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, 1998
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, 1999
Common Stock, $1 par value 40,922,609
Class B Stock, $1 par value 11,177,191
----------
Total Common and Class B Stock 52,099,800
==========
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<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Meredith Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
December 31 June 30
Assets 1998 1998
- -------------------------------------------------------------------------------
(in thousands)
Current assets:
Cash and cash equivalents $ 694 $ 4,953
Receivables, net 133,414 138,036
Inventories 45,097 34,765
Subscription acquisition costs 44,188 47,070
Program rights 27,657 14,809
Other current assets 11,954 7,168
---------- -------
Total current assets 263,004 246,801
---------- --------
Property, plant and equipment 273,388 267,488
Less accumulated depreciation (124,956) (116,407)
---------- --------
Net property, plant and equipment 148,432 151,081
---------- --------
Subscription acquisition costs 33,771 36,941
Other assets 49,555 33,808
Goodwill and other intangibles (at original cost
less accumulated amortization of $107,569
on December 31 and $97,716 on June 30) 587,507 597,358
---------- ----------
Total assets $1,082,269 $1,065,989
========== ==========
See accompanying Notes to Interim Consolidated Financial Statements.
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<PAGE>
(Unaudited)
December 31 June 30
Liabilities and Stockholders' Equity 1998 1998
- -------------------------------------------------------------------------------
(in thousands except share data)
Current liabilities:
Short-term bank debt $ 5,000 $ --
Current portion of long-term debt 40,000 40,000
Current portion of long-term program rights payable 30,575 18,934
Accounts payable 33,554 63,171
Accrued taxes and expenses 83,834 82,775
Unearned subscription revenues 145,411 141,989
---------- ----------
Total current liabilities 338,374 346,869
Long-term debt 167,000 175,000
Unearned subscription revenues 91,303 95,603
Deferred income taxes 26,370 20,822
Other deferred items 71,941 49,682
---------- ----------
Total liabilities 694,988 687,976
---------- ----------
Temporary equity: Put option agreements
Common stock, 1,913,018 shares outstanding at
December 31 and 597,878 shares at June 30 72,456 28,063
---------- ----------
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 39,064,832 at December 31 and
40,996,510 at June 30 (net of treasury shares,
27,007,056 at December 31 and 26,274,767
at June 30.) 39,065 40,996
Class B stock, par value $1 per share,
convertible to common stock
Authorized 15,000,000 shares; issued and
outstanding 11,196,350 at December 31 and
11,279,881 at June 30. 11,196 11,280
Retained earnings 267,484 301,200
Accumulated other comprehensive income (878) (1,176)
Unearned compensation (2,042) (2,350)
---------- ----------
Total stockholders' equity 314,825 349,950
---------- ----------
Total liabilities and stockholders' equity $1,082,269 $1,065,989
========== ==========
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
1998 1997 1998 1997
- -----------------------------------------------------------------------------
(in thousands except per share)
Revenues (less returns and allowances):
Advertising $150,600 $141,551 $293,538 $273,191
Circulation 69,066 67,760 136,567 134,932
All other 35,258 39,573 70,656 71,660
-------- -------- -------- --------
Total revenues 254,924 248,884 500,761 479,783
-------- -------- -------- --------
Operating costs and expenses:
Production, distribution and edit 102,267 98,638 209,170 195,030
Selling, general & administrative 94,836 98,087 189,823 196,073
Depreciation and amortization 10,018 9,294 20,060 17,386
-------- -------- -------- --------
Total operating costs and expenses 207,121 206,019 419,053 408,489
-------- -------- -------- --------
Income from operations 47,803 42,865 81,708 71,294
Gain from disposition -- -- 2,375 --
Interest income 132 298 170 766
Interest expense (3,875) (4,250) (7,686) (6,717)
-------- -------- -------- --------
Earnings before income taxes 44,060 38,913 76,567 65,343
Income taxes 18,637 16,581 32,333 27,920
-------- -------- -------- --------
Net earnings $ 25,423 $ 22,332 $ 44,234 $ 37,423
======== ======== ======== ========
Basic earnings per share $ 0.48 $ 0.42 $ 0.84 $ 0.71
======== ======== ======== ========
Basic average shares outstanding 52,304 52,980 52,411 53,048
======== ======== ======== ========
Diluted earnings per share $ 0.47 $ 0.40 $ 0.82 $ 0.67
======== ======== ======== ========
Diluted average shares outstanding 53,849 55,639 54,021 55,511
======== ======== ======== ========
Dividends paid per share $ 0.070 $ 0.065 $ 0.140 $ 0.130
======== ======== ======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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Meredith Corporation and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended December 31 1998 1997
- ---------------------------------------------------------------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 44,234 $ 37,423
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 20,060 17,386
Amortization of program rights 15,651 12,749
Gain from disposition, net of taxes (1,425) --
Changes in assets and liabilities:
Accounts receivable (1,040) (42,515)
Inventories (10,686) 148
Supplies and prepayments (1,289) (2,124)
Subscription acquisition costs 6,052 1,100
Accounts payable (28,440) 860
Accruals 4,050 3,404
Unearned subscription revenues (878) (1,290)
Deferred income taxes 1,776 10,966
Other deferred items 2,864 4,064
-------- --------
Net cash provided by operating activities 50,929 42,171
-------- --------
Cash flows from investing activities:
Redemption of marketable securities -- 50,371
Proceeds from dispositions 9,922 --
Acquisitions of businesses -- (375,000)
Additions to property, plant, and equipment (8,311) (23,363)
Changes in other assets (2,452) (3,689)
-------- --------
Net cash (used) by investing activities (841) (351,681)
-------- --------
Cash flows from financing activities:
Long-term debt incurred -- 270,000
Repayment of long-term debt (8,000) --
Short-term debt incurred, net 5,000 --
Payments for program rights (14,778) (13,199)
Proceeds from common stock issued 1,628 3,433
Purchases of company stock (31,054) (18,496)
Dividends paid (7,335) (6,887)
Other 192 673
-------- --------
Net cash (used) provided by financing activities (54,347) 235,524
-------- --------
Net (decrease) in cash and cash equivalents (4,259) (73,986)
Cash and cash equivalents at beginning of year 4,953 74,498
-------- --------
Cash and cash equivalents at end of period $ 694 $ 512
======== ========
See accompanying Notes to Interim Consolidated Financial Statements.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Accounting Policies
a. General
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. Readers are referred to the
company's Form 10-K for the year ended June 30, 1998 for complete financial
statements and related notes. Certain prior-year amounts have been restated to
conform with current-year presentation.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
c. Goodwill and other intangibles
Goodwill and other intangibles represent the excess of the purchase price over
the estimated fair values of tangible assets acquired in the purchases of
businesses. As of December 31, 1998, the unamortized portion of these assets
primarily consisted of television Federal Communications Commission (FCC)
licenses ($260.4 million), goodwill ($166.9 million) and television network
affiliation agreements ($141.2 million). Virtually all of these assets were
acquired subsequent to October 31, 1970, and are being amortized by the
straight-line method over the following periods: 40 years for television FCC
licenses; 20 to 40 years for goodwill; and 15 to 40 years for network
affiliation agreements. The company evaluates the recoverability of its
intangible assets as current events or circumstances warrant to determine
whether adjustments are needed to carrying values. Such evaluation may be
based on projected income and cash flows on an undiscounted basis from the
underlying business or from operations of related businesses. Other economic
and market variables are also considered in any evaluation.
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
2. Comprehensive Income
Meredith adopted Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income," effective July 1, 1998. SFAS No. 130
requires companies to report comprehensive income, which includes net income
and certain items that are reported as separate components of shareholders'
equity. The company's comprehensive income includes foreign currency
translation adjustments in addition to net income. Total comprehensive income
(in thousands) for the six-month periods ended December 31, 1998 and 1997, was
$44,532 and $37,423, respectively. Total comprehensive income (in thousands)
for the three-month periods ended December 31, 1998 and 1997, was $25,515 and
$22,332, respectively.
3. Acquisitions and disposition
On August 24, 1998, the company announced that it had agreed to acquire WGNX-
TV, the CBS affiliate serving Atlanta. The planned acquisition involves the
purchase of KCPQ-TV, a FOX affiliate in Seattle currently owned by Kelly
Television Co., and the subsequent trade of KCPQ with Tribune Company for WGNX-
TV in Atlanta. The transactions are subject to regulatory approvals and are
expected to be completed early in calendar 1999. The net price to the company
of this resulting asset purchase is estimated to be $370 million.
Effective July 1, 1998, the company sold the net assets of the Better Homes and
Gardens Real Estate Service to GMAC Home Services, Inc., a subsidiary of GMAC
Financial Services. Fiscal 1999 earnings for the six months ended December 31,
1998, included an after-tax gain of $1.4 million, or 3 cents per diluted share,
from the sale, which closed on July 27, 1998.
4. Inventories
Major components of inventories are summarized below. Of total inventory
values shown, approximately 45 percent are under the LIFO method at
December 31, 1998 and 58 percent at June 30, 1998.
(unaudited)
December 31 June 30
1998 1998
----------- --------
(in thousands)
Raw materials $28,858 $24,777
Work in process 20,169 13,286
Finished goods 5,980 5,446
------- -------
55,007 43,509
Reserve for LIFO cost valuation (9,910) (8,744)
------- -------
Total $45,097 $34,765
======= =======
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
5. Long-term debt and interest rate swap contracts
The company has an unsecured credit agreement which consists of a $210 million,
60-month variable rate term loan and a $150 million, 60-month variable rate
revolving credit facility. At December 31, 1998, long-term debt outstanding
under this agreement consisted of $185 million outstanding under the term loan
and $22 million outstanding under the revolving credit facility. The credit
agreement contains certain covenants. As of December 31, 1998, the company was
in compliance with all debt covenants.
Meredith utilizes interest rate swap contracts to manage interest cost and risk
associated with possible increases in variable interest rates. The company
amended its existing swap contracts effective December 31, 1998 and entered
into two new swap contracts with effective dates of March 31, 1999. Under the
contracts, Meredith pays fixed rates of interest while receiving floating rates
of interest based on three month LIBOR. These contracts effectively fix the
base interest rate on the existing credit agreement and on the new credit
agreement entered into on December 10, 1998 (see Note 7), although the
applicable margins vary based upon the company's debt-to-EBITDA ratio. These
contracts are held for purposes other than trading. The contracts expire on
June 28, 2002. The weighted average interest rate for the six months ended
December 31, 1998 was 6.75 percent.
The notional amount covered by the contracts was $220 million on December 31,
1998. The notional amount varies over the term of the contracts. The average
notional amount of indebtedness outstanding under these contracts for fiscal
years 1999 through 2002 is as follows: $273 million, $305 million, $223
million and $93 million, respectively.
The company is exposed to credit-related losses in the event of non-performance
by counterparties to the interest rate swap contracts. Management does not
expect any counterparties to fail to meet their obligations given the
creditworthiness of the counterparties to the agreements.
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<PAGE>
MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
6. Earnings per share
The following table presents the calculations of earnings per share:
(unaudited) (unaudited)
Three Months Six Months
Ended December 31 Ended December 31
1998 1997 1998 1997
- -----------------------------------------------------------------------------
(in thousands except per share)
Net earnings $25,423 $22,332 $44,234 $37,423
======= ======= ======= =======
Basic average shares outstanding 52,304 52,980 52,411 53,048
Dilutive effect of stock options 1,545 2,659 1,610 2,463
------- ------- ------- -------
Diluted average shares outstanding 53,849 55,639 54,021 55,511
======= ======= ======= =======
Basic earnings per share $ .48 $ .42 $ .84 $ .71
======= ======= ======= =======
Diluted earnings per share $ .47 $ .40 $ .82 $ .67
======= ======= ======= =======
Antidilutive options excluded from the above calculations totaled 550,000
options at December 31, 1998 (with a weighted average exercise price of $41.18)
and 78,000 options at December 31, 1997 (with a weighted average exercise price
of $34.87).
Options to purchase 51,000 shares were exercised during the six months ended
December 31, 1998 (145,000 options were exercised in the six months ended
December 31, 1997).
7. Commitments and Contingent Liabilities
In connection with the acquisition of WGNX-TV in Atlanta, Meredith has arranged
the following financing. On December 10, 1998, the company entered into a $200
million variable rate unsecured credit agreement with a group of seven banks
led by Wachovia Bank, N.A., as agent. The credit agreement provides for a $200
million term loan with required principal payments of $100 million in both
fiscal years 2003 and 2004. One of the conditions to borrowing under the
agreement is the acquisition of WGNX-TV. The commitments to lend expire on
April 30, 1999. No amounts were borrowed under this agreement at December 31,
1998. Interest rates under the credit agreement are based on applicable
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MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
margins plus, at the company's option, either adjusted LIBOR or the higher of
Wachovia Bank's prime rate or the overnight federal funds rate plus 0.5
percent. See Note 5 for information regarding interest rate swap contracts
that effectively fix the interest rate on this debt.
The company is also negotiating a private placement offering with five
insurance companies of $200 million in fixed rate unsecured Senior Notes.
These notes are expected to mature as follows: $75 million in 6 years, $50
million in 6.5 years and $75 million in 7 years from the date of closing. The
sale of the Notes is expected to occur on March 1, 1999.
The credit agreement and Senior Notes include certain financial covenants. The
most restrictive covenants require the debt-to-EBITDA ratio to be less than 3.5
to 1.0 and the fixed-charge-coverage ratio not to be less than 2.0 to 1.0. The
fixed charge coverage ratio is defined as EBITDA less capital expenditures
divided by the sum of interest expense, dividends paid and required debt
payments. As a result of these financing arrangements, the weighted-average
interest rate on the debt that will be used to acquire WGNX-TV is expected to
be 6.2 percent.
8. Segment information
Meredith adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," effective July 1, 1998.
Meredith Corporation is a diversified media company primarily focused on the
home and family marketplace. Based on products and services, the company has
two reportable segments: publishing and broadcasting. The publishing segment
includes magazine and book publishing, brand licensing, custom marketing and
other related operations. The broadcasting segment includes the operations of
11 network-affiliated television stations and syndicated television program
marketing and development. In previously reported segment information,
syndicated television programming operations were reported as unallocated
corporate expenses. Prior-year information has been restated to conform to the
current-year presentation. Intersegment revenues are not material and
virtually all businesses operate in the United States.
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<PAGE>
MEREDITH CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, continued
(Unaudited)
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
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Revenues
Publishing $182,858 $182,352 $373,674 $363,102
Broadcasting 72,066 66,532 127,087 116,681
-------- -------- -------- --------
Total revenues $254,924 $248,884 $500,761 $479,783
======== ======== ======== ========
Operating profit
Publishing $ 26,762 $ 22,630 $ 51,581 $ 42,079
Broadcasting 25,915 25,218 38,975 39,739
Unallocated corporate expense (4,874) (4,983) (8,848) (10,524)
-------- -------- -------- --------
Income from operations 47,803 42,865 81,708 71,294
Gain from disposition -- -- 2,375 --
Interest income 132 298 170 766
Interest expense (3,875) (4,250) (7,686) (6,717)
-------- -------- -------- --------
Earnings before income taxes 44,060 38,913 76,567 65,343
Income taxes 18,637 16,581 32,333 27,920
-------- -------- -------- --------
Net Earnings $ 25,423 $ 22,332 $ 44,234 $ 37,423
======== ======== ======== ========
Depreciation and amortization
Publishing $ 2,843 $ 2,458 $ 5,694 $ 4,837
Broadcasting 6,699 6,471 13,379 11,858
Unallocated corporate 476 365 987 691
-------- -------- -------- --------
Total depreciation
and amortization $ 10,018 $ 9,294 $ 20,060 $ 17,386
======== ======== ======== ========
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The following discussion presents the key factors that have affected the
company's business in the second quarter and first six months of fiscal 1999
and fiscal 1998 and compares the results of such periods. This commentary
should be read in conjunction with the consolidated financial statements
presented elsewhere in this report and with the company's Form 10-K for the
year ended June 30, 1998. All per-share amounts refer to diluted earnings per
share and are computed on a post-tax basis.
This section contains certain forward-looking statements that are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those anticipated. Reader's are referred to the company's Form
10-K for the year ended June 30, 1998, for a discussion of such factors.
Significant Events
Fiscal 1999
- -----------
On August 24, 1998, the company announced that it had reached an agreement to
acquire the net assets of WGNX-TV, a CBS network-affiliated television station
serving the Atlanta, Ga., market from Tribune Company. As part of this
transaction, Meredith has agreed to purchase Seattle's KCPQ-TV (FOX) from Kelly
Television Co. and trade the station to Tribune for WGNX-TV. The net price to
the company of this resulting asset purchase is estimated to be $370 million.
The company expects this transaction to close in early calendar year 1999,
subject to regulatory approvals.
Fiscal 1998
- -----------
On July 1, 1997, Meredith purchased the net assets of three television stations
affiliated with the FOX television network from First Media Television, L.P.
(First Media) for $216 million. Those stations are: KPDX-Portland, Ore.;
KFXO-Bend, Ore. (a low power station); and WHNS-Greenville, S.C./Spartanburg,
S.C./Asheville, N.C. On September 4, 1997, Meredith acquired and then
exchanged the net assets of the fourth First Media station, WCPX-TV in Orlando,
for WFSB-TV, a CBS network-affiliated television station serving the
Hartford/New Haven, Conn. market. WFSB-TV was acquired from Post-Newsweek
Stations, Inc. through an exchange of assets plus a $60 million cash payment to
Meredith. The result was a net cost to the company of $159 million for WFSB.
