dated July 1, 1992 (the
"Employment Contract"); and
WHEREAS, the Company and Rehm desire to extend the term of Rehm's employment
with the Company, to provide for Rehm's services as consultant following the
termination of his employment with the Company.
NOW, THEREFORE, IT IS HEREBY AGREED by and between the Company and Rehm as
follows:
1. EMPLOYMENT. Paragraph 1 of the Employment Contract is amended effective
January 1, 1997, by deleting the first sentence and inserting the following in
its place:
The Company hereby agrees to employ Rehm through December 31, 1997, or
until such date after October 31, 1997, and before December 31, 1997, as
Rehm shall specify in writing before October 31, 1997, that his employment
with Company shall be terminated, but in any event Rehm shall remain the
Chairman of the Board of Directors through December 31, 1997.
2. COMPENSATION. Paragraph 2 of the Employment Contract is amended by adding
the following sentence at the end:
Rehm and Company agree that Rehm's annual salary base rate shall be no less
than $500,000 for the period from July 1, 1997, through December 31, 1997
(or such earlier date as provided in Paragraph 1 above).
3. OTHER EMPLOYMENT RIGHTS. Paragraph 10 of the Employment Contract is
amended by adding the following sentence at the end:
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<PAGE>
Notwithstanding anything to the contrary provided in this Agreement, Rehm
shall not be eligible to participate in, and the Company shall have no
obligation to provide any benefits to Rehm under the Company's Management
Incentive Plan for the period following June 30, 1997 (or any portion
thereof that Rehm remains an employee of Company).
4. RESTRICTED STOCK AGREEMENTS.
(a) Paragraph 3 of the Restricted Stock Agreement dated September 22,
1992, by and between Company and Rehm with respect to 20,000 shares of
restricted Company common stock (post the March 16, 1995, stock split)
is amended by deleting the date "October 31, 1997," and inserting in
its place, "the effective date of Employee's retirement from
employment with the Company under the then established rules of the
Company's tax-qualified retirement plan, but in any event no later
than September 21, 2002."
(b) Paragraph 3 of the Restricted Stock Agreement dated September 22,
1992, by and between Company and Rehm with respect to 54,862 shares of
restricted Company common stock (post the March 16, 1995, stock split)
is amended by deleting the date "October 31, 1997," and inserting in
its place, "the effective date of Employee's retirement from
employment with the Company under the then established rules of the
Company's tax-qualified retirement plan, but in any event no later
than September 21, 2002."
5. ELECTION AS DIRECTOR. At the Annual Meeting of Stockholders held on
November 11, 1996, Rehm was re-elected a Director for a term to expire in 1999.
The Company agrees to nominate him for re-election for a subsequent three-year
term at the Annual Meeting of Stockholders in 1999, and Rehm agrees that he
will serve in such capacity, if elected.
6. ENGAGEMENT AS CONSULTANT. The Company hereby agrees to retain Rehm as a
consultant following the termination of his employment through December 31,
2000, but subject to termination by either party at any time upon 90 days'
advance written notice. Rehm hereby accepts such employment as a consultant to
the Company and agrees that during the period he is so retained he will render
such consulting services to the Company from time to time as the Chief
Executive Officer or the Board of Directors of the Company may reasonably
request. In order to be in a position to render such consulting services and
as a part of his duties as a member of the Board of Directors, Rehm shall keep
himself reasonably informed as to the business and affairs of the Company.
Rehm shall be available for conferences at times and places to be designated by
the Company during the term of his engagement as a consultant; it being
understood, however, that Rehm shall not be required to be available for
conferences on less than three (3) calendar days' notice or at times when Rehm
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<PAGE>
has other regularly scheduled commitments, and that any one series of
conferences shall not require Rehm's attendance for more than five (5)
consecutive days. In addition, Rehm shall be ready to furnish consultation and
advice by telephone, telegram or correspondence when reasonably requested.
Rehm shall keep the Company informed from time to time of his regularly
scheduled commitments and where he can be reached for such consultation and
advice. Notwithstanding the foregoing, Rehm, upon ten (10) days' prior notice
to the Company, may select any period up to two (2) consecutive calendar months
in any calendar year in which he may not be obligated to render the consulting
services contemplated hereby.
7. COMPENSATION FOR SERVICES AS CONSULTANT. In consideration of the agreement
of Rehm to be ready to furnish consulting services and of the consulting
services to be rendered by Rehm pursuant to Paragraph 6, the Company agrees to
pay Rehm at a rate commensurate with the consulting services requested of him
from time to time, but in no event at a rate of less than $150,000 per year.
