-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iKKR8SJwB/Y1zrTmThPAOkr2dKZSWtzvkCRaqQryiRo/2LzqvJKc6nr2/JhrByJ6 N4+xU0JrFD7zX2BJKy0G9Q== 0000950134-95-000369.txt : 19950615 0000950134-95-000369.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950134-95-000369 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950315 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELO A H CORP CENTRAL INDEX KEY: 0000356080 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 750135890 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-08598 FILM NUMBER: 95521004 BUSINESS ADDRESS: STREET 1: 400 S RECORD ST STREET 2: COMMUNICATIONS CENTER CITY: DALLAS STATE: TX ZIP: 75202 BUSINESS PHONE: 2149776600 MAIL ADDRESS: STREET 1: P O BOX 655237 CITY: DALLAS STATE: TX ZIP: 75265 10-K405 1 FORM 10-K FILED AS SUBMISSION TYPE 10-K405 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-8598 A. H. BELO CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-0135890 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. BOX 655237 DALLAS, TEXAS 75265-5237 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 977-6606 Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- SERIES A COMMON STOCK, $1.67 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: SERIES B COMMON STOCK, $1.67 PAR VALUE (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the registrant's voting stock held by nonaffiliates on February 28, 1995, based on the closing price for the registrant's Series A Common Stock on such date as reported on the New York Stock Exchange, was approximately $869,437,405.* Shares of Common Stock outstanding at February 28, 1995: 19,907,543 shares. (Consisting of 15,162,735 shares of Series A Common Stock and 4,744,808 shares of Series B Common Stock.) * For purposes of this calculation the market value of a share of Series B Common Stock was assumed to be the same as the share of Series A Common Stock into which it is convertible. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy Statement relating to the Annual Meeting of Shareholders to be held May 3, 1995 are incorporated by reference into Part III (Items 10, 11, 12 and 13). 2 A. H. BELO CORPORATION FORM 10-K TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . 6 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . 7 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 9 Item 8. Financial Statements and Supplementary Data (see Index to Financial Statements below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . 14 PART III Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . 14 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . 14 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . 14 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 14 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 INDEX TO FINANCIAL STATEMENTS Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Consolidated Statements of Earnings for the years ended December 31, 1994, 1993 and 1992 . . . . . . . 24 Consolidated Balance Sheets as of December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 25 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992 . . . . . . 28 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Management's Responsibility for Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 40
3 PART I ITEM 1. BUSINESS A. H. Belo Corporation (the "Company" or "Belo") owns and operates newspapers and network-affiliated television stations in seven U.S. cities. The Company traces its roots to The Galveston Daily News, which began publishing in 1842. Incorporated in Texas in 1926, the Company was reorganized as a Delaware corporation in 1987. (References herein to "Company" or "Belo" mean A. H. Belo Corporation and its wholly-owned subsidiaries unless the context otherwise specifies.) The Company's principal newspaper is The Dallas Morning News. In addition, the Company publishes eight community newspapers for certain suburbs in the Dallas-Fort Worth metropolitan area. The Company also owns and operates network- affiliated VHF television broadcast stations in Dallas-Fort Worth and Houston, Texas; Seattle-Tacoma, Washington; Sacramento-Stockton-Modesto, California; Norfolk-Portsmouth-Newport News-Hampton, Virginia; New Orleans, Louisiana; and Tulsa, Oklahoma. The assets of television station WWL-TV in New Orleans, Louisiana, were purchased by the Company on June 1, 1994 for $110,000,000. Further, on February 1, 1995, the Company completed the acquisition of the assets of television station KIRO-TV in Seattle, Washington, for $162,500,000, excluding final adjustments. Note 12 to the Consolidated Financial Statements, included on page 38 of this document, contains information about the Company's industry segments for the years ended December 31, 1994, 1993 and 1992. NEWSPAPER PUBLISHING The Company's wholly-owned subsidiary, The Dallas Morning News, Inc., publishes the Company's principal newspaper, The Dallas Morning News, seven days a week. Published continuously since 1885, The Dallas Morning News provides coverage of local, state, national and international news. The Morning News is distributed throughout the Southwest, though its circulation is concentrated primarily in the twelve counties surrounding Dallas: Collin, Dallas, Denton, Ellis, Henderson, Hood, Hunt, Johnson, Kaufman, Parker, Rockwall and Tarrant counties. The Dallas Morning News strives to serve the public interest by maintaining a strong and independent voice in matters of public concern. It is the policy of the Company to allocate such resources as may be necessary to maintain excellence in news reporting and editorial comment in The Dallas Morning News. The Dallas Morning News serves a large readership in its primary market. Average paid circulation for the six months ended September 30, 1994, according to the unaudited Publisher's Statement of the Audit Bureau of Circulations, an independent agency, was 524,567 daily, down slightly from the 1993 average daily circulation of 527,387. Sunday's average paid circulation was 797,206, down 2.1 percent from the six months ended September 30, 1993 average of 814,404. The Dallas Morning News competes for advertising with television and radio stations (including a television station owned and operated by the Company), magazines, direct mail, cable television, billboards and other newspapers (including the other newspapers owned and operated by the Company). Also competing with The Dallas Morning News is the Fort Worth Star-Telegram, owned by Capital Cities/ABC, Inc.. The basic material used in publishing The Dallas Morning News is newsprint. The average unit price of newsprint consumed during 1994 was slightly less than that of the prior year. However, recent market-wide increases in newsprint prices are expected to result in substantially higher newsprint prices during 1995. At present, newsprint is purchased from nine suppliers. During 1994, the Company's three largest providers of newsprint supplied approximately 57 percent of the annual requirements, but the Company is not dependent on any one of them. Management believes its sources of newsprint, along with alternate sources that are available, are adequate for its current needs. 1 4 DFW Suburban Newspapers, Inc. publishes six paid and two free circulation newspapers for suburban communities in the Dallas-Fort Worth metropolitan area. These publications are delivered either one or two days a week. Each of the Company's community publications has its own sales, circulation, news and editorial personnel, and several of the publications maintain separate offices. All administrative functions are centralized and all of the newspapers are printed at a plant in Arlington, Texas. This plant is owned and operated by DFW Printing Company, Inc., a wholly-owned subsidiary of the Company, which, in addition to printing the suburban newspapers, is the site of the Company's commercial printing operations. TELEVISION BROADCASTING The following table lists relevant information about the Company's television broadcasting stations:
TOTAL STATION, NUMBER OF NUMBER OF CHANNEL, DMA TELEVISION COMMERCIAL MARKET AND NATIONAL EXPIRATION BROADCAST BROADCAST NETWORK TV HOMES MARKET DATE OF STATIONS IN STATIONS IN AFFILIATION IN DMA (1) RANK (1) FCC LICENSE MARKET (1) MARKET (1) - -------------- ------------ ---------- ------------- ---------- ---------- WFAA-TV, Ch. 8 1,820,710 8th August 1, 1993 (2) 6 VHF 4 VHF Dallas-Fort Worth, TX 9 UHF 9 UHF (ABC) KHOU-TV, Ch. 11 1,561,530 11th August 1, 1998 4 VHF 3 VHF Houston, TX 10 UHF 10 UHF (CBS) KIRO-TV, Ch. 7 1,468,730 12th February 1, 1999 7 VHF 6 VHF Seattle-Tacoma, WA 4 UHF 2 UHF (UPN)(3) KXTV, Ch. 10 1,109,140 21st December 1, 1998 4 VHF 3 VHF Sacramento- 6 UHF 6 UHF Stockton-Modesto, CA (ABC) (4) WVEC-TV, Ch. 13 620,390 40th October 1, 1996 3 VHF 3 VHF Norfolk-Portsmouth- 3 UHF 2 UHF Newport News-Hampton, VA (ABC) WWL-TV, Ch. 4 615,180 41st June 1, 1997 4 VHF 3 VHF New Orleans, LA 3 UHF 2 UHF (CBS) KOTV, Ch. 6 462,800 59th June 1, 1998 4 VHF 3 VHF Tulsa, OK 4 UHF 3 UHF (CBS)
________________________ (1) Designated Market Area ("DMA") is an exclusive geographic area consisting of all counties in which the local stations receive a preponderance of total viewing hours. DMA data, which is published by the A. C. Nielsen Company ("Nielsen"), is a significant factor in determining television advertising rates. All the information shown in the table is as of the November 1994 Nielsen ratings book. (2) An application for renewal of the license for WFAA-TV is pending before the Federal Communications Commission, and the station's license is by statute continued in effect pending action thereon. (3) On February 1, 1995, the Company purchased television station KIRO-TV for $162,500,000, excluding final adjustments. At that time, KIRO-TV was being operated as a CBS affiliate. As of March 13, 1995, the station began operating as a United Paramount Network affiliate. (4) Effective March 6, 1995, KXTV became an ABC television affiliate. Prior to March 6, 1995, KXTV was being operated as a CBS affiliate. 2 5 Commercial television stations generally fall into one of three categories. The first category of stations consists of stations affiliated with one of the three major national networks (ABC, CBS and NBC). The second category is comprised of stations affiliated with newer national networks, such as Fox and the recently formed United Paramount Network ("UPN") and the WB (Warner Brothers) Television Network. The third category includes independent stations that are not affiliated with any network and that rely principally on local and syndicated programming. Affiliation with a television network can have a significant influence on the revenues of a television station because the audience share drawn by a network's programming can affect the rates at which a station can sell advertising time. The Federal Communications Commission ("FCC") regulates certain provisions of television stations' network affiliation contracts. The television networks compete for affiliations with licensed television stations through program commitments and local marketing support. From time to time, local television stations also solicit network affiliations on the basis of their ability to provide a network better access to a particular market. Generally, rates for national and local spot advertising sold by the Company are determined by each station, which receives all of the revenues, net of agency commissions, for that advertising. Rates are influenced both by the demand for advertising time and the popularity of the station's programming. Most advertising during network programs is sold by the networks, which pay their affiliated stations negotiated fees for broadcasting such programs and advertising. The Company's television broadcast properties compete for advertising revenues directly with other media such as newspapers (including those owned and operated by the Company), billboard advertising, magazines, direct mail advertising, radio stations, other television stations, cable television systems, and indirectly, with motion picture theaters and other news and entertainment media. The success of broadcast operations depends on a number of factors, including the general strength of the national and local economy, the ability to provide attractive programming, audience ratings, relative cost efficiency in reaching audiences as compared to other advertising media, technical capabilities and governmental regulations and policies. The three major national television networks are represented in each television market in which the Company has a television broadcast station. Fox-affiliated stations also compete in each of Belo's markets for advertising sales and local viewers. Competition for advertising sales and local viewers within each market is intense, particularly among the network-affiliated commercial VHF television stations. See the table on page two of this document for information regarding the number of competing stations in each of the Company's television broadcast markets. REGULATION OF TELEVISION BROADCASTING The Company's television broadcasting operations are subject to the jurisdiction of the FCC under the Communications Act of 1934, as amended (the "Act"). Among other things, the Act empowers the FCC to assign frequency bands; determine stations' frequencies, location and power; issue, renew, revoke and modify station licenses; regulate equipment used by stations; impose penalties for violation of the Act or of FCC regulations; impose fees for processing applications and other administrative functions; and adopt regulations to carry out the Act's provisions. The Act also prohibits the assignment of a broadcast license or the transfer of control of a broadcast licensee without prior FCC approval. Under the Act, the FCC also regulates certain aspects of the operation of cable television systems and other electronic media that compete with broadcast stations. The Act would prohibit the Company's subsidiaries from continuing as broadcast licensees if record ownership or power to vote more than one-fourth of the Company's stock were to be held by aliens or foreign governments or their representatives, or if an officer or more than one-fourth of the Company's directors were aliens. Under the Act, television broadcast licenses may be granted for maximum periods of five years and are renewable upon proper application for additional five-year terms. Renewal applications are granted without hearing if there are no competing applications or issues raised by petitioners to deny such applications that would cause the FCC to order a hearing. A full comparative hearing is required if competing applications are filed. A federal court of appeals has affirmed an FCC decision that recognizes an incumbent licensee's "renewal expectancy" based on 3 6 substantial service to its community. The precise parameters of licensees' renewal expectancies in comparative proceedings are ambiguous at the present time. This ambiguity may lead to new FCC rules or policies as the result of pending FCC rulemaking proceedings, or Congressional legislation reforming the comparative renewal process. An application for renewal of the broadcast license for WFAA-TV is pending before the FCC. The station's license is by statute continued pending action thereon. The current license expiration dates for each of the Company's television broadcast stations are set forth in the table under "Business-Television Broadcasting." FCC rules limit the total number of television broadcast stations that may be under common ownership, operation and control, or in which a single person or entity may hold office or have more than a specified interest or percentage of voting power. FCC rules also place certain limits on common ownership, operation and control of, or cognizable interests or voting power in, (a) broadcast stations serving the same area, (b) broadcast stations and daily newspapers serving the same area and (c) television broadcast stations and cable systems serving the same area. The Company's ownership of The Dallas Morning News and WFAA-TV, which are both located in the Dallas-Fort Worth area and serve the same market area, predates the adoption of the FCC's rules regarding cross-ownership, and the Company's ownership of The Dallas Morning News and WFAA-TV has been "grandfathered" by the FCC. These FCC rules affect the number, type and location of newspaper, broadcast and cable television properties that the Company might acquire in the future. For example, under current rules, the Company could not acquire any daily newspaper, broadcast or cable television properties in a market in which it now owns or has an interest deemed attributable under FCC rules in a television station, except that the FCC's rules and policies provide that waivers of their restrictions could be available to permit the Company's acquisition of radio stations in the Dallas, Houston, Seattle and Sacramento markets. Under current FCC regulations, and in light of the Company's current investments, the Company could not acquire outright any more television stations in other markets (but not including "satellite" television stations located within a parent station's grade B service contour which rebroadcast all or most of the parent station's programming) without disposing of another television station. The FCC has instituted proceedings looking toward possible relaxation of certain of these rules regulating television station ownership and changes in the standards used to determine what type of interests are considered to be attributable under it's rules. The FCC has significantly reduced its past regulation of broadcast stations, including elimination of formal ascertainment requirements and guidelines concerning amounts of certain types of programming and commercial matter that may be broadcast. There are, however, FCC rules and policies, and rules and policies of other federal agencies, that regulate matters such as network-affiliate relations, cable systems' carriage of syndicated and network television programming on distant stations, political advertising practices, obscene and indecent programming, equal employment opportunity, application procedures and other areas affecting the business or operations of broadcast stations. The FCC has modified its rules which restrict network participation in program production and syndication. The U.S. Supreme Court has refused to review a lower court decision that upheld FCC action invalidating most aspects of the Fairness Doctrine, which had required broadcasters to present contrasting views on controversial issues of public importance. The FCC may, however, continue to regulate other aspects of fairness obligations in connection with certain types of broadcasts. The FCC has adopted rules to implement the Children's Television Act of 1990, which, among other provisions, limits the permissible amount of commercial matter in children's television programs and requires each television station to present educational and informational children's programming. The FCC has adopted various regulations to implement certain provisions of the Cable Television Consumer Protection and Competition Act of 1992 ("1992 Cable Act") which, among other matters, includes provisions respecting the carriage of television stations' signals by cable television systems and requiring mid-license term review of television stations' equal employment opportunity practices. Certain provisions of the 1992 Cable Act, including the provisions respecting cable systems' carriage of local television stations, are the subject of pending judicial review proceedings. The FCC has also modified its rules to enable local telephone companies to provide a "video dialtone" service that would be similar to the ordinary telephone dialtone and would provide access for consumers to a wide variety of services, including video programming. This decision is the subject of pending judicial review proceedings. 4 7 Proposals for additional or revised regulations and requirements are pending before and are being considered by Congress and federal regulatory agencies from time to time. The FCC is at present considering revision or elimination of rules which now limit the permissible amount of primetime network programming which television stations in the top 50 markets may carry; rules relating to telephone company ownership of cable television systems; and policies with respect to high definition television. The Company cannot predict the effect of existing and proposed federal regulations and policies on its broadcast business. The foregoing does not purport to be a complete summary of all the provisions of the Act or the regulations and policies of the FCC thereunder. Also, various of the foregoing matters are now, or may become, the subject of court litigation, and the Company cannot predict the outcome of any such litigation or the impact on its broadcast business. EMPLOYEES As of December 31, 1994, the Company had 3,082 full-time employees. At such date, there were 28 full-time and 1 part-time television broadcasting employees of WFAA-TV represented by a union under a contract that expires on September 11, 1996. Furthermore, WWL-TV had 90 full-time and 1 part-time television broadcasting employees represented by unions under two separate contracts that expire on September 24, 1996 and January 8, 1997. As of February 1, 1995, KIRO-TV employed 228 employees, including 117 full-time and 13 part-time employees represented by three unions under five different agreements. Two of these agreements expired on December 31, 1994 and are currently under negotiation, two of the agreements expire on April 30, 1995 and the fifth agreement expires on May 31, 1997. ITEM 2. PROPERTIES The Company's corporate operations, several departments of The Dallas Morning News and certain broadcast administrative functions have offices that are located in downtown Dallas in a portion of a 17-story office building owned by the Company. The Company owns and operates a newspaper printing facility in Plano, Texas (the "North Plant"), in which eight high-speed offset presses are housed to print The Dallas Morning News. The remainder of The Morning News' operations are housed in a Company-owned five-story building in downtown Dallas. This facility is equipped with computerized input and photocomposition facilities and other equipment that is used in the production of both news and advertising copy. DFW Suburban Newspapers, Inc. and DFW Printing Company, Inc. operations are located at a Company-owned plant in Arlington, Texas. This facility is pledged as security for certain industrial revenue bonds issued in 1985. The studios and offices of WFAA-TV occupy Company-owned facilities in downtown Dallas. The Company also owns 50 percent of the outstanding capital stock of Hill Tower, Inc. ("Hill Tower"), owner of a 1,500-foot transmitting tower and antennas located in Cedar Hill, Texas. The remaining 50 percent of Hill Tower is owned by the CBS television affiliate in Dallas, a subsidiary of Argyle Television Holding, Inc.. This property is used by both WFAA and the CBS television affiliate. KHOU-TV operates from Company-owned facilities located in Houston. The station's transmitter is located near DeWalt, Texas and includes a 2,000-foot tower. KIRO-TV operates from Company-owned facilities located in Seattle, Washington. The station's transmitting facility, which includes a 535-foot tower, is also located in Seattle. KXTV operates from Company-owned facilities located in Sacramento, California. The station's 2,000-foot tower and transmitter system are located in Sacramento County, California. The tower and transmitter building are 5 8 owned by a joint venture between the Company and a subsidiary of River City Broadcasting, Inc., which owns and operates the ABC television affiliate in Stockton. KXTV leases the transmitter site from the joint venture. WVEC-TV operates from Company-owned facilities in Hampton and Norfolk, Virginia. The transmitting facility includes a 980-foot tower and antenna in Driver, Virginia. WVEC also leases additional building space adjacent to the Company- owned facilities that is used by the marketing and business departments. WWL-TV operates from Company-owned facilities in New Orleans, Louisiana. The transmitting facility includes a 960- foot tower in Gretna, Louisiana. WWL-TV also leases space in New Orleans, which is used as an additional broadcast studio. KOTV operates from Company-owned facilities located in Tulsa, Oklahoma. The station's transmitting system is located near Tulsa. The transmitter site and 1,839-foot tower are owned by a joint venture between the Company and Scripps Howard Inc., owner and operator of the NBC television affiliate in Tulsa. The balance of KOTV's transmitting equipment is owned by the station. All of the foregoing subsidiaries have additional leasehold interests that are used in their respective operations. The Company believes its properties are in good condition and well maintained, and that such properties are adequate for present operations. ITEM 3. LEGAL PROCEEDINGS There are legal proceedings pending against the Company, including a number of actions for alleged libel. In the opinion of management, liabilities, if any, arising from these actions are either covered by insurance or would not have a material adverse effect on the consolidated operations or financial position of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this Form 10-K. 6 9 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's authorized common equity consists of 150,000,000 shares of Common Stock, par value $1.67 per share. The Company currently has two series of Common Stock outstanding, Series A and Series B. Shares of the two series are identical in all respects except that Series B shares are entitled to ten votes per share on all matters submitted to a vote of shareholders, while the Series A shares are entitled to one vote per share; transferability of the Series B shares is limited to family members and affiliated entities of the holder; and Series B shares are convertible at any time on a one-for-one basis into Series A shares. Shares of the Company's Series A Common Stock are traded on the New York Stock Exchange (NYSE symbol: BLC). There is no established public trading market for shares of Series B Common Stock. The Company has also issued certain Preferred Stock Purchase Rights that accompany the outstanding shares of the Company's Common Stock. See Note 9 of Notes to Consolidated Financial Statements. The following table lists the high and low trading prices and the closing prices for Series A Common Stock as reported by the New York Stock Exchange for the last two years.
- ------------------------------------------------------------------------------------------- DIVIDEND HIGH LOW CLOSE PAID - ------------------------------------------------------------------------------------------- 1994 Fourth Quarter 57 1/4 47 1/2 56 1/2 .15 Third Quarter 52 1/4 43 3/8 50 3/4 .15 Second Quarter 50 3/8 43 1/8 43 1/8 .15 First Quarter 55 47 3/4 48 .15 1993 Fourth Quarter 53 44 53 .14 Third Quarter 49 5/8 45 1/4 46 3/8 .14 Second Quarter 49 39 3/4 46 3/4 .14 First Quarter 43 3/8 38 3/4 40 1/4 .14 - -------------------------------------------------------------------------------------------
On February 28, 1995, the closing price for the Company's Series A Common Stock, as reported on the New York Stock Exchange, was $56 3/8 and the approximate number of shareholders of record of the Series A Common Stock at the close of business on such date was 723. On February 28, 1995, there were approximately 559 holders of record of shares of Series B Common Stock. On February 22, 1995, the Company announced a two-for-one stock split in the form of a stock dividend whereby one additional share of Series A and Series B Common Stock will be issued for each share of Series A and Series B Common Stock outstanding on May 19, 1995, the record date for the split. The stock split will be effected on June 9, 1995. On February 22, 1995, the Board of Directors also declared a quarterly dividend increase from $.075 to $.08 per share to be paid on a post-split basis on June 9, 1995 to shareholders of record on May 19, 1995. The effect of the stock split will be to double the number of shares outstanding and reduce earnings per share and other per share amounts by one- half. Total shareholders' equity and the proportionate ownership in the Company of individual shareholders will not be affected by the stock split. All information in this report is set forth on a pre-split basis. 7 10 ITEM 6. SELECTED FINANCIAL DATA The following table presents selected financial data of the Company for each of the five years in the period ending December 31, 1994. It is intended to highlight significant trends in Belo's financial condition and results of operations. For a more complete understanding of this selected financial data, please see Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements, including the Notes thereto.
- -------------------------------------------------------------------------------------------------------------- In thousands, except per share amounts 1994 1993 1992 1991 1990 - -------------------------------------------------------------------------------------------------------------- Newspaper publishing revenues $ 369,366 $ 335,642 $ 314,701 $ 249,737 $ 246,493 Broadcasting revenues (A) 258,759 209,193 201,241 181,848 192,567 Net operating revenues $ 628,125 $ 544,835 $ 515,942 $ 431,585 $ 439,060 ------------------------------------------------------------- Net earnings (B) $ 68,867 $ 51,077 $ 37,170 $ 12,392 $ 29,591 ------------------------------------------------------------- Per share amounts: Net earnings per common and common equivalent share $ 3.41 $ 2.53 $ 1.90 $ .65 $ 1.55 Cash dividends declared $ .60 $ .56 $ .54 $ .52 $ .48 - -------------------------------------------------------------------------------------------------------------- Total assets (C) $ 913,791 $ 796,156 $ 758,527 $ 746,384 $ 694,255 Long-term debt (D) $ 330,400 $ 277,400 $ 302,151 $ 337,100 $ 280,054 - --------------------------------------------------------------------------------------------------------------
(A) Broadcasting revenues for 1994 include seven months' revenue of WWL-TV, which was purchased by Belo on June 1, 1994. (B) Net earnings for 1993 include an increase of $6,599,000 (33 cents per share) representing the cumulative effect of adopting Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," effective January 1, 1993. (C) Belo purchased substantially all of the operating assets of the Dallas Times Herald newspaper for $55,673,000 in December 1991 and in June 1994, Belo purchased substantially all of the operating assets of television station WWL-TV for approximately $110,000,000. (D) The purchase of WWL-TV in June 1994 was financed with proceeds from Belo's revolving credit agreement. 8 11 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Cash provided by operations is Belo's primary source of liquidity. During 1994, net cash provided by operations was $138,785,000, compared to $84,818,000 in 1993, a 63.6 percent increase. The increase resulted primarily from increased earnings from operations and changes in the components of working capital, primarily accounts receivable, accounts payable, accrued compensation and benefits and income taxes payable. The increase in accounts receivable is the result of higher revenues. Accounts payable were higher due primarily to larger payables for capital expenditures and timing of payments for newsprint. Accrued compensation and benefits were higher due to more employees and higher performance bonus accruals at the end of 1994. Higher income taxes payable are attributable to the earnings increase and timing of payments. Cash provided by operations was sufficient to fund capital expenditures, common stock dividends and the repurchase of 644,000 shares of treasury stock for $32,073,000. These shares were subsequently retired. On June 1, 1994, Belo acquired the assets of television station WWL-TV, the CBS affiliate in New Orleans, Louisiana, from Rampart Operating Partnership for approximately $110,000,000 in cash. The acquisition has been accounted for as a purchase. See Other Matters on page 13 for a discussion of additional borrowings of revolving debt to finance an acquisition subsequent to December 31, 1994. At December 31, 1994, Belo had access to a $600,000,000 variable rate revolving credit agreement, on which borrowings at that time were $305,000,000. The agreement expires on August 5, 1999 with an extension to August 5, 2000 at the request of the Company and consent of the participating banks. Revolving debt increased $55,000,000 from December 31, 1993 due to the net effect of the $110,000,000 in borrowings in June 1994 to finance the WWL-TV acquisition and debt repayments. From time to time, short-term unsecured notes are also used as a source of financing. Based on the Company's intent and ability to renew short-term notes through the revolving credit facility, short-term borrowings are classified as long-term. At December 31, 1994, there was $19,000,000 in short-term notes outstanding. Because substantially all of Belo's outstanding debt is currently financed under the revolving credit agreement, the Company is subject to interest rate volatility. While average revolving debt rates for 1994 were 4.8 percent, the weighted average revolving debt rate at December 31, 1994 was 6.3 percent. If this condition continues in 1995, interest expense will be higher than in 1994. During 1994, Belo had four interest rate cap agreements that were designed to limit the interest rate on $75,000,000 of its revolving debt to 6 percent. During the first quarter of 1995, Belo sold these financial instruments for $1,395,000. The Company has in place a stock repurchase program authorizing the purchase of up to $2,500,000 of Company stock annually. In addition, the Company has the authority to purchase approximately 765,000 shares of Series A Common Stock from time to time under a previous authorization from the Board of Directors. Although the Company believes its current financial condition and credit relationships will enable it to adequately fund its current obligations and near-term growth, Belo's Board of Directors has authorized the Company to file a shelf registration statement that would allow it, from time to time, to offer up to $200,000,000 of debt securities. The Company's current intentions would be to use the proceeds from any such offering to refinance existing indebtedness, to repurchase common stock under the Company's stock repurchase program and for general corporate purposes, including acquisitions. On December 31, 1994, Belo's ratio of long-term debt to total capitalization was 46.3 percent, compared to 44.5 percent at the end of 1993. The change during 1994 is due to additional borrowings to finance the acquisition of WWL-TV and the effect on shareholders' equity of the repurchase and subsequent retirement of treasury shares. Capital expenditures in 1994 were $47,371,000. Capital projects for the year included additional production equipment for The Dallas Morning News and significant building projects at two of Belo's broadcast stations. Belo expects to finance future capital expenditures using net cash generated from operations and, when necessary, 9 12 borrowings of revolving debt. Required future payments for capital expenditures in 1995 are $13,677,000 and relate primarily to additional newspaper publishing equipment and the renovation of certain newspaper publishing operating facilities. Total capital expenditures in 1995 are expected to be somewhat less than $40,000,000. Belo paid dividends of $11,984,000 or 60 cents per share on Series A and Series B Common Stock outstanding during 1994 compared to $11,128,000 or 56 cents per share in 1993. CONSOLIDATED RESULTS OF OPERATIONS Belo recorded 1994 net earnings of $68,867,000 or $3.41 per share, compared to $51,077,000 ($2.53 per share) in 1993 and $37,170,000 ($1.90 per share) in 1992. Results for 1994 include a one-time charge to net earnings of $1,567,000 (8 cents per share) from the donation of shares of Stauffer Communications, Inc. stock to The Dallas Morning News--WFAA Foundation. The transaction included a $9,271,000 gain on the write-up of the shares to fair market value, less a charge of $16,675,000 for the subsequent donation of those shares to the Foundation, and the related income tax benefit of $5,837,000. Upon consummation of an outstanding tender offer for the remaining Stauffer shares, Belo expects this transaction to increase earnings per share by approximately 8 cents in 1995, assuming the transaction occurs before June 9, 1995, the effective date of the stock split. See Market for Registrant's Common Equity and Related Stockholder Matters on page 7. Belo also reversed $631,000 of music license fee accruals (2 cents per share) during 1994 in response to a final agreement between the All Industry Television Music License Committee and Broadcast Music, Inc., which established final television music performance rights fee levels through 1994. Excluding these nonrecurring items, net earnings for 1994 were $3.47 per share. These earnings include seven months of WWL-TV results, which contributed approximately 5 cents per share to current year earnings after consideration of incremental interest and amortization. Several one-time items are included in 1993 net earnings, including a $6,599,000 increase (33 cents per share) representing the cumulative effect of adopting Statement of Financial Accounting Standards ("SFAS") No. 109 in January 1993. This increase was partially offset in the third quarter, when Belo recorded a $2,249,000 (11 cents per share) adjustment to deferred taxes following an increase in the federal income tax rate from 34 percent to 35 percent. Also included in 1993 earnings was a $5,822,000 (19 cents per share) restructuring charge related primarily to the write-off of goodwill and a reduction in the carrying value of production assets associated with the newspaper operations of Dallas-Fort Worth Suburban Newspapers, Inc., a wholly-owned subsidiary of Belo. In addition, Belo reversed certain music license fee accruals totaling $3,349,000 (10 cents per share) in 1993 in response to an agreement between the All Industry Television Music License Committee and the American Society of Composers, Authors and Publishers, defining the formula used to compute licensing fees for the use of certain music in television broadcasts from 1984 to 1994. Net earnings for 1993, excluding these special one-time items, were $2.40 per share. In 1992, net earnings included a $4,019,000 (16 cents per share) increase from a property damage settlement with the United States Navy. Excluding this one-time gain, comparable 1992 earnings were $1.74 per share. Interest expense in 1994 was $16,112,000 compared to $15,015,000 in 1993 and $24,159,000 in 1992. The decrease in interest expense from 1992 to 1993 was primarily due to lower interest rates. During 1992, Belo had $200,000,000 of fixed-rate notes outstanding, with an average rate of 9 percent while revolving rates were approximately 4 percent. In January 1993, $100,000,000 of the fixed-rate debt was converted to revolving debt, and in December of 1993, the remaining $100,000,000 was replaced with revolving debt. These transactions lowered the average rate on total debt to approximately 5.4 percent for 1993. The 1994 average rate on revolving debt was 4.8 percent. However, rate savings were offset by higher average borrowings due to the acquisition of WWL-TV in June 1994. Capitalization of interest also affected interest expense in each period, mostly in 1993 during The Dallas Morning News' North Plant expansion project. Capitalized interest for 1994, 1993 and 1992 was $138,000, $1,961,000 and $395,000, respectively. Other income and expense for 1994 includes the charge associated with the donation of Stauffer Communications, Inc. stock. Other income and expense in 1993 included a gain of $986,000 on the sale of two 10 13 parcels of non-operating real estate and in 1992, included the $4,019,000 gain on the property damage settlement with the United States Navy. The effective tax rate for 1994 of 36.2 percent includes the tax benefit associated with the Stauffer Communications, Inc. stock donation. The 1993 effective tax rate of 41.1 percent was affected by an increase in the federal income tax rate, which resulted in a $2,249,000 increase in deferred tax expense to adjust deferred taxes to the 35 percent rate. In addition, the 1993 rate was favorably impacted by the reversal of certain tax accruals as a result of new tax legislation regarding amortization of intangibles. Excluding these items, the effective tax rates for 1994 and 1993 were 38.9 percent and 39.5 percent, while the effective rate in 1992 was 39.6 percent. NEWSPAPER PUBLISHING In 1994, newspaper publishing revenues represented 58.8 percent of total revenues, compared to 61.6 percent in 1993 and 61 percent in 1992. Although publishing revenues increased 10 percent in 1994 from 1993, they have decreased as a percent of total revenues due to a disproportionate increase in broadcast revenues during 1994, partially due to the WWL-TV acquisition. The composition of publishing revenues has remained fairly consistent year to year, with advertising revenues accounting for 86 percent of revenues in 1994 and 87 percent in 1993 and 1992. Circulation revenues represent 10 percent of 1994 publishing revenue and 11 percent in 1993 and 1992. Other publishing revenues, primarily commercial printing, contributed the remainder. Newspaper advertising volume for The Dallas Morning News, Belo's principal newspaper, is measured in column inches. Volume for the last three years was as follows:
- ------------------------------------------------------------------------------------- In thousands 1994 1993 1992 - ------------------------------------------------------------------------------------- Full-run ROP inches: Classified 2,188.9 2,068.8 1,997.6 Retail 1,524.0 1,661.5 1,640.6 General 270.8 262.1 279.9 - ------------------------------------------------------------------------------------- Total 3,983.7 3,992.4 3,918.1 - -------------------------------------------------------------------------------------