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<PAGE>
Results of Operations
Three Months Six Months
Ended December 31 Ended December 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands except per share)
Total revenues $254,924 $248,884 $500,761 $479,783
======== ======== ======== ========
Income from operations $ 47,803 $ 42,865 $ 81,708 $ 71,294
======== ======== ======== ========
Earnings before
nonrecurring items $ 25,423 $ 22,332 $ 42,809 $ 37,423
======== ======== ======== ========
Net earnings $ 25,423 $ 22,332 $ 44,234 $ 37,423
======== ======== ======== ========
Diluted earnings per share
before nonrecurring items $ 0.47 $ 0.40 $ 0.79 $ 0.67
======== ======== ======== ========
Diluted earnings per share $ 0.47 $ 0.40 $ 0.82 $ 0.67
======== ======== ======== ========
Net earnings of $25.4 million, or 47 cents per share, were recorded in the
quarter ended December 31, 1998, compared to net earnings of $22.3 million, or
40 cents per share, in the prior-year second quarter. For the six months ended
December 31, 1998, net earnings were $44.2 million, or 82 cents per share,
compared to net earnings of $37.4 million, or 67 cents per share, in the prior-
year period. Net earnings for the six months ended December 31, 1998, included
a post-tax gain of $1.4 million, or 3 cents per share, from the sale of the
Better Homes and Gardens Real Estate Service.
Earnings before nonrecurring items for the comparative six-month periods were
$42.8 million, or 79 cents per share, in fiscal 1999 and $37.4 million, or 67
cents per share, in the prior-year period. Fiscal 1999 earnings per share
before nonrecurring items increased 18 percent for both the second quarter and
six-month period compared to the prior-year periods. The weighted average
diluted number of shares outstanding declined 3 percent in both periods
compared to the prior-year periods primarily due to company share repurchases.
Second quarter revenues increased 2 percent and year-to-date revenues were up 4
percent from the comparative prior-year periods. Adjusting for the impacts of
the real estate sale and the fiscal 1998 first quarter acquisition of WFSB-TV
in Hartford/New Haven, Conn., comparable revenues increased 5 percent in the
second quarter and 6 percent in the six-month period. Increased advertising,
custom publishing, consumer book and circulation revenues were the primary
factors in the growth.
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<PAGE>
Second quarter operating costs increased slightly to $207.1 million. Higher
paper and editorial costs and increased television programming and news
expenses were nearly offset by the absence of costs from the real estate
operation and lower magazine production and circulation promotion costs. For
the six-month period costs increased 3 percent to $419.1 million due to a full
six months of operating expenses and amortization expense at WFSB-Hartford/New
Haven in the current period, increased television news and programming expenses
and higher paper and custom publishing costs. As in the quarter, the absence
of costs from the real estate operation partially offset the increases in other
areas. The operating profit margin grew from 17 percent in the fiscal 1998
second quarter to 19 percent in the current quarter. For the six months ended
December 31, 1998, the operating profit margin was 16 percent compared to 15
percent in the prior-year period.
Net interest expense in the second quarter decreased slightly from the level of
the prior-year second quarter due to a lower debt level. In the six-month
period ended December 31, 1998, net interest expense increased from the prior-
year period due to the timing of debt incurred for the WFSB-Hartford/New Haven
acquisition.
The company's effective tax rate was 42.2 percent for the six months ended
December 31, 1998, compared with 42.7 percent in the comparable prior-year
period. The decline reflected the diminished impact of nondeductible items
because of an increase in projected earnings.
Publishing
- ----------
Three Months Six Months
Ended December 31 Ended December 31
1998 1997 1998 1997
-------- -------- -------- --------
(in thousands)
Revenues
---------
Advertising $ 80,115 $ 78,507 $170,538 $162,685
Circulation 69,066 67,760 136,567 134,932
Other 33,677 36,085 66,569 65,485
-------- -------- -------- --------
Total revenues $182,858 $182,352 $373,674 $363,102
======== ======== ======== ========
Operating profit $ 26,762 $ 22,630 $ 51,581 $ 42,079
======== ======== ======== ========
Publishing revenues increased slightly compared to the prior-year quarter and 3
percent versus the prior-year six month period. Excluding the impact of the
sale of the Better Homes and Gardens Real Estate Service, publishing revenues
increased 3 percent in the second quarter and 6 percent in the six-month
period versus the prior-year periods. Advertising revenues grew 2 percent in
the second quarter and 5 percent in the six-month period ended December 31,
1998. Better Homes and Gardens, the company's largest circulation title,
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<PAGE>
reported increased ad revenues in both periods from an increase in ad pages
sold and higher average revenues per page. Other titles reporting solid
increases in ad revenues in both periods included Traditional Home, Country
Home, Family Money and Country Gardens magazines. These increases in ad
revenues were partially offset by lower ad revenues at Ladies' Home Journal
magazine primarily due to fewer ad pages sold. Looking forward, management
expects advertising pages in the women's service field of the magazine industry
to be down in the company's fiscal third quarter versus the prior-year quarter.
While both Better Homes and Gardens and Ladies' Home Journal compete in this
field, management believes the decline will impact Ladies' Home Journal ad
paging more than Better Homes and Gardens. In other titles, third quarter ad
pages are generally trending up over last year. At this time, management
expects overall ad pages for the third quarter to be flat or up slightly. This
is based on current information and could change as the quarter progresses.
Circulation revenues increased slightly in both the quarter and the fiscal
year-to-date period. The second quarter increase reflected higher subscription
revenues due to additional issues of MORE and Country Gardens magazines. The
increase in the six-month period reflected these changes and increased
newsstand sales of most titles. Other publishing revenues declined in the
quarter and increased slightly in the six-month period. The changes reflect
the sale of the Better Homes and Gardens Real Estate Service and higher
consumer book and custom publishing revenues.
Publishing operating profit was up 18 percent in the fiscal 1999 second quarter
and 23 percent for the fiscal year-to-date versus the comparable prior-year
periods. The strong second quarter results were driven primarily by lower
production and circulation costs and increased magazine advertising revenues.
The improvement in the fiscal year-to-date period was primarily a result of
increased advertising revenues. Increased profit from the custom publishing
operations also contributed to improved operating profit.
Paper expense increased in both the second quarter and six-month period,
reflecting increased volumes and higher average prices. The higher average
prices result from the timing of price changes over the last year. Major
suppliers reduced coated groundwood paper prices approximately 4 percent on
January 1, 1999, following an average price decrease of approximately 3.5
percent on October 1, 1998. Coated groundwood paper accounts for more than
two-thirds of the company's paper usage. These price decreases are expected to
have a favorable impact on paper expense in the second half of fiscal 1999.
Postage rates increased on January 10, 1999. Management expects the effective
increase for the company to be less than the 4.6 percent average for magazine
publishers taken as a whole due to the company's efficient mailing processes.
In addition, the third fiscal quarter impact was lessened by mailing
promotional campaigns and magazines prior to the date of the increase when
possible.
- 15 -
<PAGE>
Broadcasting
- ------------ Three Months Six Months
Ended December 31 Ended December 31
1998 1997 1998 1997
-------- -------- -------- --------
Revenues (in thousands)
---------
Advertising $ 70,485 $ 63,044 $123,000 $110,506
Other 1,581 3,488 4,087 6,175
-------- -------- -------- --------
Total revenues $ 72,066 $ 66,532 $127,087 $116,681
======== ======== ======== ========
Operating profit $ 25,915 $ 25,218 $ 38,975 $ 39,739
======== ======== ======== ========
Broadcasting revenues increased 8 percent in the fiscal 1999 second quarter and
9 percent in the six months ended December 31, 1998 compared to the prior-year
periods. Excluding the impact of the timing of the fiscal 1998 first quarter
acquisition of WFSB-Hartford/New Haven, comparable revenues increased 5 percent
in the six-month period. Operating profit increased 3 percent in the second
quarter. All of the company's stations benefited from political advertising in
the second quarter. In addition CBS affiliates, especially those in KCTV-
Kansas City and WFSB-Hartford/New Haven, benefited from the addition of
National Football League games to network programming. Operating profit
declined 2 percent in the six-month period due primarily to lower ad revenue
resulting from the General Motors labor dispute during the first quarter and
investment spending primarily in programming, local news and sales, marketing
and research activities. Among comparable stations, revenue and operating
profit performance for both periods was led by KPDX-Portland, KCTV-Kansas City
and KVVU-Las Vegas. Looking forward to the fiscal third quarter, the stations
in total are reporting generally flat advertising pacings compared to the prior
year quarter. Increases in some areas are being offset by the absence of
incremental advertising for the Winter Olympics at the company's CBS affiliates
in the prior year. Advertising pacings are as of a point in time and are
subject to change.
Liquidity and Capital Resources
Percent
Six months ended December 31 1998 1997 Change
---------------------------- -------- -------- -------
(in thousands)
Net earnings $ 44,234 $ 37,423 18%
========= ========= ====
Cash flows from operations $ 50,929 $ 42,171 21%
========= ========= ====
Cash flows from investing $ (841) $(351,681) 100%
========= ========= ====
Cash flows from financing $(54,347) $ 235,524 nm
========= ========= ====
Net cash flows $ (4,259) $ (73,986) 94%
========= ========= ====
EBITDA $ 101,768 $ 88,680 15%
========= ========= ====
nm - not meaningful
- 16 -
<PAGE>
Cash and cash equivalents decreased by $4.3 million in the first six months of
fiscal 1999 compared to a decrease in cash of $74.0 million in the comparable
prior-year period. The change reflected cash invested for the acquisition of
four television stations in the prior-year period, net of long-term debt
incurred. Cash provided by operating activities increased 21 percent for the
six month period due to higher operating cash flows (earnings plus depreciation
and amortization) and changes in working capital items that resulted primarily
from the prior-year television station acquisitions.
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. EBITDA is often used to analyze and compare companies on the
basis of operating performance and cash flow. EBITDA for the first six months
of fiscal 1999 increased 15 percent from the prior-year period due to improved
operating results. EBITDA is not adjusted for all noncash expenses or for
working capital changes, capital expenditures or other investment requirements.
EBITDA should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles.
The company has an unsecured credit agreement which consists of a $210 million,
60-month variable rate term loan and a $150 million, 60-month variable rate
revolving credit facility. At December 31, 1998, long-term debt outstanding
under this agreement consisted of $185 million outstanding under the term loan
and $22 million outstanding under the revolving credit facility. The credit
agreement contains certain covenants. As of December 31, 1998, the company was
in compliance with all debt covenants.
In connection with the acquisition of WGNX-TV in Atlanta, the company entered
into a $200 million variable rate unsecured credit agreement with a group of
seven banks led by Wachovia Bank, N.A., as agent, on December 10, 1998. The
credit agreement provides for a $200 million term loan with required principal
payments of $100 million in both fiscal years 2003 and 2004. One of the
conditions to borrowing under the agreement is the acquisition of WGNX-TV. The
commitments to lend expire on April 30, 1999. No amounts were borrowed under
this agreement at December 31, 1998. Interest rates under the credit agreement
are based on applicable margins plus, at the company's option, either adjusted
LIBOR or the higher of Wachovia Bank's prime rate or the overnight federal
funds rate plus 0.5 percent.
To complete the financing of the acquisition of WGNX-TV, the company is
negotiating a private placement offering with five insurance companies of $200
million in fixed rate unsecured Senior Notes. These notes are expected to
mature as follows: $75 million in 6 years, $50 million in 6.5 years and $75
million in 7 years from the date of closing. The sale of the Notes is expected
to occur on March 1, 1999.
The credit agreement and Senior Notes include certain financial covenants. The
most restrictive covenants require the debt-to-EBITDA ratio to be less than 3.5
to 1.0 and the fixed-charge-coverage ratio not to be less than 2.0 to 1.0. The
fixed-charge-coverage-ratio is defined as EBITDA less capital expenditures
- 17 -
<PAGE>
divided by the sum of interest expense, dividends paid and required debt
payments. As a result of these financing arrangements, the weighted-average
interest rate on the debt that will be used to acquire WGNX-TV is expected to
be 6.2 percent.
Meredith utilizes interest rate swap contracts to manage interest cost and risk
associated with possible increases in variable interest rates. The company
amended its existing swap contracts effective December 31, 1998 and entered
into two new swap contracts with effective dates of March 31, 1999. Under the
contracts, Meredith pays fixed rates of interest while receiving floating rates
of interest based on three month LIBOR. These contracts effectively fix the
base interest rate on the existing credit agreement and on the new credit
agreement entered into on December 10, 1998, although the applicable margins
vary based upon the company's debt-to-EBITDA ratio. These contracts are held
for purposes other than trading. The contracts expire on June 28, 2002. The
weighted average interest rate for the six months ended December 31, 1998 was
6.75 percent.
The notional amount covered by the contracts was $220 million on December 31,
1998. The notional amount varies over the term of the contracts. The average
notional amount of indebtedness outstanding under these contracts for fiscal
years 1999 through 2002 is as follows: $273 million, $305 million, $223
million and $93 million, respectively.
The company is exposed to credit-related losses in the event of non-performance
by counterparties to the interest rate swap contracts. Management does not
expect any counterparties to fail to meet their obligations given the
creditworthiness of the counterparties to the agreements.
At December 31, 1998, the company also had $5.0 million in short-term variable-
rate debt outstanding under a bank line of credit agreement. The interest rate
at December 31, 1998 was approximately 6 percent.
In the first six months of fiscal 1999, the company spent $31.1 million for the
repurchase of 750,000 shares of Meredith Corporation common stock at the then
current market prices. This compares with spending of $18.5 million for the
repurchase of 592,000 shares in the comparable prior-year period. The current
period totals include the repurchase of 297,000 shares under put option
agreements. As of December 31, 1998, the company had put option agreements to
repurchase approximately 1.9 million shares. The market value of these shares
at December 31, 1998, has been reclassified from stockholders' equity to the
temporary equity classification entitled, "Put option agreements." As of
December 31, 1998, approximately 2.3 million 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.
The company expects to continue to repurchase shares in the foreseeable future,
subject to market conditions.
Dividends paid in the first six months of fiscal 1999 were $7.3 million, or 14
cents per share, compared with $6.9 million, or 13 cents per share, in the
prior-year period. On February 1, 1999, the board of directors increased the
quarterly dividend by 7 percent (one-half cent per share) to 7.5 cents per
- 18 -
<PAGE>
share effective with the dividend payable on March 15, 1999. On an annual
basis, the effect of this quarterly dividend increase would be to increase
dividends paid by approximately $1.0 million at the current number of shares
outstanding.
Spending for property, plant and equipment decreased to $8.3 million in the
first six months of fiscal 1999 from $23.4 million in the prior-year period.
The decrease primarily resulted from prior-year spending for the construction
of a new office building and related improvements in Des Moines. The project
was completed late in fiscal 1998. Total capital expenditures for fiscal 1999
are expected to be 10 to 20 percent lower than fiscal 1998 expenditures.
Spending will increase in the second half as several of the broadcasting
stations begin the conversion to digital technology and two stations prepare
for the expansion of local news programming. Funds for capital expenditures
are expected to be provided by available cash, including cash from operating
activities or, if necessary, borrowings under credit agreements.
At this time, management expects that cash on hand, internally-generated cash
flow and debt from credit agreements will provide funds for any additional
operating and recurring cash needs (e.g., working capital, cash dividends) for
foreseeable periods.
Year 2000
- ---------
The Year 2000 issue, common to most companies, concerns the inability of
information and noninformation systems to recognize and process date sensitive
information due to the use of only the last two digits to refer to a year.
This problem could affect both information systems (software and hardware) and
other equipment that relies on microprocessors. Management completed a
company-wide evaluation of this impact on its computer systems, applications
and other date-sensitive equipment. Systems and equipment that are not Year
2000 compliant have been identified and remediation efforts are in process.
Management estimates that nearly 40 percent of remediation efforts were
completed as of December 31, 1998. All remediation efforts and testing of
systems/equipment are expected to be completed by June 30, 1999.
The company is also in the process of monitoring the progress of material third
parties (vendors and suppliers) in their efforts to become Year 2000 compliant.
These third parties include, but are not limited to: magazine and book
printers, paper suppliers, magazine fulfillment providers, the U.S. Postal
Service, television networks, other television programming suppliers, mainframe
computer services suppliers, financial institutions and utilities. The company
has sought compliance information with respect to vendors and suppliers through
the use of surveys, industry groups, peer reviews and vendor websites.
Management then followed up to obtain more detailed information regarding the
Year 2000 efforts of material third parties. Most of these material third
parties have been cooperative and are supplying Year 2000 project related
information. The company continues to pursue additional information from
material third parties where needed and from those not responding.
- 19 -
<PAGE>
Through December 31, 1998, the company has spent approximately $1.3 million to
address Year 2000 issues. Total costs to address Year 2000 issues are
currently estimated not to exceed $5 million and consist primarily of costs for
the remediation of internal systems and broadcasting equipment. Funds for
these costs are expected to be provided by the operating cash flows of the
company. The majority of the internal system remediation efforts relate to
staff costs of on-staff systems engineers and therefore, are not incremental
costs.