The compensation payable Rehm in accordance with this Paragraph 7 shall be paid
from time to time at regular intervals. In addition, Rehm will be reimbursed
for all legitimate business expenses incurred in connection with the provision
of consulting services to the Company. During his engagement as a consultant,
Rehm shall be entitled to the perquisites existing during his prior employment,
including same or equivalent club memberships reimbursement, company automobile
in accordance with Company policy, office space and support services, use of
the Company aircraft on Company business, use of Company accommodations on
Company business, and tax and financial planning from KPMG Peat Marwick.
8. HEALTH COVERAGE AFTER TERMINATION OF EMPLOYMENT.
(a) As additional consideration for the consultancy services to be
provided by Rehm under this Agreement, the Company agrees to provide
at no cost to Rehm (other than any applicable income taxes) the
following benefits: (i) Medicare Supplement coverage for Rehm that is
the same coverage as provided for other retirees of the Company; (ii)
Rehm's spouse will be covered by an individual Medicare Supplement
plan; (iii) Rehm and his spouse will receive the same dental and
prescription drug coverage as is provided to Company employees; and
(iv) participation by Rehm and his spouse in the Company's officer
medical reimbursement program.
(b) Following the termination of the consultancy under this Agreement,
Rehm will be eligible to continue the Medicare Supplement coverage at
the cost applicable to a retiree from employment with the Company with
the same number of years of continuous active service as an employee
as Rehm. Further, Medicare Supplement coverage for Rehm's spouse,
dental coverage, prescription drug coverage and participation in the
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<PAGE>
Company's officer medical reimbursement program will be terminated.
At her election, the Medicare Supplement coverage may be continued by
Rehm's spouse under an individual coverage plan with the premiums to
be invoiced directly to Rehm's spouse.
9. RENEWAL OF CONSULTANCY. The term of Rehm's consultancy as provided in
Paragraph 6 above may be renewed for up to two (2) subsequent one-year (1)
terms by mutual agreement of the parties.
10. NON-COMPETITION. Paragraph 6(a) of the Employment Contract is deleted and
the following is inserted in its place:
Rehm agrees that during the period of his employment by the Company and
during the period that he is a consultant to the Company and for a period
of three (3) years following the termination of his consultancy, he shall
not consult with, accept employment with, become or invest in, or in any
way aid or abet any proprietorship, partnership, corporation or other
business entity that is a competitor of the Company in the United States
of America ("Prohibited Action"), except with the prior written consent of
the Company.
11. INDEPENDENT CONTRACTOR. The parties agree that while acting as a
consultant, Rehm shall at all times be an independent contractor and that
nothing herein shall be construed to cause Rehm to be an employee of the
Company.
12. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of the Company. Rehm may not
assign this Agreement, in whole or in part.
13. GOVERNING LAW. This Agreement and the validity of its provisions shall be
construed according to the laws of the State of Iowa.
14. ENTIRE AGREEMENT. This Agreement contains all the understandings and
representations between the parties with respect to the subject of this
Agreement.
15. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may be
amended or modified unless such amendment or modification is agreed to in
writing. No provision to be performed by a party may be waived by the other
except by in writing. No waiver by either party shall be deemed a waiver of a
similar or dissimilar provision.
16. HEADING. Headings of the sections of this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
- 4 -
<PAGE>
IN WITNESS WHEREOF, pursuant to authorization of its Board of Directors, the
Company has caused this Agreement to be signed and Rehm has set his hand as of
the 11th day of November, 1996.
MEREDITH CORPORATION JACK D. REHM
By: /s/ E. T. Meredith III /s/ Jack D. Rehm
----------------------------------- ----------------
E. T. Meredith III
Chairman of the Executive Committee
of the Board of Directors
- 5 -
Exhibit 10.3
------------
1992 MEREDITH CORPORATION
STOCK INCENTIVE PLAN AGREEMENT
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: July 1, 1996
DATE OF EXPIRATION: June 30, 2006
NUMBER OF SHARES COVERED BY THIS AWARD: 58,300
OPTION PRICE: $42.187
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 six
months after the Date of Grant. All Options shall be vested and exercisable on
and after July 1, 2001.