Revenues from newspaper publishing for 1994 were $369,366,000, an increase of $33,724,000 or 10 percent over 1993 revenues. Classified and general advertising revenues contributed the majority of the increase in year-to-year revenue gains. As noted above, linage in these two categories increased 5.8 percent and 3.3 percent, respectively, which combined with significant rate increases, resulted in an increase in classified and general advertising revenues of $27,580,000. Strong demand for employment advertising and a good automotive market drove the improvement in classified linage. The telecommunications industry was a significant component of the general advertising year-to-year increase. Retail ROP revenues for 1994 were down slightly when compared to 1993 due to volume declines of 8.3 percent, partially offset by an increase in the average rate of 8.7 percent. The retail volume declines were primarily attributable to a shift by certain department stores to preprints, which increased 15.6 percent over 1993 preprint revenue. Circulation revenues in 1994 were up 2.1 percent from 1993 despite a slight decrease in the Sunday average circulation, due to price increases in April and July. Total publishing revenues in 1993 were $335,642,000, up 6.7 percent from revenues of $314,701,000 earned in 1992. Classified advertising revenues were nearly 11 percent better than 1992 due to both linage and rate increases. The increase in linage was primarily attributable to automotive and employment advertising. Retail and general advertising revenues also improved in 1993 relative to 1992, primarily due to increased rates. Circulation revenues increased 5.9 percent in 1993, mostly because of a January 1, 1993 increase in the price of a Sunday single-copy and the weekend subscription rate. The Company believes that its advertising rates continue to compare favorably with competing media. Future demand for advertising in the Dallas-Fort Worth area will continue to depend on general economic conditions of the Southwest region and the United States as a whole. Thus, the ability of the Company to generate continued growth in circulation and advertising revenues will likely depend on its ability to compete successfully in the highly 11 14 competitive Dallas-Fort Worth media market, where numerous news and advertising alternatives are available. In addition, various market and demographic factors, such as circulation and readership trends, retail sales activity, inflation and population growth will affect future revenues. Newspaper publishing earnings from operations in 1994 were $66,568,000 compared to $44,293,000 in 1993. Operating results in 1993 included a $5,822,000 restructuring charge related to Belo's suburban newspaper operations. Excluding this one-time charge, comparable 1993 operating earnings were $50,115,000. The 32.8 percent increase in 1994 from adjusted 1993 operating earnings is due to the 10 percent increase in 1994 revenues, partially offset by a 6 percent increase in operating expenses, resulting in an operating margin of 18 percent compared to an adjusted margin of 14.9 percent in 1993. Salaries, wages and employee benefits increased in 1994 due to a larger employment base, merit increases, higher performance-based bonuses and an increase in related benefit costs. Other production, distribution and operating costs were also higher due to increased distribution and outside solicitation expenses associated with circulation efforts and higher advertising and promotion expense. Rack conversion costs to accommodate single copy price increases also contributed to higher 1994 expense. Depreciation expense was up as well, due to a full year's depreciation of The Dallas Morning News' North Plant expansion project that was completed in late 1993. Newsprint expense, which currently represents approximately 29 percent of total newspaper publishing operating costs, was only slightly higher in 1994 than in 1993. The increase was primarily due to slightly higher consumption offset by lower average prices. However, recent and proposed newsprint price increases could cause newsprint expense at The Dallas Morning News to increase by as much as 40 percent over 1994. The Company plans to offset this increase by limiting 1995 spending increases in all other operating expense categories, maintaining 1994 employee-count levels and raising advertising rates. Newspaper publishing earnings from operations in 1993 (excluding the $5,822,000 restructuring charge) increased 16.6 percent from 1992. Although total publishing revenues increased 6.7 percent, operating expenses (excluding the charge) increased only 5.1 percent, resulting in an operating margin of 14.9 percent versus 13.7 percent in 1992. Salaries, wages and employee benefits rose primarily as a result of merit increases and more full-time employees. Newsprint expense was up due to both increased consumption associated with the linage increase and a higher average cost per ton. Contributing to the increase in linage was the publishing of special sports sections in connection with the Dallas Cowboys' appearance in the Super Bowl. The higher consumption accounted for approximately 60 percent of the overall increase in newsprint expense. In addition, expansion of delivery routes resulted in increased distribution expenses. Depreciation expense was higher in 1993 than in 1992 following the completion of The Dallas Morning News' North Plant expansion project. Partially offsetting these increases were savings in outside services, bad debt expense and property taxes. BROADCASTING Belo's television broadcast subsidiaries contributed 41.2 percent of total 1994 revenues compared to 38.4 percent in 1993 and 39 percent in 1992. Broadcast revenues for 1994, which include seven months' revenue for WWL-TV, were $258,759,000. These results represent an increase of 23.7 percent over 1993 revenues of $209,193,000. In 1993, revenues improved 4 percent from the $201,241,000 of the previous year. Each station contributed to the increase in 1994 revenues with improvement in every revenue category. The greatest improvements were in local and political advertising. Local advertising revenues, which improved 25 percent overall, were up most significantly in Dallas, Houston and Tulsa while the New Orleans station contributed more than 10 percent of total 1994 local revenues. Advertising for automobiles was a significant factor in each of Belo's local market gains. National revenues benefited from the broadcast of the 1994 Winter Olympics on Belo's CBS-affiliated stations, but were offset somewhat by losses associated with the baseball strike and the move of NFL Football from CBS to the Fox network. Political revenues were up considerably in 1994 due to active gubernatorial and senate races in several states. The recent and dramatic changes in the structure of the network television industry in 1994 led to the renegotiation of several of Belo's network affiliation agreements, resulting in a significant increase in 1994 network compensation, beginning in the third quarter. Belo anticipates 1995 network compensation will exceed 1994 network compensation levels as well. This increase, however, is expected to be offset by the anticipated decline in political advertising. 12 15 Local and national advertising revenues in 1993 increased 6.2 percent and 6.6 percent, respectively, compared to 1992 revenues. Stations in Houston, Virginia and Tulsa combined for an overall revenue gain of $9,266,000 while Dallas station revenues were relatively flat and the California station experienced a slight revenue decline. In 1993, all but one of Belo's broadcast stations experienced an increase in local advertising revenues. National advertising revenues increased at all but another of Belo's stations. Contributing factors to the 1993 improvements include strong ratings performances and healthier local economies. The industry categories contributing the most to advertising revenues were restaurants, automobiles, department stores and health care. Partially offsetting these revenue gains, however, were a significant decrease in political advertising compared to 1992, a weaker California economy and other competitive forces. Broadcast earnings from operations were $80,445,000 in 1994 compared to $63,240,000 in 1993. Included in 1994 earnings are WWL-TV operations since June 1, 1994. Also included in broadcast earnings in 1994 and 1993 are increases to earnings of $631,000 and $3,349,000, respectively, for the reversal of certain music license fee accruals from previous years. Excluding the music license fee adjustments, operating earnings for 1994 and 1993 were $79,814,000 and $59,891,000, respectively. Revenue improvements were partially offset by higher operating costs. Salaries, wages and employee benefits were higher in 1994 due to increases in sales commissions, more employees, merit increases, higher profit performance bonuses and an increase in benefit costs. Other production, distribution and operating costs were higher in 1994 than in 1993 (excluding the music license fee adjustments) due primarily to an increase in programming expenses from increased contract rates for several syndicated program packages and costs to produce a new local morning show and weekly news show in Dallas. Advertising and promotion costs, as well as repair and maintenance expenses, were also higher in 1994. These increases were slightly offset by lower bad debt and outside services expense. Depreciation and amortization expense increased as a result of the purchase of WWL-TV assets. Broadcast earnings from operations for 1993, excluding the music license fee adjustment, were $59,891,000 compared to $56,461,000 in 1992, an increase of 6.1 percent. Although revenues increased 4 percent, operating costs increased only 3.3 percent, excluding the music license fee adjustment. Contributing to the increase in 1993 expenses were higher salaries, wages and employee benefits, due to merit increases, higher benefit costs and an increase in the number of broadcast employees. Communications and travel expenses were higher in 1993 than in 1992 due to coverage of significant news stories, including the Dallas Cowboys' appearance in the 1993 Super Bowl, the Presidential Inauguration, and the Branch Davidian story in Waco, Texas. These increases were partially offset by savings in 1993 programming expense. In recent years, the television broadcasting industry has been affected by increased competition for viewing audiences. Belo continues to compete aggressively for advertisers and viewing audiences in markets that offer many alternative media outlets. Future earnings growth will likely depend on the ability to offer competitive audience delivery to advertisers and on general economic conditions. OTHER MATTERS On February 1, 1995, Belo completed the acquisition of certain assets of television station KIRO-TV in Seattle, Washington for a purchase price of $162,500,000, excluding final adjustments. Belo borrowed funds from its revolving credit agreement to complete the transaction, which will be accounted for as a purchase. Although a complete purchase price allocation will not be finalized until later in 1995, it is estimated that the majority of the purchase price will be allocated to property, plant and equipment and intangible assets. The Company intends to operate the television station as a United Paramount affiliate, with an emphasis on local news programming. Management expects the acquisition to be dilutive in 1995. The net effect of inflation on Belo's revenues and net earnings from operations has not been material in the last few years because of a relatively low rate of inflation during this period, combined with efforts to lessen the effect of rising costs through improved productivity, cost control and, when warranted, increased prices. 13 16 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements, together with the report of independent auditors, are included on pages 23 through 40 of this document. Financial statement schedules have been omitted because the required information is contained in the Consolidated Financial Statements or related notes, or because such information is not applicable. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth under the headings "Outstanding Capital Stock and Stock Ownership of Directors, Certain Executive Officers and Principal Shareholders," "Executive Officers of the Company" and "Election of Directors" contained in the definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 3, 1995, is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information set forth under the heading "Executive Compensation and Other Matters" and "Election of Directors" contained in the definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 3, 1995, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under the heading "Outstanding Capital Stock and Stock Ownership of Directors, Certain Executive Officers and Principal Shareholders" contained in the definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 3, 1995, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under the headings "Executive Compensation and Other Matters" and "Election of Directors" contained in the definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 3, 1995, is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The financial statements listed in the Index to Financial Statements included in the Table of Contents are filed as part of this report. (2) The financial schedules required by Regulation S-X are either not applicable or are included in the information provided in the Notes to Consolidated Financial Statements, which are filed as part of this report. (3) Exhibits The exhibits to this report are hereby incorporated by reference, as specified: 14 17 EXHIBIT NUMBER DESCRIPTION 3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K dated March 19, 1992 (the "1991 Form 10-K")) 3.2 Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form 10-K")) 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated April 16, 1987 (incorporated by reference to Exhibit 3.3 to the 1991 Form 10-K) 3.4 Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.4 to the 1992 Form 10-K) 3.5 Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.5 to the 1992 Form 10-K) 3.6 Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.6 to the 1992 Form 10-K) 3.7 Bylaws of the Company, effective February 22, 1995 4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.6 above 4.2 Specimen Form of Certificate representing shares of the Company's Series A Common Stock (incorporated by reference to Exhibit 4.2 to the 1992 Form 10-K) 4.3 Specimen Form of Certificate representing shares of the Company's Series B Common Stock (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K dated March 20, 1989) 4.4 Form of Rights Agreement, dated March 10, 1986 between the Company and RepublicBank Dallas, National Association as Rights Agent, which includes as Exhibit B thereto the Form of Right Certificate (incorporated by reference to Exhibit 4.8 to the 1991 Form 10-K) 4.5 Supplement No. 1 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1991 Form 10-K) 4.6 Supplement No. 2 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1992 Form 10-K) 4.7 Supplement No. 3 to Rights Agreement (incorporated by reference to Exhibit 4.10 to the 1992 Form 10-K) 4.8 Supplement No. 4 to Rights Agreement dated December 12, 1988 substituting Manufacturers Hanover Trust Company as Rights Agent (incorporated by reference to Exhibit 4.8 to the Company's Annual Report on Form 10-K dated March 18, 1994 (the "1993 Form 10-K")) 4.9 Supplement No. 5 to Rights Agreement (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1993) 4.10 Supplement No. 6 to Rights Agreement 15 18 EXHIBIT NUMBER DESCRIPTION 10.1 Contracts relating to television broadcasting: (1) Contract for Affiliation between KOTV in Tulsa, Oklahoma and CBS, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(1) to the 1991 Form 10-K) (2) Contract for Affiliation between KHOU-TV in Houston, Texas and CBS, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(2) to the 1991 Form 10-K) (3) Letter Amendment to Contract for Affiliation between KHOU-TV in Houston, Texas and CBS (incorporated by reference to Exhibit 10.1(3) to the 1993 Form 10-K) (4) Contract for Affiliation between KXTV in Sacramento, California and CBS (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1993 (the "First Quarter 1993 Form 10-Q")) (5) Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(4) to the Company's Annual Report on Form 10-K dated March 28, 1991 (the "1990 Form 10-K")) (6) Rider One to Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC (incorporated by reference to Exhibit 10.1 to the First Quarter 1993 Form 10-Q) (7) Contract for Affiliation between WVEC-TV in Hampton-Norfolk, Virginia and ABC, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(5) to the 1991 Form 10-K) (8) Contract for Affiliation between WWL-TV in New Orleans, Louisiana, and CBS 10.2 Contracts relating to newspaper publication: (1) Founding Agreement between the Company and Newsprint South, Inc. for newsprint supply (incorporated by reference to Exhibit 10.2(2) to the 1990 Form 10-K) (2) Amendment to the Founding Agreement between the Company and Newsprint South, Inc. for newsprint supply (incorporated by reference to Exhibit 10.2(3) to the 1990 Form 10-K) 10.3 (1) Management Security Plan (incorporated by reference to Exhibit 10.4(1) to the 1991 Form 10-K) (2) Stock Option Plan (incorporated by reference to Exhibit 10.4(2) to the 1991 Form 10-K) (3) Amendment to Stock Option Plan by the Compensation Committee of the Board of Directors (incorporated by reference to Exhibit 10.4(3) to the 1991 Form 10-K) (4) Amendments to Stock Option Plan (incorporated by reference to Exhibit 10.4(4) to the 1991 Form 10-K) (5) Amendment to Stock Option Plan dated December 19, 1986 (incorporated by reference to Exhibit 10.4(5) to the 1991 Form 10-K) (6) Amendment to Stock Option Plan dated February 22, 1989 (incorporated by reference to Exhibit 10.3(6) to the 1993 Form 10-K) 16 19 EXHIBIT NUMBER DESCRIPTION (7) 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(7) to the 1991 Form 10-K) (8) Amendment No. 1 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(8) to the 1991 Form 10-K) (9) Amendment No. 2 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(9) to the 1992 Form 10-K) (10) Amendment No. 3 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(10) to the 1993 Form 10-K) (11) Amendment No. 4 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(11) to the 1993 Form 10-K) (12) Amendment No. 5 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(12) to the 1993 Form 10-K) (13) Amendment No. 6 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(13) to the 1992 Form 10-K) (14) The A. H. Belo Corporation Employee Savings and Investment Plan (15) First Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(15) to the 1992 Form 10-K) (16) Second Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(16) to the 1992 Form 10-K) (17) Third Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.2 to the First Quarter 1993 Form 10-Q) (18) Fourth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 4.14 to Post-Effective Amendment No. 1 to Form S-8 dated January 18, 1994 (Registration No. 33-30994)) (19) Fifth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(19) to the 1993 Form 10-K) (20) Sixth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1994 ("Second Quarter 1994 Form 10-Q")) (21) Seventh Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (22) Eighth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (23) The G. B. Dealey Retirement Pension Plan (as amended and restated effective January 1, 1988) (incorporated by reference to Exhibit 10.3(20) to the 1993 Form 10-K) (24) First Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(21) to the 1993 Form 10-K) 17 20 EXHIBIT NUMBER DESCRIPTION (25) Second Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(22) to the 1993 Form 10-K) (26) Third Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(23) to the 1993 Form 10-K) (27) Fourth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(24) to the 1993 Form 10-K) (28) Fifth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(25) to the 1993 Form 10-K) (29) Sixth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(2) to the Second Quarter 1994 Form 10-Q) (30) Seventh Amendment to the G. B. Dealey Retirement Pension Plan (31) Eighth Amendment to the G. B. Dealey Retirement Pension Plan (32) Master Trust Agreement, effective as of July 1, 1992, between A. H. Belo Corporation and Mellon Bank, N. A. (incorporated by reference to Exhibit 10.3(26) to the 1993 Form 10-K) (33) A. H. Belo Corporation Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.3(27) to the 1993 Form 10-K) (34) Trust Agreement dated February 28, 1994, between the Company and Mellon Bank, N. A. (incorporated by reference to Exhibit 10.3(28) to the 1993 Form 10-K) (35) Summary of A. H. Belo Corporation Executive Compensation Program (incorporated by reference to Exhibit 10.3(18) to the 1992 Form 10-K) (36) Employment and Consultation Agreement between A. H. Belo Corporation and James P. Sheehan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1993) 10.4 (1) Loan Agreement dated October 1, 1985, between City of Arlington Industrial Development Corporation and Dallas-Fort Worth Suburban Newspapers, Inc. (incorporated by reference to Exhibit 10.5(2) to the 1991 Form 10-K) (2) Letter of Credit and Reimbursement Agreement dated as of June 2, 1987, between Dallas-Fort Worth Suburban Newspapers, Inc. and The Sanwa Bank, Limited, Dallas Agency covering $6,400,000 City of Arlington Industrial Development Corporation Industrial Development Revenue Bonds (incorporated by reference to Exhibit 10.5(3) to the 1991 Form 10-K) (3) Credit Agreement dated as of August 5, 1994 among the Company and Citicorp Securities, Inc., as Syndication Agent, The First National Bank of Chicago, as Administrative Agent, Texas Commerce Bank National Association, as Documentation Agent and The Banks Listed Therein, as Lenders (incorporated by reference to Exhibit 10.4(1) to the Second Quarter 1994 Form 10-Q) (4) Amendment and Waiver Agreement dated as of August 5, 1994, by and between the Company and The Sanwa Bank, Limited, Dallas Agency 18 21 21 Subsidiaries of the Company 23 Consent of Ernst & Young LLP 27 Financial Data Schedule (filed electronically with the Securities and Exchange Commission) Executive Compensation Plans and Arrangements Management Security Plan--1991 Form 10-K, Exhibit 10.4(1) Stock Option Plan--1991 Form 10-K, Exhibit 10.4(2) Amendment to Stock Option Plan by the Compensation Committee of the Board of Directors--1991 Form 10-K, Exhibit 10.4(3) Amendments to Stock Option Plan--1991 Form 10-K, Exhibit 10.4(4) Amendment to Stock Option Plan dated December 19, 1986--1991 Form 10-K, Exhibit 10.4(5) Amendment to Stock Option Plan dated February 22, 1989--1993 Form 10-K, Exhibit 10.3(6) 1986 Long-Term Incentive Plan--1991 Form 10-K, Exhibit 10.4(7) Amendment No. 1 to 1986 Long-Term Incentive Plan --1991 Form 10-K, Exhibit 10.4(8) Amendment No. 2 to 1986 Long-Term Incentive Plan --1992 Form 10-K, Exhibit 10.3(9) Amendment No. 3 to 1986 Long-Term Incentive Plan--1993 Form 10-K, Exhibit 10.3(10) Amendment No. 4 to 1986 Long-Term Incentive Plan--1993 Form 10-K, Exhibit 10.3(11) Amendment No. 5 to 1986 Long-Term Incentive Plan--1993 Form 10-K, Exhibit 10.3(12) Amendment No. 6 to 1986 Long-Term Incentive Plan--1992 Form 10-K, Exhibit 10.3(13) The A. H. Belo Corporation Employee Savings and Investment Plan--filed herewith as Exhibit 10.3(14) First Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--1992 Form 10-K, Exhibit 10.3(15) Second Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--1992 Form 10-K, Exhibit 10.3(16) Third Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--First Quarter 1993 Form 10- Q, Exhibit 10.2 Fourth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--Post-Effective Amendment No. 1 to Form S-8 dated January 18, 1994, Exhibit 4.14 Fifth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--1993 Form 10-K, Exhibit 10.3(19) Sixth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--Second Quarter 1994 Form 10-Q, Exhibit 10.3(1) 19 22 Seventh Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--filed herewith as Exhibit 10.3(21) Eighth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan--filed herewith as Exhibit 10.3(22) The G. B. Dealey Retirement Pension Plan (as amended and restated effective January 1, 1988)--1993 Form 10-K, Exhibit 10.3(20) First Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form 10-K, Exhibit 10.3(21) Second Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form 10-K, Exhibit 10.3(22) Third Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form 10-K, Exhibit 10.3(23) Fourth Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form 10-K, Exhibit 10.3(24) Fifth Amendment to the G. B. Dealey Retirement Pension Plan--1993 Form 10-K, Exhibit 10.3(25) Sixth Amendment to the G. B. Dealey Retirement Pension Plan--Second Quarter 1994 Form 10-Q, Exhibit 10.3(2) Seventh Amendment to the G. B. Dealey Retirement Pension Plan--filed herewith as Exhibit 10.3(30) Eighth Amendment to the G. B. Dealey Retirement Pension Plan--filed herewith as Exhibit 10.3(31) A. H. Belo Corporation Supplemental Executive Retirement Plan--1993 Form 10-K, Exhibit 10.3(27) Summary of A. H. Belo Corporation Executive Compensation Program--1992 Form 10-K, Exhibit 10.3(18) Employment and Consultation Agreement between A. H. Belo Corporation and James P. Sheehan--Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1993, Exhibit 10.1 (b) Reports on Form 8-K. No reports on Form 8-K were filed during the last quarter of the period covered by this report. 20 23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. A. H. BELO CORPORATION By: /S/Robert W. Decherd Robert W. Decherd Chairman of the Board, President & Chief Executive Officer Dated: March 8, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- /S/Robert W. Decherd Chairman of the Board, President March 8, 1995 - -------------------- & Chief Executive Officer Robert W. Decherd /S/Ward L. Huey, Jr. Vice Chairman of the March 8, 1995 - -------------------- Ward L. Huey, Jr. Board and President, Broadcast Division /S/Burl Osborne Director, Publisher and March 8, 1995 - --------------- Editor, The Dallas Burl Osborne Morning News /S/John W. Bassett, Jr. Director March 8, 1995 - ----------------------- John W. Bassett, Jr. /S/Judith L. Craven, M.D., M.P.H. Director March 8, 1995 - --------------------------------- Judith L. Craven, M.D., M.P.H. /S/Joe M. Dealey Director and Former March 8, 1995 - ---------------- Chairman of the Board Joe M. Dealey /S/Dealey D. Herndon Director March 8, 1995 - -------------------- Dealey D. Herndon /S/Lester A. Levy Director March 8, 1995 - ----------------- Lester A. Levy /S/Arturo Madrid, Ph.D. Director March 8, 1995 - ----------------------- Arturo Madrid, Ph.D.
21 24
SIGNATURE TITLE DATE --------- ----- ---- /S/James M. Moroney, Jr. Director and Former March 8, 1995 - ------------------------ Chairman of the Board James M. Moroney, Jr. /S/Hugh G. Robinson Director March 8, 1995 - ------------------- Hugh G. Robinson /S/William H. Seay Director March 8, 1995 - ------------------ William H. Seay /S/William T. Solomon Director March 8, 1995 - --------------------- William T. Solomon /S/Thomas B. Walker, Jr. Director March 8, 1995 - ------------------------ Thomas B. Walker, Jr. /S/J. McDonald Williams Director March 8, 1995 - ----------------------- J. McDonald Williams /S/Michael D. Perry Senior Vice President and March 8, 1995 - ------------------- Chief Financial Officer Michael D. Perry /S/Dunia A. Shive Vice President/Controller March 8, 1995 - ----------------- Dunia A. Shive
22 25 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders A. H. Belo Corporation We have audited the accompanying consolidated balance sheets of A. H. Belo Corporation and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of A. H. Belo Corporation and subsidiaries at December 31, 1994 and 1993, and the consolidated results of their operations and cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in Note 5 to the consolidated financial statements, effective January 1, 1993, the Company changed its method of accounting for income taxes. /S/ERNST & YOUNG LLP Dallas, Texas January 26, 1995 except for Note 13, as to which the date is February 1, 1995. 23 26 CONSOLIDATED STATEMENTS OF EARNINGS A. H. BELO CORPORATION AND SUBSIDIARIES
Years ended December 31, - ------------------------------------------------------------------------------------------------------------- In thousands, except per share amounts 1994 1993 1992 - ------------------------------------------------------------------------------------------------------------- NET OPERATING REVENUES Newspaper publishing $369,366 $335,642 $314,701 Broadcasting (Note 2) 258,759 209,193 201,241 - ------------------------------------------------------------------------------------------------------------- Total net operating revenues 628,125 544,835 515,942 - ------------------------------------------------------------------------------------------------------------- OPERATING COSTS AND EXPENSES Salaries, wages and employee benefits (Note 6) 178,264 161,170 149,139 Newsprint, ink and other supplies 106,270 105,395 97,498 Other production, distribution and operating costs (Note 8) 166,187 145,310 151,640 Depreciation 32,854 25,281 23,547 Amortization 13,551 12,383 12,492 Restructuring charge (Note 3) - 5,822 - - ------------------------------------------------------------------------------------------------------------- Total operating costs and expenses 497,126 455,361 434,316 - ------------------------------------------------------------------------------------------------------------- Earnings from operations 130,999 89,474 81,626 - ------------------------------------------------------------------------------------------------------------- OTHER INCOME AND EXPENSE Interest expense (Note 4) (16,112) (15,015) (24,159) Other, net (Note 10) (6,990) 1,119 4,106 - ------------------------------------------------------------------------------------------------------------- Total other income and expense (23,102) (13,896) (20,053) - ------------------------------------------------------------------------------------------------------------- EARNINGS Earnings before income taxes and cumulative effect of change in accounting 107,897 75,578 61,573 Income taxes (Note 5) 39,030 31,100 24,403 - ------------------------------------------------------------------------------------------------------------- Earnings before cumulative effect of change in accounting 68,867 44,478 37,170 Cumulative effect of change in accounting for income taxes (Note 5) - 6,599 - - ------------------------------------------------------------------------------------------------------------- Net earnings $ 68,867 $ 51,077 $ 37,170 - ------------------------------------------------------------------------------------------------------------- EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE Earnings before cumulative effect of change in accounting $ 3.41 $ 2.20 $ 1.90 Cumulative effect of change in accounting $ - $ .33 $ - Net earnings $ 3.41 $ 2.53 $ 1.90 - ------------------------------------------------------------------------------------------------------------- Weighted average common and common equivalent shares outstanding 20,223 20,204 19,567 - -------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements. 24 27 CONSOLIDATED BALANCE SHEETS A. H. BELO CORPORATION AND SUBSIDIARIES
>ASSETS December 31, - ------------------------------------------------------------------------------------------------------------- In thousands 1994 1993 - ------------------------------------------------------------------------------------------------------------- Current assets: Cash and temporary cash investments $ 9,294 $ 8,943 Accounts receivable (net of allowance of $3,959 and $3,684 in 1994 and 1993, respectively) 99,825 80,023 Inventories 9,439 11,734 Deferred income taxes (Note 5) 7,641 6,053 Other current assets 4,138 10,632 - ------------------------------------------------------------------------------------------------------------- Total current assets 130,337 117,385 - ------------------------------------------------------------------------------------------------------------- Property, plant and equipment, at cost: Land 19,803 15,065 Buildings 126,632 116,466 Newspaper publishing equipment 188,006 183,211 Broadcast equipment 118,816 93,276 Other 40,369 35,610 Advance payments on plant and equipment expenditures (Note 8) 28,352 8,679 Total property, plant and equipment 521,978 452,307 Less accumulated depreciation 209,824 182,295 - ------------------------------------------------------------------------------------------------------------- Property, plant and equipment, net 312,154 270,012 - ------------------------------------------------------------------------------------------------------------- Intangible assets, net: Excess cost over values assigned to tangible assets of purchased subsidiaries (Note 2) 403,268 333,880 Other intangibles 18,949 20,221 - ------------------------------------------------------------------------------------------------------------- Total intangible assets, net 422,217 354,101 - ------------------------------------------------------------------------------------------------------------- Other assets, at cost (Note 6) 49,083 54,658 - ------------------------------------------------------------------------------------------------------------- Total assets $913,791 $796,156 - -------------------------------------------------------------------------------------------------------------
25 28 CONSOLIDATED BALANCE SHEETS (CONTINUED) A. H. BELO CORPORATION AND SUBSIDIARIES
LIABILITIES AND SHAREHOLDERS' EQUITY December 31, - -------------------------------------------------------------------------------------------------------------- In thousands, except share data 1994 1993 - -------------------------------------------------------------------------------------------------------------- Current liabilities: Accounts payable $ 27,308 $ 16,555 Accrued compensation and benefits 26,170 20,092 Other accrued expenses 9,112 12,895 Accrued interest payable 3,138 2,219 Advance subscription payments 7,935 6,913 Income taxes payable (Note 5) 10,074 1,057 - -------------------------------------------------------------------------------------------------------------- Total current liabilities 83,737 59,731 - -------------------------------------------------------------------------------------------------------------- Long-term debt (Note 4) 330,400 277,400 Deferred income taxes (Note 5) 110,324 107,308 Other liabilities (Note 6) 6,795 5,618 Commitments and contingent liabilities (Note 8) Shareholders' equity (Notes 7 and 9): Preferred stock, $1.00 par value. Authorized 5,000,000 shares; none issued. Common stock, $1.67 par value. Authorized 150,000,000 shares; Series A: Issued 14,238,888 and 14,467,182 shares at December 31, 1994 and 1993, respectively; 23,779 24,161 Series B: Issued 5,621,988 and 5,743,099 shares at December 31, 1994 and 1993, respectively. 9,389 9,591 Additional paid-in capital 124,431 116,451 Retained earnings 230,959 201,246 - -------------------------------------------------------------------------------------------------------------- Total 388,558 351,449 Less deferred compensation - restricted shares 6,023 5,350 - -------------------------------------------------------------------------------------------------------------- Total shareholders' equity 382,535 346,099 - -------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $913,791 $796,156 - --------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements. 26 29 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY A. H. BELO CORPORATION AND SUBSIDIARIES
In thousands, except share and per share amounts Three years ended December 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCK TREASURY STOCK Deferred Additional Compensation- Shares Shares Paid-in Retained Shares Restricted Series A Series B Amount Capital Earnings Series A Amount Shares Total - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT JAN. 1, 1992 12,175,609 6,667,625 $31,468 $70,626 $134,508 - $ - $(6,545) $230,057 Exercise of stock options 513,696 183,698 1,165 16,100 17,265 Restricted shares awarded 50,830 85 2,871 (2,956) - Amortization of restricted shares 2,723 2,723 Tax benefit from long-term incentive plan 4,408 4,408 Net earnings 37,170 37,170 Cash dividends declared ($.54 per share) (10,381) (10,381) Conversion of Series B to Series A 693,834 (693,834) - - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT DEC. 31, 1992 13,433,969 6,157,489 $32,718 $ 94,005 $161,297 - $ - $(6,778) $281,242 Exercise of stock options 505,295 87,326 990 16,252 17,242 Restricted shares awarded 37,192 62 2,576 (2,638) - Amortization of restricted shares 3,781 3,781 Forfeiture of restricted shares(10,990) (18) (450) 285 (183) Tax benefit from long-term incentive plan 4,068 4,068 Net earnings 51,077 51,077 Cash dividends declared ($.56 per share) (11,128) (11,128) Conversion of Series B to Series A 501,716 (501,716) - - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT DEC. 31, 1993 14,467,182 5,743,099 $33,752 $116,451 $201,246 - $ - $(5,350) $346,099 Exercise of stock options 234,545 12,500 412 7,240 7,652 Restricted shares awarded 48,360 81 2,764 (2,845) - Amortization of restricted shares 2,166 2,166 Forfeiture of restricted shares (810) (1) (25) 6 (20) Tax benefit from long-term incentive plan 1,828 1,828 Purchase of treasury stock (644,000) (32,073) (32,073) Retirement of treasury stock (644,000) (1,076) (3,827) (27,170) 644,000 32,073 - Net earnings 68,867 68,867 Cash dividends declared ($.60 per share) (11,984) (11,984) Conversion of Series B to Series A 133,611 (133,611) - - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT DEC. 31, 1994 14,238,888 5,621,988 $33,168 $124,431 $230,959 - $ - $(6,023) $382,535 - ------------------------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements. 27 30 CONSOLIDATED STATEMENTS OF CASH FLOWS A. H. BELO CORPORATION AND SUBSIDIARIES
CASH PROVIDED (USED) Years ended December 31, - -------------------------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 - -------------------------------------------------------------------------------------------------------------- OPERATIONS Net earnings $ 68,867 $ 51,077 $ 37,170 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation and amortization 46,405 37,664 36,039 Deferred income taxes 1,428 10,969 6,511 Non-cash adjustments and allowances 1,842 209 1,617 Cumulative effect of change in accounting (Note 5) - (6,599) - Restructuring charge (Note 3) - 5,822 - Other, net 1,549 1,262 2,492 Net change in current assets and liabilities: Accounts receivable (20,067) (5,211) (3,021) Inventories and other current assets 8,234 (6,685) (1,335) Accounts payable 10,187 (1,338) 2,318 Accrued compensation and benefits 14,666 2,466 4,424 Other accrued liabilities (11,927) (5,518) 279 Accrued interest payable 919 (3,662) (2,938) Income taxes payable 16,682 4,362 (5,220) - -------------------------------------------------------------------------------------------------------------- Net cash provided by operations 138,785 84,818 78,336 - -------------------------------------------------------------------------------------------------------------- INVESTMENTS Capital expenditures (47,371) (62,130) (27,145) Acquisition of WWL-TV assets (Note 2) (110,058) - - Acquisition of other assets - - (22,624) Asset dispositions 2,400 2,458 848 - -------------------------------------------------------------------------------------------------------------- Net cash used for investments (155,029) (59,672) (48,921) - -------------------------------------------------------------------------------------------------------------- FINANCING Borrowings for acquisition 110,000 - - Net proceeds from (payments on) debt (57,000) 175,000 (35,000) Repayment of long-term notes - (200,000) - Payments of dividends on stock (11,984) (11,128) (10,381) Net proceeds from exercise of stock options 7,652 17,242 17,265 Payments to repurchase stock (32,073) - - - -------------------------------------------------------------------------------------------------------------- Net cash provided by (used for) financing 16,595 (18,886) (28,116) - -------------------------------------------------------------------------------------------------------------- Net increase in cash and temporary cash investments 351 6,260 1,299 - -------------------------------------------------------------------------------------------------------------- Cash and temporary cash investments at beginning of year 8,943 2,683 1,384 Cash and temporary cash investments at end of year $ 9,294 $ 8,943 $ 2,683 - -------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES (Note 11) - --------------------------------------------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements. 28 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. Belo Corporation and Subsidiaries NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A) Principles of Consolidation The consolidated financial statements include the accounts of A. H. Belo Corporation (the "Company" or "Belo") and its wholly-owned subsidiaries after the elimination of all significant intercompany accounts and transactions. Certain amounts for the prior years have been reclassified to conform to the current year presentation. B) Statements of Cash Flows For the purpose of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a remaining maturity of three months or less to be temporary cash investments. Such temporary cash investments are classified as available for sale and carried at fair value. C) Accounts Receivable Accounts receivable are net of a valuation reserve that represents an estimation of amounts considered uncollectible. Expense for such uncollectible amounts, which is included in other production, distribution and operating costs, was $4,506,000, $4,617,000 and $3,758,000 in 1994, 1993 and 1992, respectively. Accounts written off during these years were $4,231,000, $4,408,000 and $7,235,000, respectively. D) Inventories Inventories, consisting primarily of newsprint, ink and other supplies used in printing newspapers, are stated at the lower of average cost or market value. E) Property, Plant and Equipment Depreciation of property, plant and equipment is provided principally on a straight-line basis over the estimated useful lives of the assets as follows:
---------------------------------------------------------------------------- ESTIMATED USEFUL LIVES ---------------------------------------------------------------------------- Buildings and improvements 5-20 years Newspaper publishing equipment 5-20 years Broadcast equipment 7-15 years Other 3-10 years ----------------------------------------------------------------------------
F) Intangible Assets, Net Amortization of excess cost over values assigned to tangible assets of purchased subsidiaries is recorded on a straight-line basis over 40 years. The carrying value of intangible assets is periodically reviewed to determine whether impairment exists. In 1993, the Company determined that excess cost associated with its suburban newspaper operations was not recoverable (see Note 3). Also included in intangible assets, net is an intangible asset acquired in 1991 that is being amortized on a straight-line basis over its estimated useful life of 18 years. Accumulated amortization of intangible assets was $126,326,000 and $112,775,000 at December 31, 1994 and 1993, respectively. G) Earnings Per Common and Common Equivalent Share Earnings per common and common equivalent share are based on the weighted average number of shares outstanding during the period, including common equivalent shares representing dilutive stock options. 29 32 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. Belo Corporation and Subsidiaries NOTE 2: ACQUISITION On June 1, 1994, Belo acquired the assets of television station WWL-TV, the CBS affiliate in New Orleans, Louisiana, from Rampart Operating Partnership for approximately $110,000,000 in cash. The acquisition has been accounted for as a purchase. The cost of the acquisition has been allocated on the basis of the estimated fair market value of the assets acquired. This allocation resulted in excess cost over values assigned to tangible assets of purchased subsidiaries of $81,673,000, which is being amortized on a straight-line basis over 40 years. The pro forma financial results of operations below assumes the transaction was financed with the revolving credit facility, and include certain other purchase price adjustments regarding depreciation, amortization and taxes. The pro forma financial results further assume the transaction was completed at the beginning of each of the years ended December 31, 1994 and 1993:
- ----------------------------------------------------------------------------------------------- In thousands, except per share amounts 1994 1993 - ----------------------------------------------------------------------------------------------- Net operating revenues $ 641,407 $ 573,882 Net earnings before cumulative effect of change in accounting $ 69,208 $ 44,204 Net earnings $ 69,208 $ 50,803 Net earnings per common and common equivalent share before cumulative effect of change in accounting $ 3.42 $ 2.19 Net earnings per common and common equivalent share $ 3.42 $ 2.52 - -----------------------------------------------------------------------------------------------
The pro forma financial information is provided for informational purposes only and is not necessarily representative of the operating results that would have occurred had the acquisition been completed as of the indicated dates, nor are they indicative of future operating results. NOTE 3: RESTRUCTURING CHARGE The Consolidated Statement of Earnings for 1993 includes a $5,822,000 charge related to Dallas-Fort Worth Suburban Newspapers, Inc. ("DFWSN"), that consists primarily of the write-off of goodwill and a reduction in the carrying value of production assets to their fair value. The production assets adjusted include building and improvements and publishing equipment. The charge was recognized in conjunction with the decision to restructure DFWSN upon the determination that the carrying value of these assets was not recoverable. Fair value of production assets was determined principally by market value. The restructuring was substantially completed in January 1994. NOTE 4: LONG-TERM DEBT Long-term debt consists of the following:
- -------------------------------------------------------------------------------------------------- In thousands 1994 1993 - -------------------------------------------------------------------------------------------------- Revolving credit agreement $305,000 $250,000 Short-term unsecured notes classified as long-term debt 19,000 21,000 Industrial Revenue Bonds 6,400 6,400 - -------------------------------------------------------------------------------------------------- Total $330,400 $277,400 - --------------------------------------------------------------------------------------------------
30 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES At the end of 1994, the Company had a revolving credit facility for $600,000,000. Borrowings of revolving debt were $305,000,000 and $250,000,000 at December 31, 1994 and 1993, respectively. Loans under the revolving credit agreement bear interest at a rate based, at the option of the Company, on the bank's alternate base rate, LIBOR or competitive bid. The rate obtained through competitive bid is either a Eurodollar rate or a rate agreed to by the Company and the bank. Average interest rates were 4.8 percent and 3.7 percent during 1994 and 1993, respectively. At December 31, 1994, the weighted average borrowing rate was 6.3 percent. The agreement also provides for a facility fee of 1/8 of one percent on the total commitment. The agreement expires on August 5, 1999, with an extension to August 5, 2000, at the request of the Company and consent of the participating banks. The revolving credit agreement contains certain covenants, including the maintenance of cash flow in relation to both the Company's leverage and its fixed charges and a limitation on repurchases of the Company's stock. The Company is in compliance with these covenants at December 31, 1994. During 1994, the Company used various short-term unsecured notes as an additional source of financing. For the years ended December 31, 1994 and 1993, the average interest rate on this debt was 4.8 percent and 3.7 percent, respectively. Due to the Company's intent to renew the short-term notes and its continued ability to refinance this debt on a long-term basis through its revolving credit agreement, $19,000,000 and $21,000,000 of short-term notes outstanding at December 31, 1994 and 1993, respectively, have been classified as long-term. During 1993, Belo entered into interest-rate cap agreements to reduce the effect of increases in interest rates on its revolving debt. At December 31, 1994, the Company had four interest-rate cap agreements outstanding. These agreements entitled the Company to receive the amount, if any, by which three-month LIBOR on $75,000,000 of borrowings exceeded 6 percent. No such payments were received during 1994 or 1993. The fair value of these cap agreements was approximately $1,400,000 at December 31, 1994, based on the subsequent selling price of the caps. In 1994, 1993 and 1992, the Company incurred interest costs of $16,250,000, $16,976,000 and $24,554,000, respectively, of which $138,000, $1,961,000 and $395,000, respectively, were capitalized as components of construction cost. At December 31, 1994, the Company had outstanding letters of credit of $8,032,000 issued in the ordinary course of business. Because substantially all of the Company's debt is due under the variable rate revolving credit agreement, no significant differences exist between the carrying value and fair value. NOTE 5: INCOME TAXES - -------------------------------------------------------------------------------- Effective January 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" changing to the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. As permitted by SFAS No. 109, prior years' financial statements were not restated to reflect the change. The cumulative effect of adopting SFAS No. 109 as of January 1, 1993 increased 1993 net earnings by $6,599,000 or 33 cents per share. In August 1993, subsequent to the adoption of SFAS No. 109, the federal income tax rate was increased from 34 percent to 35 percent, retroactive to January 1, 1993. The Company's deferred taxes were adjusted to reflect the new tax rate, resulting in an increase in deferred tax expense of $2,249,000. Deferred tax expense in 1993 also reflects a decrease of $1,000,000 for the reversal of certain tax accruals as a result of new tax legislation regarding the amortization of intangibles. 31 34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES Income tax expense for the years ended December 31, 1994, 1993 and 1992 consists of the following:
--------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 --------------------------------------------------------------------------------------------- Current Federal $32,548 $17,385 $15,585 State 5,054 2,746 2,307 --------------------------------------------------------------------------------------------- Total current 37,602 20,131 17,892 Deferred 1,428 10,969 6,511 --------------------------------------------------------------------------------------------- Total $39,030 $31,100 $24,403 --------------------------------------------------------------------------------------------- Effective tax rate 36.2% 41.1% 39.6% ---------------------------------------------------------------------------------------------
Income tax provisions for the years ended December 31, 1994, 1993 and 1992 differ from amounts computed by applying the applicable U.S. federal income tax rate as follows:
--------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 --------------------------------------------------------------------------------------------- Computed expected income tax expense $37,764 $26,452 $20,935 Amortization of excess cost 2,235 2,235 2,235 State income taxes 3,494 2,601 2,001 Stock donation (Note 10) (3,245) - - Effect of 1% rate increase on deferred taxes - 2,249 - Reduction for change in law regarding amortization of acquired intangible asset - (1,000) - Other (1,218) (1,437) (768) --------------------------------------------------------------------------------------------- $39,030 $31,100 $24,403 ---------------------------------------------------------------------------------------------
Significant components of the Company's deferred tax liabilities and assets as of December 31, 1994 and 1993, are as follows:
----------------------------------------------------------------------------------------- In thousands 1994 1993 ----------------------------------------------------------------------------------------- Deferred tax liabilities: Excess tax depreciation and amortization $103,621 $102,392 Deferred gain on sale of assets 4,751 5,425 Loss on investment 7,730 4,080 Expenses deductible for tax purposes in a year different from the year accrued 5,053 4,610 Other 464 654 ----------------------------------------------------------------------------------------- Total deferred tax liabilities $121,619 $117,161 ----------------------------------------------------------------------------------------- Deferred tax assets: State taxes $ 4,541 $ 4,448 Deferred compensation 4,490 3,048 Expenses deductible for tax purposes in a year different from the year accrued 5,887 4,950 Other 4,018 3,460 ----------------------------------------------------------------------------------------- Total deferred tax assets $ 18,936 $ 15,906 ----------------------------------------------------------------------------------------- Net deferred tax liability $102,683 $101,255 -----------------------------------------------------------------------------------------
32 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES The sources of deferred income taxes and the tax effect of each prior to the adoption of SFAS No. 109 are as follows:
- ------------------------------------------------------------------------------------------------------ In thousands 1992 - ------------------------------------------------------------------------------------------------------ Excess tax depreciation and amortization $3,220 Interest expense 337 Alternative Minimum Tax 3,965 Other expenses deductible for tax purposes in a year different from the year accrued (3,034) Other, net 2,023 - ------------------------------------------------------------------------------------------------------ $6,511 - ------------------------------------------------------------------------------------------------------
NOTE 6: EMPLOYEE RETIREMENT PLANS - -------------------------------------------------------------------------------- The Company sponsors a noncontributory defined benefit pension plan covering substantially all employees. The benefits are based on years of service and the average of the employee's five years of highest annual compensation earned during the most recently completed ten years of employment. The funding policy is to contribute annually to the plan an amount at least equal to the minimum required contribution for a qualified retirement plan, but not in excess of the maximum tax deductible contribution. The following table sets forth the plan's funded status and prepaid pension costs (included in other assets on the Consolidated Balance Sheets) at December 31, 1994 and 1993:
- ----------------------------------------------------------------------------------------------------- In thousands 1994 1993 - ----------------------------------------------------------------------------------------------------- Actuarial present value of benefit obligation: Vested benefit obligation $(64,476) $(65,824) Accumulated benefit obligation $(66,378) $(66,225) Projected benefit obligation for service rendered to date $(86,462) $(83,236) Plan assets at fair value, invested primarily in equity securities 75,709 74,754 - ------------------------------------------------------------------------------------------------------- Plan assets less than projected benefit obligation (10,753) (8,482) Unrecognized net loss 30,285 25,031 Unrecognized net transition asset being recognized over 12.3 years (4,069) (5,302) Unrecognized prior service cost (2,241) 915 - ------------------------------------------------------------------------------------------------------ Prepaid pension cost $ 13,222 $ 12,162 - ------------------------------------------------------------------------------------------------------
33 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES The net periodic pension cost (benefit) for the years ended December 31, 1994, 1993 and 1992 includes the following components:
- ----------------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 - ----------------------------------------------------------------------------------------------------- Service cost - benefits earned during the period $3,666 $ 2,284 $ 1,858 Interest cost on projected benefit obligation 6,461 5,782 5,109 Actual return on plan assets (604) (9,294) (3,447) Net amortization and deferral (6,563) 1,784 (4,563) - ----------------------------------------------------------------------------------------------------- Net periodic pension cost (benefit) $2,960 $ 556 $(1,043) - -----------------------------------------------------------------------------------------------------
Assumptions used in the accounting for the defined benefit plan are as follows:
- ----------------------------------------------------------------------------------------------------- 1994 1993 1992 - ----------------------------------------------------------------------------------------------------- Discount rate in determining benefit obligation 8.50% 7.50% 9.00% Discount rate in determining net periodic pension cost (benefit) 7.50% 9.00% 9.00% Expected long-term rate of return on assets 10.25% 10.25% 11.00% Rate of increase in future compensation 6.00% 5.00% 5.00% - -----------------------------------------------------------------------------------------------------
The Company sponsors a defined contribution plan that covers substantially all of its employees. Subject to certain dollar limits, employees may contribute a percentage of their salaries to this plan, and the Company will match a portion of the employee's contributions. The Company's contributions totaled $2,568,000, $1,825,000 and $1,074,000 in 1994, 1993 and 1992, respectively. Contributions have increased in recent years due to a mid-1993 change in the Company's matching percentage from 35 to 50 percent. The Company also sponsors non-qualified retirement and death benefit plans for key employees. Expense for the plans recognized in 1994, 1993 and 1992 was $1,232,000, $1,412,000 and $908,000, respectively. NOTE 7: LONG-TERM INCENTIVE PLAN The Company's current long-term incentive plan has been in place since 1986. There are, however, stock options awarded under a prior plan, which will remain outstanding until they are exercised, canceled or expire. The following table presents the status of the stock options awarded under the prior plan. At December 31, 1994, all of these options were exercisable.
PRIOR STOCK OPTION PLAN - -------------------------------------------------------------------------------------------------------- SHARES SHARES OPTION PRICE SERIES A SERIES B PER SHARE - -------------------------------------------------------------------------------------------------------- Options outstanding at January 1, 1992 204,689 170,959 $ 9-26 Exercised (181,899) (117,819) 9-26 - -------------------------------------------------------------------------------------------------------- Options outstanding at December 31, 1992 22,790 53,140 $20-26 Exercised (20,925) (50,195) 20-26 - -------------------------------------------------------------------------------------------------------- Options outstanding at December 31, 1993 1,865 2,945 $22-26 Exercised (1,265) (1,895) 22-26 - -------------------------------------------------------------------------------------------------------- Options outstanding at December 31, 1994 600 1,050 $ 26 - --------------------------------------------------------------------------------------------------------
34 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES Awards under the 1986 long-term incentive plan may be granted to employees in the form of incentive stock options, non- qualified stock options, restricted shares or performance units, the values of which are based on the long-term performance of the Company. In addition, options may be accompanied by stock appreciation rights and limited stock appreciation rights. Rights and limited rights may also be issued without accompanying options. The plan was amended in 1988 to provide for a one-time grant of non-qualified options to purchase 2,500 shares of Series A Common Stock to non-employee directors and to eliminate the previous limit on the number of restricted shares that may be issued. The plan was also amended in 1992 to provide for automatic annual grants through 1997 of non-qualified options to non-employee directors serving after the 1992 Annual Meeting of Shareholders and an additional one-time grant of options to purchase 10,000 shares of Series A Common Stock to those directors subsequently elected. The amendment also increased the number of shares for which awards could be made under the plan. The maximum aggregate number of shares of common stock that may be granted in relation to options, restricted shares and rights, and limited rights issued without accompanying options is 3,600,000, less the number of performance units granted under the plan. The maximum number of performance units that may be granted under the plan is 3,600,000, less the number of options, restricted shares and rights, and limited rights issued without accompanying options granted. Grants made under the 1986 long-term incentive plan during 1994, 1993 and 1992 are summarized below:
1986 LONG-TERM INCENTIVE PLAN - -------------------------------------------------------------------------------------------------------------- NON-QUALIFIED STOCK OPTIONS RESTRICTED SHARES OPTION SHARES SHARES PRICE SHARES SHARES PRICE SERIES A SERIES B PER SHARE SERIES A SERIES B PER SHARE - -------------------------------------------------------------------------------------------------------------- Outstanding at Jan. 1, 1992 1,628,084 158,415 $24-37 312,473 20,250 $24-38 Granted 314,580 - 40 50,830 - 40-42 Exercised (331,797) (65,879) 24-37 - - - Vested - - - (71,488) (20,250) 24-42 Canceled (15,140) (240) 25-37 - - - - -------------------------------------------------------------------------------------------------------------- Outstanding at Dec. 31, 1992 1,595,727 92,296 $24-40 291,815 - $29-42 Granted 317,955 - 40-49 37,192 - 49-53 Exercised (484,370) (37,131) 24-40 - - - Vested - - - (106,225) - 29-53 Canceled (61,285) - 29-40 (10,990) - 29-49 - -------------------------------------------------------------------------------------------------------------- Outstanding at Dec. 31, 1993 1,368,027 55,165 $24-49 211,792 - $29-53 Granted 322,795 - 50-53 48,360 - 53-57 Exercised (233,280) (10,605) 24-49 - - - Vested - - - (46,971) - 30-57 Canceled (7,002) - 29-49 (810) - 29-43 - -------------------------------------------------------------------------------------------------------------- Outstanding at Dec. 31, 1994 1,450,540 44,560 $24-53 212,371 - $29-57 - --------------------------------------------------------------------------------------------------------------
The non-qualified options granted under the Company's long-term incentive plan become exercisable in cumulative installments over a period of three years. On December 31, 1994, of the 1,495,100 options outstanding, 906,867 were exercisable. Shares of Series A Common Stock reserved for grants under the plan were 250,531 and 613,874 at December 31, 1994 and 1993, respectively. A provision for the restricted shares is made ratably over the restriction period. Expense recognized under the plan for restricted shares was $2,146,000, $3,598,000 and $2,723,000 in 1994, 1993 and 1992, respectively. 35 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES NOTE 8: COMMITMENTS AND CONTINGENT LIABILITIES The Company is involved in certain claims and litigation related to its operations. In the opinion of Management, liabilities, if any, arising from these claims and litigation are either covered by insurance or would not have a material adverse effect on the consolidated financial statements of the Company. Commitments for the purchase of broadcast film contract rights totaled approximately $141,098,000 at December 31, 1994 for broadcasts scheduled through August 2000. Advance payments on plant and equipment expenditures at December 31, 1994 primarily relate to newspaper production equipment, broadcast equipment and building renovations and improvements. Required future payments for capital expenditures for 1995, 1996, 1997 and 1998 are $13,677,000, $8,998,000, $5,489,000 and $3,350,000, respectively. Total lease expense for property and equipment was $3,131,000, $5,447,000 and $6,130,000 in 1994, 1993 and 1992, respectively. Lease expense was lower in 1994 following the Company's 1993 purchase of the building in which it had been leasing office space. Future minimum rental payments for operating lease agreements are as follows:
- ------------------------------------------------------------------------------------ In thousands - ------------------------------------------------------------------------------------ 1995 $1,631 1996 811 1997 343 1998 140 1999 129 2000 and beyond 31 - ------------------------------------------------------------------------------------ $3,085 - ------------------------------------------------------------------------------------
NOTE 9: COMMON AND PREFERRED STOCK - -------------------------------------------------------------------------------- The Company has two series of common stock authorized, issued and outstanding, Series A and Series B. The shares are identical except that Series B shares are entitled to ten votes per share on all matters submitted to a vote of shareholders, while the Series A shares are entitled to one vote per share. Transferability of the Series B shares is limited to family members and affiliated entities of the holder. Series B shares are convertible at any time on a one-for-one basis into Series A shares. Each outstanding share of common stock is accompanied by one preferred share purchase right, which entitles shareholders to purchase 1/200 of a share of Series A Junior Participating Preferred Stock. The rights will not be exercisable until a party either acquires beneficial ownership of 30 percent of the Company's common stock or makes a tender offer for at least 30 percent of its common stock. The rights expire in 1996. If the Company is acquired in a merger or business combination, each right has an initial exercise price of $87.50 (subject to adjustment) and can be used to purchase the common stock of the surviving company having a market value of twice the exercise price of each right. The number of shares of Series A Junior Participating Preferred Stock reserved for possible conversion of these rights is equivalent to 1/200 of the number of shares of common stock issued and outstanding plus the number of shares reserved for grant under the 1986 Long-Term Incentive Plan and Stock Option Plan. 36 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES NOTE 10: OTHER INCOME AND EXPENSE - -------------------------------------------------------------------------------- In 1994, Belo donated 58,835 shares of Stauffer Communications, Inc. stock to The Dallas Morning News--WFAA Foundation. The fair market value of the shares at the time of the transfer, as determined by an outstanding tender offer from a third party, exceeded the carrying value of the stock, resulting in a gain of $9,271,000, which was offset by a charge for the charitable contribution of $16,675,000. The transaction, net of a $5,837,000 income tax benefit, resulted in a decrease in 1994 net earnings of $1,567,000 (8 cents per share). NOTE 11: SUPPLEMENTAL CASH FLOW INFORMATION - -------------------------------------------------------------------------------- Net cash provided by operations reflects cash payments for interest and income taxes during the years ended December 31, 1994, 1993 and 1992 as follows:
- ----------------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 - ----------------------------------------------------------------------------------------------------- Interest paid, net of amounts capitalized $14,564 $18,677 $27,097 Income taxes paid, net of refunds $26,618 $15,679 $23,112 - -----------------------------------------------------------------------------------------------------
37 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES NOTE 12: INDUSTRY SEGMENT INFORMATION The Company operates in two industries: newspaper publishing and television broadcasting. Operations in the newspaper publishing industry involve the sale of advertising space in published issues, the sale of newspapers to distributors and individual subscribers and commercial printing. Operations in the broadcast industry involve the sale of air time for advertising and the broadcast of entertainment, news and other programming for both local markets and syndication. Net operating revenues by industry segment include sales to unaffiliated customers and intersegment revenues, which before their elimination, are accounted for on the same basis as revenues from unaffiliated customers. Selected segment data for the years ended December 31, 1994, 1993 and 1992 is as follows:
- ---------------------------------------------------------------------------------------------------- In thousands 1994 1993 1992 - ---------------------------------------------------------------------------------------------------- Net operating revenues Newspaper publishing $369,366 $335,651 $314,718 Broadcasting (A) 258,759 209,457 201,241 Intersegment revenues - (273) (17) - ---------------------------------------------------------------------------------------------------- $628,125 $544,835 $515,942 - ---------------------------------------------------------------------------------------------------- Earnings from operations Newspaper publishing $ 66,568 $ 44,293(B) $ 42,974 Broadcasting (A) 80,445(C) 63,204(C) 56,461 Corporate expenses (16,014) (18,059) (17,809) - ---------------------------------------------------------------------------------------------------- $130,999 $ 89,474 $ 81,626 - ---------------------------------------------------------------------------------------------------- Identifiable assets Newspaper publishing $271,179 $263,855 $245,589 Broadcasting (A) 568,147 446,175 444,237 Other 74,465 86,126 68,701 - ---------------------------------------------------------------------------------------------------- $913,791 $796,156 $758,527 - ---------------------------------------------------------------------------------------------------- Depreciation and amortization Newspaper publishing $ 20,716 $ 17,374 $ 16,247 Broadcasting (A) 25,079 20,039 19,460 Other 610 251 332 - ---------------------------------------------------------------------------------------------------- $ 46,405 $ 37,664 $ 36,039 - ---------------------------------------------------------------------------------------------------- Capital expenditures Newspaper publishing $ 22,227 $ 36,765 $ 17,381 Broadcasting (A) 24,623 16,996 9,666 Other 521 8,369 98 - ---------------------------------------------------------------------------------------------------- $ 47,371 $ 62,130 $ 27,145 - ----------------------------------------------------------------------------------------------------
(A) In 1994, the Broadcasting segment data includes the effect of WWL-TV, which Belo purchased on June 1, 1994 (see Note 2). (B) Included in Newspaper publishing earnings from operations in 1993 is a $5,822,000 restructuring charge consisting primarily of the write-off of goodwill and a reduction in the carrying value of production assets related to the restructuring of DFWSN (see Note 3). (C) Broadcasting earnings from operations include the reversal of certain music license fee accruals of $631,000 in 1994 and $3,349,000 in 1993. NOTE 13: SUBSEQUENT EVENT On February 1, 1995, the Company completed the acquisition of television station KIRO-TV in Seattle, Washington for $162,500,000, excluding final adjustments. The acquisition was financed with borrowings from the revolving credit agreement. The transaction will be accounted for as a purchase. Although a complete purchase price allocation will not be finalized until later in 1995, the purchase price will be allocated to property, plant and equipment and intangible assets. 38 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. H. BELO CORPORATION AND SUBSIDIARIES
NOTE 14: QUARTERLY RESULTS OF OPERATIONS (unaudited) - ------------------------------------------------------------------------------------------------------------------------------------ Following is a summary of the unaudited quarterly results of operations for 1994 and 1993: - ------------------------------------------------------------------------------------------------------------------------------------ In thousands, except per share amounts 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER - ------------------------------------------------------------------------------------------------------------------------------------ 1994 Net operating revenues Newspaper publishing $ 82,921 $ 91,107 $ 93,262 $ 102,076 Broadcasting 49,126 63,831(C) 66,319(C) 79,483(C) Intersegment revenues - (1) 1 - - ------------------------------------------------------------------------------------------------------------------------------------ $ 132,047 $ 154,937 $ 159,582 $ 181,559 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings from operations Newspaper publishing $ 10,908 $ 17,716 $ 18,220 $ 19,724 Broadcasting 11,498(A) 21,049(C) 19,083(C) 28,815(C) Corporate expenses (3,222) (3,361) (4,618) (4,813) - ------------------------------------------------------------------------------------------------------------------------------------ $ 19,184 $ 35,404 $ 32,685 $ 43,726 - ------------------------------------------------------------------------------------------------------------------------------------ Net earnings $ 10,038 $ 19,511 $ 15,748(D) $ 23,570 - ------------------------------------------------------------------------------------------------------------------------------------ Net earnings per common and common equivalent share $ .49 $ .96 $ .79 $ 1.18 - ------------------------------------------------------------------------------------------------------------------------------------ 1993 Net operating revenues Newspaper publishing $ 78,780 $ 84,747 $ 83,309 $ 88,815 Broadcasting 44,122 59,154 49,314 56,867 Intersegment revenues (62) (97) (84) (30) - ------------------------------------------------------------------------------------------------------------------------------------ $ 122,840 $ 143,804 $ 132,539 $ 145,652 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings from operations Newspaper publishing $ 11,010 $ 13,160 $ 10,887 $ 9,236(F) Broadcasting 8,283 22,042 12,187 20,728(A) Corporate expenses (3,737) (4,985) (3,686) (5,651) - ------------------------------------------------------------------------------------------------------------------------------------ $ 15,556 $ 30,217 $ 19,388 $ 24,313 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings before cumulative effect of change in accounting $ 7,271 $ 16,143 $ 7,934 $ 13,130 Cumulative effect of change in accounting 6,599(B) - - - - ------------------------------------------------------------------------------------------------------------------------------------ Net earnings $ 13,870 $ 16,143 $ 7,934(E) $ 13,130 - ------------------------------------------------------------------------------------------------------------------------------------ Earnings per common and common equivalent share: Before cumulative effect of change in accounting $ .37 $ .80 $ .39 $ .64 Cumulative effect of change in accounting $ .33(B) $ - $ - $ - Net earnings $ .70 $ .80 $ .39 $ .64 - ------------------------------------------------------------------------------------------------------------------------------------
(A) Included in Broadcasting earnings from operations for the first quarter of 1994 and the fourth quarter of 1993 is the reversal of certain music license fee accruals of $631,000 and $3,349,000, respectively. (B) Amount represents the cumulative effect of adopting SFAS No. 109, "Accounting for Income Taxes" (see Note 5). (C) Broadcasting results include the effect of WWL-TV, which Belo purchased on June 1, 1994 (see Note 2). (D) Net earnings for the third quarter of 1994 include the net charge of $1,567,000 related to the Stauffer Communications, Inc. stock donation (see Note 10). (E) Belo's income tax provision in the third quarter of 1993 reflects a $2,249,000 charge representing an adjustment to deferred taxes following an increase in the federal income tax rate from 34 percent to 35 percent (see Note 5). (F) Included in Newspaper publishing earnings from operations for the fourth quarter of 1993 is a $5,822,000 restructuring charge consisting primarily of the write-off of goodwill and a reduction in the carrying value of production assets related to the restructuring of DFWSN (see Note 3). 39 42 MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS The Management of A. H. Belo Corporation is responsible for the preparation of the Company's consolidated financial statements, as well as for their integrity and objectivity. Those statements are prepared using generally accepted accounting principles, they include amounts that are based on our best estimates and judgments, and we believe they are not misstated due to material fraud or error. Management has also prepared the other information in the Annual Report and is responsible for its accuracy and its consistency with the financial statements. Management maintains a system of internal control that is designed to provide reasonable assurance of the integrity and reliability of the financial statements, the protection of assets from unauthorized use or disposition, and the prevention and detection of fraudulent financial reporting. This system of internal control provides for appropriate division of responsibility, and is documented in written policies and procedures. These policies and procedures are updated as necessary and communicated to those employees having a significant role in the financial reporting process. Management continually monitors the system of internal control for compliance. Management believes that as of December 31, 1994, the Company's system of internal control is adequate to accomplish the objectives described above. Management recognizes, however, that no system of internal control can ensure the elimination of all errors and irregularities, and it recognizes that the cost of the internal controls should not exceed the value of the benefits derived. Finally, Management recognizes its responsibility for fostering a strong ethical climate within the Company according to the highest standards of personal and professional conduct, and this responsibility is delineated in the Company's written statement of business conduct. This statement of business conduct addresses, among other things, the necessity for due diligence and integrity, avoidance of potential conflicts of interest, compliance with all applicable laws and regulations, and the confidentiality of proprietary information. /S/Robert W. Decherd Robert W. Decherd Chairman of the Board, President and Chief Executive Officer /S/Michael D. Perry Michael D. Perry Senior Vice President and Chief Financial Officer 40 43
EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- 3.1 Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K dated March 19, 1992 (the "1991 Form 10-K")) N/A 3.2 Certificate of Correction to Certificate of Incorporation dated May 13, 1987 (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form 10-K")) N/A 3.3 Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated April 16, 1987 (incorporated by reference to Exhibit 3.3 to the 1991 Form 10-K) N/A 3.4 Certificate of Amendment of Certificate of Incorporation of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.4 to the 1992 Form 10-K) N/A 3.5 Amended Certificate of Designation of Series A Junior Participating Preferred Stock of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.5 to the 1992 Form 10-K) N/A 3.6 Certificate of Designation of Series B Common Stock of the Company dated May 4, 1988 (incorporated by reference to Exhibit 3.6 to the 1992 Form 10-K) N/A 3.7 Bylaws of the Company, effective February 22, 1995 ---- 4.1 Certain rights of the holders of the Company's Common Stock are set forth in Exhibits 3.1-3.6 above N/A 4.2 Specimen Form of Certificate representing shares of the Company's Series A Common Stock (incorporated by reference to Exhibit 4.2 to the 1992 Form 10-K) N/A 4.3 Specimen Form of Certificate representing shares of the Company's Series B Common Stock (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K dated March 20, 1989) N/A 4.4 Form of Rights Agreement, dated March 10, 1986 between the Company and RepublicBank Dallas, National Association as Rights Agent, which includes as Exhibit B thereto the Form of Right Certificate (incorporated by reference to Exhibit 4.8 to the 1991 Form 10-K) N/A 4.5 Supplement No. 1 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1991 Form 10-K) N/A 4.6 Supplement No. 2 to Rights Agreement (incorporated by reference to Exhibit 4.9 to the 1992 Form 10-K) N/A 4.7 Supplement No. 3 to Rights Agreement (incorporated by reference to Exhibit 4.10 to the 1992 Form 10-K) N/A
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EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- 4.8 Supplement No. 4 to Rights Agreement dated December 12, 1988 substituting Manufacturers Hanover Trust Company as Rights Agent (incorporated by reference to Exhibit 4.8 to the Company's Annual Report on Form 10-K dated March 18, 1994 (the "1993 Form 10-K")) N/A 4.9 Supplement No. 5 to Rights Agreement (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1993) N/A 4.10 Supplement No. 6 to Rights Agreement ---- 10.1 Contracts relating to television broadcasting: (1) Contract for Affiliation between KOTV in Tulsa, Oklahoma and CBS, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(1) to the 1991 Form 10-K) N/A (2) Contract for Affiliation between KHOU-TV in Houston, Texas and CBS, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(2) to the 1991 Form 10-K) N/A (3) Letter Amendment to Contract for Affiliation between KHOU-TV in Houston, Texas and CBS (incorporated by reference to Exhibit 10.1(3) to the 1993 Form 10-K) N/A (4) Contract for Affiliation between KXTV in Sacramento, California and CBS (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1993 (the "First Quarter 1993 Form 10-Q")) N/A (5) Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(4) to the Company's Annual Report on Form 10-K dated March 28, 1991 (the "1990 Form 10-K")) N/A (6) Rider One to Contract for Affiliation between WFAA-TV in Dallas, Texas and ABC (incorporated by reference to Exhibit 10.1 to the First Quarter 1993 Form 10-Q) N/A (7) Contract for Affiliation between WVEC-TV in Hampton-Norfolk, Virginia and ABC, with Network Affiliation Consent (incorporated by reference to Exhibit 10.1(5) to the 1991 Form 10-K) N/A (8) Contract for Affiliation between WWL-TV in New Orleans, Louisiana, and CBS ---- 10.2 Contracts relating to newspaper publication: (1) Founding Agreement between the Company and Newsprint South, Inc. for newsprint supply (incorporated by reference to Exhibit 10.2(2) to the 1990 Form 10-K) N/A
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EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- (2) Amendment to the Founding Agreement between the Company and Newsprint South, Inc. for newsprint supply (incorporated by reference to Exhibit 10.2(3) to the 1990 Form 10-K) N/A 10.3 (1) Management Security Plan (incorporated by reference to Exhibit 10.4(1) to the 1991 Form 10-K) N/A (2) Stock Option Plan (incorporated by reference to Exhibit 10.4(2) to the 1991 Form 10-K) N/A (3) Amendment to Stock Option Plan by the Compensation Committee of the Board of Directors (incorporated by reference to Exhibit 10.4(3) to the 1991 Form 10-K) N/A (4) Amendments to Stock Option Plan (incorporated by reference to Exhibit 10.4(4) to the 1991 Form 10-K) N/A (5) Amendment to Stock Option Plan dated December 19, 1986 (incorporated by reference to Exhibit 10.4(5) to the 1991 Form 10-K) N/A (6) Amendment to Stock Option Plan dated February 22, 1989 (incorporated by reference to Exhibit 10.3(6) to the 1993 Form 10-K) N/A (7) 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(7) to the 1991 Form 10-K) N/A (8) Amendment No. 1 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4(8) to the 1991 Form 10-K) N/A (9) Amendment No. 2 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(9) to the 1992 Form 10-K) N/A (10) Amendment No. 3 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(10) to the 1993 Form 10-K) N/A (11) Amendment No. 4 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(11) to the 1993 Form 10-K) N/A (12) Amendment No. 5 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(12) to the 1993 Form 10-K) N/A (13) Amendment No. 6 to 1986 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3(13) to the 1992 Form 10-K) N/A (14) The A. H. Belo Corporation Employee Savings and Investment Plan ---- (15) First Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(15) to the 1992 Form 10-K) N/A
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EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- (16) Second Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(16) to the 1992 Form 10-K) N/A (17) Third Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.2 to the First Quarter 1993 Form 10-Q) N/A (18) Fourth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 4.14 to Post-Effective Amendment No. 1 to Form S-8 dated January 18, 1994 (Registration No. 33-30994)) N/A (19) Fifth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(19) to the 1993 Form 10-K) N/A (20) Sixth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan (incorporated by reference to Exhibit 10.3(1) to the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1994 ("Second Quarter 1994 Form 10-Q")) N/A (21) Seventh Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan ---- (22) Eighth Amendment to the A. H. Belo Corporation Employee Savings and Investment Plan ---- (23) The G. B. Dealey Retirement Pension Plan (as amended and restated effective January 1, 1988) (incorporated by reference to Exhibit 10.3(20) to the 1993 Form 10-K) N/A (24) First Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(21) to the 1993 Form 10-K) N/A (25) Second Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(22) to the 1993 Form 10-K) N/A (26) Third Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(23) to the 1993 Form 10-K) N/A (27) Fourth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(24) to the 1993 Form 10-K) N/A (28) Fifth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(25) to the 1993 Form 10-K) N/A (29) Sixth Amendment to the G. B. Dealey Retirement Pension Plan (incorporated by reference to Exhibit 10.3(2) to the Second Quarter 1994 Form 10-Q) N/A