Meredith Corporation could be faced with severe consequences if Year 2000
issues are not identified and resolved in a timely manner by the company and
material third parties. A worst case scenario would result in the short-term
inability of the company to produce/distribute magazines or broadcast
television programming due to unresolved year 2000 issues. This would result
in lost revenues; however, the amount would be dependent on the length and
nature of the disruption, which cannot be predicted or estimated. In light of
the possible consequences, the company is devoting the resources needed to
address Year 2000 issues in a timely manner. Management has contracted with an
outside consultant to monitor the progress of Meredith's Year 2000 efforts and
provide update reports to the audit committee of the board of directors at each
quarterly meeting. While management expects a successful resolution of these
issues, there can be no guarantee that material third parties, on which
Meredith relies, will address all Year 2000 issues on a timely basis or that
their failure to successfully address all issues would not have an adverse
effect on the company.
Meredith is in the process of developing contingency plans in case business
interruptions do occur. Management expects these plans to be completed by June
30, 1999.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The company is subject to certain market risks as a result of the use of
financial instruments. The market risk inherent in the company's financial
instruments subject to such risks is the potential market value loss arising
from adverse changes in interest rates and/or the potential effect of changes
in the market price of company common stock on the company's liquidity.
Readers are referred to the company's Form 10-K for the year ended June 30,
1998 for a more complete discussion of these risks.
The company uses interest rate swap agreements to effectively fix the interest
rate on its debt. Therefore, there is no earnings or liquidity risk associated
with changes in interest rates. The fair market value of the interest rate
swaps is the estimated amount, based on discounted cash flows, the company
would pay or receive to terminate the swap agreements. A 10 percent decrease
in interest rates would result in a $3.6 million increase in the December 31,
1998 cost of $4.5 million to terminate the swap agreements.
At December 31, 1998, the company had put option agreements outstanding to
repurchase up to 1.9 million common shares. The risk to the company of an
increase in share price is from a liquidity perspective. Based on the
- 20 -
<PAGE>
December 31, 1998 closing price, a 10 percent increase in share price would
cause the potential repurchase cost for these put options to increase by $9.3
million.
There has been no material change in the market risk associated with program
rights payable since June 30, 1998.
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 9, 1998, at
the Company's headquarters in Des Moines, Iowa.
(b) The name of each director elected at the Annual Meeting is shown under
Item 4.(c). The other directors whose terms of office continued after
the meeting were: Herbert M. Baum, Barbara U. Charlton, Frederick B.
Henry, William T. Kerr, Robert E. Lee, Nicholas L. Reding, and Jack D.
Rehm.
(c)(1) Proposal 1: Election of four Class III directors for terms expiring in
2001. Each nominee was elected in uncontested elections by the votes
cast as follows:
Number of shareholder votes*
-----------------------------
For Withheld
----------- --------
Class III directors
Mary Sue Coleman 135,146,210 596,843
Joel W. Johnson 135,141,925 601,128
Richard S. Levitt 135,181,126 561,927
E.T. Meredith III 135,192,172 550,881
(c)(2) Proposal 2: Election of one Class I director for a term expiring in
1999. The nominee was elected in an uncontested election by the votes
cast as follows:
Number of shareholder votes*
-----------------------------
For Withheld
----------- --------
Class I director
Philip A. Marineau 135,013,980 729,073
*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.
- 21 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
2) $200 million Credit Agreement dated as of December 10, 1998, among
Meredith Corporation, and certain banks specified therein, for whom
Wachovia Bank, N.A., is acting as Agent.
27) Financial Data Schedule
99) Additional financial information from the Company's second quarter
press release dated January 19, 1999.
(b) Reports on Form 8-K
No Form 8-K was filed during the quarter ended December 31, 1998.
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
(Stephen M. Lacy)
Stephen M. Lacy
Vice President - Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: February 11, 1999
- 22 -
<PAGE>
Index to Exhibits
Exhibit
Number Item
------- -----------------------------------------------------------
2 $200 million Credit Agreement dated as of December 10,
1998, among Meredith Corporation, and certain banks specified
therein, for whom Wachovia Bank, N.A., is acting as Agent*.
27 Financial Data Schedule
99 Additional financial information from the Company's second
quarter press release dated January 19, 1999.
* Supplementary Exhibits and Schedules to this Agreement are not included in
this Form 10-Q filing. Copies of any of the Exhibits and/or Schedules to
this Agreement will be furnished supplementary to the Commission upon
request.
EXHIBIT 2
---------
$200,000,000
CREDIT AGREEMENT
dated as of
December 10, 1998
among
MEREDITH CORPORATION,
The Banks Listed Herein,
WACHOVIA BANK, N.A.,
as Agent and a Bank,
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent and a Bank,
and
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION,
as Documentation Agent and a Bank.
- 1 -
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of December 10, 1998 among MEREDITH CORPORATION,
the BANKS listed on the signature pages hereof, WACHOVIA BANK, N.A., as Agent
and as a Bank, THE FIRST NATIONAL BANK OF CHICAGO, as Syndication Agent and a
Bank, and SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, as
Documentation Agent and a Bank.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section1.01
shall, for all purposes of this Agreement and any amendment hereto (except as
herein otherwise expressly provided or unless the context otherwise requires),
have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Affiliate" of any Person means (i) any other Person which directly,
or indirectly through one or more intermediaries, controls such Person, (ii)any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii)any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means Wachovia Bank, N.A., a national banking association
organized under the laws of the United States of America, in its capacity as
agent for the Banks hereunder, and its successors and permitted assigns in such
capacity.
"Agent's Letter Agreement" means that certain letter agreement, dated
as of October 21, 1998, between the Borrower and the Agent and accepted by the
Borrower on October 22, 1998, relating to the structure of the Loans, and
certain fees from time to time payable by the Borrower to the Agent, together
with all amendments and modifications thereto.
"Agreement" means this Credit Agreement, together with all amendments
and supplements hereto.
"Applicable Margin" has the meaning set forth in Section 2.05(a).
"Applicable Unused Fee Rate" shall mean 0.20%, per annum.
"Assignee" has the meaning set forth in Section 9.07(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.07(c) in the form attached hereto as
Exhibit G.
- 2 -
<PAGE>
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as having
a Commitment, and its successors and assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate per
annum equal to the higher as of such day of (i) the Prime Rate, and (ii) one-
half of one percent above the Federal Funds Rate for such day. For purposes of
determining the Base Rate for any day, changes in the Prime Rate and the
Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Borrowing" means a Borrowing if the advances under such
borrowing bear or are to bear interest calculated by reference to the Base
Rate.
"Base Rate Loan" means Loans which bear or are to bear interest
calculated by reference to the Base Rate.
"Borrower" means Meredith Corporation, a corporation incorporated
under the laws of the State of Iowa, and its successors and permitted assigns.
"Borrower Officer's Certificate" has the meaning set forth in Section
3.01(f).
"Borrowing" shall mean a borrowing under the Commitments consisting
of Loans made to the Borrower at the same time by the Banks pursuant to Article
II. A Borrowing is a "Euro-Dollar Borrowing" if such Loans are made as Euro-
Dollar Loans and a "Base Rate Borrowing" if such Loans are made as Base Rate
Loans.
"Broadcast Licenses" means licenses, permits, authorizations or
certificates now or hereafter held by the Borrower and its Subsidiaries
(including, without limitation, the Broadcast Licenses listed on Schedule 4.19
hereto) to construct, own, operate or promote the Stations granted by the FCC,
the administrative law courts or by any state, county, city, town, village or
other local government authority, and all extensions, additions and renewals
thereto or thereof.
"Capital Expenditures" means for any period the sum of all capital
expenditures incurred during such period by the Borrower and its Consolidated
Subsidiaries, as determined in accordance with GAAP; provided, however, for
purposes of calculating the "Fixed Charge Coverage Ratio" for any Fiscal
Quarter, Capital Expenditures, in an aggregate amount up to $16,000,000,
incurred in connection with the construction of a new facility and expanded
news programming for WGNX will not be included in "Capital Expenditures".
"Capital Stock" means any nonredeemable capital stock of the Borrower
or any Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Information System established pursuant to CERCLA.
- 3 -
<PAGE>
"Change of Law" shall have the meaning set forth in Section 8.02.
"Closing Certificate" has the meaning set forth in Section 3.01(e).
"Closing Date" means December 10, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Commitment" means, with respect to each Bank, (i) the amount
designated as the Commitment set forth opposite the name of such Bank on the
signature pages hereof, or (ii) as to any Bank which enters into an Assignment
and Acceptance (whether as transferor Bank or as Assignee thereunder), the
amount of such Bank's Commitment after giving effect to such Assignment and
Acceptance, in each case as such amount may be reduced from time to time
pursuant to Section 2.08.
"Commitment Reduction Date" means November 1, 2002, May 1, 2003,
November 1, 2003 and May 1, 2004.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Fixed Charges" for any period means the sum of (i)
Consolidated Interest Expense for such period; (ii) all payments of principal
in respect of Debt (excluding principal payments made with respect to any
revolving line of credit) of the Borrower or any of its Consolidated
Subsidiaries for such period; and (iii) all dividends paid by the Borrower and
its Consolidated Subsidiaries for such period.
"Consolidated Funded Debt" means, at any date, the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date.
"Consolidated Gross Revenues" means as applied to any Person for any
period, the aggregate gross revenues of such Person for such period, as
determined in accordance with GAAP.
"Consolidated Interest Expense" for any period means interest
expensed in respect of Debt of the Borrower or any of its Consolidated
Subsidiaries outstanding during such period.
"Consolidated Net Income" means, for any period, the Net Income of
the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis, but excluding (i) extraordinary items and (ii) any equity interests of
the Borrower or any Subsidiary in the unremitted earnings of any Person that is
not a Subsidiary.
"Consolidated Net Worth" means, at any time, the shareholders' equity
of the Borrower and its Consolidated Subsidiaries, as set forth or reflected on
the most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any Redeemable
Preferred Stock of the Borrower or any of its Consolidated Subsidiaries.
Shareholders' equity generally would include, but not be limited to (i) the par
- 4 -
<PAGE>
or stated value of all outstanding Capital Stock, (ii) capital surplus, (iii)
retained earnings, and (iv) various deductions such as (A) purchases of
treasury stock, (B) valuation allowances, (C) receivables due from an employee
stock ownership plan, (D) employee stock ownership plan debt guarantees, and
(E) translation adjustments for foreign currency transactions.
"Consolidated Operating Profits" means, for any period, the Operating
Profits of the Borrower and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means, at any time, the total assets of
the Borrower and its Consolidated Subsidiaries, determined on a consolidated
basis, as set forth or reflected on the most recent consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries, prepared in accordance with
GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other
Person in respect of amounts payable under a bankers' acceptance, (vi) all
Redeemable Preferred Stock of such Person (in the event such Person is a
corporation), (vii) all obligations (absolute or contingent) of such Person to
reimburse any bank or other Person in respect of amounts paid under a letter of
credit or similar instrument, with an expiration date more than one year from
such date, (viii) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, and (ix) all Debt
of others Guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived in writing, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day, the sum
of 2% plus the then highest interest rate (including the Applicable Margin)
which may be applicable to any Euro-Dollar Loan or Base Rate Loan hereunder
(irrespective of whether any such type of loans are actually outstanding
hereunder).
"Depreciation and Amortization" means for any period the sum of all
depreciation and amortization expenses of the Borrower and its Consolidated
Subsidiaries for such period, as determined in accordance with GAAP.
"Dollars" or "$" means dollars in lawful currency of the United
States of America.
- 5 -
<PAGE>
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Georgia are authorized or required by
law to close.
"EBITDA" for any period means the sum of: (i) Consolidated Net
Income, (ii) taxes on income, (iii) Consolidated Interest Expense, and (iv)
Depreciation and Amortization, all determined with respect to the Borrower and
its Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP. In computing EBITDA, any of the foregoing items
realized or accrued for such period and prior to the date of a Permitted
Acquisition (solely for purposes of this definition, Permitted Acquisition
shall be deemed to include the acquisition of any asset) by the Person so
acquired or attributable to the assets so acquired shall be included in EBITDA,
but only to the extent that such items of such Person or attributable to such
assets would have been available to the Borrower or such Subsidiary had the
Borrower or such Subsidiary acquired such Person or such assets at the
beginning of such period.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower or any Subsidiary required by any Environmental
Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements, which when combined with all other Environmental
Liabilities of the Borrower is greater than $500,000.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
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from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local
laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"E. T. Meredith Family Stockholders" means (a) the lineal descendants
by blood or adoption of E.T. Meredith ("descendants") and the spouses and
surviving spouses of such descendants; (b) any estate, trust, guardianship,
custodianship or other fiduciary arrangement for the primary benefit of any one
or more individuals described in (a) above; and (c) any corporation,
partnership, limited liability company or other business organization so long
as (i) one or more individuals or entities described in clauses (a) and (b)
above possess, directly or indirectly, the power to direct or cause the
direction of, the management and policies of such corporation, partnership,
limited liability company or other business organization and (ii) substantially
all of the ownership, beneficial or other equity interests in such corporation,
partnership, limited liability company or other business organization are
owned, directly or indirectly, by one or more individuals or entities described
in clauses (a) and (b) above.
"Euro-Dollar Borrowing" means a Borrowing if the advances under such
borrowing bear or are to bear interest at a rate based upon the London
Interbank Offered Rate.
"Euro-Dollar Business Day" means any Domestic Business Day on which
dealings in Dollar deposits are carried out in the London interbank market.
"Euro-Dollar Loan" means Loans which bear or are to bear interest at
a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"FCC" means the Federal Communications Commission.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the next higher 1/100th of 1%) equal to the weighted
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average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if the day for which such rate is
to be determined is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(ii) if such rate is not so published for any day, the Federal Funds Rate for
such day shall be the average rate charged to Wachovia on such day on such
transactions as determined by the Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Charge Coverage Ratio" means the ratio, measured as of the
last day of each Fiscal Quarter, of: (A) the amount equal to: (i) EBITDA,
calculated for the Fiscal Quarter then ended and the immediately preceding
three Fiscal Quarters, less (ii) Capital Expenditures, calculated for the
Fiscal Quarter then ended and the immediately preceding three Fiscal Quarters,
to (B) Consolidated Fixed Charges for the Fiscal Quarter then ended and the
immediately preceding three Fiscal Quarters.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any Subsidiary of the Borrower before any court,
arbitrator or Governmental Authority having jurisdiction over the Borrower or
such Subsidiary or the receipt of notice by any such party that any of them is
a suspect in or a target of any governmental inquiry or investigation, which
may result in: (a) an indictment of any of them; or (b) the seizure or
forfeiture of any of their property which, when combined with all other
property of the Borrower of any Subsidiary of the Borrower seized or forfeited
during the current Fiscal Quarter and the immediately preceding three Fiscal
Quarters has an aggregate fair market value in excess of $500,000.
"Funding Date" means the earliest of the following dates: (i) April
30, 1999; (ii) the date on which the Borrower terminates the Commitments; and
(iii) the Initial Draw Date.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, or any instrumentality of any of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to provide collateral security, to
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take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that
the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b) any
"hazardous substance", "pollutant" or "contaminant", as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976,
or in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Initial Draw Amount" means the aggregate principal amount of all
Loans advanced by the Banks on the Initial Draw Date.
"Initial Draw Date" means the date on which the first Loan is
advanced by the Banks hereunder.
"Interest Payment Date" means each April 1, July 1, October 1 and
January 1.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such borrowing and ending on
the numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (subject to clause (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to clause (c) below, end on the last Euro-Dollar
Business Day of the appropriate subsequent calendar month; and
(c) any Interest Period applicable to the Loans which begins before
the Maturity Date and would otherwise end after the Maturity Date shall
end on the Maturity Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the
date of such borrowing and ending 30 days thereafter; provided that:
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(a) any Interest Period (subject to clause (b) below) which would
otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
(b) any Interest Period applicable to the Loans which begins before
the Maturity Date and would otherwise end after the Maturity Date shall
end on the Maturity Date.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means, as to each Bank, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For
the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan Documents" means this Agreement, the Notes, any other document
evidencing, relating to or securing the Loans, and any other document or
instrument delivered from time to time in connection with this Agreement, the
Notes, or the Loans, as such documents and instruments may be amended or
supplemented from time to time.
"Loans" means the loans made by the Banks under the Commitments and
"Loan" means any one of such Loans.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(c).
"Margin Stock" means "margin stock" as defined in Regulation T, U or
X of the Board of Governors of the Federal Reserve System, as in effect from
time to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of the
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Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Agent or the Banks under the Loan Documents, or the ability of
the Borrower to perform its obligations under the Loan Documents to which it is
a party, as applicable, or (c) the legality, validity or enforceability of any
Loan Document.
"Maturity Date" means May 1, 2004.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Net Proceeds of Capital Stock" means any and all proceeds (whether
cash or non-cash) or other consideration received by the Borrower or a
Consolidated Subsidiary in respect of the issuance of Capital Stock (including,
without limitation, the aggregate amount of any and all Debt converted into
Capital Stock), from a Person other than the Borrower or a Consolidated
Subsidiary, after deducting therefrom all reasonable and customary costs and
expenses incurred by the Borrower or such Consolidated Subsidiary directly in
connection with the issuance of such Capital Stock.