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,
his legal representative or a permitted transferee under this Agreement; (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 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
- 1 -
<PAGE>
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; (d) shall be accompanied by payment in full of the Option Price
of the shares to be purchased; and (e) 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) 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, his or her
legal representative or permitted transferee under this Agreement, as the case
may be, certificates for the shares so purchased, which may, if appropriate, be
endorsed with appropriate restrictive legends as determined by the Committee.
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, any outstanding Options granted to Optionee that are not
exercisable at the date of termination shall become fully exercisable, except
for Options granted within six (6) months prior to the date of death, which
Options shall become fully exercisable on the next business day after the sixth
month anniversary of the Date of Grant. 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
Date of Expiration set forth above.
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 determined pursuant to the September 11, 1991,
Employment Agreement by and between Kerr and Company, and any successor
employment agreement (the "Employment Agreement")), any outstanding Options
granted to Optionee that are not exercisable at the date of termination shall
- 2 -
<PAGE>
become fully exercisable, except for Options granted within six (6) months
prior to the date of termination, which Options shall become fully exercisable
on the next business day after the sixth month anniversary of the Date of
Grant. Optionee shall have the same right to exercise this Option as Optionee
had during his employment for a period ending on the Date of Expiration set
forth above.
6. Termination of Employment by Retirement. If 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), any
outstanding options granted to Optionee that are not exercisable at the date of
termination shall be forfeited by Optionee and canceled by the Company. If,
without having fully exercised this Option, Optionee's employment is terminated
by reason of Retirement, Optionee shall have the same right to exercise options
that are exercisable on the date of the termination of employment as Optionee
had during his or her employment for a period ending on the Date of Expiration
set forth above.
7. Termination of Employment Voluntarily by Kerr or for Due Cause. If,
without having fully exercised this Option, Optionee's employment with the
Company is terminated by Company for "Due Cause" as defined under Section 9.3
of the Employment Agreement or by Optionee as "Employee Voluntary" as defined
under Section 9.5 of the Employment Agreement, any outstanding options granted
to Optionee under this Option that are not exercisable at the date of
termination shall be forfeited by Optionee and canceled by the Company.
Further, Optionee's rights under this Option shall terminate as of the date of
the termination of employment, provided, however, that there shall be an
exercise period for options that are exercisable at the date of employment
termination of up to 30 days after the date of such termination, but such
extension period shall not continue beyond the expiration of the term of this
Option.
8. Termination of Employment for Other Reasons. If, without having fully
exercised this Option, Optionee's employment with the Company is terminated by
Company "At Will" as defined under Section 9.4 of the Employment Agreement, or
by Company for other reasons that are treated under the Employment Agreement in
the same manner as being "At Will," including, without limitation, failure to
renew as discussed under Section 9.8 of the Employment Agreement, or by
Optionee for failure by the Company to elect him to the office of Chairman of
the Company's Board of Directors effective on or about January 1, 1998, or by
Optionee by reason of Optionee not being re-elected to serve as a Director of
the Company or as a member of the Executive Committee of the Company's Board of
Directors, any outstanding Options granted to Optionee that are not exercisable
at the date of termination shall become fully exercisable, except for Options
granted within six (6) months prior to the date of termination, which Options
shall become fully exercisable on the next business day after the sixth month
- 3 -
<PAGE>
anniversary of the Date of Grant. Optionee shall have the same right to
exercise this Option as Optionee had during his employment for a period ending
on the Date of Expiration.
9. 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. Notwithstanding the foregoing,
Optionee may transfer this Option, in whole or in part, to members of
Optionee's immediate family or trusts or family partnerships for the benefit of
such persons, provided, that no such transfer may be made prior to the
amendment of the Plan to permit such transfers, and provided, further, that
Optionee receive the advance written permission of the Company to make such a
transfer and to further notify the Company upon the completion of the transfer.
Further, this Option shall be exercisable during Optionee's lifetime only by
Optionee, Optionee's legal representative or permitted transferee, as provided
above.
10. 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 which may be delivered under the Plan, and in
the number and class of and/or price of Shares subject to outstanding Options,
granted under the Plan, 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 any
Award shall always be rounded to the nearest whole number. Any adjustment of an
ISO under this paragraph shall be made in such a manner so as not to constitute
a "modification" within the meaning of Section 425(h)(3) of the Code.
11. 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.
12. 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.
13. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject to
all the terms and conditions (including Shareholder approval) 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
- 4 -
<PAGE>
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, with respect
to a Nonqualified Stock Option, 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").
(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.