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EXHIBIT SEQ. NUMBER DESCRIPTION PAGE NO. - ------ ----------- -------- (30) Seventh Amendment to the G. B. Dealey Retirement Pension Plan ---- (31) Eighth Amendment to the G. B. Dealey Retirement Pension Plan ---- (32) Master Trust Agreement, effective as of July 1, 1992, between A. H. Belo Corporation and Mellon Bank, N. A. (incorporated by reference to Exhibit 10.3(26) to the 1993 Form 10-K) N/A (33) A. H. Belo Corporation Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.3(27) to the 1993 Form 10-K) N/A (34) Trust Agreement dated February 28, 1994, between the Company and Mellon Bank, N. A. (incorporated by reference to Exhibit 10.3(28) to the 1993 Form 10-K) N/A (35) Summary of A. H. Belo Corporation Executive Compensation Program (incorporated by reference to Exhibit 10.3(18) to the 1992 Form 10-K) N/A (36) Employment and Consultation Agreement between A. H. Belo Corporation and James P. Sheehan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1993) N/A 10.4 (1) Loan Agreement dated October 1, 1985, between City of Arlington Industrial Development Corporation and Dallas-Fort Worth Suburban Newspapers, Inc. (incorporated by reference to Exhibit 10.5(2) to the 1991 Form 10-K) N/A (2) Letter of Credit and Reimbursement Agreement dated as of June 2, 1987, between Dallas-Fort Worth Suburban Newspapers, Inc. and The Sanwa Bank, Limited, Dallas Agency covering $6,400,000 City of Arlington Industrial Development Corporation Industrial Development Revenue Bonds (incorporated by reference to Exhibit 10.5(3) to the 1991 Form 10-K) N/A (3) Credit Agreement dated as of August 5, 1994 among the Company and Citicorp Securities, Inc., as Syndication Agent, The First National Bank of Chicago, as Administrative Agent, Texas Commerce Bank National Association, as Documentation Agent and The Banks Listed Therein, as Lenders (incorporated by reference to Exhibit 10.4(1) to the Second Quarter 1994 Form 10-Q) N/A (4) Amendment and Waiver Agreement dated as of August 5, 1994, by and between the Company and The Sanwa Bank, Limited, Dallas Agency ---- 21 Subsidiaries of the Company ---- 23 Consent of Ernst & Young LLP ---- 27 Financial Data Schedule (filed electronically with the Securities and Exchange Commission) N/A
E-5 EX-3.7 2 AMENDED AND RESTATED BYLAWS OF A.H. BELO 1 Exhibit 3.7 AMENDED AND RESTATED BYLAWS OF A. H. BELO CORPORATION (A Delaware Corporation) Effective February 22, 1995 2 INDEX TO BYLAWS OF A. H. BELO CORPORATION
Page ---- ARTICLE I - OFFICES Section 1. Registered Office . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II - MEETINGS OF THE STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2. Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 3. Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 4. Notice of Annual or Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 5. Business at Special Meeting . . . . . . . . . . . . . . . . . . . 2 Section 6. Quorum of Stockholders . . . . . . . . . . . . . . . . . . . . . 2 Section 7. Act of Stockholders' Meeting . . . . . . . . . . . . . . . . . . 3 Section 8. Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 9. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 10. Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 11. Order of Business . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 12. Notice of Stockholder Business . . . . . . . . . . . . . . . . . 5 Section 13. Notice of Stockholder Nominees . . . . . . . . . . . . . . . . . 6 ARTICLE III - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 1. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 2. Number of Directors . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3. Election and Term . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 5. Resignation and Removal . . . . . . . . . . . . . . . . . . . . . 10 Section 6. Compensation of Directors . . . . . . . . . . . . . . . . . . . . 10 ARTICLE IV - MEETINGS OF THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 1. First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 2. Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 3. Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 4. Business at Regular or Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5. Quorum of Directors . . . . . . . . . . . . . . . . . . . . . . . 11 Section 6. Act of Directors' Meeting . . . . . . . . . . . . . . . . . . . . 12 Section 7. Action by Written Consent Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE V - COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE VI - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 1. Methods of Giving Notice . . . . . . . . . . . . . . . . . . . . 14 Section 2. Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 3. Attendance as Waiver . . . . . . . . . . . . . . . . . . . . . . 15
(i) 3 ARTICLE VII - ACTION WITHOUT A MEETING BY USE OF A CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE VIII - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 1. Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2. Election and Qualification . . . . . . . . . . . . . . . . . . . 16 Section 3. Division Officers . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 4. Other Officers and Agents . . . . . . . . . . . . . . . . . . . . 17 Section 5. Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 6. Term, Removal and Vacancies . . . . . . . . . . . . . . . . . . . 18 Section 7. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . 18 Section 8. Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . 18 Section 9. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 10. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 11. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 12. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . 20 Section 13. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 14. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . 21 Section 15. Officers' Bond . . . . . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE IX - CERTIFICATES FOR SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 1. Certificates Representing Shares . . . . . . . . . . . . . . . . 21 Section 2. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . 23 Section 3. Lost, Stolen or Destroyed Certificate . . . . . . . . . . . . . . 23 Section 4. Closing of Stock Ledger and Fixing Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Section 5. Foreign Share Ownership . . . . . . . . . . . . . . . . . . . . . 24 Section 6. Registered Stockholders . . . . . . . . . . . . . . . . . . . . . 27 ARTICLE X - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 1. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 5. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE XI - INDEMNIFICATION OF OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . 28 Section 1. Actions, Suits, or Proceedings Other Than by or in the Right of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2. Actions or Suits by or in the Right of the Corporation . . . . . . . . . . . . . . . . . . . 29 Section 3. Indemnification for Costs, Charges, and Expenses of Successful Party . . . . . . . . . . . . . . . 30 Section 4. Determination of Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 5. Advance of Costs, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 6. Procedure for Indemnification . . . . . . . . . . . . . . . . . . 31 Section 7. Other Rights; Continuation of Right to Indemnification . . . . . . . . . . . . . . . . . . . 32 Section 8. Extent of Indemnification . . . . . . . . . . . . . . . . . . . . 33 Section 9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(ii) 4 Section 10. Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE XII - AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(iii) 5 BYLAWS OF A. H. BELO CORPORATION (A Delaware Corporation) ARTICLE I OFFICES Section 1. Registered Office. The registered office shall be located in the City of Wilmington, County of New Castle, State of Delaware. Section 2. Other Offices. The corporation also may have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or as the business of the corporation may require. ARTICLE II MEETINGS OF THE STOCKHOLDERS Section 1. Place of Meetings. All meetings of the stockholders for the election of directors or for any other proper purpose shall be held at such time and place, within or without the State of Delaware, as the Board of Directors may from time to time designate, as stated in the notice of such meeting or a duly executed waiver of notice thereof. Section 2. Annual Meeting. An annual meeting of the stockholders shall be held at 10:00 a.m. on the first Wednesday in May in each year, unless such day in a legal holiday, in which case such meeting shall be held at the specified time on the first full business day thereafter which is not a legal holiday. At such meeting the stockholders entitled to vote thereat shall elect, by a plurality vote of the voting power of all of the shares entitled to vote thereon, the successors to the directors whose terms shall expire that year, and may transact such other business as properly may be brought before the meeting. 6 Section 3. Special Meeting. Special meetings of the stockholders may be called by the Chief Executive Officer, the Board of Directors or the holders of not less than one-fifth of the voting power of all shares entitled to vote at the meeting. Section 4. Notice of Annual or Special Meeting. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board, the Secretary, or the officer or person calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the records of the corporation, with postage thereon prepaid. Section 5. Business at Special Meeting. The business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice thereof. Section 6. Quorum of Stockholders. Unless otherwise provided in the Certificate of Incorporation, the holders of a majority of the voting power of all of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the stockholders, but in no event shall a quorum consist of the holders of less than one-third (1/3) of the shares entitled to vote and thus represented at such meeting. If, however, a quorum shall not be present or represented at any meeting of the stockholders, the stockholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, -2- 7 without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 7. Act of Stockholders' Meeting. The vote of the holders of a majority of the voting power of all of the shares entitled to vote and thus represented at a meeting at which a quorum is present shall be the act of the stockholders' meeting, unless the vote of a greater number is required by law or the Certificate of Incorporation. Section 8. Voting of Shares. Each outstanding share shall be entitled to the number of votes per share as provided in the Certificate of Incorporation and the Certificate of Designation, if any, which relates to such share, on each matter submitted to a vote at a meeting of the stockholders. At each election of directors, every stockholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of votes alloted to the shares owned by him for as many persons as there are directors to be elected and for whose election he has the right to vote. Cumulative voting in the election of directors or otherwise is expressly prohibited by the Certificate of Incorporation. Section 9. Proxies. At any meeting of the stockholders, each stockholder having the right to vote shall be entitled to vote either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney-in-fact. Any such proxy shall be delivered to the secretary of such meeting at or prior to the time designated by the chairman of the meeting or in the order of -3- 8 business for so delivering such proxies. No proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless otherwise made irrevocable by law. Unless required by statute or determined by the chairman of the meeting to be advisable, the vote on any question need not be by ballot. On a vote by ballot, each ballot shall be signed by the stockholder voting or by such stockholder's proxy, if there be such proxy. Section 10. Voting List. The officer or agent having charge of the stock ledger for shares of the corporation shall make, at least ten (10) days before each meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and number of shares of each class or series of the corporation's stock registered in the name of each stockholder, which list, for a period of ten (10) days prior to such meeting, shall be open to the examination of any stockholder, for any purpose germane to the meeting, at any time during the usual business hours, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The corporation shall be entitled to rely upon the stock ledger as the only evidence as to who are the stockholders entitled to examine the stock ledger, the aforementioned list of -4- 9 stockholders or the books of the corporation, or to vote in person or by proxy at any such meeting of stockholders. Section 11. Order of Business. The order of business of each meeting of the stockholders of the corporation shall be determined by the chairman of the meeting. The chairman of the meeting shall have the right and authority to prescribe such rules, regulations, and procedures and to do all such acts and things as are necessary or desirable for the conduct of the meeting, including, without limitation, the establishment of procedures for the dismissal of business not properly presented, the maintenance of order and safety, limitations on the time allotted to questions or comments on the affairs of the corporation, restrictions on entry to such meetings after the time prescribed for commencement thereof, and opening and closing of the voting polls. Section 12. Notice of Stockholder Business. At an annual or special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the corporation entitled to vote at such annual or special meeting who complies with the notice procedures set forth in this Section 12. For business to be properly brought before an annual or special meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation, not less than thirty (30) days nor more than sixty (60) days prior to the meeting; provided, however, that in the event that less than forty (40) days' notice or prior public disclosure of the date of the meeting is given or made to the -5- 10 stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the annual or special meeting was mailed or such public disclosure was made. Such stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual or special meeting (a) a brief description of the business desired to be brought before the annual or special meeting and the reasons for conducting such business at the annual or special meeting; (b) the name and address, as they appear on the corporation's books, of such stockholder; (c) the class and number of each class or series of the shares of the corporation which are beneficially owned by such stockholder; and (d) any material interest of such stockholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual or special meeting except in accordance with the procedures set forth in this Section 12. The chairman of an annual or special meeting shall, if the facts warrant, determine that business was not properly brought before the meeting and in accordance with the provisions of this Section 12, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 12, a stockholder seeking to have a proposal included in the corporation's proxy statement shall comply with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended (including, but not limited to, Rule 14a-8 or its successor provision). Section 13. Notice of Stockholder Nominees. Only persons who are nominated in accordance with the procedures set forth in -6- 11 these Bylaws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 13. Nominations by stockholders shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than thirty (30) days nor more than sixty (60) days prior to the meeting; provided, however, that in the event that less than forty (40) days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the corporation's books, of such stockholder and (ii) the class, series and number of shares of the corporation -7- 12 which are beneficially owned by such stockholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in these Bylaws. The chairman of the meeting shall, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE III BOARD OF DIRECTORS Section 1. Powers. The business and affairs of the corporation shall be managed by its Board of Directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute, the Certificate of Incorporation or by these Bylaws directed or required to be exercised and done by the stockholders. Section 2. Number of Directors. The number of directors of the corporation constituting the Board of Directors shall be not less than nine (9) nor more than eighteen (18), determined from time to time in accordance with these Bylaws by resolution of the Board of Directors or of the stockholders. Section 3. Election and Term. The directors shall be classified with respect to the time for which they shall severally hold office by dividing them into three (3) classes, each -8- 13 consisting of approximately one-third (1/3) of the whole number of the Board of Directors, and each director of the corporation shall hold office until his successor is elected and qualified or until his death, resignation, or removal. Each class of directors shall be as nearly equal in number of directors as possible and shall be denominated in such manner as the Board of Directors may determine. The term of office of those of the first class will expire at the first annual meeting of stockholders after adoption of this Bylaw provision; of the second class one year thereafter; of the third class two years thereafter; and at each annual election held after such classification and election, the successors to the class of directors whose terms shall expire that year shall be elected to hold office for a term of three (3) years, so that the term of office for one class of directors shall expire in each year. Directors need not be residents of the State of Delaware or stockholders of the corporation. Notwithstanding the foregoing, no person shall be eligible to stand for election as director if he or she has attained the age of 75 years. Furthermore, for directors elected to the Board at or after the 1995 Annual Meeting of Stockholders, a director shall be qualified to continue to serve as a director only until the first annual meeting of stockholders following the date on which such director attains the age of 75 years. The term of any director who has attained the age of 75 years shall automatically terminate upon the commencement of such next ensuing annual meeting of stockholders without further action by such director, the board of directors or the stockholders of the corporation. -9- 14 Section 4. Vacancies. Any vacancies occurring in the Board of Directors and any newly created directorships resulting from any increase in the authorized number of directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the directors, subject to the applicable provisions then in effect of the Delaware General Corporation Law pertaining thereto. A director elected to fill a newly created directorship shall hold office until his successor is elected and qualified or until his death, resignation, or removal. Section 5. Resignation and Removal. Any director may resign at any time upon giving written notice to the corporation. At any meeting of stockholders called expressly for the purpose of removing a director or directors, any director or the entire Board of Directors may be removed, but for cause only (removal of directors without cause being expressly prohibited), by a vote of the holders of a majority of the voting power of all of the shares then entitled to vote at an election of directors. Section 6. Compensation of Directors. As specifically prescribed from time to time by resolution of the Board of Directors, the directors of the corporation may be paid their expenses of attendance at each meeting of the Board and may be paid reasonable compensation for their services as directors. This provision shall not preclude any director from serving the corporation in any other capacity and receiving compensation -10- 15 therefor. Members of special or standing committees may be allowed like compensation for their services in such capacities. ARTICLE IV MEETINGS OF THE BOARD Section 1. First Meeting. The first meeting of each newly elected Board of Directors shall be held immediately following the annual meeting of the stockholders and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. Section 2. Regular Meetings. Regular meetings of the Board of Directors may be held with or without notice at such time and at such place either within or without the State of Delaware as from time to time shall be prescribed by resolution of the Board of Directors. Section 3. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer or the Secretary on the written request of two directors. Written notice of special meetings of the Board of Directors shall be given to each director at least three (3) days before the date of the meeting. Section 4. Business at Regular or Special Meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 5. Quorum of Directors. A majority of the Board of Directors shall constitute a quorum for the transaction of business, unless a greater number is required by law or the Certificate of Incorporation. If a quorum shall not be present at -11- 16 any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement of the meeting, until a quorum shall be present. Section 6. Act of Directors' Meeting. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the vote of a greater number is required by law or the Certificate of Incorporation. Section 7. Action by Written Consent Without a Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors or of any committee thereof under the applicable provisions of any statute, the Certificate of Incorporation or these Bylaws may be taken without a meeting if a consent in writing setting forth the action so taken is signed by all members of the Board of Directors or of the committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote of the Board of Directors or of the committee, as the case may be. ARTICLE V COMMITTEES The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees, each of which, to the extent provided in such resolution, the Certificate of Incorporation or these Bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all -12- 17 papers which may require it, except that no such committee shall have the power or authority of the Board of Directors in reference to amending the Certificate of Incorporation (except as permitted by the Delaware General Corporation Law), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the property and assets of the corporation otherwise than in the usual and regular course of its business, recommending to the stockholders a voluntary dissolution of the corporation or a revocation thereof, amending, altering, or repealing the Bylaws of the corporation or adopting new Bylaws for the corporation, filling vacancies in or removing members of the Board of Directors or any such committee, fixing the compensation of any member of such committee, or altering or repealing any resolution of the Board of Directors which by its terms provides that it shall not be so amendable or repealable. Unless such resolution, the Certificate of Incorporation or these Bylaws so provides, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of shares of the corporation, or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. Vacancies in the membership of any such committee shall be filled by resolution adopted by the majority of the full Board of Directors at a regular or special meeting of the Board. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. Any executive committee designated by the Board of Directors shall consist of the Chief Executive Officer and such number (not -13- 18 less than two (2)) of other directors as the Board may from time to time determine by resolution adopted by the majority of the full Board of Directors, one of the members of which committee shall be designated the chairman thereof by the Board of Directors. The executive committee may make rules for the conduct of its business, not inconsistent with this Article V, as it shall from time to time deem necessary and shall keep regular minutes of its proceedings and report the same to the Board when required. A majority of the members of the executive committee shall constitute a quorum for the transaction of business. If a quorum is not present at a meeting, the members present may adjourn the meeting until a quorum is present. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the executive committee, except as otherwise specifically provided by statute, the Certificate of Incorporation or the Bylaws of the corporation. Any member of the executive committee may be removed by the Board of Directors by the affirmative vote of a majority of the full Board, whenever in its judgment the best interests of the corporation will be served thereby. ARTICLE VI NOTICES Section 1. Methods of Giving Notice. Whenever any notice is required to be given to any stockholder or director under the provisions of any statute, the Certificate of Incorporation or these Bylaws, it shall be given in writing and delivered personally or mailed to such stockholder or director at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time the same shall be deposited in the -14- 19 United States mail with sufficient postage thereon prepaid. Notice to directors may also be given by telegram, telex, telecopy or similar means of visual data transmission, and notice given by any of such means shall be deemed to be delivered when transmitted for delivery to the recipient. Section 2. Waiver of Notice. Whenever any notice is required to be given to any stockholder or director under the provisions of any statute, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to said notice shall be deemed equivalent to the giving of such notice. Section 3. Attendance as Waiver. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE VII ACTION WITHOUT A MEETING BY USE OF A CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT Subject to the provisions required or permitted for notice of meetings, unless otherwise restricted by the Certificate of Incorporation or these Bylaws, stockholders, members of the Board of Directors or members of any committee designated by such Board may participate in and hold a meeting of such stockholders, Board or committee by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where -15- 20 a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE VIII OFFICERS Section 1. Executive Officers. The officers of the corporation shall consist of a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents (with such supplemental designation to indicate seniority or scope of duties as the Board of Directors may determine from time to time), a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors as provided in Section 2 of this Article; provided that any of such offices except President, Secretary and Treasurer may be allowed to become vacant by failure of the Board of Directors to fill the office. Any two or more offices may be held by the same person, except that the Chairman of the Board or the President and the Secretary shall not be the same person. Section 2. Election and Qualification. The Board of Directors shall annually choose (subject to the provisions of Section 1 of this Article) a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, and a Treasurer, none of whom, except the Chairman of the Board, the Chief Executive Officer and the President need to be a member of the Board. Section 3. Division Officers. The Board of Directors may from time to time establish one or more divisions of the corporation and assign to such divisions responsibilities for such of the corporation's business, operations and affairs as the Board -16- 21 may designate. The Board of Directors may appoint or authorize an officer of the corporation to appoint in writing officers of a division. Unless elected or appointed an officer of the corporation by the Board of Directors or pursuant to authority granted by the Board, an officer of a division shall not as such be an officer of the corporation, except that he shall be an officer of the corporation for the purposes of executing and delivering documents on behalf of the corporation or for other specific purposes, if and to the extent that he may be authorized to do so by the Board of Directors. Unless otherwise provided in the writing appointing an officer of a division, such officer shall hold office until his successor is appointed and qualified. Any officer of a division may be removed with or without cause by the Board of Directors or by the officer, if any, of the corporation then authorized by the Board of Directors to appoint such officer of a division. The Board of Directors may prescribe or authorize an officer of the corporation or an officer of a division to prescribe in writing the duties and powers and authority of officers of divisions and may authorize an officer of the corporation or an officer of a division to determine the compensation for officers of divisions. Section 4. Other Officers and Agents. The Board of Directors may elect or appoint such other officers, assistant officers and agents as the Board may deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. -17- 22 Section 5. Salaries. Subject to the provisions of Section 3 of this Article, the compensation of all officers and agents of the corporation shall be determined by the Board of Directors. Section 6. Term, Removal and Vacancies. Each officer of the corporation shall hold office until his successor is elected and qualified, or until his earlier death, resignation or removal. Any officer may resign at any time upon giving written notice to the corporation. Any officer or agent or member of the executive committee elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise shall be filled (subject to the provisions of Sections 1 and 3 of this Article) by the Board of Directors. Section 7. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors and shall have such other powers and duties as usually pertain to such office or as may be prescribed by the Board of Directors. Section 8. Chief Executive Officer. The Board of Directors may designate whether the Chairman of the Board or the President shall be the Chief Executive Officer of the corporation. The officer so designated as the Chief Executive Officer shall have general powers of oversight, supervision and management of the business and affairs of the corporation, and shall see that all orders and resolutions of the Board of Directors are carried into -18- 23 effect. He shall execute bonds, mortgages and other contracts requiring a seal under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. The Chief Executive Officer shall have such other powers and duties as usually pertain to such office or as may be prescribed by the Board of Directors. If a Chief Executive Officer is not otherwise designated by the Board of Directors, the Chairman of the Board shall be the Chief Executive Officer of the corporation. Section 9. President. The President, in the absence or disability of the Chairman of the Board, shall perform the duties and exercise the powers of the Chairman of the Board. The President shall perform such other duties and exercise such other powers as usually pertain to such office or as may be delegated from time to time by the Board of Directors. Section 10. Vice Presidents. Unless otherwise determined by the Board of Directors, the Vice Presidents, in the order of their seniority as such seniority may from time to time be designated by the Board of Directors, shall perform the duties and exercise the powers of the President in the absence or disability of the President. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 11. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders, and shall record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be -19- 24 kept for that purpose, and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors. He shall keep in safe custody the seal of the corporation, and, when authorized by the Board of Directors, affix the same to any instrument requiring it. When so affixed, such seal shall be attested by his signature or by the signature of the Treasurer or an Assistant Secretary. Section 12. Assistant Secretaries. Unless otherwise determined by the Board of Directors, the Assistant Secretaries, in the order of their seniority as such seniority may from time to time be designated by the Board of Directors, shall perform the duties and exercise the powers of the Secretary in the absence or disability of the Secretary. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 13. Treasurer. The Treasurer shall have the custody of the corporate funds and securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. -20- 25 Section 14. Assistant Treasurers. Unless otherwise determined by the Board of Directors, the Assistant Treasurers, in the order of their seniority as such seniority may from time to time be designated by the Board of Directors, shall perform the duties and exercise the powers of the Treasurer in the absence or disability of the Treasurer. They shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. Section 15. Officers' Bond. If required by the Board of Directors, any officer so required shall give the corporation a bond (which shall be renewed as the Board may require) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of any and all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. ARTICLE IX CERTIFICATES FOR SHARES Section 1. Certificates Representing Shares. The corporation shall deliver certificates representing all shares to which stockholders are entitled. Such certificates shall be numbered and shall be entered in the books of the corporation as they are issued, and shall be signed by the Chairman of the Board, the President or a Vice President, and the Secretary or an Assistant Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. The signatures of -21- 26 the Chairman of the Board, the President or Vice President, Secretary or Assistant Secretary, upon a certificate may be facsimiles, if the certificate is countersigned by a transfer agent or registered by a registrar, either of which is other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issuance. If the corporation is authorized to issue shares of more than one class of stock or more than one series of any class, there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the corporation will furnish to any stockholder upon request and without charge, a full statement of all of the powers, designations, preferences, and rights of the shares of each class authorized to be issued and the qualifications, limitations or restrictions thereof, and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined, and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series. Each certificate representing shares shall state upon the face thereof that the corporation is organized under the laws of the State of Delaware, the name of the person to whom issued, the number and the class and the designation of the series, if any, which such certificate represents and the par value of each share represented by such certificate or a statement that the -22- 27 shares are without par value. No certificate shall be issued for any share until the consideration therefor has been fully paid. Section 2. Transfer of Shares. Subject to the provisions of Section 5 of this Article IX and the provisions of Section 2 of Article Four of the Certificate of Incorporation, upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction upon its books. Section 3. Lost, Stolen or Destroyed Certificate. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 4. Closing of Stock Ledger and Fixing Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment -23- 28 thereof, or entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the stock ledger shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock ledger shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such ledger shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock ledger, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days, and, in case of a meeting of stockholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock ledger is not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this Section 4, such determination shall apply to any adjournment thereof, except where the determination has been made through the closing of the stock ledger and the stated period of closing has expired. Section 5. Foreign Share Ownership. As used in these Bylaws, the word "Alien" shall include any individual not a citizen of the United States of America and any representative of any such -24- 29 individual; any corporation or other entity organized under the laws of any foreign government; any foreign government, its agencies or representatives; any partnership of which any partner is an alien, except for limited partners insulated in accordance with the rules and regulations of the Federal Communications Commission; any corporation or other entity controlled directly or indirectly by other than United States citizens; and any other entity or individual determined to be an alien under Section 310 of the Communications Act of 1934, as amended, or the rules and regulations of the Federal Communications Commission. At no time shall Aliens (i) own, directly or indirectly, more than one-fourth of the equity in the corporation, or in any other corporation directly or indirectly controlling the corporation, that is represented by the issued and outstanding capital stock of such corporation; or (ii) vote, directly or indirectly, more than one-fourth of the total voting rights in the corporation, or in any other corporation directly or indirectly controlling the corporation, that are represented by the issued and outstanding capital stock of such corporation. The percentage of voting rights and equity ownership of Aliens in the corporation's issued and outstanding capital stock shall be determined in accordance with the Communications Act of 1934, as amended, and the rules and regulations of the Federal Communications Commission, taking into account direct and indirect equity interests and direct and indirect voting rights in the corporation as may be required. As used in these Bylaws, a "Noncompliance Status" means the existence of circumstances in which, but for the following provisions of this Section 5, Aliens would own or hold voting -25- 30 rights or interests in the corporation in excess of the thresholds set forth in this paragraph. In the event a Noncompliance Status shall arise, then, so long as the Noncompliance Status continues to exist, those stockholders causing or contributing to the Noncompliance Status shall have no voting, dividend, or other rights with respect to the shares of the corporation that they may hold, except the right to transfer such shares in such a manner that the Noncompliance Status will cease to exist. No transfers of shares of domestic record to Aliens shall be made if a Noncompliance Status exists or if such transfer would result in a Noncompliance Status. If the corporation shall determine that stock of domestic record in fact is held or voted, in whole or in part, by or for the account of an Alien, and that such interest, but for this Section 5, would give rise to a Noncompliance Status, the holder of such stock shall not be entitled to vote, to receive dividends, or to exercise any other normal stockholder rights, except the right to transfer such stock to a citizen of the United States of America. Alien voting and equity interests and rights in stock of the corporation and the citizenship of transferees of the corporation's stock shall be determined in conformity with regulations prescribed by or upon the approval of the Board of Directors, which shall not be less restrictive than the requirements imposed by the Communications Act of 1934, as amended, and the rules and regulations of the Federal Communications Commission. The Board of Directors shall be authorized, at any time and from time to time, to adopt such other provisions as the directors may deem necessary or desirable to avoid violation of the provisions of Section 310 of the Communications Act of 1934 as now in effect or as it may -26- 31 hereafter from time to time be amended, and to carry out the provisions of this Section 5. Section 6. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. ARTICLE X GENERAL PROVISIONS Section 1. Dividends. The Board of Directors from time to time may declare, and the corporation may pay, dividends on its outstanding shares in cash, property, or its own shares pursuant to law and subject to the provisions of the Certificate of Incorporation and these Bylaws. Section 2. Reserves. The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any proper purpose or purposes, and may abolish any such reserve in the same manner. Section 3. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors from time to time may designate. Section 4. Fiscal Year. The fiscal year of the corporation shall be the calendar year. -27- 32 Section 5. Seal. The corporate seal shall have inscribed thereon the name of the corporation and may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. ARTICLE XI INDEMNIFICATION OF OFFICERS AND DIRECTORS Section 1. Actions, Suits, or Proceedings Other Than by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo -28- 33 contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. Actions or Suits by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, -29- 34 such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. Section 3. Indemnification for Costs, Charges, and Expenses of Successful Party. Notwithstanding the other provisions of this Article, to the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Section 4. Determination of Right to Indemnification. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be paid by the corporation unless a determination is made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the vote of the holders of a majority of the voting power of all of the shares entitled to vote thereon, that indemnification of the director, officer, employee or agent is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections 1 and 2 of this Article. Section 5. Advance of Costs, Charges and Expenses. Costs, charges and expenses (including attorneys' fees) incurred by a -30- 35 person referred to in Sections 1 and 2 of this Article in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the corporation as authorized in this Article. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate. The Board of Directors may, in the manner set forth above, and upon approval of such director, officer, employee or agent of the corporation, authorize the corporation's counsel to represent such person, in any action, suit or proceeding, whether or not the corporation is a party to such action, suit or proceeding. Section 6. Procedure for Indemnification. Any indemnification under Sections 1, 2 and 3, or advance of costs, charges and expenses under Section 5 of this Article, shall be made promptly, and in any event within 60 days, upon the written request of the director, officer, employee or agent. The right to indemnification or advances as granted by this Article shall be enforceable by the director, officer, employee or agent in any court of competent jurisdiction, if the corporation denies such -31- 36 request, in whole or in part, or if no disposition thereof is made within 60 days. Such person's costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 5 of this Article where the required undertaking, if any, has been received by the corporation) that the claimant has not met the standard of conduct set forth in Sections 1 or 2 of this Article, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 or 2 of this Article, nor the fact that there has been an actual determination by the corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 7. Other Rights; Continuation of Right to Indemnification. The indemnification and advancement of costs, charges and expenses provided by this Article shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of costs, charges and expenses may be entitled under any law (common or statutory), other Bylaw provision, agreement, vote of stockholders or disinterested -32- 37 directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent as to actions taken while he was such a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article shall be deemed to be a contract between the corporation and each director, officer, employee or agent of the corporation who serves or served in such capacity at any time while this Article is in effect. Any repeal or modification of this Article or any repeal or modification of relevant provisions of the Delaware General Corporation Law or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the corporation arising hereunder. Section 8. Extent of Indemnification. In addition to the specific indemnification provided for herein, the corporation shall indemnify each person who is or was or has agreed to become a director, officer, employee or agent of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent authorized or permitted (i) by the General Corporation Law of Delaware, or any other applicable law, or by any amendment thereof or other statutory provisions in effect on the date hereof, or (ii) by the corporation's Certificate of Incorporation as in effect on the date hereof. The corporation shall also advance expenses to any of the foregoing individuals to -33- 38 the fullest extent authorized or permitted (i) by the General Corporation Law of Delaware, or any other applicable law, or by any amendment thereof or other statutory provision in effect on the date hereof, or (ii) by the corporation's Certificate of Incorporation as in effect on the date hereof. Section 9. Insurance. Notwithstanding the foregoing, the corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article. Section 10. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director, officer, employee and agent of the corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated and to the full extent permitted by applicable law. -34- 39 ARTICLE XII AMENDMENTS The initial Bylaws of the corporation shall be adopted by the Board of Directors. The power to alter, amend, or repeal the Bylaws or adopt new Bylaws, subject to repeal or change by action of the stockholders, is vested in the Board of Directors. Thus, these Bylaws may be altered, amended, or repealed or new Bylaws may be adopted by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board, subject to repeal or change at any regular or special meeting of stockholders at which a quorum is present or represented by the affirmative vote of not less than two-thirds of the voting power of all of the shares entitled to vote at such meeting, voting together as a single class, and present or represented thereat, provided notice of the proposed repeal or change is contained in the notice of such meeting of stockholders. -35- EX-4.10 3 SUPPLEMENT NO. 6 TO RIGHTS AGREEMENT 1 Exhibit 4.10 SUPPLEMENT NO. 6 TO RIGHTS AGREEMENT This Supplement No. 6 to the Rights Agreement between the parties hereto supplements that certain Rights Agreement dated as of March 10, 1986, between A. H. Belo Corporation ("Belo") and RepublicBank Dallas, N.A., a national banking association ("Republic"), as amended prior to the date hereof (the "Rights Agreement"). RECITALS WHEREAS, Belo and Republic entered into the Rights Agreement as of March 10, 1986; WHEREAS, Belo and Republic amended the Rights Agreement by Supplement No. 1 dated April 9, 1987; WHEREAS, Belo and Republic amended the Rights Agreement by Supplement No. 2 dated May 6, 1987; WHEREAS, Belo and First RepublicBank Dallas, National Association ("First Republic"), as successor to Republic as the Rights Agent pursuant to the provisions of Section 19 of the Rights Agreement, amended the Rights Agreement by Supplement No. 3 dated May 19, 1988; WHEREAS, Belo, NCNB Texas National Bank ("NCNB-Texas"), as successor to First Republic as the Rights Agent pursuant to the provisions of Section 19 of the Rights Agreement, and Manufacturers Hanover Trust Company ("Manufacturers Hanover") amended the Rights Agreement by Supplement No. 4 dated December 12, 1988, in part to appoint Manufacturers Hanover as the Rights Agent under the Rights Agreement; WHEREAS, Belo and Chemical Bank ("Chemical"), as successor to Manufacturers Hanover as the Rights Agent pursuant to the provisions of Section 19 of the Rights Agreement, amended the Rights Agreement by Supplement No. 5 dated May 6, 1993; and WHEREAS, the Board of Directors of Belo has declared a two-for-one stock split in the form of a stock dividend on all outstanding shares of its Common Stock, pursuant to which, on or about June 9, 1995 it will distribute one share of its Series A Common Stock for each share of Series A Common Stock held as of May 19, 1995 and one share of its Series B Common Stock for each share of Series B Common Stock held as of May 19, 1995 (the "Distribution"); and WHEREAS, in connection with the Distribution, Belo and Chemical desire to amend the Rights Agreement pursuant to Section 26 of the Rights Agreement; 2 NOW, THEREFORE, the parties hereto agree to amend the Rights Agreement as follows: Pursuant to the provisions of Section 11(n), as a result of the Distribution (i) each Right shall entitle the holder thereof to purchase one four-hundredth of a Preferred Share, rather than one-two hundredth, at an exercise price of $43.75 per one-four hundredth of a Preferred Share, and (ii) the redemption price of $.05 per Right set forth in Section 23 is hereby adjusted to $.025 per Right. IN WITNESS WHEREOF, the parties hereto have caused this Supplement No. 6 to be duly executed and attested as of the 22nd day of February, 1995. A. H. BELO CORPORATION ATTEST: By: /s/ Robert W. Decherd By: /s/ Michael J. McCarthy ______________________________ ______________________________ Robert W. Decherd Michael J. McCarthy Chairman of the Board, President Senior Vice President, Secretary and Chief Executive Officer and General Counsel CHEMICAL BANK ATTEST: By: /s/ [illegible] By: /s/ [illegible] ________________________________ ____________________________________ Name:______________________________ Name:__________________________________ Title:_____________________________ Title:_________________________________ 2 EX-10.1(8) 4 CBS AFFILIATION AGREEMENT 1 EXHIBIT 10.1(8) CBS TELEVISION NETWORK CBS Affiliate Relations A Division of CBS Inc. AFFILIATION AGREEMENT --------------- CBS AFFILIATE RELATIONS, A Division of CBS Inc., 51 West 52 Street, New York, New York 10019 ("CBS"), and WWL-TV INC., 1024 North Rampart Street, New Orleans, Louisiana 70116 ("Broadcaster"), licensed to operate television station WWL-TV at New Orleans, Louisiana on channel number 4 ("Affiliated Station"), hereby mutually covenant and agree, as of the 10th day of May, 1994, as follows: 1. Offer, Acceptance and Delivery of Network Programs. Broadcaster shall have a "first call" on CBS network television programs ("Network Programs") as follows: (a) Offer of Network Programs. CBS shall offer to Broadcaster for broadcasting by Affiliated Station those Network Programs which are to be broadcast on a network basis by any television broadcast station licensed to operate in Affiliated Station's community of license. (b) Acceptance of Network Programs. As to any offer described in Paragraph 1(a) of this Agreement, Broadcaster may accept such offer only by notifying CBS, by means of CBS's computer-based communications system, of such acceptance within 72 hours (exclusive of Saturdays, Sundays and holidays), or such longer period as CBS may specify therein, after such offer; provided, however, that, if the first broadcast referred to in such offer is scheduled to occur less than 72 hours after the making of the offer, Broadcaster shall notify CBS of the acceptance or rejection of such offer as promptly as possible and in any event prior to the first broadcast time specified in such offer. Such acceptance shall constitute Broadcaster's agreement that Affiliated Station will broadcast such Network Program or Programs in accordance with the terms of this Agreement and of such offer, and so long as Affiliated Station so broadcasts such Network Program or Programs, CBS will not, subject to its rights in the program material, authorize the broadcast thereof on a network basis by any other television broadcast station licensed to operate in Affiliated Station's community of license; provided, however, that CBS shall have the right to authorize any television broadcast station, wherever licensed to operate, to broadcast any Network Program consisting of an address by the President of the United States of America on a subject of public importance or consisting of coverage of a matter of immediate national concern. If as to any Network Program offered hereunder, Broadcaster does not notify CBS as provided for in this Paragraph 1(b), Broadcaster shall have no rights with respect to such Network Program, and CBS may offer such Network Program on the same or different terms to any other television broadcast station or stations licensed to operate in Affiliated Station's community of license; - 1 - 2 provided, however, that, if any Network Program offered hereunder is accepted, by Affiliated Station, upon any other terms or conditions to which CBS agrees in writing, then the provisions of this Agreement shall apply to the broadcast of such Network Program except to the extent such provisions are expressly varied by the terms and conditions of such acceptance as so agreed to by CBS. (c) Delivery of Network Programs. Any obligation of CBS to furnish Network Programs for broadcasting by Affiliated Station is subject to CBS's making of arrangements satisfactory to it for the delivery of Network Programs to Affiliated Station. 2. Payment to Broadcasters. (a) Definitions. (i) "Live Time Period," means the time period or periods specified by CBS in its initial offer of a Network Program to Broadcaster for the broadcast of such Network Program over Affiliated Station; (ii) "Affiliated Station's Network Rate" shall be $4,622 and is used herein solely for purposes of computing payments by CBS to Broadcaster; (iii) "Commercial Availability" means a period of time made available by CBS during a Network Commercial Program for one or more Network Commercial Announcements or local cooperative commercial announcements; and (iv) "Network Commercial Announcements" means a commercial announcement broadcast over Affiliated Station during a Commercial Availability and paid for by or on behalf of one or more CBS advertisers, but does not include announcements consisting of billboards, credits, public service announcements, promotional announcements and announcements required by law. (b) Payment for Broadcast of Programs. For each Network Commercial Program or portion thereof, except those specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station during the Live Time Period therefor and the Live Time Period for which is set forth in the table below, CBS shall pay Broadcaster the amount resulting from multiplying the following: (i) Affiliated Station's Network Rate; by (ii) the percentage set forth below opposite such time period (which, unless otherwise specified, is expressed in Affiliated Station's then-current local time); by (iii) the fraction of an hour substantially occupied by such program or portion thereof; by (iv) the fraction of the aggregate length of all Commercial Availabilities during such program or portion thereof occupied by Network Commercial Announcements. -2- 3 Table Monday through Friday 6:00 a.m.- 9:00 a.m ............................. 7% 9:00 a.m.- 11:OO a.m ............................. 15% 11:00 a.m.- 3:00 p.m ............................. 6% 3:00 p.m.- 5:00 p.m ............................. 12% 5:00 p.m.- 7:00 p.m ............................. 15% 7:00 p.m.- 10:00 p.m ............................. 28% 10:00 p.m.- 11:00 p.m ............................. 15% Saturday 7:00 a.m.- 8:00 a.m ............................. 7% 8:00 a.m.- 5:00 p.m ............................. 12% 5:00 p.m.- 7:00 p.m ............................. 15% 7:00 p.m.- 10:00 p.m ............................. 28% 10:00 p.m.- 11:00 p.m ............................. 15% Sunday 10:30 a.m.- 5:00 p.m ............................. 12% 5:00 p.m.- 6:00 p.m ............................. 15% 6:00 p.m.- 10:00 p.m. ............................ 28% 10:00 p.m.- 11:00 p.m ............................. 15%
For each Network Program or portion thereof, except those specified in Paragraph 2(c) hereof, which is broadcast by Affiliated Station during a time period other than the Live Time Period therefor and the Live Time Period for which is set forth in the table above, CBS shall pay Broadcaster as if Affiliated Station had broadcast such program or portion thereof during such Live Time Period, except that: (i) if the percentage set forth above opposite the time period during which Affiliated Station broadcast such program or portion thereof is less than that set forth opposite such Live Time Period, then CBS shall pay Broadcaster on the basis of the time period during which Affiliated Station broadcast such program or portion thereof; and (ii) if the time period or any portion thereof during which Affiliated Station broadcast such program is not set forth in the table above, then CBS shall pay Broadcaster in accordance with Paragraph 2(c) hereof. (c) Payment for Broadcast of Other Programs. For the following programs, the percentages listed below (rather than those daypart percentages set forth in the table in Paragraph 2(b) hereinabove) shall be used in computing payment to Affiliated Station: -3- 4 Monday-Friday Daytime Game shows .................................... 15% Monday-Friday Continuing Dramas ..................................... 6% Monday-Friday Late Night Daypart ....................10% per telecast for live clearance or 5% per telecast for delayed clearance Monday - Friday CBS EVENING NEWS .................................... 15% CBS Sports programs ................................................. 0% CBS SUNDAY MORNING and FACE THE NATION .............................. 8%
Notwithstanding the payment obligations set forth in Paragraph 2(b) above, CBS shall pay Broadcaster such amounts as specified in CBS's program offer for Network Programs broadcast by Affiliated Station consisting of (i) special event programs (including, but not limited to, such programs as awards programs, mini-series, movie specials, entertainment specials, special-time-period broadcasts of regularly-scheduled series, and news specials such as political conventions, election coverage, presidential inaugurations and related events), (ii) paid political programming, and (iii) programs for which CBS specified a Live Time Period, or which Affiliated Station broadcast during a time period, any portion of which is not set forth in the table above. (d) Deduction. From the amounts otherwise payable to Broadcaster hereunder, there shall be deducted, for each week of the term of this Agreement, a sum equal to 168% of Affiliated Station's Network Rate. (e) Changes in Rate. CBS may reduce Affiliated Station's Network Rate in connection with a re-evaluation and reduction of the Affiliated Station Network Rate of CBS's affiliated stations in general, by giving Affiliated Station at least thirty-days' prior notice of such reduction in Affiliated Station's Network Rate in which event Broadcaster may terminate this Agreement, effective as of the effective date of any such reduction, on not less than fifteen-days' prior notice to CBS. In order to reflect differences in the importance of compensation payments to stations in markets of varying size, the size of any general reduction of the Network Rate of CBS's affiliated stations pursuant to this Paragraph 2(e) may vary to a reasonable degree according to each station's market-size category (i.e., 1-50, 51-100, 101-150 or 151+). (f) Time of Payment. CBS shall make the payments hereunder reasonably promptly after the end of each four-week or five-week accounting period of CBS for Network Commercial Programs broadcast during such accounting period. -4- 5 (g) Reports. Broadcaster shall submit to CBS in the manner requested by CBS such reports as CBS may reasonably request concerning the broadcasting of Network Programs by Affiliated Station. 3. Term and Termination. (a) Term. The term of this Agreement shall be the period commencing on the date Affiliated Station's license is transferred to Broadcaster and expiring on May 31, 1998; provided, however, that, unless Broadcaster or CBS shall notify the other at least six months prior to the expiration of the original period or any subsequent two-year period that the party giving such notice does not wish to have the term extended beyond such period, the term of this Agreement shall be automatically extended upon the expiration of the original period and each subsequent extension thereof for an additional period of two years. Notwithstanding any provision of any offer or acceptance under Paragraph 1 hereof, upon the expiration or any termination of the term of this Agreement, Broadcaster shall have no right whatsoever to broadcast over Affiliated Station any Network Program. (b) Termination on Transfer of License or Interest in Broadcaster. Broadcaster shall notify CBS forthwith if any application is made to the Federal Communications Commission relating to a transfer either of any interest in Broadcaster or of Broadcaster's license for Affiliated Station. CBS shall have the right to terminate this Agreement effective as of the effective date of any such transfer (except a transfer within the provisions of Section 73.3540(f) of the Federal Communications Commission's present Rules and Regulations) by giving Broadcaster notice thereof within thirty days after the date on which Broadcaster gives CBS notice of the making of such application. If CBS does not so terminate this Agreement, Broadcaster shall, prior to the effective date of any such transfer of Broadcaster's license for Affiliated Station, procure and deliver to CBS, in form satisfactory to CBS, the agreement of the proposed transferee that, upon consummation of the transfer, the transferee will unconditionally assume and perform all obligations of Broadcaster under this Agreement. Upon delivery of said agreement to CBS, in form satisfactory to it, the provisions of this Agreement applicable to Broadcaster shall, effective upon the date of such transfer, be applicable to such transferee. If Broadcaster does not so notify CBS or does not so procure such agreement of the proposed transferee, then CBS shall have the right to terminate the term of this Agreement effective upon giving Broadcaster and the transferee notice thereof within thirty days after the later of the effective date of such transfer and the date on which CBS first learns of such application. (c) Termination on Change of Transmitter Location, Power, Frequency or Hours of Operation of Affiliated Station. -5- 6 Broadcaster shall notify CBS forthwith if application is made to the Federal Communications Commission to modify the transmitter location, power or frequency of Affiliated Station or Broadcaster plans to modify the hours of operation of Affiliated Station. CBS shall have the right to terminate this Agreement, effective upon the effective date of such modification, by giving Broadcaster notice thereof within thirty (30) days after the date on which Broadcaster gives CBS notice of the application or plan for such modification. If Broadcaster fails to notify CBS as required herein, then CBS shall have the right to terminate this Agreement by giving Broadcaster thirty (30) days' notice thereof within thirty (30) days of the date on which CBS first learns of such application. (d) Termination in the Event of Bankruptcy. Upon one (1) month's notice, CBS may terminate this Agreement if a petition in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster otherwise takes advantage of any insolvency law, or an involuntary petition in bankruptcy is filed against Broadcaster and not dismissed within thirty (30) days thereafter, or if a receiver or trustee of any of Broadcaster's property is appointed at any time and such appointment is not vacated within thirty (30) days thereafter (it being understood that Broadcaster will have a similar right of termination upon the occurrence of any such event with respect to CBS). (e) Termination in the Event of Breach. Each party, effective upon notice to the other, may, in addition to its other rights, terminate this Agreement if any material representation, warranty or agreement of the other party contained in this Agreement has been breached. 4. Use of Network Programs. (a) General. Broadcaster shall not broadcast any Network Program over Affiliated Station unless such Network Program has first been offered by CBS to Broadcaster for broadcasting over Affiliated Station and has been accepted by Broadcaster in accordance with this Agreement. Except with the prior written consent of CBS, Broadcaster shall neither sell any Network Program, in whole or in part, or any time therein, for sponsorship, nor otherwise use Network Programs except as specifically authorized in this Agreement. Affiliated Station shall not broadcast any commercial announcement or announcements during any interval, within a Network Program, which is designated by CBS to Affiliated Station as being for the sole purpose of making a station identification announcement. Broadcaster shall, with respect to each Network Program broadcast over Affiliated Station, broadcast such Network Program in its entirety (including but not limited to commercial announcements, billboards, credits, public service announcements, promotional announcements and network identification), without interruption, alteration, compression, deletion or addition of any kind, from the beginning of the Network Program to the final system cue at the conclusion of the Network Program. Nothing herein shall be construed as preventing Broadcaster's deletion of (i) part of a Network Program in order to broadcast an emergency announcement or -6- 7 news bulletin; (ii) a promotional announcement for a Network Program not to be broadcast over Affiliated Station (provided that Affiliated Station shall broadcast an alternative promotional announcement for CBS network programming in place of the deleted promotional announcement); (iii) such words, phrases or scenes as Broadcaster, in the reasonable exercise of its judgment, determines it would not be in the public interest to broadcast over Affiliated Station; provided, however, that Broadcaster shall not substitute for any material deleted pursuant to this clause (iii) any commercial or promotional announcement of any kind whatsoever; and provided further that Broadcaster shall notify CBS of every such deletion within 72 hours thereof. Broadcaster shall not, without CBS's prior written consent, authorize or permit any Network Program, recording, or other material furnished by CBS to Broadcaster or Affiliated Station hereunder to be recorded, duplicated, rebroadcast, retransmitted or otherwise used for any purpose whatsoever other than broadcasting by Affiliated Station as provided herein; except that Broadcaster may assert a right to carriage of Affiliated Station's signal by a cable system pursuant to the provisions of Section 4 of the Cable Consumer Protection and Competition Act of 1992 ("the 1992 Cable Act") and may, to the extent permitted by paragraph 4(b) hereof, grant consent to the retransmission of such signal by a cable system or other multichannel video programming distributor, as defined by said Act, pursuant to the provisions of Section 6 thereof. (b) Retransmission Consent. Broadcaster may grant consent to the retransmission of Affiliated Station's signal by a cable system or other multichannel video programming distributor pursuant to the provisions of Section 6 of the 1992 Cable Act (hereafter "retransmission consent"), provided that one of the following conditions applies at the time retransmission consent is granted: (i) the cable system or other multichannel program service on which Affiliated Station's signal is to be retransmitted serves television homes within Affiliated Station's television market; (ii) the majority of television homes served by the cable system or other multichannel program service on which Affiliated Station's signal is to be retransmitted are within a county or community in which Affiliated Station's signal is, and has been since October 5, 1992, "significantly viewed" as defined in Section 76.54 of the FCC's rules; or (iii) the cable system or other multichannel program service on which Affiliated Station's signal is to be retransmitted carried such signal on October 5, 1992, and does not receive such signal by satellite delivery. Notwithstanding anything to the contrary in the foregoing, in no case shall retransmission consent be granted to a television receive-only satellite service, or a direct broadcast satellite service, if Affiliated Station's signal is to be retransmitted by such service to television homes outside of Affiliated Station's television market other than "unserved household(s)," as that term is defined in -7- 8 Section 119(d) of Title 17, United States Code, as in effect on October 5, 1992. For purposes of this paragraph, a station's "television market" shall be defined in the same manner as set forth in Sections 76.55(e) and 76.59 of the FCC's rules. (c) Taped Recordings of Network Programs. When authorized to make a taped delayed broadcast of a Network Program, Broadcaster shall use Broadcaster-owned tape to record the Network Program when transmitted by CBS only for a single broadcast by Affiliated Station and shall erase the Program recorded on the tape within 24 hours of broadcasting the Network Program and observe any limitations which CBS may place on the exploitation of the Network Program so recorded and erased. 5. Rejection, Refusal, Substitution and Cancellation of Network Programs. (a) Rights of Broadcaster and CBS. With respect to Network Programs offered to or already accepted hereunder by Broadcaster, nothing in this Agreement shall be construed to prevent or hinder: (i) Broadcaster from rejecting or refusing any such Network Program which Broadcaster reasonably believes to be unsatisfactory or unsuitable or contrary to the public interest, or from substituting a program which, in Broadcaster's opinion, is of greater local or national importance; or (ii) CBS from substituting one or more other Network Programs, in which event CBS shall offer such substituted program or programs to Broadcaster pursuant to the provisions of Paragraph 1 hereof; or (iii) CBS from canceling one or more Network Programs. (b) Notice. In the event of any such rejection, refusal, substitution or cancellation by either party hereto, such party shall notify the other thereof as soon as practicable by telex or by such computer-based communications system as CBS may develop for notifications of this kind. Notice given to CBS shall be addressed to CBS Affiliate Relations. 6. Disclosure of Information. CBS shall endeavor in good faith, before furnishing any Network Program, to disclose to Broadcaster information of which CBS has knowledge concerning the inclusion of any matter in such Network Program for which any money, service or other valuable consideration is directly or indirectly paid or promised to, or charged or accepted by, CBS or any employee of CBS or any other person with whom CBS deals in connection with the production or preparation of such Network Program. As used in this Paragraph 6, the term "service or other valuable consideration" shall not include any service or property furnished without charge or at a nominal charge for use in, or in connection -8- 9 with, any Network Program "unless it is so furnished in consideration for an identification in a broadcast of any person, product, service, trademark, or brand name beyond an identification which is reasonably related to the use of such service or property on the broadcast," as such words are used in Section 317 of the Communications Act of 1934 as amended. The provisions of this Paragraph 6 requiring the disclosure of information shall not apply in any case where, because of a waiver granted by the Federal Communications Commission, an announcement is not required to be made under said Section 317. The inclusion in any such Network Program of an announcement required by said Section 317 shall constitute the disclosure to Broadcaster required by this Paragraph 6. 7. Indemnification. CBS will indemnify Broadcaster from and against any and all claims, damages, liabilities, costs and expenses arising out of the broadcasting, pursuant to this Agreement, of Network Programs furnished by CBS to the extent that such claims, damages, liabilities, costs and expenses are (i) based upon alleged libel, slander, defamation, invasion of the right of privacy, or violation or infringement of copyright or literary or dramatic rights; (ii) based upon the broadcasting of Network Programs as furnished by CBS, without any deletions by Broadcaster; and (iii) not based upon any material added by Broadcaster to such Network Programs (as to which deletions and added material Broadcaster shall, to the like extent, indemnify CBS, all network advertisers, if any, on Such Network Program, and the advertising agencies of such advertisers). Furthermore, each party will so indemnify the other only if such other party gives the indemnifying party prompt notice of any claim or litigation to which its indemnity applies; it being agreed that the indemnifying party shall have the right to assume the defense of any or all claims or litigation to which its indemnity applies and that the indemnified party will cooperate fully with the indemnifying party in such defense and in the settlement of such claim or litigation. Except as herein provided to the contrary, neither Broadcaster nor CBS shall have any rights against the other party hereto for claims by third persons or for the non-operation of facilities or the non-furnishing of Network Programs for broadcasting if such non-operation or non-furnishing is due to failure of equipment, action or claims by any third person, labor dispute or any cause beyond such party's reasonable control. 8. News Reports Included in Affiliated Station's Local News Broadcasts. As provided in the agreements pertaining to CBS Newsnet and CBS regional news cooperatives (but as a separate obligation of this Affiliation Agreement as well), Broadcaster shall make available, on request by CBS News, coverage produced by Affiliated Station of news stories and breaking news events of national and/or regional interest, to CBS News and to regional news cooperatives operated by CBS News. Affiliated Station shall be compensated at CBS News' then-prevailing rates for material broadcast by CBS News or included in the national Newsnet service. 9. Non-Duplication of Network Programs. (a) For purposes of this paragraph, a television station's "Network Exclusivity Zone" shall mean the zone within thirty-five (35) miles of the station's reference points, or, in the case of a -9- 10 "small market television station," as defined in Section 76.92 of the FCC rules, the zone within 55 miles of said reference points; provided, however, that in no case shall the "Network Exclusivity Zone" include an area within the Area of Dominant Influence (ADI), as determined by Arbitron and published in the then-current edition of its Television ADI Market Guide, of another CBS Television Network Affiliate. A station's "reference points" for purposes of this paragraph shall be as defined in Section 73.658(m) of the FCC rules, and shall be deemed to include, with respect to a station in a hyphenated market, the reference points of each named community in that market. (b) Broadcaster shall be entitled to exercise, within Affiliated Station's Network Exclusivity Zone, the protection against duplication of network programming, as provided by Sections 76.92 through 76.97 of the FCC rules, with respect to a Network Program during the period beginning one (1) day before and ending seven (7) days after the delivery of such Network Program by CBS to Broadcaster; provided, however, that such right shall apply only to Network Programs broadcast in the live time period as offered or on no more than a one day delay as accepted by CBS; and provided further that nothing herein shall be deemed to preclude CBS from granting to any other broadcast television station licensed to any other community similar network non-duplication rights within that station's Network Exclusivity Zone, and Broadcaster's aforesaid right of network non-duplication shall not apply with respect to the transmission of the programs of another CBS affiliate (current or future) by a "community unit," as that term is defined by the rules of the FCC, located (wholly or partially) within the area in which Broadcaster's Network Exclusivity Zone overlaps the Network Exclusivity Zone of that other CBS affiliate. (c) Broadcaster's network non-duplication rights under this paragraph shall be subject to cancellation by CBS on six (6) months written notice to Broadcaster. Any such cancellation by CBS shall not affect any of the other rights and obligations of the parties under this Agreement. 10. Assignment, Conveyance and Conditions for Use of Descramblers. (a) For value received, CBS hereby conveys, transfers, and assigns to Broadcaster, all of its rights, title and interest in and to the tangible personal property consisting of two (2) Videocipher 1B Descramblers (the "Descramblers") subject to the following conditions: (i) Broadcaster may not assign its rights in the Descramblers to any party without CBS's written approval. (ii) At the termination or expiration of this Agreement, Broadcaster's rights in the Descramblers shall cease and Broadcaster shall take appropriate steps to assign the Descramblers to CBS. (b) Broadcaster shall use the Descramblers solely in connection with the broadcast rights granted and specified in the Agreement. - 10- 11 (c) CBS makes no warranties whatsoever, either express or implied, in respect of the equipment including, but not limited to, any warranties of merchantability or fitness for a particular purpose. (d) Broadcaster shall be solely responsible for any and all installation and other related costs or charges in connection with the use and installation of the Descramblers. Broadcaster shall at all times use and maintain the Descramblers as instructed by CBS and the manufacturer and shall use its best efforts to assure that the Descramblers are kept in good condition and that no tampering with the Descramblers or other breach of security, as defined in subparagraph (g) below, occurs. Broadcaster shall promptly notify the CBS Satellite Management Center by telephone of any defect or failure in the operation of the Descramblers and shall follow such procedures as are established by CBS for the replacement or repair of the Descramblers. CBS shall be responsible for the cost of correcting any defect or of rectifying any failure of the Descramblers to operate during the Term of the Agreement, provided that Broadcaster shall be responsible for any costs associated with its failure to follow the prescribed procedures. (e) In addition to its rights under paragraph 7 of the Agreement, CBS will not be liable for any damages resulting from the operation of the Descramblers or from the failure of the Descramblers to function properly or, any loss, cost or damage to Broadcaster or others arising from defects or non-performance of the Descramblers. (f) If Broadcaster makes any use of the Descramblers in violation of the terms and conditions of this Agreement, said use shall be a material breach of this Agreement. (g) Should Broadcaster's willful acts or negligence result in any breach in the security of the two Descramblers covered by this Agreement, such breach of security shall be a material breach of this Agreement. Breach of security shall include but not be limited to any theft of all or part of the Descramblers, any unauthorized reproduction of all or part of the Descramblers, any unauthorized reproduction of the code involved in descrambling the network feed from CBS to Broadcaster, or any related misappropriation of the physical property or intellectual property contained in the Descramblers. 11. General. (a) As of the beginning of the term hereof, this Agreement takes the place of, and is substituted for, any and all television affiliation agreements heretofore existing between Broadcaster and CBS concerning Affiliated Station, subject only to the fulfillment of any obligations thereunder relating to events occurring prior to the beginning of the term hereof. This Agreement cannot be changed or terminated orally and no waiver by either Broadcaster or CBS of any breach of any provision hereof shall be or be deemed to be a waiver of any preceding or subsequent breach of the same or any other provision of this Agreement. (b) The obligations of Broadcaster and CBS under this Agreement are subject to all applicable federal, state and local law, rules and regulations (including but not limited to the Communications Act of 1934 as amended and the Rules and Regulations of the Federal Communications Commission) and this Agreement and all matters or issues collateral thereto shall -11- 12 be governed by the law of the State of New York applicable to contracts performed entirely therein. (c) Neither Broadcaster nor CBS shall be or be deemed to be or hold itself out as the agent of the other under this Agreement. (d) Unless specified otherwise, all notices given hereunder shall be given in writing, by personal delivery, mail, telegram, telex system or private wire at the respective addresses of Broadcaster and CBS set forth above, unless either party at any time or times designates another address for itself by notifying the other party thereof by certified mail, in which case all notices to such party shall thereafter be given at its most recently so designated address. Notice given by mail shall be deemed given on the date of mailing thereof with postage prepaid. Notice given by telegram shall be deemed given on delivery of such telegram to a telegraph office with charges therefor prepaid or to be billed to the sender thereof. Notice given by private wire shall be deemed given on the sending thereof. (e) The titles of the paragraphs in this Agreement are for convenience only and shall not in any way affect the interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WWL-TV INC. CBS AFFILIATE RELATIONS A Division of CBS Inc. By /s/ WARD L. HUEY, JR. By /s/ [illegible] ---------------------- ------------------- - 12- 13 [CBS LETTERHEAD] May 10, 1994 WWL-TV INC. New Orleans, Louisiana Gentlemen: Reference is made to the CBS Television Network Affiliation Agreement between you and us dated May 10, 1994 relating to television station WWL-TV at New Orleans, Louisiana. You and we agree that at such time as WWL-TV commences clearance of the two hour weekday morning CBS News program CBS THIS MORNING, effective on the premiere date of the program a revenue-neutral reallocation of payment will be made by increasing payment for the Monday - Friday 6:00AM - 9:00AM time period from 7% to 11.2% per hour as specified in paragraph 2(b), and reducing payment for the Monday - Friday CBS EVENING NEWS from 15% to 5% per hour as specified in paragraph 2(c). This letter shall not be construed as amending in any way any of the other terms or conditions of the Agreement. WWL-TV INC. CBS AFFILIATE RELATIONS A Division of CBS Inc. /s/ [ILLEGIBLE] /s/ [ILLEGIBLE] ______________________________ _____________________________ EX-10.3(14) 5 A.H. BELO EMPLOYEE SAVING AND INVESTMENT PLAN 1 EXHIBIT 10.3(14) A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT PLAN 2 A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT PLAN A. H. Belo Corporation, a Delaware corporation, adopts this employee savings and investment plan effective October 1, 1989. The Plan is a profit sharing plan with a cash or deferred arrangement intended to qualify under Code section 401(a) and to meet the requirements of Code section 401(k). The Company and Fidelity Management Trust Company have entered into a trust agreement that provides for the investment and reinvestment of the assets of the Plan. Words and phrases with initial capital letters used throughout the Plan are defined in Article 1. (i) 3 TABLE OF CONTENTS
Page ---- Article 1 Definitions 1 Article 2 Participation 8 Article 3 Contributions 10 Article 4 Allocations to Participants' Accounts 13 Article 5 Vesting 15 Article 6 Distributions to Participants 16 Article 7 Distributions to Beneficiaries 21 Article 8 Provisions Regarding Company Stock 23 Article 9 Administration of the Plan and Trust Agreement 26 Article 10 Limitations on Contributions and Allocations to Participants' Accounts 31 Article 11 Restrictions on Distributions to Participants and Beneficiaries 43 Article 12 Top-Heavy Provisions 46 Article 13 Adoption of Plan by Controlled Group Members 52 Article 14 Amendment of the Plan 53 Article 15 Termination, Partial Termination and Complete Discontinuance of Contributions 54 Article 16 Miscellaneous 56 Appendix A Participating Employers 59