"Non-excluded Taxes" has the meaning set forth in Section 2.11(c).
"Notes" means the promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, together with all amendments, consolidations, modifications,
renewals and supplements thereto and "Note" means any one of such Notes.
"Notice of Borrowing" has the meaning set forth in Section 2.02.
"Operating Profits" means, as applied to any Person for any period,
the operating income of such Person for such period, as determined in
accordance with GAAP.
"Participant" has the meaning set forth in Section 9.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition by the Borrower or any
Subsidiary of the Borrower of shares of capital stock of any Person or assets
from any Person, if: (A) in the case of the acquisition of shares of capital
stock of any Person, immediately after giving effect to such acquisition (i)
such Person is a Consolidated Subsidiary; (ii) the Borrower controls such
Person directly or indirectly through a Subsidiary; (iii) no Default shall have
occurred and be continuing; (iv) the line or lines of business engaged in by
such Person are substantially the same as the lines of business engaged in by
the Borrower and its Subsidiaries on the Closing Date; and (v) such acquisition
is made on a negotiated basis with the approval of the Board of Directors of
the Person to be acquired and, if necessary, the shareholders of the Person to
be acquired; and (B) in the case of the acquisition of assets from any Person,
immediately after giving effect to such acquisition: (i) the assets acquired
by the Borrower or such Subsidiary of the Borrower, shall be used by the
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Borrower or such Subsidiary in a line of business substantially the same as the
lines of business engaged in by the Borrower and its Subsidiaries on the
Closing Date; and (ii) no Default shall have occurred and be continuing.
"Person" means an individual, a corporation, a limited liability
company, a partnership (including without limitation, a joint venture), an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding 5 plan years made contributions.
"Prime Rate" refers to that interest rate so denominated and set by
Wachovia from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Borrower or any Subsidiary, wherever located.
"Rate Determination Date" has the meaning set forth in Section
2.05(a).
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Maturity Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise)
or (ii) redeemable at the option of the holder thereof.
"Reported Net Income" means, for any period, the Net Income of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis.
"Required Banks" means at any time: (1) Banks having at least 51% of
the aggregate amount of the Commitments; or, (2) if the Commitments are no
longer in effect, Banks holding at least 51% of the aggregate outstanding
principal amount of the Notes.
"Stations" means collectively (i) KPHO-TV, a VHF broadcasting station
licensed to Phoenix, Arizona, and serving the Phoenix market, (ii) WOFL-TV, a
UHF broadcasting station licensed to Orlando, Florida, and serving the Orlando-
Daytona-Melbourne-Cocoa-Claremont market; (iii) KCTV, a VHF broadcasting
station licensed to Kansas City, Missouri, and serving the Kansas City market;
(iv) WSMV-TV, a VHF broadcasting station licensed to Nashville, Tennessee, and
serving the Nashville market; (v) WNEM-TV, a VHF broadcasting station licensed
to Bay City, Michigan, and serving the Saginaw-Bay City-Flint market; (vi)
KVVU-TV, a VHF broadcasting station licensed to Henderson, Nevada, and serving
the Las Vegas-Henderson market; (vii) WOGX-TV, a UHF broadcasting station
licensed to Ocala, Florida, and serving the Ocala-Gainesville market; (viii)
WHNS-TV, a UHF broadcasting station licensed to Asheville, North Carolina, and
serving the Asheville, North Carolina-Greenville, South Carolina, market;
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(ix) KPDX, a UHF broadcasting station licensed to Vancouver, Washington, and
serving the Portland, Oregon, market; (x) WFSB, a VHF broadcasting station
licensed to Hartford, Connecticut, and serving the Hartford-New Haven,
Connecticut market; (xi) KFXO-LP, a low power broadcasting station licensed to
Bend, Oregon, and serving the Bend, Oregon market; and (xii) any and all
television, radio or other broadcasting stations, now or hereafter acquired or
controlled, directly or indirectly, by the Borrower.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Total Assets" of any Person means, at any time, the total assets of
such Person, as set forth or reflected or as should be set forth or reflected
on the most recent balance sheet of such Person, prepared in accordance with
GAAP.
"Transferee" has the meaning set forth in Section 9.07(d).
"Unencumbered Total Assets" of any Person means, at any time, Total
Assets of such Person which are subject to any arrangement specified in 12 CFR
Section 221.2(g)(1).
"Unused Fee Payment Date" means each April 1, July 1, October 1 and
January 1.
"Wachovia" means Wachovia Bank, N.A., a national banking association
and its successors.
"WGNX" means WGNX, a UHF broadcasting station licensed to Atlanta,
Georgia and serving the Atlanta, Georgia market.
"WGNX Acquisition" means the acquisition by KCPQ Acquisition Corp. (a
Consolidated Subsidiary of the Borrower) of all or substantially all of the
assets used in connection with KCPQ-TV (the "KCPQ Assets"), a VHF broadcasting
station serving the Seattle, Washington market and the subsequent exchange of
the KCPQ Assets, for the assets used in connection with the operation of WGNX
and no less than $5,000,000 in cash; which exchange shall occur simultaneously
with the acquisition of the KCPQ Assets.
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
"Year 2000 Compliant and Ready" as used herein means that (A) the
Borrower's and its Subsidiaries' hardware and software systems with respect to
the operation of its business and its general business plan will in all
material respects: (i) handle date information involving any and all dates
before, during and/or after January 1, 2000, including accepting input,
providing output and performing date calculations in whole or in part;
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(ii) operate, accurately without interruption on and in respect of any and all
dates before, during and/or after January 1, 2000 and without any change in
performance; (iii) store and provide date input information without creating
any ambiguity as to the century and; (B) the Borrower has developed alternative
plans to ensure business continuity in all material respects in the event of
the failure of any or all of items (i) through (iii) above.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries
delivered to the Banks, unless with respect to any such change concurred in by
the Borrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this Agreement or any of
the other Loan Documents: (i) the Borrower shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements, or (ii) the Required Banks shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.01 hereof, shall mean the
financial statements referred to in Section 4.04).
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
SECTION 1.05. References. Unless otherwise indicated, references in
this Agreement to "Articles", "Exhibits", "Schedules", and "Sections" are
references to articles, exhibits, schedules and sections hereof.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth herein, to make Loans to the Borrower from
time to time before the Maturity Date; provided that, (i) each Bank's
Commitment shall be initially advanced, if at all, in one advance made on the
Funding Date; and (ii) immediately after each Loan is made, the aggregate
outstanding principal amount of the Loans by such Bank shall not exceed such
Bank's Commitment, provided further that the aggregate principal amount of all
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Loans at any one time outstanding shall not exceed the aggregate amount of the
Commitments of all of the Banks at such time. Each Borrowing that is a Euro-
Dollar Borrowing under this Section shall be in an aggregate principal amount
of $5,000,000 or any larger multiple of $1,000,000 and each Borrowing that is
a Base Rate Borrowing under this Section shall be in an aggregate principal
amount of $1,000,000 or any larger multiple of $500,000 and shall be made from
the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under this Section 2.01,
repay or, to the extent permitted by Section 2.08, repay Loans and reborrow
under this Section 2.01 at any time before the Maturity Date; provided,
however, that after the Funding Date: (i) the proceeds of any Borrowing shall
be used exclusively for the purpose of repaying Loans maturing on the date of
such Borrowing and for no other purpose; and (ii) the ability to reborrow may
be limited by the provisions of Section 2.08 hereof.
SECTION 2.02. Method of Borrowing Loans. (a) The Borrower shall
give the Agent notice in the form attached hereto as Exhibit H (a "Notice of
Borrowing") prior to 11:00 A.M. (Atlanta, Georgia time) on the Domestic
Business Day of each Base Rate Borrowing and at least 3 Euro-Dollar Business
Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such borrowing, which shall be a Domestic Business
Day in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing;
(ii) the aggregate amount of the Borrowing; and
(iii) whether the Loans comprising a Borrowing are to be Base Rate
Loans or Euro-Dollar Loans, and the duration of the Interest Period
applicable thereto, subject to the provisions of the definition of
Interest Period; provided, however, commencing on the Funding Date and
continuing until October 8, 1999, the Loans comprising a Borrowing shall
be Euro-Dollar Loans.
(b) Upon receipt of a Notice of Borrowing, the Agent shall promptly
notify each Bank of the contents thereof and of such Bank's ratable share of
such Borrowing, and such Notice of Borrowing shall not thereafter be revocable
by the Borrower.
(c) Not later than 12:00 P.M. (Atlanta, Georgia time) on the date of
each Borrowing referenced in the Notice of Borrowing, each Bank shall (except
as provided in subsection (d) of this Section) make available its ratable share
of such Borrowing in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address referred to in or specified pursuant to
Section 9.01. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make the funds
so received from the Banks available to the Borrower at the Agent's aforesaid
address. Unless the Agent receives notice from a Bank, at the Agent's address
referred to in Section 9.01, no later than 4:00 P.M. (local time at such
address) on the Domestic Business Day before the date of the applicable
Borrowing stating that such Bank will not make the applicable Loan in
connection with such Borrowing, the Agent shall be entitled to assume that such
Bank will make the Loan in connection with such Borrowing and, in reliance on
such assumption, the Agent may (but shall not be obligated to) make available
such Bank's ratable share of such Borrowing to the Borrower for the account of
such Bank. If the Agent makes such Bank's ratable share available to the
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Borrower and such Bank does not in fact make its ratable share of such
Borrowing available on such date, the Agent shall be entitled to recover such
Bank's ratable share from such Bank or the Borrower (and for such purpose shall
be entitled to charge such amount to any account of the Borrower with the
Agent), together with interest thereon for each day during the period from the
date of such Borrowing until such sum shall be paid in full at a rate per annum
equal to the rate at which the Agent determines that it obtained (or could have
obtained) overnight Federal funds to cover such amount for each such day during
such period, provided that any such payment by the Borrower of such Bank's
ratable share and interest thereon shall be without prejudice to any rights
that the Borrower may have against such Bank. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such borrowing for purposes of this Agreement.
(d) If any Bank makes a new Loan hereunder on a day on which the
Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by such Bank to
the Agent as provided in subsection (c) of this Section, or remitted by the
Borrower to the Agent as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Euro-Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not
have been cured or waived in writing.
(f) In the event that a Notice of Borrowing fails to specify whether
the Loans comprising such Borrowing are to be Base Rate Loans or Euro-Dollar
Loans, such Loans shall be made as Base Rate Loans. If the Borrower is
otherwise entitled under this Agreement to repay any Loans maturing at the end
of an Interest Period applicable thereto with the proceeds of a new Borrowing
and the Borrower fails to repay such Loans using its own moneys and fails to
give a Notice of Borrowing in connection with a new corresponding Borrowing, a
new Borrowing shall be deemed to be made on the date such Loans mature in an
amount equal to the principal amount of the Loans so maturing, and the Loans
comprising such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein, (i)
there shall not be more than nine (9) different Interest Periods outstanding at
the same time (for which purpose Interest Periods described in different
numbered clauses of the definition of the term "Interest Period" shall be
deemed to be different Interest Periods even if they are coterminous)
applicable to the Loans; (ii) there shall not be more than eight (8) different
Interest Periods outstanding at the same time (for which purpose Interest
Periods described in different numbered clauses of the definition of the term
"Interest Period" shall be deemed to be different Interest Periods even if they
are coterminous) applicable to the Loans that are Euro-Dollar Loans; and (iii)
the proceeds of any Borrowing that is a Base Rate Borrowing shall be applied
first to repay the unpaid principal amount of all Borrowings that are Base Rate
Loans (if any) outstanding immediately before such Borrowing.
SECTION 2.03. Notes. (a) The Loans of each Bank shall be evidenced
by a single Note payable to the order of such Bank for the account of its
Lending Office in an amount equal to the original principal amount of such
Bank's Commitment.
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(b) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Agent shall deliver such Note to such Bank. Each Bank shall record, and prior
to any transfer of its Note shall endorse on the schedule forming a part
thereof appropriate notations to evidence, the date, amount and maturity of,
and effective interest rate for, each Loan made by it, the date and amount of
each payment of principal made by the Borrower with respect thereto and
whether, in the case of such Bank's Note, such Loan is a Base Rate Loan or
Euro-Dollar Loan, and such schedule shall constitute rebuttable presumptive
evidence of the principal amount owing and unpaid on such Bank's Notes;
provided that the failure of any Bank to make, or any error in making, any such
recordation or endorsement shall not affect the obligation of the Borrower
hereunder or under the Notes or the ability of any Bank to assign its Notes.
Each Bank is hereby irrevocably authorized by the Borrower so to endorse its
Notes and to attach to and make a part of any Note a continuation of any such
schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the first to occur of: (i) the last day of the Interest Period
applicable to such Borrowing; or (ii) the Maturity Date; provided, however,
that the aggregate outstanding principal amount of all Loans at any one time
outstanding shall not exceed the aggregate amount of the Commitments of all of
the Banks at such time.
SECTION 2.05. Interest Rates. (a) Commencing on the Funding Date
and continuing until October 8, 1999, the Applicable Margin shall be .75% for
Euro-Dollar Loans. Commencing on October 8, 1999, and continuing at all times
thereafter, the "Applicable Margin" shall be determined quarterly based upon
the ratio of Consolidated Funded Debt to EBITDA (calculated as of the last day
of each Fiscal Quarter for the Fiscal Quarter then ended and the immediately
preceding three Fiscal Quarters), as follows:
If the Ratio of Consolidated Base
Funded Debt to EBITDA is: Rate Loans Euro-Dollar Loans
- ----------------------------- ---------- -----------------
Greater than or equal to 3.00 0% .90%
Greater than or equal to 2.50
but less than 3.00 0% .75%
Greater than or equal to 2.00
but less than 2.50 0% .625%
Less than 2.0 0% .50%
The Applicable Margin shall be determined effective as of the date (herein, the
"Rate Determination Date") which is 50 days after the last day of the Fiscal
Quarter as of the end of which the foregoing ratios are being determined, based
on the quarterly financial statements for such Fiscal Quarter, and the
Applicable Margin so determined shall remain effective from such Rate
Determination Date until the date which is 50 days after the last day of the
Fiscal Quarter in which such Rate Determination Date falls (which latter date
shall be a new Rate Determination Date); provided that (i) in the case of any
Applicable Margin determined for the fourth and final Fiscal Quarter of a
Fiscal Year, the Rate Determination Date shall be the date which is 100 days
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after the last day of such final Fiscal Quarter and such Applicable Margin
shall be determined based upon the annual audited financial statements for the
Fiscal Year ended on the last day of such final Fiscal Quarter, and (ii) if on
any Rate Determination Date the Borrower shall have failed to deliver to the
Banks the financial statements required to be delivered pursuant to Section
5.01(a) or Section 5.01(b) with respect to the Fiscal Year or Quarter, as the
case maybe, most recently ended prior to such Rate Determination Date, then
for the period beginning on such Rate Determination Date and ending on the
earlier of (A) the date on which the Borrower shall deliver to the Banks the
financial statements to be delivered pursuant to Section 5.01(b) with respect
to such Fiscal Quarter or any subsequent Fiscal Quarter, or (B) the date on
which the Borrower shall deliver to the Banks annual financial statements
required to be delivered pursuant to Section 5.01(a) with respect to the Fiscal
Year which includes such Fiscal Quarter or any subsequent Fiscal Year, the
Applicable Margin shall be determined as if the ratio of Consolidated Funded
Debt to EBITDA was more than 3.00 at all times during such period. Any change
in the Applicable Margin on any Rate Determination Date shall result in a
corresponding change, effective on and as of such Rate Determination Date, in
the interest rate applicable to each Loan outstanding on such Rate
Determination Date; provided that: (i) for Euro-Dollar Loans, changes in
Applicable Margin shall only be effective for Interest Periods commencing on or
after the Rate Determination Date; and (ii) no Applicable Margin shall be
decreased pursuant to this Section 2.05 if a Default is in existence on the
Rate Determination Date.
(b) Each Loan that is a Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Base Rate
Loan is made until it becomes due, at a rate per annum equal to the Base Rate
for such day plus the Applicable Margin. Such interest shall be payable on the
Interest Payment Date immediately following the last day of such Interest
Period. Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the Default Rate.
(c) Each Loan that is a Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period;
provided that if any Euro-Dollar Loan shall, as a result of clause (1)(c) of
the definition of Interest Period, have an Interest Period of less than one
month, such Euro-Dollar Loan shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period. Such interest shall
be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than 3 months, on each Interest Payment Date during
such Interest Period. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Euro-Dollar
Loan means for the Interest Period of such Euro-Dollar Loan the rate per annum
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determined on the basis of the rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rate appears on the display
designated as Page "3750" of the Telerate Service (or such other page as may
replace page 3750 of that service or such other service or services as may be
nominated by the British Banker's Association for the purpose of displaying
London Interbank Offered Rates for U.S. dollar deposits) determined as of 1:00
p.m. New York City time, 2 Euro-Dollar Business Days prior to the first day of
such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in respect of "Eurocurrency liabilities" (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted London Interbank Offered
Rate shall be adjusted automatically on and as of the effective date of any
change in the Euro-Dollar Reserve Percentage.