- 5 -
<PAGE>
(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: /s/ Thomas L. Slaughter
---------------------------
Thomas L. Slaughter
Its: Vice President-General
Counsel and Secretary
/s/ William T. Kerr
- -----------------------------------
Optionee, William T. Kerr
300 Walnut, #2405
Des Moines, IA 50309
Social Security number: ###-##-####
- 6 -
Exhibit 10.4
------------
1996 MEREDITH CORPORATION
STOCK INCENTIVE PLAN AGREEMENT
NONQUALIFIED
STOCK OPTION AWARD
You have been selected to be a Participant in the 1996 Meredith
Corporation Stock Incentive Plan (the "Plan"), as specified below:
OPTIONEE: William T. Kerr
DATE OF GRANT: August 14, 1996
DATE OF EXPIRATION: August 13, 2006
NUMBER OF SHARES COVERED BY THIS AWARD: 58,300
OPTION PRICE: $40.625
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
six months after the Date of Grant. All Options shall be vested and
exercisable on and after August 14, 2001.
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, his legal representative or permitted transferee under this
Agreement; (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 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
- 1 -
<PAGE>
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; (d) shall be accompanied by payment in
full of the Option Price of the shares to be purchased; and (e) 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) 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, his or her
legal representative or permitted transferee under this Agreement, as the case
may be, certificates for the shares so purchased, which may, if appropriate,
be endorsed with appropriate restrictive legends as determined by the
Committee. 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, any outstanding Options granted to Optionee that are not
exercisable at the date of termination shall become fully exercisable, except
for Options granted within six (6) months prior to the date of death, which
Options shall become fully exercisable on the next business day after the
sixth month anniversary of the Date of Grant. 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 Date of Expiration set forth above.
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 determined pursuant to the September 11, 1991,
Employment Agreement by and between Kerr and Company, and any successor
employment agreement (the "Employment Agreement")), any outstanding Options
granted to Optionee that are not exercisable at the date of termination shall
- 2 -
<PAGE>
become fully exercisable, except for Options granted within six (6) months
prior to the date of termination, which Options shall become fully exercisable
on the next business day after the sixth month anniversary of the Date of
Grant. Optionee shall have the same right to exercise this Option as Optionee
had during his employment for a period ending on the Date of Expiration set
forth above.
6. Termination of Employment by Retirement. If 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), any
outstanding options granted to Optionee that are not exercisable at the date
of termination shall be forfeited by Optionee and canceled by the Company.
If, without having fully exercised this Option, Optionee's employment is
terminated by reason of Retirement, Optionee shall have the same right to
exercise options that are exercisable on the date of the termination of
employment as Optionee had during his or her employment for a period ending on
the Date of Expiration set forth above.
7. Termination of Employment Voluntarily by Kerr or for Due Cause. If,
without having fully exercised this Option, Optionee's employment with the
Company is terminated by Company for "Due Cause" as defined under Section 9.3
of the Employment Agreement or by Optionee as "Employee Voluntary" as defined
under Section 9.5 of the Employment Agreement, any outstanding options granted
to Optionee under this Option that are not exercisable at the date of
termination shall be forfeited by Optionee and canceled by the Company.
Further, Optionee's rights under this Option shall terminate as of the date of
the termination of employment, provided, however, that there shall be an
exercise period for options that are exercisable at the date of employment
termination of up to 30 days after the date of such termination, but such
extension period shall not continue beyond the expiration of the term of this
Option.
8. Termination of Employment for Other Reasons. If, without having
fully exercised this Option, Optionee's employment with the Company is
terminated by Company "At Will" as defined under Section 9.4 of the Employment
Agreement, or by Company for other reasons that are treated under the
Employment Agreement in the same manner as being "At Will," including, without
limitation, failure to renew as discussed under Section 9.8 of the Employment
Agreement, or by Optionee for failure by the Company to elect him to the
office of Chairman of the Company's Board of Directors effective on or about
January 1, 1998, or by Optionee by reason of Optionee not being re-elected to
serve as a Director of the Company or as a member of the Executive Committee
of the Company's Board of Directors, any outstanding Options granted to
Optionee that are not exercisable at the date of termination shall become
fully exercisable, except for Options granted within six (6) months prior to
the date of termination, which Options shall become fully exercisable on the
- 3 -
<PAGE>
next business day after the sixth month anniversary of the Date of Grant.
Optionee shall have the same right to exercise this Option as Optionee had
during his employment for a period ending on the Date of Expiration.