(ii) 4 ARTICLE 1 DEFINITIONS 1.1 "Account" means the records, including subaccounts, maintained by the Committee in the manner provided in Article 4 to determine the interest of each Participant in the assets of the Plan and may refer to either or both of the Participant's Deferral Contribution Account and his Matching Contribution Account. 1.2 "Beneficiary" means the one or more persons or entities entitled to receive distribution of a Participant's interest in the Plan in the event of his death as provided in Article 7. 1.3 "Board of Directors" or "Board" means the Board of Directors of the Company. 1.4 "Code" means the Internal Revenue Code of 1986, as amended from time to time. 1.5 "Committee" or "Administrative Committee" means the Committee appointed under Article 9. 1.6 "Company" means A. H. Belo Corporation, a Delaware corporation. 1.7 "Company Stock" means the Series A Common Stock, par value $1.67 per share, of the Company. 1.8 "Compensation" means the earnings paid to an Employee by the Participating Employers which are subject to reporting on Internal Revenue Service Form W-2, excluding, however, any earnings paid to the Employee in a form other than cash. In addition, Compensation includes any contributions made by the Participating Employers on behalf of an Employee pursuant to a deferral election under the Plan or under any other employee benefit plan containing a cash or deferred arrangement under Code section 401(k) and any amounts that would have been received as cash but for an election to receive benefits under a cafeteria plan meeting the requirements of Code section 125. The annual Compensation of an Employee taken into account for any purpose for any Plan Year will not exceed $200,000, as adjusted in regulations prescribed by the Secretary of the Treasury. For purposes of applying the $200,000 limit set forth in the preceding sentence, an Employee's Compensation includes the Compensation of his spouse 5 and any lineal descendants who are under age 19 at the end of the Plan Year if the Employee is a Highly Compensated Employee (as defined in Section 10.2(m)) who is either (i) a 5-percent owner, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the 10 most highly compensated Employees ranked on the basis of Compensation paid by the Controlled Group during the year, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder. 1.9 "Controlled Group" means the Company and all other corporations, trades and businesses, the employees of which, together with employees of the Company, are required by the first sentence of subsection (b), by subsection (c), by subsection (m) or by subsection (o) of Code section 414 to be treated as if they were employed by a single employer. 1.10 "Controlled Group Member" means each corporation or unincorporated trade or business that is or was a member of the Controlled Group, but only during such period as it is or was such a member. 1.11 "Deferral Contribution" means the amount of a Participant's Compensation that he elects to have contributed to the Plan by the Participating Employers rather than paid to him directly in cash. 1.12 "Deferral Contribution Account" means the Account established for each Participant, the balance of which is attributable to the Participant's Deferral Contributions and earnings and losses of the Trust Fund with respect to such contributions. 1.13 "Effective Date" means the first day of October, 1989. 1.14 "Employee" means any person who is: (i) employed by any Controlled Group Member if their relationship is, for federal income tax purposes, that of employer and employee, or (ii) "a leased employee" of a Controlled Group Member within the meaning of Code section 414(n)(2) but only for purposes of the requirements of Code section 414(n)(3). 1.15 "Entry Date" means January 1, April 1, July 1 and October 1 of each Plan Year. 1.16 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. -2- 6 1.17 "Hour of Service" means each hour credited in accordance with the following rules: (a) Credit for Services Performed. An Employee will be credited with one Hour of Service for each hour for which he is paid, or entitled to payment, by one or more Controlled Group Members for the performance of duties. (b) Credit for Periods in Which No Services Are Performed. An Employee will be credited with one Hour of Service for each hour for which he is paid, or entitled to payment, by one or more Controlled Group Members on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated); except that (i) no more than 501 Hours of Service will be credited under this subsection (b) to an Employee on account of any single continuous period during which he performs no duties (whether or not such period occurs in a single Plan Year), (ii) an hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed will not be credited to the Employee if the payment is made or due under a plan maintained solely for the purpose of complying with applicable workers' compensation or unemployment compensation or disability insurance laws, and (iii) Hours of Service will not be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee. For purposes of this subsection (b), an Employee will be credited with Hours of Service on the basis of his regularly scheduled working hours per week (or per day if he is paid on a daily basis) or, in the case of an Employee without a regular work schedule, on the basis of 40 Hours of Service per week (or 8 Hours of Service per day if he is paid on a daily basis) for each week (or day) during the period of time during which no duties are performed; except that an Employee will not be credited with a greater number of Hours of Service for a period during which no duties are performed than the number of hours for which he is regularly scheduled for the performance of duties during the period or, in the case of an Employee without a regular work schedule, on the basis of 40 Hours of Service per week (or 8 Hours of Service per day if he is paid on a daily basis). (c) Credit for Back Pay. An Employee will be credited with one Hour of Service for each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by one or more Controlled Group Members; except that an hour will not be credited under both subsection (a) or (b), as the case may be, and this subsection (c), and -3- 7 Hours of Service credited under this subsection (c) with respect to periods described in subsection (b) will be subject to the limitations and provisions under subsection (b). (d) Credit for Certain Absences. If an Employee is absent from work on or after the Effective Date for any period by reason of the pregnancy of the Employee, by reason of the birth of a child of the Employee, by reason of the placement of a child with the Employee, or for purposes of caring for a child for a period beginning immediately following the birth or placement of that child, the Employee will be credited with Hours of Service (solely for the purpose of determining whether he has a One Year Break in Service under the Plan) equal to (i) the number of Hours of Service which otherwise would normally have been credited to him but for his absence, or (ii) if the number of Hours of Service under clause (i) is not determinable, 8 Hours of Service per normal workday of the absence, provided, however, that the total number of Hours of Service credited to an Employee under this subsection (d) by reason of any pregnancy, birth or placement will not exceed 501 Hours of Service. Hours of Service will not be credited to an Employee under this subsection (d) unless the Employee furnishes to the Committee such timely information as the Committee may reasonably require to establish that the Employee's absence from work is for a reason specified in this subsection (d) and the number of days for which there was such an absence. (e) Manner of Counting Hours. No hour will be counted more than once or be counted as more than one Hour of Service even though the Employee may receive more than straight-time pay for it. With respect to Employees whose compensation is not determined on the basis of certain amounts for each hour worked during a given period and for whom hours are not required to be counted and recorded by any federal law (other than ERISA), Hours of Service will be credited on the basis of 10 Hours of Service daily, 45 Hours of Service weekly, 95 Hours of Service semi-monthly, or 190 Hours of Service monthly, if the Employee's compensation is determined on a daily, weekly, semi-monthly or monthly basis, respectively, for each period in which the Employee would be credited with at least one Hour of Service under this section. Except as otherwise provided in subsection (d), Hours of Service will be credited to eligibility and vesting computation periods in accordance with the provisions of 29 C.F.R. Section 2530.200b-2, which provisions are incorporated in this Plan by reference. 1.18 "Matching Contribution Account" means the Account established for each Participant, the balance of which is -4- 8 attributable to Participating Employer matching contributions made pursuant to Article 3, forfeitures and earnings and losses of the Trust Fund with respect to such contributions and forfeitures. 1.19 "Net Profits" means the amount of a Participating Employer's current and accumulated earnings as determined under accounting principles adopted by the Participating Employer and consistently applied, without regard to whether the Participating Employer has current or accumulated earnings and profits for federal income tax purposes, and determined before the deduction of federal or state income taxes and contributions to the Plan. 1.20 "One Year Break in Service" means a period of at least 12 consecutive months in which an Employee is absent from service. A One Year Break in Service Year will begin on the Employee's termination date (as defined in Section 1.30) and will end on the day on which the Employee again performs an Hour of Service for a Controlled Group Member. If an Employee who is absent from work with a Controlled Group Member because of (i) the Employee's pregnancy, (ii) the birth of the Employee's child, (iii) the placement of a child with the Employee in connection with the Employee's adoption of the child, or (iv) caring for such child immediately following such birth or placement, will be absent for such reason beyond the first anniversary of the first date of his absence, his period of absence, solely for purposes of preventing a One Year Break in Service, will commence on the second anniversary of the first day of his absence from work. The period of absence from work between the first and second anniversaries of the first date of his absence from work will not be taken into account in determining whether the Employee has completed a Year of Service. The provisions of this paragraph will not apply to an Employee unless the Employee furnishes to the Committee such timely information that the Committee may reasonably require to establish (i) that the absence from work is for one of the reasons specified in this paragraph and (ii) the number of days for which there was such an absence. 1.21 "Participant" means an Employee or former Employee who has met the applicable eligibility requirements of Article 2 and who has not yet received a distribution of the entire amount of his vested interest in the Plan. 1.22 "Participating Employer" means each Controlled Group Member set forth on Appendix A and any other Controlled -5- 9 Group Member or organizational unit of the Company or a Controlled Group Member which is designated as a Participating Employer under the Plan by the Board of Directors. 1.23 "Plan" means the employee savings and investment plan set forth herein, as amended from time to time. 1.24 "Plan Year" means the period with respect to which the records of the Plan are maintained, which will be the 12-month period beginning on December 31 and ending on December 30. 1.25 "Qualified Plan" means an employee benefit plan that is qualified under Code section 401(a). 1.26 "Trust Agreement" means the agreement or agreements executed by the Company and the Trustee which establishes a trust fund to provide for the investment, reinvestment, administration and distribution of contributions made under the Plan and the earnings thereon, as amended from time to time. 1.27 "Trust Fund" means the assets of the Plan held by the Trustee pursuant to the Trust Agreement. 1.28 "Trustee" means the one or more individuals or organizations who have entered into the Trust Agreement as Trustee, and any duly appointed successor. 1.29 "Valuation Date" means the date with respect to which the Trustee determines the fair market value of the assets comprising the Trust Fund or any portion thereof. The regular Valuation Date will be the last day of each Plan Year. However, if the Committee determines that the fair market value of any asset comprising the Trust Fund has changed substantially since the previous Valuation Date, or if the Committee determines it to be in the best interests of the Plan and the Participants to value any asset of the Trust Fund at a time other than the regular Valuation Date, the Committee may fix, in a uniform and nondiscriminatory manner, one or more interim Valuation Dates. 1.30 "Year of Service" means each period of 365 days (determined by aggregating periods of service that are not consecutive) beginning on the date an Employee is first credited with an Hour of Service (or is again credited with an Hour of Service following his reemployment) and ending on the earlier of (i) the date on which the Employee quits, retires, is discharged or dies or (ii) the first anniversary of the date -6- 10 on which the Employee is absent from service with a Controlled Group Member for any other reason, such as vacation, holiday, sickness, disability, leave of absence or layoff (the earlier of such dates is hereafter referred to as the Employee's "termination date"). An Employee's period of service for purposes of determining a Year of Service will include each period in which the Employee is absent from service for less than 12 months (measured from the Employee's termination date) and any periods during which he is in the service of the armed forces of the United States and his reemployment rights are guaranteed by law, provided he returns to employment with a Controlled Group Member within the time such rights are guaranteed. -7- 11 ARTICLE 2 PARTICIPATION 2.1 Eligibility to Participate. Each Employee who had both attained age 21 and completed a Year of Service before the Effective Date, or who participated in the Company's Employee Stock Purchase Plan immediately before the Effective Date, will be a Participant as of the first payroll period beginning on or after the Effective Date, if he is then employed by a Participating Employer. Each Employee who is not a Participant as of the Effective Date will become a Participant as of the first payroll period beginning on or after the first Entry Date following the date he has both attained age 21 and completed a Year of Service, if he is then employed by a Participating Employer. 2.2 Exclusions from Participation. (a) Ineligible Employees. An Employee who is otherwise eligible to participate in the Plan will not become or continue as an active Participant if (i) he is covered by a collective bargaining agreement that does not expressly provide for participation in the Plan, provided that the representative of the Employees with whom the collective bargaining agreement is executed has had an opportunity to bargain concerning retirement benefits for those Employees; (ii) he is represented by a bargaining representative but is not covered by a collective bargaining agreement, unless the Company and the bargaining representative agree in writing that the Employee will be eligible to participate in the Plan; (iii) he is classified as a part-time Employee in accordance with standard personnel practices of his Participating Employer and did not participate in the Company's Employee Stock Purchase Plan immediately before the Effective Date; (iv) he is a nonresident alien who receives no earned income (within the meaning of Code section 911(d)(2)) from a Participating Employer which constitutes income from sources within the United States (within the meaning of Code section 861(a)(3)); (v) he is a leased employee required to be treated as an Employee under Code section 414(n); (vi) he is employed by a Controlled Group Member or an organizational unit thereof that has not been designated as a Participating Employer by the Board; or (vii) he is then on an approved leave of absence without pay or in the service of the armed forces of the United States. (b) Exclusion after Participation. A Participant who becomes ineligible under subsection (a) may not elect to have Deferral Contributions made or continued to the Plan. -8- 12 (c) Participation after Exclusion. An Employee or Participant who is excluded from active participation will be eligible to participate in the Plan on the first day he is no longer described in subsection (a) and is credited with one or more Hours of Service by a Participating Employer, provided that he has otherwise met the requirements of Section 2.1. This subsection will apply to an Employee who returns from an approved leave of absence or from military leave and who would otherwise be treated as a new Employee under Section 2.3 only if he returns to employment with a Controlled Group Member immediately following the expiration of the leave of absence or, in the case of an Employee on military leave, during the period in which reemployment rights are guaranteed by law. 2.3 Reemployment Provisions. All Hours of Service are counted in determining eligibility to participate, except as otherwise provided in this Section. (a) Termination of Employment before Participation. If an Employee terminates employment before becoming a Participant and is reemployed by a Controlled Group Member before incurring five consecutive One Year Breaks in Service, he will become a Participant on the later of the Entry Date initially determined under Section 2.1 or the date he is credited with one or more Hours of Service by a Participating Employer after reemployment; but if he is reemployed by a Controlled Group Member after incurring five consecutive One Year Breaks in Service he will be treated as a new Employee for purposes of the Plan and his Hours of Service completed before his reemployment will be disregarded in determining when he will become a Participant. (b) Termination of Employment after Participation. A Participant who terminates employment will again become an active Participant immediately upon his reemployment by a Participating Employer. -9- 13 ARTICLE 3 CONTRIBUTIONS 3.1 Participant Deferral Contributions. (a) Amount of Deferral Contributions. A Participant may elect, in accordance with procedures established by the Committee from time to time, to have Deferral Contributions made to the Plan by the Participating Employers, provided the amount of a Participant's Deferral Contributions for any Plan Year will not be less than 2% nor more than 10% of his Compensation for the Plan Year. (b) Modification and Suspension of Deferral Contributions. A Participant may increase or decrease the amount of his Deferral Contributions during the Plan Year, provided that only one such modification may be made during any six-month period. A Participant may suspend his Deferral Contributions at any time during the Plan Year, and a suspension of his Deferral Contributions will not be considered a modification for purposes of this subsection (b). A Participant who suspends his Deferral Contributions may not again authorize Deferral Contributions to the Plan for a period of six months. The Committee will adopt from time to time procedures for administering the rules contained in this subsection. (c) Limitations on Deferral Contributions. The sum of a Participant's Deferral Contributions and his elective deferrals (within the meaning of Code section 402(g)(3)) under any other plans, contracts or arrangements of any Controlled Group Member will not exceed $7,000 (as adjusted for cost of living increases in the manner described in Code section 415(d)) for any taxable year of the Participant. A Participant's Deferral Contributions will also be subject to the deferral percentage limitation set forth in Section 10.6. In the event a Participant's Deferral Contributions and other elective deferrals (whether or not under a plan, contract or arrangement of a Controlled Group Member) for any taxable year exceed the foregoing $7,000 limitation, the excess allocated by the Participant to Deferral Contributions (adjusted for Trust Fund earnings and losses in the manner described in Section 10.6(d)) may, in the discretion of the Committee, be distributed to the Participant no later than April 15 following the close of such taxable year. The amount of Deferral Contributions distributed to a Participant for a Plan Year pursuant to this Section will be reduced by any excess Deferral -10- 14 Contributions previously distributed to him pursuant to Section 10.6(c) for the same Plan Year. 3.2 Participating Employer Matching Contributions. (a) Amount of Matching Contributions. The Participating Employers will pay to the Trustee as a matching contribution for each Plan Year an amount equal to 30% of each Participant's Deferral Contributions, but only to the extent that the Participant's Deferral Contributions do not exceed 5% of the Participant's Compensation for the portion of the Plan Year with respect to which he has authorized Deferral Contributions. In addition, each Participating Employer may make an additional matching contribution for any Plan Year if authorized by its board of directors, but no Participating Employer will be required to make an additional matching contribution for any Plan Year. Participating Employer matching contributions may be made in cash or in shares of Company Stock or both. (b) Limitation on Matching Contributions. Participating Employer matching contributions will be subject to the contribution percentage limitation set forth in Section 10.7. 3.3 Net Profits Restriction. Deferral Contributions and Participating Employer matching contributions will be made by the Participating Employers from their Net Profits. If a Participating Employer which is a member of an affiliated group within the meaning of Code section 1504 is prevented from making its accrued contribution to the Plan by reason of having no Net Profits or because the Net Profits of the Participating Employer are less than the contribution which it has accrued, then so much of the contribution which the Participating Employer was prevented from making may be made, for the benefit of Participants who are employed by the Participating Employer, by any other Participating Employer, subject to the limitations of Code section 404(a)(3)(B) and the Treasury Regulations thereunder. If a Participating Employer does not have sufficient Net Profits to contribute the total amount of Deferral Contributions elected by its Employees for a Plan Year, and if the other Participating Employers do not make up the full balance of such contribution pursuant to the preceding sentence, then the Deferral Contributions elected for such Plan Year by the Participants employed by that Participating Employer will be reduced ratably, and no further Participating Employer matching contributions will be made to the Plan. -11- 15 3.4 Time of Payment. Deferral Contributions and Participating Employer matching contributions will be paid to the Trustee as soon as practicable following the close of each calendar month during the Plan Year. 3.5 Investment of Contributions. Participating Employer matching contributions will be invested by the Trustee pursuant to the Trust Agreement solely in shares of Company Stock. The Deferral Contributions allocated to a Participant's Deferral Contribution Account will be invested by the Trustee in accordance with the Participant's directions in the investment funds established for such purpose pursuant to the Trust Agreement. The Committee from time to time will establish rules and procedures regarding Participant investment directions, including, without limitation, rules and procedures with respect to the manner in which such directions may be furnished, the frequency with which such directions may be changed during the Plan Year and the minimum portion of a Participant's Deferral Contribution Account that may be invested in any one investment fund. 3.6 Rollover and Transfer Contributions. Unless directed to do so by the Committee, the Trustee is not authorized to accept (i) any part of the cash or other assets distributed to a Participant from a Qualified Plan or from an individual retirement account or annuity described in Code section 408, or (ii) a direct transfer of assets to the Plan on behalf of a Participant from the trustee or other funding agent of a Qualified Plan. -12- 16 ARTICLE 4 ALLOCATIONS TO PARTICIPANTS' ACCOUNTS 4.1 Establishment of Accounts. The Committee will establish a Deferral Contribution Account and a Matching Contribution Account for each Participant and may establish one or more subaccounts of a Participant's Accounts, if the Committee determines that subaccounts are necessary or desirable in administering the Plan. 4.2 Allocation of Contributions and Forfeitures. Each Deferral Contribution made by a Participating Employer on behalf of a Participant will be allocated by the Committee to the Participant's Deferral Contribution Account. Each Participating Employer matching contribution made with respect to a Plan Year and all forfeitures arising during that Plan Year will be allocated by the Committee to the Matching Contribution Accounts of Participants employed by that Participating Employer in the ratio that the Deferral Contributions made on behalf of each such Participant for the Plan Year bear to the total Deferral Contributions made on behalf of all such Participants for the Plan Year, taking into account for purposes of this ratio only Deferral Contributions that do not exceed 5% of each Participant's Compensation. 4.3 Limitation on Allocations. Article 10 sets forth certain rules under Code sections 401(k), 401(m) and 415 that limit the amount of contributions and forfeitures that may be allocated to a Participant's Accounts for a Plan Year. 4.4 Allocation of Trust Fund Income and Loss. (a) Accounting Records. The Committee, through its accounting records, will clearly segregate each Account and subaccount and will maintain a separate and distinct record of all income and losses of the Trust Fund attributable to each Account or subaccount. Income or loss of the Trust Fund will include any unrealized increase or decrease in the fair market value of the assets of the Trust Fund. (b) Method of Allocation. The share of net income or net loss of the Trust Fund to be credited to, or deducted from, each Account will be the allocable portion of the net income or net loss of the Trust Fund attributable to each Account determined by the Committee as of each Valuation Date in a uniform and nondiscriminatory manner, based upon the ratio that each Account balance as of the previous Valuation -13- 17 Date bears to all Account balances after adjustment for withdrawals, distributions and other additions or subtractions that may be appropriate. The share of net income or net loss to be credited to, or deducted from, any subaccount will be an allocable portion of the net income or net loss credited to or deducted from the Account under which the subaccount is established. 4.5 Valuation of Trust Fund. The fair market value of the total net assets comprising the Trust Fund will be determined by the Trustee as of each Valuation Date. 4.6 No Guarantee. The Participating Employers, the Committee and the Trustee do not guarantee the Participants or their Beneficiaries against loss or depreciation or fluctuation of the value of the assets of the Trust Fund. 4.7 Annual Statement of Accounts. The Committee will furnish each Participant and each Beneficiary of a deceased Participant, at least annually, a statement showing (i) the value of his Accounts at the end of the Plan Year, (ii) the allocations to and distributions from his Accounts during the Plan Year, and (iii) his vested and nonforfeitable interest in his Accounts at the end of the Plan Year. No statement will be provided to a Participant or Beneficiary after the Participant's entire vested and nonforfeitable interest in his Accounts has been distributed. -14- 18 ARTICLE 5 VESTING 5.1 Determination of Vested Interest. Except as provided in Section 5.2, the interest of each Participant in his Deferral Contribution Account and his Matching Contribution Account will be 100% vested and nonforfeitable at all times. 5.2 Unclaimed Distribution. If the Committee cannot locate a person entitled to receive a benefit under the Plan within a reasonable period (as determined by the Committee in its discretion), the amount of the benefit will be treated as a forfeiture during the Plan Year in which the period ends. If, before final distributions are made from the Trust Fund following termination of the Plan, a person who was entitled to a benefit which has been forfeited under this Section makes a claim to the Committee or the Trustee for his benefit, he will be entitled to receive, as soon as administratively feasible, a benefit in an amount equal to the value of the forfeited benefit on the date of forfeiture. This benefit will be reinstated from Participating Employer contributions made to the Plan for this purpose. 5.3 Application of Forfeited Amounts. The amount of a Participant's Accounts which is forfeited pursuant to Section 5.2 will be applied to reduce Participating Employer contributions pursuant to Article 3. -15- 19 ARTICLE 6 DISTRIBUTIONS TO PARTICIPANTS 6.1 Basic Rules Governing Distributions. (a) Timing of Distributions. Except as set forth in Sections 6.2 and 6.3, distribution of a Participant's vested Account balances will be made as soon as practicable after the Valuation Date coinciding with or immediately following the Participant's termination of employment. If a loan is outstanding from the Trust Fund to the Participant on the date his vested Account balances become distributable, the amount distributed to the Participant will be reduced by any security interest in his Accounts held by the Plan by reason of the loan. (b) Form of Distributions. Distributions will be made in a single lump sum payment. Shares of Company Stock allocated to a Participant's Accounts will be distributed in the form of whole shares plus cash for any fractional share, unless the Participant elects to receive the cash value of such shares. (c) Participant's Consent to Certain Payments. If the amount of a Participant's vested Account balances exceeds $3,500, the Committee will not distribute the Participant's vested Account balances to him prior to his attainment of age 62 unless he consents to the distribution. The foregoing provision will not apply to any distributions required under Sections 10.6 and 10.7. 6.2 Withdrawals after Age 59-1/2. A Participant who has not terminated employment may request a distribution from his Accounts if he has reached age 59-1/2. A Participant who is a director, officer or principal stockholder of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934 may exercise the foregoing withdrawal right only in accordance with rules and procedures established from time to time by the Committee. All other Participants may exercise their withdrawal rights at any time or times during the Plan Year. 6.3 Hardship Distributions. (a) General Rule. A Participant who has not terminated employment may request a distribution from the vested portion of his Accounts in the event of his hardship. A -16- 20 distribution will be on account of hardship only if the distribution is necessary to satisfy an immediate and heavy financial need of the Participant, as defined below, and satisfies all other requirements of this Section. (b) Deemed Financial Need. For purposes of this Section, a distribution is made on account of an immediate and heavy financial need of the Participant only if the distribution is for (i) the payment of medical expenses described in Code section 213(d) incurred by the Participant, the Participant's spouse or any dependents of the Participant (as defined in Code section 152); (ii) the purchase (excluding mortgage payments) of a principal residence for the Participant; (iii) the payment of tuition for the next semester or quarter of post-secondary education for the Participant, his spouse, children, or dependents; (iv) the need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence; or (v) the payment of funeral expenses of a family member. (c) Reasonable Reliance Test. A distribution will be considered necessary to satisfy an immediate and heavy financial need of the Participant only if all three of the following requirements are satisfied: (i) the distribution is not in excess of the amount required to relieve the immediate and heavy financial need of the Participant (taking into account the taxable nature of the distribution); (ii) the Participant represents in writing, on forms provided by the Committee, that the need cannot be relieved through reimbursement or compensation by insurance or otherwise, by reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself cause an immediate and heavy financial need, by cessation of Deferral Contributions under the Plan, or by distributions other than hardship distributions or nontaxable (at the time of the loan) loans from the Plan and any other plans maintained by any Controlled Group Member or any other entity by which the Participant is employed, or by borrowing from commercial sources on reasonable commercial terms; and (iii) the Committee determines that it can reasonably rely on the Participant's written representation. (d) Limitation for Loans. No distribution under this Section will be made in an amount that is greater than the excess of the Participant's vested interest in his Accounts over the aggregate amount of outstanding loans, plus accrued interest, secured by the Participant's Accounts. (e) Source of Hardship Distributions. The cumulative amount distributed to a Participant on account of -17- 21 hardship will not exceed the amount of his Deferral Contributions that have not been previously withdrawn (but not the income allocable to his Deferral Contributions). 6.4 Distribution Procedures. Distributions pursuant to Sections 6.2 and 6.3 will be made as soon as practicable following the Committee's approval of the Participant's written request for withdrawal and will be made in the form described in Section 6.1(b). Distributions pursuant to Section 6.2 will be made first from the vested portion of the Participant's Matching Contribution Account and next from his Deferral Contribution Account. 6.5 Loans to Participants. (a) Effective Date. The provisions of this Section will be effective as of a date determined by the Committee in its discretion and communicated to Participants. (b) General Provisions. A Participant may, subject to the provisions of this Section, borrow from the vested interest in his Accounts. All such loans will be subject to the requirements of this Section and such other rules as the Committee may from time to time prescribe, including without limitation any rules restricting the purposes for which loans will be approved. The Committee will have complete discretion as to approval of a loan hereunder and as to the terms thereof, provided that its decisions will be made on a uniform and nondiscriminatory basis and in accordance with this Section. If the Committee approves a loan, the Committee will direct the Trustee to make the loan and will advise the Participant and the Trustee of the terms and conditions of the loan. Nothing in this Section will require the Committee to make loans available to Participants. (c) Terms and Conditions. Loans to Participants will be made according to the following terms and conditions and such additional terms and conditions as the Committee may from time to time establish: (i) no loan will be for a term of longer than five years unless the loan proceeds are used to acquire a dwelling unit which, within a reasonable time, is to be used (determined at the time the loan is made) as the principal residence of the Participant; (ii) all loans will become due and payable in full upon termination (by death or otherwise) of the Participant's employment with the Controlled Group and upon the occurrence of such other events as the Committee may from time to time specify; (iii) all loans will bear a reasonable rate of interest as determined by the Committee from time to time; (iv) all loans will be made only -18- 22 upon receipt of adequate security (the minimum security for a loan will be the Participant's vested interest in the Trust Fund in an amount that equals the principal amount of the loan); (v) payments of principal and interest will be made through payroll deductions sufficient to provide for substantially level amortization of principal and interest with payments not less frequently than quarterly, which will be irrevocably authorized by the Participant in writing on a form provided by the Committee at the time the loan is made; (vi) the amount of any indebtedness (including accrued and unpaid interest) under any loan will be deducted from a Participant's interest in the Trust Fund if and only if such indebtedness or any installment thereof is not paid when due (including amounts due by acceleration) unless the Committee determines that there is adequate security for such loan other than the Participant's interest in the Trust Fund; (vii) no more than one outstanding loan will be permitted with respect to a Participant at any time, except that a Participant may have a home loan and a loan which is not a home loan outstanding at the same time; and (viii) all loans will be evidenced by a note containing such additional terms and conditions as the Committee will determine. (d) Maximum Amount of Loans. The amount of any loan made pursuant to this Section, when added to the outstanding balance of all other loans to the Participant from all qualified employer plans (as defined in Code section 72(p)(4)) of the Controlled Group, will not exceed the lesser of (i) one-half of the nonforfeitable interest in his Accounts, or (ii) $50,000 reduced by the excess, if any, of (A) the highest outstanding balance of all other loans from qualified employer plans of the Controlled Group to the Participant during the 1-year period ending on the date on which such loan was made, over (B) the outstanding balance of all loans from qualified employer plans of the Controlled Group to the Participant on the date on which such loan was made. (e) Minimum Loan. The minimum loan permitted under this Section is $1,000. If such minimum amount exceeds the limitations of subsection (d), no loan will be made. (f) Source of Loans. All loans will be made first from a Participant's Matching Contribution Account and next from his Deferral Contribution Account. (g) Investment of Loan Payments. All loans will be treated as a separate investment fund of the borrowing Participant. All payments with respect to a loan will be credited to the borrowing Participant's Accounts and will be -19- 23 invested in the fixed income fund established pursuant to the Trust Agreement, or if none, as directed by the Committee. 6.6 Reemployment of Participant. If a Participant who terminated employment again becomes an Employee before receiving a distribution of his Account balances, no distribution from the Trust Fund will be made while he is an Employee, and amounts distributable to him on account of his prior termination will be held in the Trust Fund until he is again entitled to a distribution under the Plan. 6.7 Valuation of Accounts. A Participant's distributable Account balances will be valued as of the Valuation Date immediately preceding the date the Accounts are to be distributed, except that there will be added to the value of his Accounts the fair market value of any amounts allocated to his Accounts under Article 4 after that Valuation Date. 6.8 Restrictions on Distributions. Article 11 sets forth certain rules under various provisions of the Code relating to restrictions on distributions to Participants. -20- 24 ARTICLE 7 DISTRIBUTIONS TO BENEFICIARIES 7.1 Designation of Beneficiary. Each Participant will have the right to designate a Beneficiary or Beneficiaries to receive his vested Account balances upon his death. The designation will be made on forms prescribed by the Committee and will be effective upon receipt by the Committee. A Participant will have the right to change or revoke any designation by filing a new designation or notice of revocation with the Committee, but the revised designation or revocation will be effective only upon receipt by the Committee. 7.2 Consent of Spouse Required. A Participant who is married may not designate a Beneficiary other than, or in addition to, his spouse unless his spouse consents to the designation by means of a written instrument that is signed by the spouse, contains an acknowledgment by the spouse of the effect of the consent, and is witnessed by a member of the Committee (other than the Participant) or by a notary public. The designation will be effective only with respect to the consenting spouse, whose consent will be irrevocable. A Beneficiary designation to which a spouse has consented may not be changed by the Participant without spousal consent (other than to designate the spouse as Beneficiary), unless the spouse's consent expressly permits Beneficiary designations by the Participant without any further consent of the spouse. 7.3 Failure to Designate Beneficiary. In the event a Participant has not designated a Beneficiary, or in the event no Beneficiary survives a Participant, the distribution of the Participant's vested Account balances upon his death will be made (i) to the Participant's spouse, if living, (ii) if his spouse is not then living, to his then living issue by right of representation, (iii) if neither his spouse nor his issue are then living, to his then living parents, and (iv) if none of the above are then living, to his estate. 