(d) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Borrower and the
Banks by telecopy of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(e) After the occurrence and during the continuance of a Default,
the principal amount of the Loans (and, to the extent permitted by applicable
law, all accrued interest thereon) may, at the election of the Required Banks,
bear interest at the Default Rate; provided, however, that automatically
whether or not the Required Banks elect to do so, any overdue principal of and,
to the extent permitted by law, overdue interest on any Loan shall bear
interest payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
(f) Notwithstanding anything herein to the contrary, if one or more
Commitment Reduction Dates are scheduled to occur during an Interest Period in
which the Loans are Euro-Dollar Loans other than on the last day of such
Interest Period, then during such Interest Period a portion of the outstanding
balance of the Loans which is equal to the aggregate amount of the principal
payment due on the Loans on such Commitment Reduction Dates shall be Base Rate
Loans, and only the remaining portion of the outstanding principal of the Loans
shall constitute Euro-Dollar Loans.
SECTION 2.06. Fees.
(a) The Borrower shall pay to the Agent for the ratable account of
each Bank an unused fee equal to the product of: (i) the aggregate of the daily
average amounts of such Bank's Commitment, times (ii) a per annum percentage
equal to the Applicable Unused Fee Rate. Such unused fee shall accrue from and
including the Closing Date to and including the Funding Date. Unused fees
shall be payable quarterly in arrears on each Unused Fee Payment Date and on
the Funding Date, provided that should the Commitments be terminated at any
time prior to the Funding Date for any reason, the entire accrued and unpaid
unused fee shall be paid on the date of such termination.
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<PAGE>
(b) (1) On the Closing Date, the Borrower shall pay to the Agent for
the account of each Bank a closing up-front fee equal to the amount set forth
on Schedule 2.06A corresponding to such Bank's name.
(2) On the Initial Draw Date, the Borrower shall pay to the Agent
for the account of each Bank a funding up-front fee equal to the amount set
forth on Schedule 2.06B corresponding to such Bank's name; provided that the
Borrower shall have no obligation to pay any such funding up-front fee in the
event Loans are not advanced under this Agreement.
(c) The Borrower shall pay to the Agent, for the account and sole
benefit of the Agent, such fees and other amounts at such times as set forth in
the Agent's Letter Agreement.
SECTION 2.07. Optional Termination or Reduction of Commitments. At
any time prior to the Initial Draw Date, the Borrower may, upon at least 3
Domestic Business Days' notice to the Agent, terminate at any time, or
proportionately reduce from time to time by an aggregate amount of at least
$5,000,000 or any larger multiple of $1,000,000, the Commitments. If the
Commitments are terminated in their entirety, all accrued fees (as provided
under Section 2.06(a)) shall be payable on the effective date of such
termination.
SECTION 2.08. Mandatory Reduction and Termination of Commitments.
(1) The Commitments shall terminate on the Maturity Date and any
Loans then outstanding (together with accrued interest thereon) shall be due
and payable on such date.
(2) The aggregate amount of the Commitments shall be reduced,
commencing on the first Commitment Reduction Date and continuing on each
Commitment Reduction Date thereafter until and including the Commitment
Reduction Date on the Maturity Date in the amounts set forth below
corresponding to the respective Commitment Reduction Date:
Commitment Amount of
Reduction Date Reduction
-------------- ---------
November 1, 2002 20% of the amount of the Commitment on
the Funding Date (after giving effect to
the reduction in the Commitment, if any,
pursuant to Section 2.08(4)).
May 1, 2003 30% of the amount of the Commitment on
the Funding Date (after giving effect to the
reduction in the Commitment, if any,
pursuant to Section 2.08(4)).
November 1, 2003 20% of the amount of the Commitment on
the Funding Date (after giving effect to the
reduction in the Commitment, if any,
pursuant to Section 2.08(4)).
May 1, 2004 30% of the amount of the Commitment on
the Funding Date (after giving effect to
the reduction in the Commitment, if any,
pursuant to Section 2.08(4)).
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<PAGE>
(3) If the Borrower shall repay or prepay any Loans other than with
the proceeds of a new Borrowing under the Commitments then there shall be a
mandatory reduction of the Commitments to an amount equal to the aggregate
principal amount of all Loans then outstanding (after giving effect to such
repayment or prepayment).
(4) If on the Funding Date the Commitments shall not have been
reduced to a lesser amount pursuant to this Section 2.08, then on the Funding
Date there shall be a mandatory reduction of the Commitments to an amount equal
to the aggregate principal amount of all Loans outstanding on the Funding Date.
(5) Each reduction of the Commitments shall be applied to reduce the
Commitments of the several Banks ratably. Any optional reduction of the
Commitments shall reduce the amount of any subsequent mandatory reductions
pursuant to this Section 2.08 in their inverse chronological order of maturity.
No mandatory reduction of the Commitments pursuant to any paragraph of this
Section 2.08 shall reduce the amount of any subsequent mandatory reduction of
the Commitments pursuant to such paragraph or any other paragraph of this
Section 2.08.
SECTION 2.09. Optional Prepayments of Loans. (a) The Borrower may,
upon at least 1 Domestic Business Day's notice to the Agent, prepay any Loan
that is a Base Rate Borrowing in whole at any time, or from time to time in
part in amounts aggregating at least $1,000,000 or any larger multiple of
$500,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several Banks included in
such Base Rate Borrowing. Any optional or mandatory prepayment of any Loan
pursuant to Section 2.09 or Section 2.10 shall not be reborrowed by Borrower
under this Agreement.
(b) Except as provided in Section 8.02, the Borrower may not prepay
all or any portion of the principal amount of any Euro-Dollar Loan prior to the
last day of an Interest Period applicable thereto.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share of such prepayment and such notice shall not thereafter be
revocable by the Borrower.
SECTION 2.10. Mandatory Prepayments. On each date on which the
Commitments are reduced or terminated pursuant to Section 2.07 or Section 2.08,
the Borrower shall repay or prepay such principal amount of the outstanding
Loans, if any (together with interest accrued thereon and any amounts due under
Section 8.05(a)), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Loans does not exceed the aggregate amount of
the Commitments as then reduced. Each such payment or prepayment shall be
applied to repay or prepay ratably the Loans of the several Banks; provided
that such prepayment shall be applied to Loans outstanding on the date of such
prepayment (in direct order of maturity).
SECTION 2.11. General Provisions as to Payments. (a) The Borrower
shall make each payment of principal of, and interest on the Loans and of
unused fees hereunder, not later than 11:00 A.M. (Atlanta, Georgia time) on the
date when due, in Federal or other funds immediately available in Atlanta,
Georgia, to the Agent at its address referred to in Section 9.01. The Agent
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<PAGE>
will promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, the Base
Rate Loans or of fees shall be due on a day which is not a Domestic Business
Day, the date for payment thereof shall be extended to the next succeeding
Domestic Business Day. Whenever any payment of principal of, or interest on,
the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any tax, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of each Bank, (i)
taxes imposed on or measured by its net income, (ii) franchise taxes imposed on
it, by the jurisdiction under the laws of which such Bank is organized or any
political subdivision thereof, and (iii) taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, imposts, levies, duties, deductions or withholdings of any nature being
"Non-excluded Taxes"). In the event that the Borrower is required by
applicable law to make any such withholding or deduction of Non-excluded Taxes
with respect to any Loan or fee or other amount, promptly after receiving
notice thereof, the Borrower shall pay such deduction or withholding to the
applicable taxing authority, shall promptly furnish to any Bank in respect of
which such deduction or withholding is made all receipts and other documents
evidencing such payment and shall pay to such Bank additional amounts as may be
necessary in order that the amount received by such Bank after the required
withholding or other payment shall equal the amount such Bank would have
received had no such withholding or other payment been made. If no withholding
or deduction of Non-excluded Taxes are payable in respect of any Loan or fee
relating thereto, the Borrower shall furnish any Bank, at such Bank's request,
a certificate from each applicable taxing authority or an opinion of counsel
acceptable to such Bank, in either case stating that such payments are exempt
from or not subject to withholding or deduction of Non-excluded Taxes. If the
Borrower fails to provide such original or certified copy of a receipt
evidencing payment of Non-excluded Taxes or certificate(s) or opinion of
counsel of exemption, the Borrower hereby agrees to compensate such Bank for,
and indemnify them with respect to, the tax consequences of the Borrower's
failure to provide evidence of tax payments or tax exemption.
In the event any Bank receives a refund of any Non-excluded Taxes
paid by the Borrower pursuant to this Section 2.11, it will pay to the Borrower
the amount of such refund promptly upon receipt thereof; provided, however, if
at any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
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<PAGE>
this Section 2.11 shall be applicable with respect to any Participant, Assignee
or other Transferee, and any calculations required by such provisions (i) shall
be made based upon the circumstances of such Participant, Assignee or other
Transferee, and (ii) constitute a continuing agreement and shall survive the
termination of this Agreement and the payment in full or cancellation of the
Notes.
SECTION 2.12. Computation of Interest and Fees. Interest on Base
Rate Loans shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed (including the first day but excluding the
last day). Interest on Euro-Dollar Loans shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed, calculated as
to each Interest Period from and including the first day thereof to but
excluding the last day thereof. Unused fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Closing. On the Closing Date, the
Borrower shall satisfy each of the following conditions:
(a) receipt by the Agent from each of the parties hereto of either
(i) a duly executed counterpart of this Agreement signed by such party or
(ii) a facsimile transmission stating that such party has duly executed a
counterpart of this Agreement and sent such counterpart to the Agent;
(b) receipt by the Agent of a duly executed Note for the account of
each Bank complying with the provisions of Section 2.03;
(c) receipt by the Agent of an opinion (together with any opinions
of local counsel relied on therein) of Thomas Slaughter, General Counsel
of the Borrower, dated as of the Closing Date, substantially in the form
of Exhibit B hereto and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may reasonably
request;
(d) receipt by the Agent of an opinion of Womble, Carlyle, Sandridge
& Rice, PLLC, special counsel for the Agent, dated as of the Closing Date,
substantially in the form of Exhibit C hereto and covering such additional
matters relating to the transactions contemplated hereby as the Agent may
reasonably request;
(e) receipt by the Agent of a certificate (the "Closing
Certificate"), dated the Closing Date, substantially in the form of
Exhibit D hereto, signed by a principal financial officer of the Borrower,
to the effect that (i) no Default has occurred and is continuing on the
Closing Date; and (ii) the representations and warranties of the Borrower
contained in Article IV are true on and as of the Closing Date;
(f) receipt by the Agent of all documents which the Agent or any
Bank may reasonably request relating to the existence of the Borrower, the
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<PAGE>
corporate authority for and the validity of this Agreement, the Notes, and
any other matters relevant hereto, all in form and substance satisfactory
to the Agent, including without limitation a certificate of incumbency of
the Borrower (the "Borrower Officer's Certificate"), signed by the
Secretary or an Assistant Secretary of the Borrower, substantially in the
form of Exhibit E hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of the Borrower authorized to
execute and deliver the Loan Documents to which it is a party, and
certified copies of the following items: (i) the Borrower's Certificate of
Incorporation, (ii) the Borrower's Bylaws, (iii) a certificate of the
Secretary of State of the State of incorporation of the Borrower as to the
existence of the Borrower as a corporation organized under the laws of
such state, and (iv) the action taken by the Board of Directors of the
Borrower authorizing the Borrower's execution, delivery and performance of
this Agreement, the Notes and the other Loan Documents to which it is a
party;
(g) receipt and satisfactory review by the Agent of all documents,
agreements and other matters and information which the Agent may
reasonably request relating to the WGNX Acquisition;
(h) receipt by the Agent of all fees due and payable under Sections
2.06(b)(1) and (c); and
(i) receipt by the Agent of such other documents, certificates and
other information, as the Agent or any Bank may reasonably request.
SECTION 3.02 Conditions to First Borrowing. The obligation of each
Bank to make a Loan on the occasion of the first Borrowing is subject to the
satisfaction of the conditions set forth in Section 3.03 and the following
additional conditions:
(a) receipt by the Agent of satisfactory evidence that on or before
the date of the first Borrowing, the Borrower shall have consummated the
WGNX Acquisition and acquired WGNX upon terms and conditions substantially
similar to the terms and conditions disclosed by the Borrower to the Agent
and the Banks on or before the Closing Date; and
(b) receipt by the Agent of satisfactory evidence that the Borrower
shall have obtained any and all consents, authorizations and approvals
from or in respect of, and shall have made all filings, registrations and
notices with, any and all governmental authorities, agencies or officials
with respect to the WGNX Acquisition and such WGNX Acquisition shall be in
compliance with and shall not constitute a default under any provision of
applicable law or regulation or of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower; and
(c) receipt by the Agent of all fees due and payable under Sections
2.06(b)(2) and (c); and
(d) the fact that, immediately before and after such Borrowing, no
Default shall have occurred.
SECTION 3.03. Conditions to All Borrowings. The obligation of each
Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
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(a) except as provided in Section 2.02(f), receipt by the Agent of a
Notice of Borrowing as required by Section 2.02;
(b) the fact that, immediately before and after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the Borrower
contained in Article IV of this Agreement shall be true on and as of the
date of such Borrowing; and
(d) the fact that, immediately after such Borrowing, (i) the
aggregate outstanding principal amount of the Loans of each Bank will not
exceed the amount of its Commitment and (ii) the aggregate outstanding
principal amount of the Loans will not exceed the aggregate amount of the
Commitments of all of the Banks as of such date.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the articles
of incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries, and (v) do not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower enforceable in accordance with its terms,
and the Notes and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations
of the Borrower enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
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<PAGE>
SECTION 4.04. Financial Information. (a) The consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of June 30, 1998 and
the related consolidated statements of income, shareholders' equity and cash
flows for the Fiscal Year then ended, reported on by KPMG Peat Marwick, copies
of which have been delivered to each of the Banks, and the unaudited
consolidated financial statements of the Borrower for the interim period ended
September 30, 1998, copies of which have been delivered to each of the Banks,
fairly present, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
(b) Since June 30, 1998, there has been no event, act, condition or
occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending, or to the knowledge of the Borrower threatened, against or affecting
the Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could have a Material Adverse
Effect or which in any manner draws into question the validity or
enforceability of, or could impair the ability of the Borrower to perform its
obligations under, this Agreement, the Notes or any of the other Loan
Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled Group has
incurred any withdrawal liability with respect to any Multiemployer Plan under
Title IV of ERISA, and no such liability is expected to be incurred.
SECTION 4.07. Taxes. There have been filed on behalf of the
Borrower and its Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower or any Subsidiary have been paid. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the Borrower and its
Subsidiaries have been examined and closed through the Fiscal Year ended June
30, 1995.
SECTION 4.08. Subsidiaries. Each of the Borrower's Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, is duly qualified to transact
business in every jurisdiction where, by the nature of its business, such
qualification is necessary (except where the failure to be qualified shall not
cause or be reasonably expected to cause a material adverse effect upon such
Subsidiary's condition (financial, business or other)), and has all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. The Borrower has no
Subsidiaries except those Subsidiaries listed on Schedule 4.08, which
accurately sets forth each such Subsidiary's complete name and jurisdiction of
incorporation.
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SECTION 4.09. Not an Investment Company. Neither the Borrower nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the Borrower
and its Consolidated Subsidiaries has title to its properties sufficient for
the conduct of its business, and none of such property is subject to any Lien
except as permitted in Section 5.07.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party or by which it or any of its
property is bound which could have or cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 4.13. Full Disclosure. All information heretofore furnished
by the Borrower to the Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all such
information hereafter furnished by the Borrower to the Agent or any Bank will
be, true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all
facts which could have or cause a Material Adverse Effect.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower nor
any Subsidiary is subject to any Environmental Liability which could have or
cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. None of the Properties has been identified on
any current or proposed (i) National Priorities List under 40 C.F.R. Section
300, (ii) CERCLIS list or (iii) any list arising from a state statute similar
to CERCLA.
(b) No Hazardous Materials have been or are being used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to or from the
Properties or are otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Borrower, at or from any adjacent site or
facility, except for Hazardous Materials, such as cleaning solvents, pesticides
and other materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, and managed or otherwise handled in minimal
amounts in the ordinary course of business in compliance with all applicable
Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries and Affiliates, has
procured all Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in
connection with the operation of the Properties and the Borrower's, and each of
its Subsidiary's and Affiliate's, respective businesses.
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SECTION 4.15. Compliance with Laws. The Borrower and each
Subsidiary is in compliance with all applicable laws, including, without
limitation, all Environmental Laws, except where any failure to comply with any
such laws would not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities of the Borrower and its Subsidiaries presently
issued and outstanding are validly and properly issued in accordance with all
applicable laws, including, but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued shares of
Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of
the issued shares of capital stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.17. Margin Stock. No part of the proceeds of any Loan
will be used for any purpose which violates, or which is inconsistent with, the
provisions of Regulations T, U or X.
SECTION 4.18. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such
term as used in O.C.G.A. Section 18-2-22 or as defined in Section 101 of Title
11 of the United States Code or Section 2 of the Uniform Fraudulent Transfer
Act, or any other applicable state law pertaining to fraudulent transfers, as
each may be amended from time to time, or be unable to pay its debts generally
as such debts become due, or have an unreasonably small capital to engage in
any business or transaction, whether current or contemplated.