9. 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. Notwithstanding the foregoing,
Optionee may transfer this Option, in whole or in part, to members of
Optionee's immediate family or trusts or family partnerships for the benefit
of such persons, provided, that Optionee receive the advance written
permission of the Company to make such a transfer and to further notify the
Company upon the completion of the transfer. Further, this Option shall be
exercisable during Optionee's lifetime only by Optionee, Optionee's legal
representative or permitted transferee, as provided above.
10. Adjustments in Authorized Shares. If the Company shall at any time
change the number of issued shares of Common Stock without new consideration
to the Company (such as by stock dividends or stock splits), the number of
shares to be delivered under this Option and the price of the shares subject
to this Option shall be equitably adjusted so that the aggregate consideration
payable to the Company, if any, shall not be changed. In the case of any
merger, consolidation or combination of the Company with or into another
corporation, other than a merger, consolidation or combination in which the
Company is the continuing corporation and which does not result in the
outstanding Common Stock of the Company being converted into or exchanged for
different securities, cash or other property, or any combination thereof (an
"Acquisition"), the Option shall have the right to receive upon exercise of
this Option the Acquisition Consideration receivable upon such Acquisition by
a holder of the number of shares of Common Stock which might have been
obtained upon exercise of the Option, as the case may be, immediately prior to
such Acquisition.
11. Change in Control. Immediately upon a change in control of the
Company all outstanding Options shall become exercisable. For purposes
hereof, a change in control of the Company shall be deemed to have occurred on
the first to occur of any of the following dates:
(a) on the date the Board of Directors of the Company votes to
approve and recommends a stockholder vote to approve:
(i) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant
to which shares of the Common Stock and Class B Stock would be
converted into cash, securities or other property, other than any
consolidation or merger of the Company in which the holders of the
Common Stock and Class B Stock immediately prior to the
- 4 -
<PAGE>
consolidation or merger have at least a majority of the ownership in
and voting power of the surviving corporation immediately after the
consolidation or merger; or
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or
(iii) any plan or proposal for the liquidation or dissolution of
the Company; or
(b) on the date any person (as such term is used in Section 13(d)
of the Securities Exchange Act of 1934, hereinafter the "1934 Act"),
other than the Company's Savings and Investment Plan or similar successor
plan, shall become the beneficial owner (within the meaning of Rule 13d-3
under the 1934 Act) of thirty percent (30%) or more of the outstanding
voting power of the Company except as a result of actions beyond the
control of such person, including, without limitation, as a result of a
shift in voting power of the Company as a result of the conversion by
other persons of their Class B Stock into Common Stock; or
(c) on the date, during any period of twenty-four (24) consecutive
months on which individuals who at the beginning of such period
constitute the entire Board of Directors of the Company shall cease for
any reason to constitute a majority thereof unless the election of each
new director comprising the majority was approved by a vote of at least a
2/3 majority of the Directors still in office who were Directors at the
beginning of the period.
Notwithstanding anything to the contrary contained herein, no change in
control shall be deemed to have occurred for the purpose of this Plan by
virtue of any combination or agreement among shareholders of the Company who
are descendants of E.T. Meredith, the founder of the Company, or trusts for
the benefit of such persons.
12. 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.
13. Fair Market Value. For the purposes of this Agreement, Fair Market
Value shall mean the average of the high and low market prices at which a
share of the Company common stock shall have traded on the valuation date or
on the next preceding trading date if the valuation date is not a trading day
as reported in the Midwest edition of The Wall Street Journal.
- 5 -
<PAGE>
14. 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.
15. Miscellaneous.
(a) This Agreement and the rights of Optionee hereunder are subject
to all the terms and conditions (including Shareholder approval) 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, with respect to
a Nonqualified Stock Option, 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.
- 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.
15. Effectiveness. The effectiveness of this Agreement and the grant of
the Options hereunder is contingent upon the approval of the Plan by the
stockholders of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.