7.4 Distributions to Beneficiaries. Distribution of a Participant's vested Account balances to the Participant's Beneficiary will be made as soon as practicable after Participant's death. The Participant's vested Account balances will be distributed to the Beneficiary in a single lump sum payment and will be in the same form as provided for Participants in Section 6.1(b). The Participant's Account balances will be valued as of the Valuation Date coinciding -21- 25 with or immediately preceding the date the Accounts are to be distributed to his Beneficiary, except that there will be added to the value of the Participant's Accounts the fair market value of any amounts allocated to his Accounts under Article 4 after that Valuation Date. If a loan is outstanding from the Trust Fund to the Participant on the date of his death, the amount distributed to his Beneficiary will be reduced by any security interest in the Participant's Accounts held by the Plan by reason of the loan. 7.5 Restrictions on Distributions. Article 11 sets forth certain rules under various provisions of the Code relating to restrictions on distributions to Beneficiaries. -22- 26 ARTICLE 8 PROVISIONS REGARDING COMPANY STOCK 8.1 Powers and Duties of the Committee. (a) Committee as Named Fiduciary. Except as otherwise provided in this Section, the Committee will be the named fiduciary within the meaning of ERISA section 402(a)(2) for purposes of all shareholder action authorized or permitted to be taken with respect to Company Stock held in the Trust Fund. The powers and duties of the Committee as named fiduciary for this purpose will include, without limitation, the powers and duties to direct the Trustee with respect to the voting of all shares of Company Stock; to direct the Trustee to accept or reject a tender offer for shares of Company Stock; to direct the Trustee to sell shares of Company Stock under any other circumstances to any person, including the Company, provided that any sale to the Company or other "disqualified person" within the meaning of Code section 4975 or "party in interest" within the meaning of ERISA section 3(14) is made at a price which is not less than adequate consideration as defined in ERISA section 3(18) and no commission is charged with respect to the sale; and to exercise any options, warrants or other rights in connection with shares of Company Stock held in the Trust Fund. The Committee will also have the power, in its discretion, to permit each Participant and Beneficiary to direct the Trustee to take or to refrain from taking any action with respect to the shares of Company Stock allocated to his Accounts that the Committee could have directed the Trustee to take or refrain from taking. If the Committee permits Participants and Beneficiaries to direct the Trustee in connection with any matter relating to Company Stock held in the Trust Fund, each Participant and Beneficiary who furnishes instructions to the Trustee will be a named fiduciary within the meaning of ERISA section 402(a)(2) with respect to such matter, but the Committee will retain the power and duty to direct the Trustee with respect to shares of Company Stock allocated to the Accounts of Participants and Beneficiaries who fail to furnish timely instructions to the Trustee and with respect to any shares of Company Stock that have not been allocated to Participants' Accounts. The Committee will adopt from time to time whatever procedures it determines to be appropriate in order to exercise its powers and duties under this subsection (a) and may retain advisors and consultants (including, without limitation, legal counsel and financial advisors) who are independent of the Company, the Board and the -23- 27 Trustee to the extent the Committee determines such independent advice to be necessary or appropriate. (b) Delegation of Powers and Duties. The Committee may, in its discretion, delegate any power or duty allocated to it pursuant to subsection (a) above to another person or entity, who will act as an independent fiduciary and will exercise such power or duty to the same extent as it could have been exercised by the Committee. The persons or entities to which such powers and duties may be delegated will include, without limitation, the Board or any committee of the Board, the Trustee, any other person or entity that meets the requirements of an investment manager under ERISA section 3(38), or any other person or entity that the Committee determines in good faith has the requisite knowledge and experience concerning the matter with respect to which the delegation is made. The Committee may also remove any fiduciary to whom it has delegated any power or duty and exercise such power or duty itself or appoint a successor fiduciary. For purposes of Sections 8.2 and 8.3, the term "Committee" will also mean any fiduciary to which the Committee has delegated any power or duty pursuant to this subsection (b). 8.2 Voting Company Stock. Unless the Committee determines otherwise pursuant to Section 8.1, voting rights with respect to shares of Company Stock held in the Trust Fund will be exercised by Participants and Beneficiaries and the procedures of this Section will apply. Before each annual or special meeting of its shareholders, the Committee will cause to be sent to each Participant and Beneficiary who has Company Stock allocated to his Accounts on the record date of such meeting a copy of the proxy solicitation material for the meeting, together with a form requesting confidential instructions to the Trustee on how to vote the shares of Company Stock allocated to his Accounts. Upon receipt of such instructions, the Trustee will vote the shares allocated to such Participant's or Beneficiary's Accounts as instructed. The Trustee will vote allocated shares of Company Stock for which it does not receive timely instructions from Participants or Beneficiaries in accordance with the Committee's instructions. A Participant's or Beneficiary's right to instruct the Trustee with respect to voting shares of Company Stock will not include rights concerning the exercise of any appraisal rights, dissenters' rights or similar rights granted by applicable law to the registered or beneficial holders of Company Stock. These matters will be exercised by the Trustee in accordance with the Committee's instructions. -24- 28 8.3 Tender Offer for Company Stock. Unless the Committee determines otherwise pursuant to Section 8.1, the right to accept or reject a tender offer for shares of Company Stock held in the Trust Fund will be exercised by Participants and Beneficiaries and the procedures of this Section will apply. In the event of a tender offer for shares of Company Stock subject to Section 14(d)(1) of the Securities Exchange Act of 1934 or subject to Rule 13e-4 promulgated under that Act (as those provisions may from time to time be amended or replaced by successor provisions of federal securities laws), the Committee will advise each Participant and Beneficiary who has shares of Company Stock allocated to his Accounts in writing of the terms of the tender offer as soon as practicable after its commencement and will furnish each Participant and Beneficiary with a form by which he may instruct the Trustee confidentially to tender shares allocated to his Accounts. The Trustee will tender those shares it has been properly instructed to tender, and will not tender those shares which it has been properly instructed not to tender. The Committee will also advise Participants and Beneficiaries that the Committee will furnish instructions to the Trustee with respect to allocated shares for which no instructions are received from Participants and Beneficiaries and will furnish such related documents as are prepared by any person and provided to the shareholders of the Company pursuant to the Securities Exchange Act of 1934. The Committee may also provide Participants with such other material concerning the tender offer as the Committee in its discretion determines to be appropriate. The number of shares to which a Participant's instructions apply will be the total number of shares allocated to his Accounts as of the latest date for which Participant statements were prepared. The Committee will advise the Trustee of the commencement date of any tender offer and, until receipt of that advice, the Trustee will not be obligated to take any action under this Section. Funds received in exchange for tendered stock will be credited to the Accounts of the Participant or Beneficiary whose stock was tendered and will be used by the Trustee to purchase Company Stock, if available on a national securities exchange, commencing on the earlier of the following dates: (a) the trading day following the first date on which the closing price of the Company Stock on a national securities exchange on which the Company Stock is then traded is within 20% of the closing price on the tenth trading day preceding the commencement date of the tender offer or (b) the thirtieth trading day after the expiration date of the tender offer, of which date the Committee will advise the Trustee. In the interim, or if Company Stock is not available for purchase, the Trustee will invest such funds in short term investments permitted under the Trust Agreement. -25- 29 ARTICLE 9 ADMINISTRATION OF THE PLAN AND TRUST AGREEMENT 9.1 Appointment of Committee Members. The Board will appoint an Administrative Committee consisting of at least three or more members, to hold office at the pleasure of the Board. Members of the Committee are not required to be Employees or Participants. Any member may resign by giving notice, in writing, filed with the Board. 9.2 Officers and Employees of the Committee. The Committee will choose from its members a Chairman and a Secretary. The Secretary will keep a record of the Committee's proceedings and all dates, records and documents pertaining to the Committee's administration of the Plan. The Committee may employ and suitably compensate such persons or organizations to render advice with respect to the duties of the Committee under the Plan as the Committee determines to be necessary or desirable. 9.3 Action of the Committee. Action of the Committee may be taken with or without a meeting of Committee members, provided that action will be taken only upon the vote or other affirmative expression of a majority of the Committee's members qualified to vote with respect to such action. The Chairman or the Secretary of the Committee may execute any certificate or other written direction on behalf of the Committee. In the event the Committee members qualified to vote on any question are unable to determine such question by a majority vote or other affirmative expression of a majority of the Committee members qualified to vote on such question, such question will be determined by the Board. A member of the Committee who is a Participant may not vote on any question relating specifically to himself unless he is the sole member of the Committee. 9.4 Expenses and Compensation. The expenses of administering the Plan, including without limitation the expenses of the Committee properly incurred in the performance of its duties under the Plan, will be paid from the Trust Fund, and all such expenses paid by the Participating Employers on behalf of the Plan will be reimbursed from the Trust Fund unless the Participating Employers in their discretion elect not to submit such expenses for reimbursement. Notwithstanding the foregoing, the members of the Committee will not be compensated by the Plan for their services as Committee members. -26- 30 9.5 General Powers and Duties of the Committee. The Committee will have the full power and responsibility to administer the Plan and the Trust Agreement and to construe and apply their provisions. For purposes of ERISA, the Committee will be the named fiduciary with respect to the operation and administration of the Plan and the Trust Agreement. In addition, the Committee will have the powers and duties granted by the terms of the Trust Agreement. The Committee, and all other persons with discretionary control respecting the operation, administration, control, and/or management of the Plan, the Trust Agreement, and/or the Trust Fund, will perform their duties under the Plan and the Trust Agreement solely in the interests of Participants and their Beneficiaries. 9.6 Specific Powers and Duties of the Committee. The Committee will administer the Plan and have all powers necessary to accomplish that purpose, including the following: (i) resolving all questions relating to the eligibility of Employees to become Participants, (ii) determining the amount of benefits payable to Participants or their Beneficiaries, and determining the time and manner in which such benefits are to be paid, (iii) authorizing and directing all disbursements by the Trustee from the Trust Fund, (iv) engaging any administrative, legal, medical, accounting, clerical, or other services it deems appropriate in administering the Plan or the Trust Agreement, (v) construing and interpreting the Plan and the Trust Agreement and adopting rules for administration of the Plan and the Trust Agreement which are not inconsistent with the terms of such documents, (vi) compiling and maintaining all records it determines to be necessary, appropriate or convenient in connection with the administration of the Plan and the Trust Agreement, (vii) determining the disposition of assets in the Trust Fund in the event the Plan is terminated, (viii) reviewing the performance of the Trustee with respect to the Trustee's administrative duties, responsibilities and obligations under the Plan and the Trust Agreement, reporting to the Board regarding such administrative performance of the Trustee, and recommending to the Board, if necessary, the removal of the Trustee and the appointment of a successor Trustee, and (ix) resolving all questions of fact relating to any of the foregoing. 9.7 Allocation of Fiduciary Responsibility. The Committee from time to time may allocate to one or more of its members and may delegate to any other persons or organizations any of its rights, powers, duties and responsibilities with respect to the operation and administration of the Plan and the Trust Agreement that are permitted to be delegated under ERISA. Any such allocation or delegation will be made in -27- 31 writing, will be reviewed periodically by the Committee, and will be terminable upon such notice as the Committee in its discretion deems reasonable and proper under the circumstances. Whenever a person or organization has the power and authority under the Plan or the Trust Agreement to delegate discretionary authority respecting the administration of the Plan or the Trust Fund to another person or organization, the delegating party's responsibility with respect to such delegation is limited to the selection of the person to whom authority is delegated and the periodic review of such person's performance and compliance with applicable law and regulations. Any breach of fiduciary responsibility by the person to whom authority has been delegated which is not proximately caused by the delegating party's failure to properly select or supervise, and in which breach the delegating party does not otherwise participate, will not be considered a breach by the delegating party. 9.8 Information to be Submitted to the Committee. To enable the Committee to perform its functions, the Participating Employers will supply full and timely information to the Committee on all matters relating to Employees and Participants as the Committee may require and will maintain such other records required by the Committee to determine the benefits due to Participants or their Beneficiaries under the Plan. 9.9 Notices, Statements and Reports. The Company will be the "administrator" of the Plan as defined in ERISA section 3(16)(A) for purposes of the reporting and disclosure requirements imposed by ERISA and the Code. The Committee will assist the Company, as requested, in complying with such reporting and disclosure requirements. 9.10 Claims Procedure. (a) Filing Claim for Benefits. If a Participant or Beneficiary does not receive the benefits which he believes he is entitled to receive under the Plan, he may file a claim for benefits with the Committee. All claims will be made in writing and will be signed by the claimant. If the claimant does not furnish sufficient information to determine the validity of the claim, the Committee will indicate to the claimant any additional information which is required. (b) Notification by the Committee. Each claim will be approved or disapproved by the Committee within 90 days following the receipt of the information necessary to process the claim. In the event the Committee denies a claim for benefits in whole or in part, the Committee will notify the -28- 32 claimant in writing of the denial of the claim. Such notice by the Committee will also set forth, in a manner calculated to be understood by the claimant, the specific reason for such denial, the specific Plan provisions on which the denial is based, a description of any additional material or information necessary to perfect the claim with an explanation of why such material or information is necessary, and an explanation of the Plan's claim review procedure as set forth in subsection (c). If no action is taken by the Committee on a claim within 90 days, the claim will be deemed to be denied for purposes of the review procedure. (c) Review Procedure. A claimant may appeal a denial of his claim by requesting a review of the decision by the Committee or a person designated by the Committee, which person will be a named fiduciary under ERISA section 402(a)(2) for purposes of this Section. An appeal must be submitted in writing within six months after the denial and must (i) request a review of the claim for benefits under the Plan, (ii) set forth all of the grounds upon which the claimant's request for review is based and any facts in support thereof, and (iii) set forth any issues or comments which the claimant deems pertinent to the appeal. The Committee or the named fiduciary designated by the Committee will make a full and fair review of each appeal and any written materials submitted in connection with the appeal. The Committee or the named fiduciary designated by the Committee will act upon each appeal within 60 days after receipt thereof unless special circumstances require an extension of the time for processing, in which case a decision will be rendered as soon as possible but not later than 120 days after the appeal is received. The claimant will be given the opportunity to review pertinent documents or materials upon submission of a written request to the Committee or named fiduciary, provided the Committee or named fiduciary finds the requested documents or materials are pertinent to the appeal. On the basis of its review, the Committee or named fiduciary will make an independent determination of the claimant's eligibility for benefits under the Plan. The decision of the Committee or named fiduciary on any claim for benefits will be final and conclusive upon all parties thereto. In the event the Committee or named fiduciary denies an appeal in whole or in part, it will give written notice of the decision to the claimant, which notice will set forth in a manner calculated to be understood by the claimant the specific reasons for such denial and which will make specific reference to the pertinent Plan provisions on which the decision was based. 9.11 Service of Process. The Committee may from time to time designate an agent of the Plan for the service of legal -29- 33 process. The Committee will cause such agent to be identified in materials it distributes or causes to be distributed when such identification is required under applicable law. In the absence of such a designation, the Company will be the agent of the Plan for the service of legal process. 9.12 Correction of Participants' Accounts. If an error or omission is discovered in the Accounts of a Participant, or in the amount distributed to a Participant, the Committee will make such equitable adjustments in the records of the Plan as may be necessary or appropriate to correct such error or omission as of the Plan Year in which such error or omission is discovered. Further, a Participating Employer may, in its discretion, make a special contribution to the Plan which will be allocated by the Committee only to the Account of one or more Participants to correct such error or omission. 9.13 Payment to Minors or Other Persons Under Legal Disability. If any benefit becomes payable to a minor or to a person under a legal disability, payment of such benefit will be made only to the conservator or the guardian of the estate of such person appointed by a court of competent jurisdiction or such other person as the Committee determines is necessary to ensure that the payment will legally discharge the Plan's obligation to such person. 9.14 Uniform Application of Rules and Policies. The Committee in exercising its discretion granted under any of the provisions of the Plan or the Trust Agreement will do so only in accordance with rules and policies established by it which will be uniformly applicable to all Participants and Beneficiaries. 9.15 Funding Policy. The Plan is to be funded through Participating Employer contributions and earnings on such contributions; and benefits will be paid to Participants and Beneficiaries as provided in the Plan. 9.16 The Trust Fund. The Trust Fund will be held by the Trustee for the exclusive benefit of Participants and Beneficiaries. The assets held in the Trust Fund will be invested and reinvested in accordance with the terms of the Trust Agreement, which is hereby incorporated into and made a part of the Plan. All benefits will be paid solely out of the Trust Fund, and no Participating Employer will be otherwise liable for benefits payable under the Plan. -30- 34 ARTICLE 10 LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS TO PARTICIPANTS' ACCOUNTS 10.1 Priority over Other Contribution and Allocation Provisions. The provisions set forth in this Article will supersede any conflicting provisions of Articles 3 and 4. 10.2 Definitions Used in this Article. The following words and phrases, when used with initial capital letters, will have the meanings set forth below. (a) "Annual Addition" means the sum of the following amounts with respect to all Qualified Plans and Welfare Benefit Funds maintained by the Controlled Group Members: (i) the amount of Controlled Group Member contributions with respect to the Limitation Year allocated to the Participant's account; (ii) the amount of any forfeitures for the Limitation Year allocated to the Participant's account; (iii) the amount, if any, carried forward pursuant to Section 10.4 or a similar provision in another Qualified Plan and allocated to the Participant's account; (iv) the amount of a Participant's voluntary nondeductible contributions for the Limitation Year, provided, however, that the Annual Addition for any Limitation Year beginning before January 1, 1987 will not be recomputed to treat all of the Participant's nondeductible voluntary contributions as part of the Annual Addition; (v) the amount allocated after March 31, 1984 to an individual medical benefit account (as defined in Code section 415(1)(2)) which is part of a Defined Benefit Plan or an annuity plan; and (vi) the amount derived from contributions paid or accrued after December 31, 1985 in taxable years ending after such date that are attributable to post-retirement medical benefits allocated to the separate account of a key employee (as defined in Code section 419A(d)(3)) under a Welfare Benefit Fund. A Participant's Annual Addition will not include any nonvested amounts restored to his account following -31- 35 his reemployment before incurring five consecutive One Year Breaks in Service, and a corrective allocation pursuant to Section 9.12 will be considered an Annual Addition for the Limitation Year to which it relates. (b) "Average Contribution Percentage" means the average of the Contribution Percentages of each Participant in a group of Participants. (c) "Average Deferral Percentage" means the average of the Deferral Percentages of each Participant in a group of Participants. (d) "Contribution Percentage" means the ratio (expressed as a percentage) determined by dividing the Matching Contributions made to the Plan on behalf of a Participant who is eligible to receive an allocation of Matching Contributions for a Plan Year (but only to the extent such Matching Contributions are not taken into account in determining the Participant's Deferral Percentage for the Plan Year) by the Participant's Compensation for the Plan Year. A Participant is eligible to receive an allocation of Matching Contributions for purposes of determining his Contribution Percentage even though no Matching Contributions are made to the Plan on his behalf because of the suspension of his Deferral Contributions under the terms of the Plan, because of an election not to participate, or because of the limitations contained in Sections 10.3 through 10.5 of the Plan. (e) "Deferral Percentage" means the ratio (expressed as a percentage) determined by dividing the Deferral Contributions made to the Plan on behalf of a Participant who is eligible to make Deferral Contributions for all or any portion of a Plan Year by the Participant's Compensation for the Plan Year. In addition, if the Matching Contributions to the Plan for any Plan Year satisfy the requirements of Code section 401(k)(2)(B) and (C), a Participant's Deferral Percentage will be determined by aggregating the Deferral Contributions and the Matching Contributions made to the Plan on his behalf for such Plan Year, unless such aggregation is prohibited in regulations prescribed by the Secretary of the Treasury. A Participant is eligible to make Deferral Contributions for purposes of determining his Deferral Percentage even though he does not make Deferral Contributions because of the suspension of his Deferral Contributions under the terms of the Plan, because of an election not to participate, or because of the limitations contained in Sections 10.3 through 10.5 of the Plan. -32- 36 (f) "Defined Benefit Dollar Limitation" means for any Limitation Year, $90,000 or such amount as determined by the Commissioner of Internal Revenue under Code section 415(d)(1) as of the January 1 falling within such Limitation Year. (g) "Defined Benefit Fraction" means a fraction, the numerator of which is the Projected Annual Benefit of a Participant under all Defined Benefit Plans maintained by a Controlled Group Member determined as of the close of the Limitation Year and the denominator of which is the lesser of (i) 140% of the Participant's average Includable Compensation that may be taken into account for the Limitation Year under Code section 415(b)(1)(B), or (ii) 125% of the Defined Benefit Dollar Limitation, determined as of the close of the Limitation Year. If the Participant was a participant in a Defined Benefit Plan maintained by a Controlled Group Member in existence on July 1, 1982, or on May 6, 1986, the denominator of the Defined Benefit Fraction will not be less than 125% of the greater of the Participant's accrued Projected Annual Benefit under such plan as of the end of the last Limitation Year beginning before January 1, 1983, or his accrued Projected Annual Benefit of the end of the last Limitation Year beginning January 1, 1987. The preceding sentence applies only if the Defined Benefit Plan satisfied the requirements of Code section 415 as in effect at the end of such Limitation Year. (h) "Defined Benefit Plan" means a Qualified Plan other than a Defined Contribution Plan. (i) "Defined Contribution Dollar Limitation" means for any Limitation Year, $30,000 or, if greater, 25% of the Defined Benefit Dollar Limitation for the same Limitation Year. If a short Limitation Year is created because of a Plan amendment changing the Limitation Year to a different 12-consecutive month period, the Defined Contribution Dollar Limitation for the short Limitation Year will not exceed the amount determined in the preceding sentences multiplied by a fraction, the numerator of which is the number of months in the short Limitation Year and the denominator of which is 12. (j) "Defined Contribution Fraction" means a fraction, the numerator of which is the sum of the Annual Additions allocated to the Participant's accounts for the applicable Limitation Year and each prior Limitation Year, and the denominator of which is the sum of the lesser of the following products for each Limitation Year in which the Participant was an Employee (regardless of whether a Defined Contribution Plan was in existence for such Limitation Year) (i) the Defined Contribution Dollar Limitation (determined for -33- 37 this purpose without regard to the provisions of Code section 415(c)(6)) effective for the Limitation Year multiplied by 125%, or (ii) 35% of the Participant's Includable Compensation for such Limitation Year. (k) "Defined Contribution Plan" means a Qualified Plan described in Code section 414(i). (l) "Family Member" means, with respect to an Employee, the Employee's spouse and lineal ascendants or descendants and the spouses of such lineal ascendants or descendants. (m) "Highly Compensated Employee" means any Employee who performs services for a Controlled Group Member during the determination year (as hereinafter defined) and who during the look-back year (as hereinafter defined): (i) received Compensation from a Controlled Group Member in excess of $75,000 (as adjusted pursuant to Code section 415(d)); (ii) received Compensation from a Controlled Group Member in excess of $50,000 (as adjusted pursuant to Code section 415(d)) and was a member of the top-paid group for such year; or (iii) was an officer of a Controlled Group Member and received Compensation during such year that is greater than 50% of the dollar limitation in effect under Code section 415(b)(1)(A). The term Highly Compensated Employee also includes: (i) an Employee who is both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Compensation from the Controlled Group during the determination year; and (ii) an Employee who is a 5-percent owner at any time during the look-back year or determination year. If no officer has satisfied the Compensation requirement of (ii) above during either a determination year or look-back year, the officer with the highest Compensation for such year will be treated as a Highly Compensated Employee. For purposes of this subsection, the determination year is the Plan Year, and the look-back year is the twelve-month period immediately preceding the determination year. A Highly Compensated Employee also includes any Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no services for a Controlled Group Member during the determination year, and was a Highly Compensated Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. All determinations under this definition will be made in accordance with Code section 414(q) and the Treasury Regulations thereunder. -34- 38 (n) "Includable Compensation" means an Employee's total wages from the Controlled Group as determined for purposes of Internal Revenue Service Form W-2, excluding, however: (i) moving expense reimbursements that are deductible by the Employee under Code section 217, (ii) contributions of Controlled Group Members to a simplified employee pension plan to the extent such contributions are deductible by the Employee and contributions of Controlled Group Members to any other plan of deferred compensation that are not includable in the Employee's gross income, (iii) distributions to the Employee from any plan of deferred compensation other than an unfunded, nonqualified plan of deferred compensation, (iv) amounts realized from the exercise of a nonqualified stock option, (v) amounts realized under Code section 83 with respect to restricted property that becomes freely transferable or is no longer subject to a substantial risk of forfeiture, (vi) amounts realized from the disposition of stock acquired under a qualified stock option within the meaning of Code section 422, and (vii) any other amounts that receive special tax benefits within the meaning of section 1.415-2(d)(2) of the Treasury Regulations. The annual Includable Compensation of an Employee taken into account for any purpose for any Plan Year will not exceed $200,000, as that amount may be adjusted by the Secretary of the Treasury. (o) "Limitation Year" means the 12-consecutive-month period used by a Qualified Plan for purposes of computing the limitations on benefits and annual additions under Code section 415. The Limitation Year for this Plan is the Plan Year. (p) "Maximum Annual Addition" means with respect to a Participant for any Limitation Year an amount equal to the lesser of (i) the Defined Contribution Dollar Limitation or (ii) 25% of the Participant's Includable Compensation. (q) "Nonhighly Compensated Employee" means an Employee who is neither a Highly Compensated Employee nor a Family Member of a Highly Compensated Employee. (r) "Projected Annual Benefit" means the annual benefit (as defined in Code section 415(b)(2)) to which a Participant would be entitled under the terms of a Defined Benefit Plan maintained by a Controlled Group Member, assuming that the Participant will continue employment until his normal retirement age under the Defined Benefit Plan (or current age, if later) and that the Participant's Includable Compensation for the current Limitation Year and all other relevant factors -35- 39 used to determine benefits under the Defined Benefit Plan will remain constant for all future Limitation Years. (s) "Matching Contribution" means the Participating Employer matching contribution made to the Plan on behalf of a Participant pursuant to Article 3. (t) "Welfare Benefit Fund" means an organization described in paragraph (7), (9), (17) or (20) of Code section 501(c), a trust, corporation or other organization not exempt from federal income tax, or to the extent provided in Treasury Regulations, any account held for an employer by any person, which is part of a plan of an employer through which the employer provides benefits to employees or their beneficiaries, other than a benefit to which Code sections 83(h), 404 (determined without regard to section 404(b)(2)) or 404A applies, or to which an election under Code section 463 applies. 10.3 General Allocation Limitation. The Annual Addition of a Participant for any Limitation Year will not exceed the Maximum Annual Addition. If, except for the application of this section, the Annual Addition of a Participant for any Limitation Year would exceed the Maximum Annual Addition, the excess Annual Addition attributable to this Plan will not be allocated to the Participant's Account for the Plan Year included in such Limitation Year, but will be subject to the provisions of Section 10.4. The limitations contained in this Article will apply on an aggregate basis to all Defined Contribution Plans and all Defined Benefit Plans (whether or not any of such plans have terminated) established by the Controlled Group Members. 10.4 Excess Allocations. (a) Participants Covered by One Defined Contribution Plan. If the Participant is not covered under another Defined Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group Member during the Limitation Year and the amount otherwise allocable to his Account would exceed the Maximum Annual Addition, the Participating Employer contributions and forfeitures which would cause the Participant's Annual Addition to exceed the Maximum Annual Addition will be successively allocated in the manner described in Section 4.2 among the Accounts of eligible Participants whose Annual Additions do not exceed the Maximum Annual Addition. If, after such allocations have been made, there remain Participating Employer contributions or forfeitures which cannot be allocated without causing the Annual Addition of a Participant to exceed the Maximum Annual Addition, the -36- 40 forfeitures which cause the Annual Addition to exceed the Maximum Annual Addition and the Participating Employer contributions which result from a reasonable error in estimating the Participant's Includable Compensation or from any other limited facts and circumstances which the Commissioner of Internal Revenue finds justifiable under section 1.415-6(b)(6) of the Treasury Regulations and which cause the Participant's Annual Addition to exceed the Maximum Annual Addition will be held in a suspense account in the Trust Fund to be carried forward and allocated in subsequent Limitation Years as provided in Section 4.2. Such suspense account will not participate in the allocation of the net income or net loss of the Trust Fund. (b) Participants Covered by Two or More Defined Contribution Plans. If, in addition to this Plan, the Participant is covered under another Defined Contribution Plan or a Welfare Benefit Fund maintained by a Controlled Group Member during the Limitation Year, the following provisions will apply. The Annual Addition which may be credited to a Participant's Account under this Plan for any such Limitation Year will not exceed the Maximum Annual Addition reduced by the Annual Addition credited to a Participant's accounts under the other Defined Contribution Plans and Welfare Benefit Funds for the same Limitation Year. If the Annual Addition with respect to the Participant under the other Defined Contribution Plans and Welfare Benefit Funds maintained by a Controlled Group Member is less than the Maximum Annual Addition and the Participating Employer contribution that would otherwise be contributed or allocated to the Participant's Account under this Plan would cause the Annual Addition for the Limitation Year to exceed the Maximum Annual Addition, the amount to be contributed or allocated to the Participant's Account under this Plan will be reduced so that the Annual Addition under all such Defined Contribution Plans and Welfare Benefit Funds for the Limitation Year will equal the Maximum Annual Addition. If the aggregate Annual Addition with respect to the Participant under such other Defined Contribution Plans and Welfare Benefit Funds is equal to or greater than the Maximum Annual Addition, no amount will be contributed or allocated to the Participant's Account under this Plan for the Limitation Year. An excess Annual Addition will be reduced in the manner described in subsection (c). (c) Reduction of Excess Allocations. As soon as is administratively feasible after the end of the Limitation Year, the Maximum Annual Addition for the Limitation Year will be determined on the basis of the Participant's Includable Compensation for the Limitation Year. If a Participant's -37- 41 Annual Addition under this Plan and the other Defined Contribution Plans and Welfare Benefit Funds maintained by Controlled Group Members would result in the Annual Addition exceeding the Maximum Annual Addition for the Limitation Year, the excess amount will be deemed to consist of the Annual Addition last allocated. In making this determination, the Annual Addition attributable to a Welfare Benefit Fund will be deemed to have been allocated first regardless of the actual date of allocation. If an excess amount was allocated to a Participant on an allocation date of this Plan that coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of (i) the total excess amount allocated as of such date and (ii) the ratio of the Annual Addition allocated to the Participant for the Limitation Year as of such date under this Plan to the total Annual Addition allocated to the Participant for the Limitation Year as of such date under this and all the other Defined Contribution Plans. Any excess amount attributed to this Plan will be disposed of in the manner described in subsection (a). 10.5 Aggregate Benefit Limitation. If a Controlled Group Member maintains, or at any time maintained, one or more Defined Benefit Plans covering any Participant in this Plan, the sum of the Defined Benefit Fraction and the Defined Contribution Fraction for any Limitation Year will equal no more than one (1.0). The provisions of the Defined Benefit Plans will govern the order of reduction of Annual Additions or benefit accruals necessary to meet this limitation. If the provisions of the Defined Benefit Plans are silent, the current Annual Addition under this Plan will be reduced first, and then the rate of accrual under the Defined Benefit Plans will be reduced, if necessary to meet this limitation. If the Defined Contribution Plans taken into account in determining the Participant's Annual Addition under this Article satisfied the requirements of Code section 415 as in effect for all Limitation Years beginning before January 1, 1987, an amount will be subtracted from the numerator of the Defined Contribution Fraction (not exceeding such numerator) as prescribed by the Secretary of the Treasury so that the sum of the Defined Contribution Fraction and the Defined Benefit Fraction does not exceed 1.0. For purposes of this Section, a Participant's voluntary nondeductible contributions to a Defined Benefit Plan will be treated as being part of a separate Defined Contribution Plan. 10.6 Limitation on Deferral Contributions. (a) Average Deferral Percentage Test. Notwithstanding any other provision of the Plan, the Average -38- 42 Deferral Percentage for a Plan Year for Participants who are Highly Compensated Employees will not exceed the greater of: (i) the Average Deferral Percentage for Participants who are Nonhighly Compensated Employees multiplied by 1.25; or (ii) the lesser of (A) the Average Deferral Percentage for Participants who are Nonhighly Compensated Employees plus two percentage points or (B) the Average Deferral Percentage for Participants who are Nonhighly Compensated Employees multiplied by 2.0. The multiple use of the alternative test in clause (ii) of this subsection will be restricted as provided in regulations prescribed by the Secretary of the Treasury. (b) Suspension of Deferral Contributions. If at any time during a Plan Year the Committee determines, on the basis of estimates made from information then available, that the limitation described in subsection (a) above will not be met for the Plan Year, the Committee in its discretion may reduce or suspend the Deferral Contributions of one or more Participants who are Highly Compensated Employees to the extent necessary (i) to enable the Plan to meet such limitation or (ii) to reduce the amount of excess Deferral Contributions that would otherwise be distributed pursuant to subsection (c) below. (c) Reduction of Excess Deferral Contributions. If, for any Plan Year, the Average Deferral Percentage for Participants who are Highly Compensated Employees exceeds the limitation described in subsection (a) above, the Deferral Percentage for each such Participant will be reduced (in the order of Deferral Percentages, beginning with the highest of such percentages) until the limitation in subsection (a) is satisfied. In order to reduce a Participant's Deferral Percentage, the Participant's excess Deferral Contributions will be distributed to him. If Matching Contributions are taken into account in determining Deferral Percentages, a Participant's Deferral Percentage will be reduced by distributing first Deferral Contributions in excess of 5% of Compensation and by distributing next the remaining Deferral Contributions and Matching Contributions, in proportion to the amount of such contributions for the Plan Year. All distributions under this subsection will be increased by Trust Fund earnings and decreased by Trust Fund losses for the Plan Year and for the period between the end of the Plan Year and the date of distribution and will be made within two and one-half months following the close of the Plan Year, if practicable, but in no event later than the last day of the immediately following Plan Year. The amount of excess Deferral Contributions distributed pursuant to this Section with respect to a Participant for the Plan Year will be reduced by any -39- 43 Deferral Contributions previously distributed to the Participant for the same Plan Year pursuant to Section 3.1(c). (d) Determination of Earnings and Losses. The earnings and losses of the Trust Fund for the Plan Year allocable to the portion of a Participant's Deferral Contributions that are distributed pursuant to subsection (c) above will be determined by multiplying the Trust Fund earnings or losses for the Plan Year allocable to the Participant's Deferral Contribution Account by a fraction, the numerator of which is the amount of Deferral Contributions to be distributed to the Participant and the denominator of which is the balance of the Participant's Deferral Contribution Account on the last day of the Plan Year, reduced by the earnings and increased by the losses allocable to such Account for the Plan Year. The earnings and losses of the Trust Fund allocable to the Participant's Deferral Contributions that are distributed pursuant to subsection (c) for the period between the end of the Plan Year and the date of such distribution will be determined in accordance with regulations prescribed by the Secretary of the Treasury interpreting Code section 401(k). The earnings and losses of the Trust Fund allocable to the portion of a Participant's Matching Contributions that are distributed pursuant to subsection (c) above will be determined in the manner described in Section 10.7(c). 