SECTION 4.19. Broadcast Licenses. (a) Each of the Borrower and its
Subsidiaries owns, possesses or has the right to use all of the material
patents, trademarks, service marks, trade names, copyrights, licenses
(including, without limitation, Broadcast Licenses) and material rights with
respect thereto, necessary for the present and currently planned future conduct
of its business, without any known conflict with the rights of others.
(b) (i) Schedule 4.19 to this Agreement accurately lists and
describes each material Broadcast License of the Borrower and its Subsidiaries
which is in existence on the date hereof or which will be in existence on the
Closing Date and the expiration date, if any, of each such material Broadcast
License;
(ii) each such material Broadcast License is, or on the Closing Date
will be, in full force and effect;
(iii) the Borrower and each Subsidiary has fulfilled and performed
all of its obligations, if any, with respect to such material Broadcast
Licenses; and
(iv) no event has occurred which (A) permits, or after notice or
lapse of time or both would permit, revocation or termination of any such
material Broadcast License or (B) causes a Material Adverse Effect or in
the future may (so far as the Borrower can now reasonably foresee) cause a
Material Adverse Effect in any of the rights of the Borrower or any
Subsidiary thereunder. Except to the extent required by the
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Communications Act of 1934, as amended, and the rules and regulations of
the FCC, no Broadcast License or other franchise or license held by the
Borrower or any Subsidiary requires that any present stockholder,
director, officer or employee of the Borrower remain as such or that any
transfer of control of the Borrower or any Subsidiary must be approved by
any public or governmental body.
(c) The Broadcast Licenses described on Schedule 4.19 to this
Agreement constitute all of the main station licenses and low power television
licenses issued by the FCC or any Governmental Authority, necessary for the
operation of the business of the Borrower and each Subsidiary in the same
manner as it is currently conducted and as proposed to be conducted. The
Broadcast Licenses described on Schedule 4.19 to this Agreement are, or on the
Closing Date will be, validly issued and in full force and effect, unimpaired
by any act or omission by the Borrower or any Subsidiary. Except for
rulemakings or similar proceedings of general applicability to entities such as
the Borrower and its Subsidiaries, no Borrower or Subsidiary is a party to any
investigation (to the best of its knowledge), notice of violation, order, or
complaint issued by or before the FCC or any other Governmental Authority, nor
are there any other proceedings involving the Borrower or any one or more of
the Subsidiaries by or before the FCC or any other Governmental Authority,
which investigation, notice, order, complaint or proceeding could in any manner
materially threaten or adversely affect such Broadcast Licenses. Neither the
Borrower nor any Subsidiary has any knowledge of a threat of any such
investigation, notice of violation, order, complaint or proceeding with respect
thereto. Neither the Borrower nor any Subsidiary has any reason to believe
that the Broadcast Licenses listed and described on Schedule 4.19 to this
Agreement will not be renewed in the ordinary course. The Borrower and each
Subsidiary has filed with the FCC and all other applicable Governmental
Authorities all material reports, applications, documents, instruments and
information required to be filed by it pursuant to applicable rules and
regulations or requests of the FCC or such applicable Governmental Authorities.
SECTION 4.20. Y2K Plan. The Borrower has developed a comprehensive
plan (the "Y2K Plan") for insuring that the Borrower's and its Subsidiaries'
software and hardware systems which impact or affect in any way the business
operations of the Borrower and its Subsidiaries will be Year 2000 Compliant and
Ready. The Borrower and its Subsidiaries have met in all material respects the
Y2K Plan milestones such that all hardware and software systems will be Year
2000 Compliant and Ready in accordance with the Y2K Plan.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of the
Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, shareholders' equity and cash flows for such
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Fiscal Year, setting forth in each case in comparative form the figures for the
previous fiscal year, all certified by KPMG Peat Marwick or other independent
public accountants of nationally recognized standing, with such certification
to be free of exceptions and qualifications not acceptable to the Required
Banks;
(b) as soon as available and in any event within 45 days after the
end of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end
of such Fiscal Quarter and the related statement of income and statement of
cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ended
at the end of such Fiscal Quarter, setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the chief
financial officer or the controller of the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit F (a "Compliance Certificate"), of the
chief financial officer or the treasurer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.03 through 5.07,
inclusive, and 5.10 and 5.21 on the date of such financial statements, (ii)
setting forth the aggregate amount, as of the date of such certificate, of the
Capital Expenditures incurred in connection with the construction of the new
facility and expanded news programming for WGNX, and (iii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is taking
or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of annual financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower becomes aware
of the occurrence of any Default, a certificate of the chief financial officer
or the treasurer of the Borrower setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual, quarterly or monthly reports which the
Borrower shall have filed with the Securities and Exchange Commission;
(h) if and when the Borrower or any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
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notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice;
(i) promptly after the Borrower knows of the commencement thereof,
notice of any litigation, dispute or proceeding involving a claim against the
Borrower and/or any Subsidiary for $5,000,000 or more in excess of amounts
covered in full by applicable insurance; and
(j) promptly after the commencement thereof or promptly after the
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
(k) as soon as practicable after the receipt thereof, and in any
event within ten (10) Domestic Business Days after the issuance thereof:
(i) copies of any order or notice of the FCC, a court of
competent jurisdiction or any other Governmental Authority which
designated any Broadcast License of the Borrower or any Subsidiary
or application therefor for a hearing, or which refuses renewal or
extension of any such Broadcast License, or revokes or suspends the
authority of the Borrower or any Subsidiary to operate a broadcast
station;
(ii) a copy of any competing application filed against any
Broadcast License of the Borrower or any Subsidiary or application
therefor;
(iii) copies of any citation, notice of violation or order to
show cause from the FCC, or any material complaint filed by or with
the FCC, in each case, in connection with the Borrower or any
Subsidiary; and
(iv) a copy of any notice or application by the Borrower or any
Subsidiary requesting authority to cease broadcasting on any
broadcast station for any period in excess of forty-eight (48) hours;
and
(l) simultaneously with the delivery of each set of annual and
quarterly financial statements referred to in paragraphs (a) and (b)
above, a statement of the Chief Executive Officer, Chief Financial
Officer, or Chief Technology Officer to the effect that nothing has come
to their attention to cause them to believe that the Y2K Plan milestones
have not been met in a manner such that the Borrower's and its
Subsidiaries hardware and software systems will not be Year 2000 Compliant
and Ready;
(m) within 5 Domestic Business Days after the Borrower becomes aware
of any deviations from the Y2K Plan which would cause the Borrower to not
be Year 2000 Compliant and Ready, a statement of the Chief Executive
Officer, Chief Financial Officer, or Chief Technology Officer setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
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(n) promptly upon the receipt thereof, a copy of any third party
assessments of the Borrower's Y2K Plan together with any recommendations
made by such third party with respect to Year 2000 compliance;
(o) from time to time such additional information regarding the
financial position or business of the Borrower or any Subsidiary as the
Agent at the request of any Bank may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and will cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the occurrence of
an Event of Default and at the Borrower's expense after the occurrence of an
Event of Default to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and inspections, in each
case at such reasonable times and as often as may reasonably be desired.
SECTION 5.03. Ratio of Consolidated Funded Debt to EBITDA. The
ratio of Consolidated Funded Debt to EBITDA (calculated for the Fiscal Quarter
most recently ended and the immediately preceding three Fiscal Quarters) shall
at all times be less than 3.50 to 1.00.
SECTION 5.04. Fixed Charges Coverage. At the end of each Fiscal
Quarter the Fixed Charge Coverage Ratio shall not be less than 2.00 to 1.00 for
the period commencing with the Fiscal Quarter ending September 30, 1998, and
continuing for each Fiscal Quarter thereafter.
SECTION 5.05. Loans or Advances. Neither the Borrower nor any of
its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances to employees not exceeding Five Million and No/100 Dollars
($5,000,000) in the aggregate outstanding made in the ordinary course of
business and consistently with practices existing on June 30, 1998; (ii)
deposits required by government agencies or public utilities; (iii) loans or
advances to Wholly Owned Subsidiaries; and (iv) loans or advances not otherwise
permitted by the foregoing clauses of this Section, provided that the aggregate
outstanding loans and advances made under this clause (iv) when aggregated with
the Investments made under Section 5.06(vi) shall not at any time exceed
$40,000,000; provided, further, that after giving effect to the making of any
loans, advances or deposits permitted by clause (i), (ii), (iii) or (iv) of
this Section, no Default shall have occurred and be continuing.
SECTION 5.06. Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except as permitted by
Section 5.05 and except Investments in (i) direct obligations of the United
States Government maturing within one year, (ii) certificates of deposit issued
by or money market accounts maintained at a United States bank: (x) whose
long-term certificates of deposit are rated at least AA or the equivalent
thereof by Standard & Poor's Corporation and Aa or the equivalent thereof by
Moody's Investors Service, Inc.; or (y) if the long-term certificates of
deposit of such United States bank are unrated, the long-term debt of the
corporation owning such bank must be rated at least AA or the equivalent
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thereof by Standard & Poor's Corporation and Aa or the equivalent thereof by
Moody's Investors Service, Inc., (iii) commercial paper rated A-1 or the
equivalent thereof by Standard & Poor's Corporation or P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in either case maturing within 9
months after the date of acquisition, (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of deposit are
rated at least AA or the equivalent thereof by Standard & Poor's Corporation
and Aa or the equivalent thereof by Moody's Investors Service, Inc., (v)
Permitted Acquisitions; and/or (vi) debt and investment securities not
otherwise permitted by the foregoing clauses of this Section, provided that the
aggregate amount of Investments made under this clause (vi) when aggregated
with the loans and advances made under section 5.05(iv) shall not at any time
exceed $40,000,000.
SECTION 5.07. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $5,000,000;
(b) any Lien existing on any asset of any corporation at the time
such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or constructing
such asset, provided that such Lien attaches to such asset concurrently with or
within 18 months after the acquisition or completion of construction thereof;
(d) any Lien on any asset of any corporation existing at the time
such corporation is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition thereof
by the Borrower or a Consolidated Subsidiary and not created in contemplation
of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the Borrower;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that (i) such Debt is not secured by any
additional assets, and (ii) the amount of such Debt secured by any such Lien is
not increased;
(h) Liens incidental to the conduct of its business or the ownership
of its assets which (i) do not secure Debt and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(i) any Lien on Margin Stock; and
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(j) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt (other than indebtedness represented by the Notes) in an
aggregate principal amount at any time outstanding not to exceed 5% of
Consolidated Net Worth.
SECTION 5.08. Maintenance of Existence. The Borrower shall, and
shall cause each Subsidiary to, maintain its corporate existence and carry on
its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained, except through
corporate reorganization to the extent permitted by Section 5.10.
SECTION 5.09. Dissolution. Neither the Borrower nor any of its
Subsidiaries shall suffer or permit dissolution or liquidation either in whole
or in part or redeem or retire any shares of its own stock or that of any
Subsidiary, except through corporate reorganization to the extent permitted by
Section 5.10.
SECTION 5.10. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge
with or into, or sell, lease or otherwise transfer all or any substantial part
of its assets to, any other Person, or discontinue or eliminate any business
line or segment, provided that (a) the Borrower may merge with another Person
if (i) such Person was organized under the laws of the United States of America
or one of its states, (ii) the Borrower is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, (b) Subsidiaries of the Borrower may
merge with one another, (c) KCPQ Acquisition Corp., a Consolidated Subsidiary
of the Borrower, may merge with Kelly Television Co. if (i) Kelly Television
Co. is organized under the laws of the United States of America or one of its
states, (ii) KCPQ Acquisition Corp. is the corporation surviving such merger,
and (iii) immediately after giving effect to such merger, no Default shall have
occurred and be continuing, and (d) the foregoing limitation on the sale, lease
or other transfer of assets and on the discontinuation or elimination of a
business line or segment shall not prohibit, during any Fiscal Quarter, a
transfer of assets or the discontinuance or elimination of a business line or
segment (in a single transaction or in a series of related transactions) unless
the aggregate assets to be so transferred or utilized in a business line or
segment to be so discontinued, when combined with all other assets transferred,
and all other assets utilized in all other business lines or segments
discontinued, during such Fiscal Quarter and the immediately preceding three
Fiscal Quarters, either (x) contributed more than 20% of Consolidated Gross
Revenues during the 4 Fiscal Quarters immediately preceding such Fiscal
Quarter, or (y) contributed more than 20% of Consolidated Operating Profits
during the 4 consecutive Fiscal Quarters immediately preceding such Fiscal
Quarter; provided, however, that the exchange of assets in connection with the
WGNX Acquisition shall be excluded from any computation made pursuant to this
Section 5.10(c).
SECTION 5.11. Use of Proceeds. No portion of the proceeds of the
Loans will be used by the Borrower or any Subsidiary (i) in connection with,
either directly or indirectly, any tender offer for, or other acquisition of,
stock of any corporation with a view towards obtaining control of such other
corporation, except a Permitted Acquisition or (ii) for any purpose in
violation of any applicable law or regulation. The proceeds of the initial
Borrowing under this Agreement shall be used exclusively to finance or
refinance the WGNX Acquisition.
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SECTION 5.12. Compliance with Laws; Payment of Taxes. (a) The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. The Borrower will, and will cause each of its Subsidiaries
to, pay promptly when due all taxes, assessments, governmental charges, claims
for labor, supplies, rent and other obligations which: (A) if unpaid, might
become a lien against the property of the Borrower or any Subsidiary, except
liabilities being contested in good faith by appropriate proceedings diligently
pursued and against which, if requested by the Agent, the Borrower shall have
set up reserves in accordance with GAAP; or (B) when combined with all other
taxes, assessments, governmental charges, claims for labor, supplies, rent and
other obligations not paid promptly when due during the current Fiscal Quarter
and the immediately preceding three Fiscal Quarters is greater than $500,000.
(b) The Borrower shall not permit the aggregate complete or partial
withdrawal liability under Title IV of ERISA with respect to Multiemployer
Plans incurred by the Borrower and members of the Controlled Group to exceed
$5,000,000 at any time. For purposes of this Section 5.12(b), the amount of
withdrawal liability of the Borrower and members of the Controlled Group at any
date shall be the aggregate present value of the amount claimed to have been
incurred less any portion thereof which: (1) the Borrower and members of the
Controlled Group have paid; or (2) as to which the Borrower reasonably
believes, after appropriate consideration of possible adjustments arising under
Sections 4219 and 4221 of ERISA, it and members of the Controlled Group will
have no liability, provided that the Borrower shall obtain prompt written
advice from independent actuarial consultants supporting any such adjustments
under Sections 4219 and 4221 of ERISA. The Borrower agrees, from time to time
but no more frequently than once each Fiscal Year, upon the request of the
Agent (i) to request and obtain a current statement of the withdrawal liability
of the Borrower and members of the Controlled Group from each Multiemployer
Plan, if any, and (ii) to transmit a copy of such statement to the Agent and
the Banks within fifteen (15) days after the Borrower receives the same.
(c) No portion of the proceeds of the Loans will be used by the
Borrower or any Subsidiary in violation of (or in a manner so as to cause the
Agent or the Banks to be in violation of) any applicable law or regulation,
including without limitation Regulations G, T, U and X. At no time will the
value of Margin Stock purchased or held by the Borrower (including, without
limitation, shares of common stock of the Borrower repurchased by and held by
the Borrower but excluding shares of common stock of the Borrower repurchased
by and immediately retired by the Borrower) exceed 25% of Unencumbered Total
Assets of the Borrower.
SECTION 5.13. Insurance. The Borrower will maintain, and will cause
each of its Subsidiaries to maintain (either in the name of the Borrower or in
such Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its Property in at least such amounts and against
at least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business.
SECTION 5.14. Change in Fiscal Year. The Borrower will not change
its Fiscal Year without the consent of the Required Banks.
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SECTION 5.15. Maintenance of Property. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.16. Environmental Notices. The Borrower shall furnish to
the Banks and the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties or any adjacent property, and
all facts, events, or conditions that could lead to any of the foregoing.
SECTION 5.17. Environmental Matters. The Borrower and its
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at,
or otherwise handle or ship or transport to or from the Properties any
Hazardous Materials except for Hazardous Materials such as cleaning solvents,
pesticides and other similar materials used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed, managed or otherwise handled in
minimal amounts in the ordinary course of business in compliance with all
applicable Environmental Requirements.
SECTION 5.18. Environmental Release. The Borrower agrees that upon
the occurrence of an Environmental Release at or on any of the Properties it
will act immediately to investigate the extent of, and to take appropriate
remedial action to eliminate, such Environmental Release, whether or not
ordered or otherwise directed to do so by any Environmental Authority.
SECTION 5.19. Transactions with Affiliates. Neither the Borrower
nor any of its Subsidiaries shall enter into, or be a party to, any Affiliate
Transaction, except: (1) as permitted by law; (2) in the ordinary course of
business; and (3) pursuant to reasonable terms which are no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person which is not an Affiliate. As used herein,
"Affiliate Transaction" means a transaction between the Borrower or any of its
Subsidiaries with any Affiliate of the Borrower or any such Subsidiary (which
Affiliate is not the Borrower or a Subsidiary) which transaction when combined
with all other transactions between the Borrower or any of its Subsidiaries and
any Affiliate of the Borrower or a Subsidiary of the Borrower during the
current Fiscal Quarter and the immediately preceding three Fiscal Quarters is
greater than $1,000,000.