MEREDITH CORPORATION
By: /s/ Thomas L. Slaughter
-----------------------
Thomas L. Slaughter
Its: Vice President-General
Counsel and Secretary
/s/ William T. Kerr
- -------------------------------
Optionee, William T. Kerr
300 Walnut, #2405
Des Moines, IA 50309
Social Security number: ###-##-####
- 7 -
Exhibit 10.5
------------
Statement re: Meredith Corporation Nonqualified Stock Option
Award Agreements with William T. Kerr
Meredith Corporation has two other nonqualified stock option award agreements
with William T. Kerr that are substantially identical, in all material respects
to the agreements filed as Exhibits 10.3 and 10.4 in this Form 10-Q for the
period ended December 31, 1996, except as to the number of stock options
awarded and the stock option price. Such agreements are not filed herewith,
pursuant to Instruction 2. to Item 601 of Regulation S-K. The numbers of stock
options awarded and the stock option prices reflected in those two agreements
are as follows:
# of Stock
Options Awarded Stock Option Price
--------------- ------------------
Under an agreement substantially 29,200 $52.734
identical to the agreement filed
as Exhibit 10.3 in this Form 10-Q
Under an agreement substantially 29,200 $50.781
identical to the agreement filed
as Exhibit 10.4 in this Form 10-Q
Exhibit 11
----------
MEREDITH CORPORATION
Computation of Primary and Fully Diluted Per
Common Share Earnings - Treasury Stock Method
For the Six Months Ended December 31, 1996 and 1995
(Unaudited)
Weighted average number of shares
(in thousands)
1996 1995
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Weighted average number of shares
outstanding in thousands 26,835 26,835 27,536 27,536
Dilutive effect of unexercised
stock options in thousands 982 1,110 653 740
------ ------ ------ ------
Total 27,817 27,945 28,189 28,276
====== ====== ====== ======
Primary and fully
diluted earnings per common share
1996 1995
Fully Fully
Primary Diluted Primary Diluted
------- ------- ------- -------
Earnings per share from
continuing operations $1.06 $1.05* $ .91 $ .91
Discontinued operation 1.00 1.00 ( .03) ( .03)
----- ----- ----- -----
Net earnings per share $2.06 $2.05 $ .88 $ .88
===== ===== ===== =====
*Dilution is less than three percent from primary earnings per share.
Note: Primary - Based on average market prices for the period.
Fully Diluted - Based on the higher of the average market price
for the period or the market price at December 31
of each year.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at December 31, 1996 and the Consolidated Statement
of Earnings for the six months ended December 31, 1996 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-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 76,135
<SECURITIES> 20,060
<RECEIVABLES> 97,530<F1>
<ALLOWANCES> 0
<INVENTORY> 24,400
<CURRENT-ASSETS> 304,035
<PP&E> 189,564
<DEPRECIATION> 107,970
<TOTAL-ASSETS> 731,260
<CURRENT-LIABILITIES> 267,975
<BONDS> 0
0
0
<COMMON> 26,754
<OTHER-SE> 278,270
<TOTAL-LIABILITY-AND-EQUITY> 731,260
<SALES> 408,952
<TOTAL-REVENUES> 408,952
<CGS> 168,898
<TOTAL-COSTS> 168,898
<OTHER-EXPENSES> 11,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,071
<INCOME-PRETAX> 52,093
<INCOME-TAX> 22,556
<INCOME-CONTINUING> 29,537
<DISCONTINUED> 27,693
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,230
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 0
<FN>
<F1>Net of allowances
</FN>
</TABLE>
Exhibit 99
----------
MEREDITH CORPORATION
FISCAL 1997 SECOND QUARTER EARNINGS PER SHARE AT-A-GLANCE
- -- The chart below depicts comparable quarterly and fiscal-year earnings
per share before special items and discontinued operations:
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Fiscal Year
-------- -------- -------- -------- -----------
F1993 .12 .18 .21 .19 .70
F1994 .17 .26 .32 .26 1.01
F1995 .27 .38 .38 .39 1.42
F1996 .34 .45 .49 .54 1.82
F1997 .45 .61
- -- Fiscal 1997 second quarter earnings per share from continuing operations
were 61 cents, a 36 percent increase over the prior-year quarter. Prior-
year second quarter earnings per share from continuing operations before
non-recurring items were 45 cents.
- -- Fiscal 1997 net earnings include a post-tax gain of $1.00 per share in
discontinued operations from the sale of the Company's remaining interests
in cable television systems.
- -- Fiscal 1997 second quarter net earnings were $1.61 per share, compared to
prior-year earnings from continuing operations and net earnings of 57 cents
per share, including a gain of 12 cents per share from the sale of the book
clubs.
- -- Fiscal 1997 year-to-date earnings from continuing operations were $1.06 per
share, a 34 percent increase over prior-year-to-date comparable earnings
per share of 79 cents.
- -- Fiscal 1997 year-to-date net earnings were $2.06 per share, including the
gain from the sale of the discontinued cable operations. In the prior
year, net earnings were 88 cents per share, including a gain from the sale
of the book clubs and a first-quarter loss of 3 cents per share in
discontinued cable operations.