SECTION 5.20 Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to purchase, lease or otherwise acquire (in a single
transaction or in a series of transactions), directly or indirectly: (i) all
or any substantial part of the assets or stock of any other Person; (ii) a
business line or segment of any other Person; or (iii) control of any other
Person; provided that the Borrower and it Subsidiaries may enter into a
Permitted Acquisition.
SECTION 5.21. Debt. (a) The Borrower shall not at any time incur,
create, assume, or permit to exist any Debt except: (1) the Loans; (2) Debt
owing to a Subsidiary of the Borrower; (3) Debt outstanding on the date of this
Agreement described on Schedule 5.21; and (4) Debt, in addition to Debt
permitted under clauses (1), (2) and (3) of this Section 5.21(a), provided that
the Borrower shall not incur, create, assume or permit to exist any Debt under
this Section 5.21(a) if the incurrence, creation, assumption or existence of
any such Debt shall result in a Default or Event of Default.
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(b) No Subsidiary of the Borrower shall at any time incur, create,
assume, or permit to exist any Debt except: (1) Debt owing to the Borrower or
another Subsidiary of the Borrower; and (2) Debt, in addition to Debt permitted
under clause (1) of this Section 5.21(b), provided that the aggregate
outstanding principal amount of Debt of all of the Subsidiaries of the Borrower
incurred under this clause (2) of Section 5.21(b) shall not at any time exceed
$1,000,000; provided further that no Subsidiary of the Borrower shall incur,
create, assume, or permit to exist any Debt under this Section 5.21(b) if the
incurrence, creation, assumption or existence of any such Debt shall result in
a Default or Event of Default.
SECTION 5.22. Termination or Loss of Licenses. The Borrower will
not, nor will it permit any Subsidiary to, take or fail to take any action
which permits, or after notice or lapse of time or both would permit,
revocation or termination of any material Broadcast License; except: (1)
revocation or termination of the Broadcast Licenses applicable to the KCPQ
Assets to the extent such revocation or termination is required in connection
with the WGNX Acquisition; and (2) revocation or termination of Broadcast
Licenses applicable to other assets that are transferred by the Borrower to the
extent any such transfer is permitted under this Agreement.
SECTION 5.23. No Activities Leading to Forfeiture. The Borrower
will not, nor will it permit any Subsidiary to, engage in the conduct of any
business or activity which could result in a Forfeiture Proceeding.
SECTION 5.24. Y2K Compliant and Ready. The Borrower will meet the
milestones contained in the Y2K Plan in all material respects and will have all
hardware and software systems Year 2000 Compliant and Ready (including all
material internal and external testing) on or before June 30, 1999.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan or shall fail to pay any interest on any Loan within five Domestic
Business Days after such interest shall become due, or shall fail to pay
any fee or other amount payable hereunder within five Domestic Business
Days after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.01(e), 5.01(m), 5.02(ii), or 5.03 to 5.11,
inclusive, or Section 5.13, or Sections 5.20 to 5.23 inclusive; or
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained or incorporated by reference in this Agreement (other
than those covered by clause (a) or (b) above) for thirty days after the
earlier of (i) the first day on which the Borrower has knowledge of such
failure or (ii) written notice thereof has been given to the Borrower by
the Agent at the request of any Bank; or
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(d) any representation, warranty, certification or statement made or
deemed made by the Borrower in Article IV of this Agreement or in any
certificate, financial statement or other document delivered pursuant to
this Agreement shall prove to have been incorrect or misleading in any
material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any payment in
respect of Debt outstanding (other than the Notes) in an aggregate
principal amount in excess of $10,000,000 when due or within any
applicable grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt outstanding of the Borrower or any
Subsidiary in an aggregate principal amount in excess of $10,000,000 or
the mandatory prepayment or purchase of such Debt by the Borrower (or its
designee) or such Subsidiary (or its designee) prior to the scheduled
maturity thereof, or enables (or, with the giving of notice or lapse of
time or both, would enable) the holders of such Debt or any Person acting
on such holders' behalf to accelerate the maturity thereof or require the
mandatory prepayment or purchase thereof prior to the scheduled maturity
thereof, without regard to whether such holders or other Person shall have
exercised or waived their right to do so; or
(g) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally, or shall admit in writing its inability, to pay its debts as
they become due, or shall take any corporate action to authorize any of
the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall fail to
pay when due any material amount which it shall have become liable to pay
to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or
any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed
to administer any such Plan or Plans or a proceeding shall be instituted
by a fiduciary of any such Plan or Plans to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed
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within 30 days thereafter; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any such
Plan or Plans must be terminated; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower or any
Subsidiary under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower or any Subsidiary under Section 4068 of ERISA
and in either case such lien shall remain undischarged for a period of 25
days after the date of filing; or
(l) (i) any Person or two or more Persons (other than the E. T.
Meredith Family Stockholders) acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 20%
or more of the outstanding shares of the voting stock of the Borrower; or
(ii) as of any date a majority of the Board of Directors of the Borrower
consists of individuals who were not either (A) directors of the Borrower
as of the corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of the Borrower of
which a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Directors of the
Borrower of which a majority consisted of individuals described in clause
(A) and individuals described in clause (B); or
(m) except as permitted by Section 5.22, if any of the Broadcast
Licenses necessary for the operation of the Stations shall be terminated,
forfeited or revoked or shall fail to be renewed for any reason
whatsoever, or, for any other reason, the Borrower or any Subsidiary of
the Borrower shall at any time fail to be a licensee under any of the
Broadcast Licenses or shall otherwise fail to have all required
authorizations, licenses and permits to construct, own, operate or promote
the Stations pursuant to the Broadcast Licenses; or
(n) if (x) any Forfeiture Proceeding shall have been commenced or the
Borrower shall have given the Bank written notice of the commencement of
any Forfeiture Proceeding as provided in Section 5.01(j) hereof; or (y)
the Bank has a good faith basis to believe that a Forfeiture Proceeding
has been threatened or commenced; or
(o) if, at any time, the FCC or any court of competent jurisdiction
shall have entered any final order or judgment (which, in either case,
shall have been outstanding for any period of more than thirty (30) days
during which enforcement of such order or judgment has not been stayed, by
reason of a pending appeal or otherwise) requiring the Borrower or any
Subsidiary of the Borrower to sell, transfer or divest itself of any
Station, or the assets which comprise any Station, by virtue of any
failure on the part of the Borrower or any Subsidiary of the Borrower to
comply with the Federal Communications Act of 1934, as amended, the rules
and regulations of the FCC promulgated thereunder or any FCC order or any
judgment, and the Borrower or any Subsidiary of the Borrower shall fail to
consummate such sale, transfer or divestiture within the time allotted
therefor;
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then, and in every such event, the Agent shall (i)if requested by the
Required Banks, by notice to the Borrower terminate the Commitments and they
shall thereupon terminate, and (ii) if requested by the Required Banks, by
notice to the Borrower declare the Notes (together with accrued interest
thereon) and all other amounts payable hereunder and under the other Loan
Documents to be, and the Notes (together with all accrued interest thereon) and
all other amounts payable hereunder and under the other Loan Documents shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that if any Event of Default specified in clause (g) or (h)
above occurs with respect to the Borrower, without any notice to the Borrower,
or any other act by the Agent or the Banks, the Commitments shall thereupon
automatically terminate and the Notes (together with accrued interest thereon)
and all other amounts payable hereunder and under the other Loan Documents
shall automatically become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower. Notwithstanding the foregoing, the Agent shall have available to
it all other remedies at law or equity, and shall exercise any one or all of
them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Borrower of any Default under Section 6.01(c) promptly upon being requested to
do so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated
to the Agent by the terms hereof and thereof, together with such other powers
as are reasonably incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and the other
Loan Documents, and shall not by reason of this Agreement or any other Loan
Document be a trustee for any Bank; (b) shall not be responsible to the Banks
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or other document
referred to or provided for in, or received by any Bank under, this Agreement
or any other Loan Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other Loan Document
or any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The
provisions of this Article VII are solely for the benefit of the Agent and the
Banks, and the Borrower shall not have any rights as a third party beneficiary
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of any of the provisions hereof. In performing its functions and duties under
this Agreement and under the other Loan Documents, the Agent shall act solely
as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Borrower. The duties of the Agent shall be ministerial and administrative
in nature, and the Agent shall not have by reason of this Agreement or any
other Loan Document a fiduciary relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
non-payment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice of the occurrence of a Default or an
Event of Default, the Agent shall give prompt notice thereof to the Banks. The
Agent shall give each Bank prompt notice of each non-payment of principal of or
interest on the Loans, whether or not it has received any notice of the
occurrence of such non-payment. The Agent shall (subject to Section 9.05) take
such action with respect to such Default or Event of Default as shall be
directed by the Required Banks; provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Banks.
SECTION 7.04. Rights of Agent and its Affiliates as a Bank. With
respect to any Loan made by Wachovia or an Affiliate of Wachovia, such
Affiliate and Wachovia in their capacity as a Bank hereunder shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though it were not an Affiliate of Wachovia (or in Wachovia's case, acting as
the Agent), and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include such Affiliate of Wachovia or Wachovia in its individual
capacity. Such Affiliate and Wachovia may (without having to account therefor
to any Bank) accept deposits from, lend money to and generally engage in any
kind of banking, trust or other business with the Borrower (and any of its
Affiliates) as if they were not an Affiliate of the Agent or the Agent,
respectively; and such Affiliate and Wachovia may accept fees and other
consideration from the Borrower (in addition to any agency fees and arrangement
fees heretofore agreed to between the Borrower and Wachovia) for services in
connection with this Agreement or any other Loan Document or otherwise without
having to account for the same to the Banks.
SECTION 7.05. Indemnification. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
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the Borrower, ratably in accordance with the aggregate amount of its Commitment
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation, counsel fees
and disbursements) or disbursements of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement or any other Loan Document or any other
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (excluding, unless an Event of Default has
occurred and is continuing, the normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the enforcement
of any of the terms hereof or thereof or any such other documents; provided,
however, that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent. If
any indemnity furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. Payee of Note Treated as Owner. The Agent may deem
and treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with the Agent and the provisions of Section 9.07(c) have been
satisfied. Any requests, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor or
replacement thereof.
SECTION 7.08. Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. The Agent shall not be required to keep itself (or any
Bank) informed as to the performance or observance by the Borrower of this
Agreement or any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of the
Borrower or any other Person. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
other Person (or any of their Affiliates) which may come into the possession of
the Agent. Each Bank acknowledges that each Bank designated as a "Syndication
Agent" or "Documentation Agent" on the signature pages of this Agreement shall
have no right, duty or responsibility and shall incur no liability, under this
Agreement in its capacity as a Syndication Agent or Documentation Agent.
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SECTION 7.09. Failure to Act. Except for action expressly required
of the Agent hereunder or under the other Loan Documents, the Agent shall in
all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction by
the Banks of their indemnification obligations under Section 7.05 against any
and all liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action.
SECTION 7.10. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Borrower
and the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent. If no successor Agent that has been duly
appointed by the Required Banks shall have accepted such appointment within 30
days after the retiring Agent's notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent. Any successor Agent shall be a bank which
has a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent determines that deposits in Dollars (in the applicable
amounts) are not being offered in the relevant market for such Interest
Period, or
(b) the Required Banks advise the Agent that the London Interbank
Offered Rate, as determined by the Agent will not adequately and fairly
reflect the cost to such Banks of funding the relevant type of Euro-Dollar
Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon: (i) the obligations of the Banks to make the Euro-Dollar
Loans specified in such notice shall be suspended; and (ii) the
obligations of the Banks to make the Euro-Dollar Loans specified in such
notice shall continue to be suspended until the Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer
exist. Unless the Borrower notifies the Agent at least 2 Domestic
Business Days before the date of any Euro-dollar Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow
on such date, such borrowing shall instead be made as a Base Rate
Borrowing.
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SECTION 8.02. Illegality. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any existing or future
law, rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof (any such authority,
bank or agency being referred to as an "Authority" and any such event being
referred to as a "Change of Law"), or compliance by any Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority shall make it unlawful or impossible for any Bank (or its
Lending Office) to make, maintain or fund its Euro-Dollar Loans and such Bank
shall so notify the Agent, the Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until such Bank notifies the Borrower
and the Agent that the circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this Section,
such Bank shall designate a different Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such Bank shall determine
that it may not lawfully continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest thereon and any
amount due such Bank pursuant to Section 8.05(a). Concurrently with prepaying
each such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an
equal principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after the
date hereof, a Change of Law or compliance by any Bank (or its Lending Office)
with any request or directive (whether or not having the force of law) of any
Authority:
(i) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to its Euro-Dollar Loans, its Notes or its
obligation to make Euro-Dollar Loans, or shall change the basis of
taxation of payments to any Bank (or its Lending Office) of the principal
of or interest on its Euro-Dollar Loans or any other amounts due under
this Agreement in respect of its Euro-Dollar Loans or its obligation to
make Euro-Dollar Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Lending Office imposed by the
jurisdiction in which such Bank's principal executive office or Lending
Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Euro-Dollar Loan any such
requirement included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on the
London interbank market any other condition affecting its Euro-Dollar
Loans, its Notes or its obligation to make Euro-Dollar Loans;
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and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that after the date hereof the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any existing or future law, rule or regulation, or any change
in the interpretation or administration thereof, or compliance by any Bank (or
its Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any Authority, has or would have
the effect of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) The provisions of this Section 8.03 shall be applicable with
respect to any Participant, Assignee or other Transferee, and any calculations
required by such provisions shall be made based upon the circumstances of such
Participant, Assignee or other Transferee.
SECTION 8.04. Base Rate Loans Substituted for Euro-Dollar Loans. If
(i) the obligation of any Bank to make or maintain Euro-Dollar Loans has been
suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances giving rise to such
suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (in all cases
interest and principal on such Loans shall be payable contemporaneously
with the related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such
Euro-Dollar Loans shall be applied to repay its Base Rate Loans instead.
- 45 -
<PAGE>
In the event that the Borrower shall elect that the provisions of this Section
shall apply to any Bank, the Borrower shall remain liable for, and shall pay to
such Bank as provided herein, all amounts due such Bank under Section 8.03 in
respect of the period preceding the date of conversion of such Bank's Loans
resulting from the Borrower's election.
SECTION 8.05. Compensation. Upon the request of any Bank, delivered
to the Borrower and the Agent, the Borrower shall pay to such Bank such amount
or amounts as shall compensate such Bank for any loss, cost or expense incurred
by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09, Section
2.10 or otherwise) of a Euro-Dollar Loan on a date other than the last day of
an Interest Period for such Euro-Dollar Loan;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan on the
date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan on the
date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a part
specified in the applicable Notice of Borrowing delivered pursuant to Section
2.02;
such compensation to include, without limitation, an amount equal to the
excess, if any, of (x) the amount of interest which would have accrued on the
amount so paid or prepaid or not prepaid or borrowed for the period from the
date of such payment, prepayment or failure to prepay or borrow to the last day
of the then current Interest Period for such Euro-Dollar Loan (or, in the case
of a failure to prepay or borrow, the Interest Period for such Euro-Dollar Loan
which would have commenced on the date of such failure to prepay or borrow) at
the applicable rate of interest for such Euro-Dollar Loan provided for herein
over (y) the amount of interest (as reasonably determined by such Bank) such
Bank would have paid on deposits in Dollars of comparable amounts having terms
comparable to such period placed with it by leading banks in the London
interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its
address or telecopy number set forth on the signature pages hereof or such
other address or telecopy number as such party may hereafter specify for the
purpose by notice to each other party. Each such notice, request or other
communication shall be effective (i) if given by telecopier, when such telecopy
is transmitted to the telecopy number specified in this Section and the
telecopy machine used by the sender provides a written confirmation that such
telecopy has been so transmitted or receipt of such telecopy transmission is
otherwise confirmed, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, and (iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Agent under Article II
or Article VIII shall not be effective until received.
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<PAGE>
SECTION 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note or
other Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes; Indemnification. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent, including fees
and disbursements of special counsel for the Banks and the Agent, in connection
with the preparation of this Agreement and the other Loan Documents, any waiver
or consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Agent or any Bank, including
fees and disbursements of counsel to the Agent and each Bank, in connection
with such Default and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing this
Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Agent and each Bank against any
transfer taxes, documentary taxes, assessments or charges made by any Authority
by reason of the execution and delivery of this Agreement or the other Loan
Documents.
(c) The Borrower shall indemnify the Agent, the Banks and each
Affiliate thereof and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of or result from any
actual or proposed use by the Borrower of the proceeds of any extension of
credit by any Bank hereunder or breach by the Borrower of this Agreement or any
other Loan Document or from any investigation, litigation (including, without
limitation, any actions taken by the Agent or any of the Banks to enforce this
Agreement or any of the other Loan Documents) or other proceeding (including,
without limitation, any threatened investigation or proceeding) relating to the
foregoing, and the Borrower shall reimburse the Agent and each Bank, and each
Affiliate thereof and their respective directors, officers, employees and
agents, upon demand for any expenses (including, without limitation, legal
fees) incurred in connection with any such investigation or proceeding; but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified.
SECTION 9.04. Set-Offs; Sharing of Set-Offs. (a) The Borrower
hereby grants to each Bank, as security for the full and punctual payment and
performance of the obligations of the Borrower under this Agreement, a
continuing lien on and security interest in all deposits and other sums
credited by or due from such Bank to the Borrower or subject to withdrawal by
the Borrower; and regardless of the adequacy of any collateral or other means
of obtaining repayment of such obligations, each Bank may at any time upon or
after the occurrence of any Event of Default, and without notice to the
Borrower, set off the whole or any portion or portions of any or all such
deposits and other sums against such obligations, whether or not any other
Person or Persons could also withdraw money therefrom.
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<PAGE>
(b) Each Bank agrees that if it shall, by exercising any right of
set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest owing with respect to the Notes held
by it which is greater than the proportion received by any other Bank in
respect of the aggregate amount of all principal and interest owing with
respect to the Notes held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks owing to such other Banks, and/or such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Notes held by the Banks owing to
such other Banks shall be shared by the Banks pro rata; provided that (i)
nothing in this Section shall impair the right of any Bank to exercise any
right of set-off or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Notes, and (ii) if all or any portion of such payment
received by the purchasing Bank is thereafter recovered from such purchasing
Bank, such purchase from each other Bank shall be rescinded and such other Bank
shall repay to the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such other Bank's
ratable share (according to the proportion of (x) the amount of such other
Bank's required repayment to (y) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the foregoing arrangements, may exercise rights of set-off or counterclaim
and other rights with respect to such participation as fully as if such holder
of a participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. (a) Any provision of this
Agreement, the Notes or any other Loan Documents may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Borrower and the Required Banks (and, if the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such amendment or waiver
shall, unless signed by all of the Banks, (i) change the Commitment of any Bank
or subject any Bank to any additional obligation, (ii) change the principal of
or decrease the rate of interest on any Loan or change the amount of any fees
hereunder, (iii) change the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder, (iv) change the amount of
principal, interest or fees due on any date fixed for the payment thereof under
this Agreement, the Notes or any other Loan Document, (v) change the percentage
of the Commitment or of the aggregate unpaid principal amount of the Notes, or
the percentage of Banks, which shall be required for the Banks or any of them
to take any action under this Section or any other provision of this Agreement,
(vi) change the manner of application of any payments made under this Agreement
or the Notes, (vii) release or substitute all or any substantial part of the
collateral (if any) held as security for the Loans, (viii) waive any of the
conditions precedent contained in Section 3.01, Section 3.02 or Section 3.03,
(ix) change the date fixed for any reduction or termination of the Commitments
of any Bank, or (x) release, discharge or terminate any guaranty given to
support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement unless each Bank shall be informed thereof by the Borrower and shall
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<PAGE>
be afforded an opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be
delivered by the Borrower to each Bank forthwith following the date on which
the same shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to all such Banks.
SECTION 9.06. Margin Stock Collateral. Each of the Banks represents
to the Agent and each of the other Banks that it in good faith is not, directly
or indirectly (by negative pledge or otherwise), relying upon any Margin Stock
as collateral in the extension or maintenance of the credit provided for in
this Agreement.
SECTION 9.07. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that the Borrower may not
assign or otherwise transfer any of its rights under this Agreement, without
the written consent of the Banks and Agent.
(b) Any Bank may at any time sell to one or more Persons (each a
"Participant") participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participating interest
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking
any action hereunder except that such Bank may agree that it will not (except
as provided below), without the consent of the Participant, agree to (i) the
change of any date fixed for the payment of principal of or interest on the
related Loan or Loans, (ii) the change of the amount of any principal, interest
or fees due on any date fixed for the payment thereof with respect to the
related Loan or Loans, (iii) the change of the principal of the related Loan or
Loans or , (iv) any change in the rate at which either interest is payable
thereon or (if the Participant is entitled to any part thereof) facility or
unused fee is payable hereunder from the rate at which the Participant is
entitled to receive interest or facility or unused fee (as the case may be) in
respect of such participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security for the Loans, or
(vi) the release of any guaranty given to support payment of the Loans. Each
Bank selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement shall, within 10 Domestic Business Days of such
sale, provide the Borrower and the Agent with written notification stating that
such sale has occurred and identifying the Participant and the interest
purchased by such Participant. The Borrower agrees that each Participant shall
be entitled to the benefits of Article VIII with respect to its participation
in Loans outstanding from time to time.
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<PAGE>
(c) Any Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of
all, of its rights and obligations under this Agreement, the Notes and the
other Loan Documents, and such Assignee shall assume all such rights and
obligations, pursuant to an Assignment and Acceptance in the form attached
hereto as Exhibit G, executed by such Assignee, such transferor Bank and the
Agent (and, in the case of (i) an Assignee that is not then a Bank or an
Affiliate of a Bank; and (ii) an assignment not made during the existence of a
Default or an Event of Default, by the Borrower); provided that (i) the
aggregate amount of the Commitment of the assigning Bank being assigned
pursuant to such assignment (determined as of the effective date of the
assignment) shall be equal to $10,000,000 (or any larger multiple of
$1,000,000), (ii) no interest may be sold by a Bank pursuant to this paragraph
(c) to any Assignee that is not then a Bank or an Affiliate of a Bank without
the consent of the Borrower, which consent shall not be unreasonably withheld,
provided that the Borrower's consent shall not be necessary with respect to any
assignment made during the existence of a Default or an Event of Default; (iii)
a Bank may not, at any one time, have more than two (2)Assignees that either:
(y) are not then Banks or an Affiliate of such a Bank; or (z) that were not
previously Banks; (iv) no interest may be sold by a Bank pursuant to this
paragraph (c) to any Assignee that is not then a Bank or an Affiliate of a
Bank, without the consent of the Agent, which consent shall not be unreasonably
withheld, provided, that, although the Agent's consent may not be necessary
with respect to an Assignee that is then a Bank or an Affiliate of a Bank, no
such assignment shall be effective until the conditions set forth in the
following sentence are satisfied. Upon (A) execution of the Assignment and
Acceptance by such transferor Bank, such Assignee, the Agent and (if
applicable) the Borrower, (B) delivery of an executed copy of the Assignment
and Acceptance to the Borrower and the Agent, (C) payment by such Assignee to
such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, and (D) payment by the assigning Bank
of a processing and recordation fee of $3,500 to the Agent, such Assignee shall
for all purposes be a Bank party to this Agreement and shall have all the
rights and obligations of a Bank under this Agreement to the same extent as if
it were an original party hereto with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by the Borrower, the Banks or the Agent shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this paragraph (c), the
transferor Bank, the Agent and the Borrower shall make appropriate arrangements
so that, if required, new Notes are issued to each of such Assignee and such
transferor Bank.
(d) Subject to the provisions of Section 9.08, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial and other information in such Bank's possession concerning the
Borrower which has been delivered to such Bank by the Borrower pursuant to this
Agreement or which has been delivered to such Bank by the Borrower in
connection with such Bank's credit evaluation prior to entering into this
Agreement.
(e) No Transferee shall be entitled to receive any greater payment
under Section 8.03 than the transferor Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 8.02
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<PAGE>
or 8.03 requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Anything in this Section 9.07 to the contrary notwithstanding,
any Bank may assign and pledge all or any portion of the Loans and/or
obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release
the assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.08. Confidentiality. Each Bank agrees to exercise its
best efforts to keep any information delivered or made available by the
Borrower to it which is clearly indicated to be confidential information,
confidential from anyone other than persons employed or retained by such Bank
who are or are expected to become engaged in evaluating, approving, structuring
or administering the Loans; provided, however, that nothing herein shall
prevent any Bank from disclosing such information (i) to any other Bank, (ii)
upon the order of any court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over such
Bank, (iv) which has been publicly disclosed, (v) to the extent reasonably
required in connection with any litigation to which the Agent, any Bank or
their respective Affiliates may be a party, (vi) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (vii) to such
Bank's legal counsel, Affiliates and independent auditors and (viii) to any
actual or proposed Participant, Assignee or other Transferee of all or part of
its rights hereunder which has agreed in writing to be bound by the provisions
of this Section 9.08.
SECTION 9.09. Representation by Banks. Each Bank hereby represents
that it is a commercial lender or financial institution which makes loans in
the ordinary course of its business and that it will make its Loans hereunder
for its own account in the ordinary course of such business; provided, however,
that, subject to Section 9.07, the disposition of the Note or Notes held by
that Bank shall at all times be within its exclusive control.
SECTION 9.10. Obligations Several. The obligations of each Bank
hereunder are several, and no Bank shall be responsible for the obligations or
commitment of any other Bank hereunder. Nothing contained in this Agreement
and no action taken by the Banks pursuant hereto shall be deemed to constitute
the Banks to be a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each Bank shall
be a separate and independent debt, and each Bank shall be entitled to protect
and enforce its rights arising out of this Agreement or any other Loan Document
and it shall not be necessary for any other Bank to be joined as an additional
party in any proceeding for such purpose.
SECTION 9.11. Survival of Certain Obligations. Sections 8.03(a),
8.03(b), 8.05 and 9.03, and the obligations of the Borrower thereunder, shall
survive, and shall continue to be enforceable notwithstanding, the termination
of this Agreement and the Commitments and the payment in full of the principal
of and interest on all Loans.
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<PAGE>
SECTION 9.12. Georgia Law. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of Georgia.
SECTION 9.13. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.14. Interest. In no event shall the amount of interest
due or payable hereunder or under the Notes exceed the maximum rate of interest
allowed by applicable law, and in the event any such payment is inadvertently
made to any Bank by the Borrower or inadvertently received by any Bank, then
such excess sum shall be credited as a payment of principal, unless the
Borrower shall notify such Bank in writing that it elects to have such excess
sum returned forthwith. It is the express intent hereof that the Borrower not
pay and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law.
SECTION 9.15. Interpretation. No provision of this Agreement or any
of the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.16. Consent to Jurisdiction. The Borrower (a) submits to
personal jurisdiction in the State of Georgia, the courts thereof and the
United States District Courts sitting therein, for the enforcement of this
Agreement, the Notes and the other Loan Documents, (b) waives any and all
personal rights under the law of any jurisdiction to object on any basis
(including, without limitation, inconvenience of forum) to jurisdiction or
venue within the State of Georgia for the purpose of litigation to enforce this
Agreement, the Notes or the other Loan Documents, and (c) agrees that service
of process may be made upon it in the manner prescribed in Section 9.01 for the
giving of notice to the Borrower. Nothing herein contained, however, shall
prevent the Agent from bringing any action or exercising any rights against any
security and against the Borrower personally, and against any assets of the
Borrower, within any other state or jurisdiction.
SECTION 9.17. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, under seal, by their respective authorized officers as of the
day and year first above written.
MEREDITH CORPORATION
ATTEST: By: /s/ Michael A. Sell (SEAL)
-------------------
Title: Treasurer
/s/ Thomas L. Slaughter 1716 Locust Street
- ----------------------- Des Moines, Iowa 50309-3023
Its: Secretary Attention: Michael A. Sell
Telecopy number: 515-284-3828
[CORPORATE SEAL] Telephone number: 515-284-2633
With a copy to:
Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309-3023
Attention: General Counsel
Telecopy Number: (515) 284-3933
Telephone Number: (515) 284-3056
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<PAGE>
COMMITMENTS:
WACHOVIA BANK, N.A., as Agent and as a Bank
Commitment:
$47,500,000 By: /s/ Mark L. Thomas (SEAL)
------------------
Title: Vice President
Wachovia Bank, N.A.
Syndication Services
191 Peachtree Street, N.E., Mail Code GA-0423
Atlanta, Georgia 30303-1757
Attention: Lynn Smith (27th Floor)
Telecopy number: (404) 332-4005
Telephone number: (404) 332-4008
With a copy to:
Wachovia Bank, N.A.
191 Peachtree Street, N.E., Mail Code GA-0370
Atlanta, Georgia 30303-1757
Attention: Mark Thomas (28th Floor)
Telecopy number: (404) 332-6898
Telephone number: (404) 332-6450
[Remainder of this page intentionally left blank]
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<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO, as
Syndication Agent and a Bank
Commitment:
$32,500,000 By: /s/ Laurie W. Blazek (SEAL)
--------------------
Title: Vice President
Lending Office
--------------
The First National Bank of Chicago
One First National Plaza
Suite 0629
Chicago, IL 60670
Attention: Laurie Blazek
Telecopy number: (312) 732-8587
Telephone number: (312) 732-5475
With a copy to:
BankOne, Colorado, N.A.
1125 17th Street
3rd Floor
MC: CO1-9523
Denver, CO 80202
Attention: Mariel Keane Hough, Vice President
Telecopy number: (303) 244-3351
Telephone number: (303) 244-3225
[Remainder of this page intentionally left blank]
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<PAGE>
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Documentation Agent and a Bank
Commitment:
$32,500,000 By: /s/ Ronald K. Rueve (SEAL)
-------------------
Title: Vice President
Lending Office
--------------
SunTrust Bank, Central Florida, National
Association
Mail Code O-1043
2000 South Trust Bank
Orlando, FL 32801
Attention: Stephen L. Leister, Vice President,
National Banking
Telecopy number: (407) 237-6894
Telephone number: (407) 237-4705
[Remainder of this page intentionally left blank]
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<PAGE>
FLEET NATIONAL BANK
Commitment:
$27,500,000 By: /s/ Stephen J. Healey (SEAL)
---------------------
Title: Senior Vice President
Lending Office
--------------
Fleet National Bank
1 Federal Street
MC: MAOFD03D
Boston, MA 02110
Attention: Stephen Healey
Telecopy number: (617) 346-4346
Telephone number: (617) 346-4367
[Remainder of this page intentionally left blank]
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<PAGE>
BANQUE NATIONALE de PARIS
Commitment:
$20,000,000 By: /s/ Jo Ellen Bender (SEAL)
-------------------
Title: Senior Vice President & Manager
By: /s/ Arnaud Collin Du Bocage (SEAL)
---------------------------
Title: Executive Vice President & General Manager
Lending Office
--------------
Banque Nationale de Paris
209 South LaSalle Street
Chicago, IL 60604
Attention: Jo Ellen Bender
Telecopy number: (312) 977-1380
Telephone number (312) 977-2225
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<PAGE>
NORWEST BANK IOWA, N.A.
Commitment:
$20,000,000 By: /s/ Wm C. Green Jr. (SEAL)
-------------------
Title: Vice President
Lending Office
--------------
Norwest Bank Iowa, N.A.
666 Walnut Street
Telecopy number: (515)245-3128
Telephone number: (515)245-3354
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<PAGE>
THE BANK OF NEW YORK
Commitment:
$20,000,000 By: /s/ B. Todres
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Title: Vice President
Lending Office
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The Bank of New York
One Wall Street
New York, NY 10286
Attention: Benjamin B. Todres
Telecopy number: (212) 635-8593
Telephone number (212) 635-8745
- 60 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM the
Consolidated Balance Sheet at December 31, 1998 and the Consolidated Statement
of Earnings for the six months ended December 31, 1998 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-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 694
<SECURITIES> 0
<RECEIVABLES> 133,414<F1>
<ALLOWANCES> 0
<INVENTORY> 45,097
<CURRENT-ASSETS> 263,004
<PP&E> 273,388
<DEPRECIATION> 124,956
<TOTAL-ASSETS> 1,082,269
<CURRENT-LIABILITIES> 338,374
<BONDS> 167,000
0
0
<COMMON> 50,261
<OTHER-SE> 264,564
<TOTAL-LIABILITY-AND-EQUITY> 1,082,269
<SALES> 500,761
<TOTAL-REVENUES> 500,761
<CGS> 209,170
<TOTAL-COSTS> 209,170
<OTHER-EXPENSES> 20,060
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,686
<INCOME-PRETAX> 76,567
<INCOME-TAX> 32,333
<INCOME-CONTINUING> 44,234
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,234
<EPS-PRIMARY> .84
<EPS-DILUTED> .82
<FN>
<F1>Net of allowances
</FN>
</TABLE>
Exhibit 99
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MEREDITH CORPORATION
FISCAL 1999 SECOND QUARTER AND YEAR-TO-DATE
EARNINGS PER SHARE AT-A-GLANCE
(Note: All figures are adjusted for stock splits)
- -- The chart below depicts comparable quarterly and fiscal-year diluted
earnings per share (EPS) before special items and discontinued operations:
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Fiscal Year
-------- -------- -------- -------- -----------
F1993 .06 .09 .10 .10 .35
F1994 .08 .13 .16 .13 .50
F1995 .14 .19 .18 .20 .71
F1996 .17 .22 .24 .28 .91
F1997 .22 .31 .33 .36 1.22
F1998 .27 .40 .37 .42 1.46
F1999 .32 .47
- -- Fiscal 1999 second quarter net earnings increased 18 percent to a record
47 cents per share, compared to 40 cents per share in the prior year.
- -- For the first half of fiscal 1999, earnings per share before non-recurring
items increased 18 percent to 79 cents, compared to 67 cents in fiscal
1998.
- -- Net earnings for the first six months of fiscal 1999 were 82 cents per
share, including an after-tax gain of 3 cents per share from the sale of
the Better Homes and Gardens Real Estate Service in the fiscal 1999 first
quarter.