10.7 Limitation on Matching Contributions. (a) Average Contribution Percentage Test. Notwithstanding any other provision of the Plan, the Average Contribution Percentage for a Plan Year for Participants who are Highly Compensated Employees will not exceed the greater of: (i) the Average Contribution Percentage for Participants who are Nonhighly Compensated Employees multiplied by 1.25; or (ii) the lesser of (A) the Average Contribution Percentage Test for Participants who are Nonhighly Compensated Employees plus two percentage points or (B) the Average Contribution Percentage for Participants who are Nonhighly Compensated Employees multiplied by 2.0. The multiple use of the alternative test contained in clause (ii) of this subsection will be restricted as provided in regulations prescribed by the Secretary of the Treasury. (b) Reduction of Excess Matching Contributions. If, for any Plan Year, the Average Contribution Percentage for Participants who are Highly Compensated Employees exceeds the limitation described in subsection (a) above, the Contribution Percentage for each such Participant will be reduced (in the order of Contribution Percentages, beginning with the highest -40- 44 of such percentages) until the limitation in subsection (a) is satisfied. In order to reduce a Participant's Contribution Percentage, the Participant's excess Matching Contributions (increased by Trust Fund earnings and decreased by Trust Fund losses for the Plan Year and for the period between the end of the Plan Year and the date of distribution) will be distributed to the Participant within two and one-half months following the close of the Plan Year, if practicable, but in no event later than the last day of the immediately following Plan Year. (c) Determination of Earnings and Losses. The earnings and losses of the Trust Fund for the Plan Year allocable to the portion of a Participant's Matching Contributions that are distributed pursuant to Section 10.6 or subsection (b) above will be determined by multiplying the Trust Fund earnings or losses for the Plan Year allocable to the Participant's Matching Contribution Account by a fraction, the numerator of which is the amount of Matching Contributions to be distributed and the denominator of which is the balance of the Participant's Matching Contribution Account on the last day of the Plan Year, reduced by the earnings and increased by the losses allocable to such Account for the Plan Year. The earnings and losses of the Trust Fund allocable to a Participant's Matching Contributions that are distributed pursuant to Section 10.6 or subsection (b) above for the period between the end of the Plan Year and the date of such distribution will be determined in accordance with regulations prescribed by the Secretary of the Treasury interpreting Code sections 401(k) and 401(m). 10.8 Aggregation Rules. (a) Code Section 415. For purposes of the allocation limitations under Code section 415 set forth in this Article, all Defined Benefit Plans ever maintained by a Controlled Group Member will be treated as one Defined Benefit Plan, and all Defined Contribution Plans ever maintained by a Controlled Group Member will be treated as one Defined Contribution Plan. (b) Code Section 401(k). For purposes of the limitation on Deferral Contributions set forth in this Article, the Average Deferral Percentage for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have deferral contributions allocated to his account under two or more plans or arrangements described in Code section 401(k) that are maintained by the Company or any Controlled Group Member will be determined as if all such deferral contributions were made under a single arrangement. -41- 45 (c) Code Section 401(m). If this Plan satisfies the requirements of Code section 410(b) only if aggregated with one or more other plans, the Contribution Percentages of all Participants will be determined as if all such plans were a single plan. In addition, the Contribution Percentage of a Participant who is a Highly Compensated Employee for a Plan Year and who is eligible to make voluntary Employee contributions or receive deferral contributions or matching employer contributions allocated to his account under two or more Defined Contribution Plans maintained by the Company or a Controlled Group Member will be determined as if all such contributions were made to a single plan. (d) Family Members. For purposes of determining the Contribution Percentage or the Deferral Percentage of a Participant who is both a Highly Compensated Employee and either (i) a 5-percent owner, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the 10 most highly compensated Employees ranked on the basis of Compensation paid by the Controlled Group during the year, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder, the Matching Contributions, Deferral Contributions, and Compensation of such Participant will include the Matching Contributions, Deferral Contributions and Compensation of Family Members, and Family Members will be disregarded in determining the Contribution Percentage or the Deferral Percentage of Participants who are not such Highly Compensated Employees. -42- 46 ARTICLE 11 RESTRICTIONS ON DISTRIBUTIONS TO PARTICIPANTS AND BENEFICIARIES 11.1 Priority over Other Distribution Provisions. The provisions set forth in this Article will supersede any conflicting provisions of Article 6 or Article 7. 11.2 General Restrictions. (a) Distributions Prior to a Separation from Service. Except for distributions permitted under Article 6 with respect to Participants who attain age 59-1/2 or suffer a hardship, a Participant's interest in the Plan will not be distributed before the Participant's separation from service, disability or death unless: (i) the Plan is terminated without the establishment or maintenance by the Participating Employers of another defined contribution plan (other than an employee stock ownership plan as defined in Code section 4975(e)(7)); (ii) a Participating Employer that is a corporation sells all or substantially all of the assets used by the Participating Employer in a trade or business to a person other than a Controlled Group Member and the Participant becomes an employee of the acquiring employer; or (iii) a Participating Employer that is a corporation disposes of its interest in a subsidiary to a person other than an Controlled Group Member but only if the Participant continues employment with the subsidiary. An event will not be treated as described in clause (ii) or (iii) above unless the Participating Employer continues to maintain the Plan after the disposition. (b) Lump Sum Distribution Required. An event described in subparagraph (a) that would otherwise permit distribution of a Participant's interest in the Plan will not be treated as described in subparagraph (a) unless the Participant receives a lump sum distribution by reason of the event. A lump sum distribution for this purpose will be a distribution described in Code section 402(e)(4), without regard to clauses (i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B), or subparagraph (H) thereof. 11.3 Restrictions on Commencement of Distributions. The provisions of this Section will apply to restrict the Committee's ability to delay the commencement of distributions. Unless a Participant elects otherwise in writing, distribution of the Participant's vested interest in his Account will begin no later than the 60th day after the -43- 47 close of the Plan Year in which occurs the latest of (i) the date on which the Participant attains age 65, (ii) the tenth anniversary of the Plan Year in which the Participant began participation in the Plan, or (iii) the Participant's termination of employment. 11.4 Restrictions on Delay of Distributions. The following provisions will apply to limit a Participant's ability to delay the distribution of benefits. (a) General Rule. Distribution of a Participant's entire vested and nonforfeitable interest will be made or commence not later than April 1 following the calendar year in which he attains age 70-1/2. (b) Rule for Certain Participants Who Attained Age 70-1/2 Before 1988. Notwithstanding subsection (a), if a Participant attained age 70-1/2 before January 1, 1988 and was not a 5-percent owner (as such term is defined in Code Section 416(i)) at any time during the five-plan-year period ending in the calendar year in which he attained age 70-1/2, then distribution of his entire vested and nonforfeitable interest will be made or commence not later than April 1 following the earlier of (i) the calendar year in which his employment with the Controlled Group terminates or (ii) the calendar year in which he becomes a 5-percent owner. (c) Rule for Participants Who Attained Age 70-1/2 in 1988. If a Participant attained age 70-1/2 during 1988 and had not terminated employment with the Controlled Group as of January 1, 1989, distribution of his entire vested and nonforfeitable interest will be made or commence not later than April 1, 1990. 11.5 Limitation to Assure Benefits Payable to Beneficiaries are Incidental. In the event that any payments under the Plan are to be made to someone other than the Participant or jointly to the Participant and his spouse or other payee, such payments must conform to the "incidental benefit" rules of Code section 401(a)(9)(G) and Treasury Regulation section 1.401(a)(9)-2. 11.6 Restrictions in the Event of Death. Upon the death of a Participant, the following distribution provisions will apply to limit the Beneficiary's ability to delay distributions. If the Participant dies after distribution of his benefit has begun, the remaining portion of his benefit will continue to be distributed at least as rapidly as under the method of distribution being used prior to the -44- 48 Participant's death; but if he dies before distribution of his benefit commences, his entire benefit will be distributed no later than five years after his death, unless an individual who is a designated Beneficiary elects to receive distributions in substantially equal installments over the Beneficiary's life or life expectancy beginning no later than one year after the Participant's death. If the designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin will not be earlier than the date on which the Participant would have attained age 70-1/2, and, if the spouse dies before payments begin, subsequent distributions will be made as if the spouse had been the Participant. Any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. 11.7 Compliance with Regulations. Distributions under the Plan to Participants or Beneficiaries will be made in accordance with Treasury Regulations issued under Code section 401(a)(9), including Treasury Regulations thereunder. 11.8 Delayed Payments. If the amount of a distribution required to begin on a date determined under the applicable provisions of the Plan cannot be ascertained by such date, or if it is not possible to make such payment on such date because the Committee has been unable to locate a Participant or Beneficiary after making reasonable efforts to do so, a payment retroactive to such date may be made no later than 60 days after the earliest date on which the amount of such payment can be ascertained or the date on which the Participant or Beneficiary is located (whichever is applicable). -45- 49 ARTICLE 12 TOP-HEAVY PROVISIONS 12.1 Priority over Other Plan Provisions. If the Plan is or becomes a Top-Heavy Plan in any Plan Year, the provisions of this Article will supersede any conflicting provisions of the Plan. However, the provisions of this Article will not operate to increase the rights or benefits of Participants under the Plan except to the extent required by Code section 416 and other provisions of law applicable to Top-Heavy Plans. 12.2 Definitions Used in this Article. The following words and phrases, when used with initial capital letters, will have the meanings set forth below. (a) "Defined Benefit Dollar Limitation" means the limitation described in Section 10.2(f). (b) "Defined Benefit Plan" means the Qualified Plan described in Section 10.2(h). (c) "Defined Contribution Dollar Limitation" means the limitation described in Section 10.2(i). (d) "Defined Contribution Plan" means the Qualified Plan described in Section 10.2(k). (e) "Determination Date" means for the first Plan Year of the Plan the last day of the Plan Year and for any subsequent Plan Year the last day of the preceding Plan Year. (f) "Determination Period" means the Plan Year containing the Determination Date and the four preceding Plan Years. (g) "Includable Compensation" means the compensation described in Section 10.2(n). (h) "Key Employee" means any Employee or former Employee (and the Beneficiary of a deceased Employee) who at any time during the Determination Period was (i) an officer of a Controlled Group Member, if such individual's Includable Compensation (modified as described below) exceeds 50% of the Defined Benefit Dollar Limitation, (ii) an owner (or considered an owner under Code section 318) of one of the ten largest interests in a Controlled Group Member, if such individual's Includable Compensation exceeds the Defined Contribution Dollar -46- 50 Limitation, (iii) a 5% owner of a Controlled Group Member, or (iv) a 1% owner of a Controlled Group Member who has annual Includable Compensation of more than $150,000. The determination of who is a Key Employee will be made in accordance with Code section 416(i). For purposes of this subsection, Includable Compensation will include the amount of any salary reduction contributions pursuant to a cash or deferred arrangement meeting the requirements of Code section 401(k) or a cafeteria plan meeting the requirements of Code section 125. (i) "Minimum Allocation" means the allocation described in the first sentence of Section 12.4(a). (j) "Permissive Aggregation Group" means the Required Aggregation Group of Qualified Plans plus any other Qualified Plan or Qualified Plans of a Controlled Group Member which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410 (including simplified employee pension plans). (k) "Present Value" means present value based only on the interest and mortality rates specified in a Defined Benefit Plan. (l) "Required Aggregation Group" means the group of plans consisting of (i) each Qualified Plan (including simplified employee pension plans) of a Controlled Group Member in which at least one Key Employee participates, and (ii) any other Qualified Plan (including simplified employee pension plans) of a Controlled Group Member which enables a Qualified Plan to meet the requirements of Code sections 401(a)(4) or 410. (m) "Top-Heavy Plan" means the Plan for any Plan Year in which any of the following conditions exists: (i) if the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is not a part of any Required Aggregation Group or Permissive Aggregation Group of Qualified Plans; (ii) if the Plan is a part of a Required Aggregation Group but not part of a Permissive Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Required Aggregation Group exceeds 60%; or (iii) if the Plan is a part of a Required Aggregation Group and part of a Permissive Aggregation Group of Qualified Plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60%. (n) "Top-Heavy Ratio" means a fraction, the numerator of which is the sum of the Present Value of accrued -47- 51 benefits and the account balances (as required by Code section 416)) of all Key Employees with respect to such Qualified Plans as of the Determination Date (including any part of any accrued benefit or account balance distributed during the five-year period ending on the Determination Date), and the denominator of which is the sum of the Present Value of the accrued benefits and the account balances (including any part of any accrued benefit or account balance distributed in the five-year period ending on the Determination Date) of all Employees with respect to such Qualified Plans as of the Determination Date. The value of account balances and the Present Value of accrued benefits will be determined as of the most recent Top-Heavy Valuation Date that falls within or ends with the 12-month period ending on the Determination Date, except as provided in Code section 416 for the first and second Plan Years of a Defined Benefit Plan. The account balances and accrued benefits of a participant who is not a Key Employee but who was a Key Employee in a prior year will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers, transfers and contributions unpaid as of the Determination Date are taken into account will be made in accordance with Code section 416. Employee contributions described in Code section 219(e)(2) will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The accrued benefit of any Employee other than a Key Employee will be determined under the method, if any, that uniformly applies for accrual purposes under all Qualified Plans maintained by all Controlled Group Members and included in a Required Aggregation Group or a Permissive Aggregation Group or, if there is no such method, as if the benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional accrual rate of Code section 411(b)(1)(C). Notwithstanding the foregoing, the account balances and accrued benefits of any Employee who has not performed services for an employer maintaining any of the aggregated plans during the five-year period ending on the Determination Date will not be taken into account for purposes of this subsection. (o) "Top-Heavy Valuation Date" means the last day of each Plan Year. 12.3 Minimum Allocation. (a) Calculation of Minimum Allocation. For any Plan Year in which the Plan is a Top-Heavy Plan, each Participant who is not a Key Employee will receive an -48- 52 allocation of Participating Employer contributions and forfeitures of not less than the lesser of 3% of his Includable Compensation for such Plan Year or the percentage of Includable Compensation that equals the largest percentage of Participating Employer contributions and forfeitures allocated to a Key Employee. The Minimum Allocation is determined without regard to any Social Security contribution. Deferral Contributions made on behalf of Participants who are not Key Employees will not be treated as Participating Employer contributions for purposes of the Minimum Allocation. Matching Contributions that are allocated to Participants who are not Key Employees and that are taken into account in determining a Participant's Deferral Percentage or Contribution Percentage will not be treated as Participating Employer contributions for such Plan Year for purposes of the Minimum Allocation. The Minimum Allocation applies even though under other Plan provisions the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the Plan Year because (i) the non-Key Employee fails to make mandatory contributions to the Plan, (ii) the non-Key Employee's Includable Compensation is less than a stated amount, or (iii) the non-Key Employee fails to complete 1,000 Hours of Service in the Plan Year. (b) Limitation on Minimum Allocation. No Minimum Allocation will be provided pursuant to subsection (a) to a Participant who is not employed by a Controlled Group Member on the last day of the Plan Year. (c) Minimum Allocation When Participant is Covered by Another Qualified Plan. If a Controlled Group Member maintains one or more other Defined Contribution Plans covering Employees who are Participants in this Plan, the Minimum Allocation will be provided under this Plan, unless such other Defined Contribution Plans make explicit reference to this Plan and provide that the Minimum Allocation will not be provided under this Plan, in which case the provisions of subsection (a) will not apply to any Participant covered under such other Defined Contribution Plans. If a Controlled Group Member maintains one or more Defined Benefit Plans covering Employees who are Participants in this Plan, and such Defined Benefit Plans provide that Employees who are participants therein will accrue the minimum benefit applicable to top-heavy Defined Benefit Plans notwithstanding their participation in this Plan, then the provisions of subsection (a) will not apply to any Participant covered under such Defined Benefit Plans. If a Controlled Group Member maintains one or more Defined Benefit Plans covering Employees who are Participants in this Plan, and the provisions of the preceding sentence do not -49- 53 apply, then each Participant who is not a Key Employee and who is covered by such Defined Benefit Plans will receive a Minimum Allocation determined by applying the provisions of subsection (a) with the substitution of "5%" in each place that "3%" occurs therein. (d) Nonforfeitability. The Participant's Minimum Allocation, to the extent required to be nonforfeitable under Code section 416(b) and the special vesting schedule provided in this Article, may not be forfeited under Code section 411(a)(3)(B) (relating to suspension of benefits on reemployment) or 411(a)(3)(D) (relating to withdrawal of mandatory contributions). 12.4 Modification of Aggregate Benefit Limit. (a) Modification. Subject to the provisions of subsection (b), in any Plan Year in which the Top-Heavy Ratio exceeds 60%, the aggregate benefit limit described in Article 10 will be modified by substituting "100%" for "125%" in Sections 10.1(b) and (c). (b) Exception. The modification of the aggregate benefit limit described in subsection (a) will not be required if the Top-Heavy Ratio does not exceed 90% and one of the following conditions is met: (i) Employees who are not Key Employees do not participate in both a Defined Benefit Plan and a Defined Contribution Plan which are in the Required Aggregation Group, and the Minimum Allocation requirements of Section 12.4(a) are met when such requirements are applied with the substitution of "4%" for "3%"; (ii) the Minimum Allocation requirements of Section 12.4(c) are met when such requirements are applied with the substitution of "7 1/2%" for "5%"; or (iii) Employees who are not Key Employees have an accrued benefit of not less than 3% of their average Includable Compensation for the five consecutive Plan Years in which they had the highest Includable Compensation multiplied by their Years of Service in which the Plan is a Top-Heavy Plan (not to exceed a total such benefit of 30%), expressed as a life annuity commencing at the Participant's normal retirement age in a Defined Benefit Plan which is in the Required Aggregation Group. 12.5 Minimum Vesting. (a) Required Vesting. For any Plan Year in which this Plan is a Top-Heavy Plan, the minimum vesting schedule set forth in subsection (b) will automatically apply to the Plan to the extent it provides a higher vested -50- 54 percentage than the regular vesting schedule set forth in Article 5. The minimum vesting schedule applies to all Account balances including amounts attributable to Plan Years before the effective date of Code section 416 and amounts attributable to Plan Years before the Plan became a Top-Heavy Plan. Further, no reduction in vested Account balances may occur in the event the Plan's status as a Top-Heavy Plan changes for any Plan Year, and any change in the effective vesting schedule from the schedule set forth in subsection (b) to the regular schedule set forth in Article 5 will be treated as an amendment subject to Section 14.1(iii). However, this subsection does not apply to the Account balances of any Employee who does not have an Hour of Service after the Plan has initially become a Top-Heavy Plan, and such Employee's Account balances will be determined without regard to this Section. (b) Minimum Vesting Schedule.
Percentage Vested Years of Service and Nonforfeitable ---------------- ------------------ Less than 2 0 2 but less than 3 20 3 but less than 4 40 4 but less than 5 60 5 but less than 6 80 6 or more 100
-51- 55 ARTICLE 13 ADOPTION OF PLAN BY CONTROLLED GROUP MEMBERS 13.1 Adoption Procedure. Any Controlled Group Member may become a Participating Employer under the Plan provided that (i) the Board approves the adoption of the Plan by the Controlled Group Member and designates the Controlled Group Member as a Participating Employer; (ii) the Controlled Group Member adopts the Plan and Trust Agreement together with all amendments then in effect by appropriate resolutions of the board of directors of the Controlled Group Member; and (iii) the Controlled Group Member by appropriate resolutions of its board of directors agrees to be bound by any other terms and conditions which may be required by the Board, provided that such terms and conditions are not inconsistent with the purposes of the Plan. 13.2 Effect of Adoption by Controlled Group Member. A Controlled Group Member that adopts the Plan pursuant to this Article will be deemed to be a Participating Employer for all purposes hereunder, unless otherwise specified in the resolutions of the Board designating the Controlled Group Member as a Participating Employer. In addition, the Board may provide, in its discretion and by appropriate resolutions, that the Employees of the Controlled Group Member will receive credit for their employment with the Controlled Group Member prior to the date it became a Controlled Group Member for purposes of determining either or both the eligibility of such Employees to participate in the Plan and the vested and nonforfeitable interest of such Employees in their Account balances provided that such credit will be applied in a uniform and nondiscriminatory manner with respect to all such Employees. -52- 56 ARTICLE 14 AMENDMENT OF THE PLAN 14.1 Right to Amend the Plan. The Company reserves to the Compensation Committee of the Board of Directors the right to amend the Plan at any time and from time to time to the extent it may deem advisable or appropriate, provided that (i) no amendment will increase the duties or liabilities of the Trustee without its written consent; (ii) no amendment will cause a reversion of Plan assets to the Participating Employers not otherwise permitted under the Plan; (iii) no amendment will have the effect of reducing the percentage of the vested and nonforfeitable interest of any Participant in his Account nor will the vesting provisions of the Plan be amended unless each Participant with at least three Years of Service (including Years of Service disregarded pursuant to the reemployment provisions (if any) of Article 5) is permitted to elect to continue to have the prior vesting provisions apply to him, within 60 days after the latest of the date on which the amendment is adopted, the date on which the amendment is effective, or the date on which the Participant is issued written notice of the amendment; and (iv) no amendment will be effective to the extent that it has the effect of decreasing a Participant's Account balance or eliminating an optional form of distribution as it applies to an existing Account balance. 14.2 Amendment Procedure. Any amendment to the Plan will be made only pursuant to action of the Compensation Committee of the Board. A certified copy of the resolutions adopting any amendment and a copy of the executed amendment will be delivered to the Trustee, the Committee and the Company. Upon such action by the Compensation Committee of the Board, the Plan will be deemed amended as of the date specified as the effective date by such action or in the instrument of amendment. The effective date of any amendment may be before, on or after the date of such action, except as otherwise set forth in Section 14.1. 14.3 Effect on Participating Employers. Unless an amendment expressly provides otherwise, all Participating Employers will be bound by any amendment to the Plan. -53- 57 ARTICLE 15 TERMINATION, PARTIAL TERMINATION AND COMPLETE DISCONTINUANCE OF CONTRIBUTIONS 15.1 Continuance of Plan. The Participating Employers expect to continue the Plan indefinitely, but they do not assume an individual or collective contractual obligation to do so, and the right is reserved to the Company, by action of the Board, to terminate the Plan or to completely discontinue contributions thereto at any time. In addition, subject to remaining provisions of this Article, any Participating Employer at any time may discontinue its participation in the Plan with respect to its Employees. 15.2 Complete Vesting. If the Plan is terminated, or if there is a complete discontinuance of contributions to the Plan by the Participating Employers, the amounts allocated or to be allocated to the Accounts of all affected Participants will become 100% vested and nonforfeitable without regard to their Years of Service. For purposes of this Section, a Participant who has terminated employment and is not again an Employee at the time the Plan is terminated or there is a complete discontinuance of Participating Employer contributions will not be an affected Participant entitled to full vesting if the Participant had no vested interest in his Account balance attributable to Participating Employer contributions at his termination of employment. In the event of a partial termination of the Plan, the amounts allocable to the Accounts of those Participants who cease to participate on account of the facts and circumstances which result in the partial termination will become 100% vested and nonforfeitable without regard to their Years of Service. 15.3 Disposition of the Trust Fund. If the Plan is terminated, or if there is a complete discontinuance of contributions to the Plan, the Committee will instruct the Trustee either (i) to continue to administer the Plan and pay benefits in accordance with the Plan until the Trust Fund has been depleted, or (ii) to distribute the assets remaining in the Trust Fund. If the Trust Fund is to be distributed, the Committee will make, after deducting estimated expenses for termination of the Trust Fund and distribution of its assets, the allocations required under the Plan as though the date of completion of the Trust Fund termination were a Valuation Date. The Trustee will distribute to each Participant the amount credited to his Account as of the date of completion of the Trust Fund termination. -54- 58 15.4 Withdrawal by A Participating Employer. A Participating Employer may withdraw from participation in the Plan or completely discontinue contributions to the Plan only with the approval of the Board. If any Participating Employer withdraws from the Plan or completely discontinues contributions to the Plan, a copy of the resolutions of the board of directors of the Participating Employer adopting such action, certified by the secretary of such board of directors and reflecting approval by the Board, will be delivered to the Committee as soon as it is administratively feasible to do so, and the Committee will communicate such action to the Trustee and to the Employees of the Participating Employer. -55- 59 ARTICLE 16 MISCELLANEOUS 16.1 Reversion Prohibited. (a) General Rule. Except as provided in subsections (b), (c) and (d), it will be impossible for any part of the Trust Fund either (i) to be used for or diverted to purposes other than those which are for the exclusive benefit of Participants and their Beneficiaries (except for the payment of taxes and administrative expenses), or (ii) to revert to a Controlled Group Member. (b) Disallowed Contributions. Each contribution of the Participating Employers under the Plan is expressly conditioned upon the deductibility of the contribution under Code section 404. If all or part of a Participating Employer's contribution is disallowed as a deduction under Code section 404, such disallowed amount (reduced by any Trust Fund losses attributable thereto) may be returned by the Trustee to the Participating Employer with respect to which the deduction was disallowed (upon the direction of the Committee) within one year after the disallowance. (c) Mistaken Contributions. If a contribution is made by a Participating Employer by reason of a mistake of fact, then so much of the contribution as was made as a result of the mistake (reduced by any Trust Fund losses attributable thereto) may be returned by the Trustee to the Participating Employer (upon direction of the Committee) within one year after the mistaken contribution was made. (d) Failure to Qualify. In the event the Internal Revenue Service determines that the Plan and the Trust Agreement, as amended by amendments acceptable to the Company, initially fail to constitute a qualified plan and establish a tax-exempt trust under the Code, then notwithstanding any other provisions of the Plan or the Trust Agreement, the contributions made by the Participating Employers prior to the date of such determination will be returned to the Participating Employers and the Plan and Trust Agreement will terminate. 16.2 Bonding, Insurance and Indemnity. (a) Bonding. To the extent required under ERISA, the Participating Employers will obtain, pay for and keep current a bond or bonds with respect to each Committee -56- 60 member and each Employee who receives, handles, disburses, or otherwise exercises custody or control of, any of the assets of the Plan. (b) Insurance. The Participating Employers, in their discretion, may obtain, pay for and keep current a policy or policies of insurance, insuring the Committee members, the members of the board of directors of each Participating Employer and other Employees to whom any fiduciary responsibility with respect to the administration of the Plan has been delegated against any and all costs, expenses and liabilities (including attorneys' fees) incurred by such persons as a result of any act, or omission to act, in connection with the performance of their duties, responsibilities and obligations under the Plan and any applicable law. (c) Indemnity. If the Participating Employers do not obtain, pay for and keep current the type of insurance policy or policies referred to in subsection (b), or if such insurance is provided but any of the parties referred to in subsection (b) incur any costs or expenses which are not covered under such policies, then the Participating Employers will indemnify and hold harmless, to the extent permitted by law, such parties against any and all costs, expenses and liabilities (including attorneys' fees) incurred by such parties in performing their duties and responsibilities under this Plan, provided that such party or parties were acting in good faith within what was reasonably believed to have been the best interests of the Plan and its Participants. 16.3 Merger, Consolidation or Transfer of Assets. There will be no merger or consolidation of all or any part of the Plan with, or transfer of the assets or liabilities of all or any part of the Plan to, any other Qualified Plan unless each Participant who remains a Participant hereunder and each Participant who becomes a participant in the other Qualified Plan would receive a benefit immediately after the merger, consolidation or transfer (determined as if the other Qualified Plan and the Plan were then terminated) which is equal to or greater than the benefit they would have been entitled to receive under the Plan immediately before the merger, consolidation or transfer if the Plan had then terminated. 16.4 Spendthrift Clause. The rights of any Participant or Beneficiary to and in any benefits under the Plan will not be subject to assignment or alienation, and no Participant or Beneficiary will have the power to assign, transfer or dispose of such rights, nor will any such rights to benefits be subject to attachment, execution, garnishment, -57- 61 sequestration, the laws of bankruptcy or any other legal or equitable process. This Section will not apply to a "qualified domestic relations order". A "qualified domestic relations order" means a judgment, decree or order made pursuant to a state domestic relations law which satisfies the requirements of Code section 414(p). 16.5 Rights of Participants. Participation in the Plan will not give any Participant the right to be retained in the employ of a Controlled Group Member or any right or interest in the Plan or the Trust Fund except as expressly provided herein. 16.6 Gender, Tense and Headings. Whenever any words are used herein in the masculine gender, they will be construed as though they were also used in the feminine gender in all cases where they would so apply. Whenever any words used herein are in the singular form, they will be construed as though they were also used in the plural form in all cases where they would so apply. Headings of Articles, Sections and subsections as used herein are inserted solely for convenience and reference and constitute no part of the Plan. 16.7 GOVERNING LAW. THE PLAN WILL BE CONSTRUED AND GOVERNED IN ALL RESPECTS IN ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT NOT PREEMPTED BY SUCH FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. Executed: this 15th day of September, 1989. A. H. BELO CORPORATION BY /S/ ROBERT W. DECHERD BY --------------------- -58- 62 APPENDIX A PARTICIPATING EMPLOYERS A. H. Belo Corporation Dallas-Ft. Worth Suburban Newspapers, Inc. Great Western Broadcasting Corporation Gulf Television Corporation KOTV, Inc. The Dallas Morning News Company WFAA Television, Inc. WVEC Television, Inc. -59- EX-10.3(21) 6 7TH AMEND EMPLOYEE SAVING AND INVESTMENT PLAN 1 EXHIBIT 10.3 (21) SEVENTH AMENDMENT TO A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT PLAN A. H. Belo Corporation, a Delaware corporation, pursuant to authorization of its Board of Directors, adopts the following amendments to the A. H. Belo Corporation Employee Savings and Investment Plan (the "Plan"). 1. The first sentence of Section 1.8 of the Plan ("Compensation") is amended in its entirety to read as follows: "Compensation" means the earnings paid to an Employee by the Participating Employers which are subject to reporting on Internal Revenue Service Form W-2, excluding, however, reimbursements for moving expenses, automobile allowances and any earnings paid to the Employee in a form other than cash. 2. Clause (iv) of Section 2.2(a) of the Plan (relating to employees ineligible to participate) is amended in its entirety to read as follows: (iv) he is a leased employee required to be treated as an Employee under Code section 414(n) or he is classified by a Participating Employer as an independent contractor whose compensation for services is reported on a form other than Form W-2 or any successor form for reporting wages paid to employees; 2 3. Section 3.1(a) of the Plan ("Amount of Deferral Contributions") is amended by the addition of the following sentence: Effective with the first payroll period beginning on or after January 1, 1995, the amount of a Participant's Deferral Contributions will not be less than 2% nor more than 15% of his Compensation for each payroll period. 4. Sections 3.2(a) and 3.2(b) of the Plan are amended in their entirety to read as follows: (a) Amount of Matching Contributions. Prior to January 1, 1995, the Participating Employers will pay to the Trustee as a matching contribution for each Plan Year an amount equal to 50% of each Participant's Deferral Contributions, but only to the extent that the Participant's Deferral Contributions do not exceed 6% of the Participant's Compensation for the Plan Year (excluding Compensation earned before the Participant was eligible to participate under Section 2.1). Effective with the first payroll period beginning on or after January 1, 1995, the Participating Employers will pay to the Trustee as a matching contribution for each payroll period an amount equal to 50% of each Participant's Deferral Contributions, but only to the extent that the Participant's Deferral Contributions do not exceed 6% of the Participant's Compensation for the payroll period. In addition, each Participating Employer may make an additional matching contribution for any Plan Year if authorized by its board of directors, but no Participating Employer will be required to make an additional matching contribution for any Plan Year. Participating Employer matching contributions may be made in cash or in shares of Company Stock or both. -2- 3 (b) Calculation of Matching Contributions. For Plan Years beginning before January 1, 1995, Participating Employer matching contributions initially will be calculated on the basis of Deferral Contributions and Compensation for each payroll period within the Plan Year. Except as otherwise set forth in Section 3.2(c), as of one or more dates within each Plan Year beginning before January 1, 1995, the Participating Employers will make an additional matching contribution for a Participant to the extent necessary to cause the matching contributions for such Participant for the Plan Year to be equal to the amount required by Section 3.2(a) calculated on the basis of the Participant's Deferral Contributions and Compensation for the entire Plan Year (excluding Compensation earned before the Participant was eligible to participate under Section 2.1). For Plan Years beginning on and after January 1, 1995, Participating Employer matching contributions will be calculated solely on the basis of Deferral Contributions and Compensation for each payroll period within the Plan Year. 5. Section 3.2(d) of the Plan is amended in its entirety to read as follows: (d) Participants Ineligible for Matching Contributions. Notwithstanding the foregoing provisions of this Section, (i) no matching contributions will be made for any payroll period beginning on or after April 1, 1994, with respect to any Employee who is employed by DFW Suburban Newspapers, Inc. and (ii) no matching contributions will be made for any payroll period beginning before January 1, 1995, with respect to any Employee who is employed by WWL-TV, Inc. -3- 4 6. Section 4.2 of the Plan is amended in its entirety to read as follows: 4.2 Allocation of Contributions and Forfeitures. Each Deferral Contribution made by a Participating Employer on behalf of a Participant will be allocated by the Committee to the Participant's Deferral Contribution Account. Prior to 1995, each Participating Employer matching contribution made with respect to a Plan Year and all forfeitures arising during that Plan Year will be allocated by the Committee to the Matching Contribution Accounts of Participants employed by that Participating Employer in the ratio that the Deferral Contributions made on behalf of each such Participant for the Plan Year bear to the total Deferral Contributions made on behalf of all such Participants for the Plan Year, taking into account for purposes of this ratio only Deferral Contributions that do not exceed 6% of each Participant's Compensation. Effective with the first payroll period beginning on and after January 1, 1995, each Participating Employer matching contribution made with respect to a payroll period and all forfeitures will be allocated by the Committee to the Matching Contribution Accounts of Participants employed by that Participating Employer in the ratio that the Deferral Contributions made on behalf of each such Participant for each payroll period in the Plan Year bear to the total Deferral Contributions made on behalf of all such Participants for each such payroll period, taking into account for purposes of this ratio only Deferral Contributions that do not exceed 6% of each Participant's Compensation for the payroll period. 7. Clause (i) of Section 6.5(c) of the Plan (relating to the term of participant loans) is amended in its entirety to read as follows: -4- 5 (i) no loan will be for a term of longer than five years; 8. The second sentence of Section 6.5(g) of the Plan (relating to the investment of loan repayments) is amended in its entirety to read as follows: All payments with respect to a loan will be credited to the borrowing Participant's Accounts and will be invested in the investment funds under the Trust Agreement in accordance with the Participant's latest investment directions pursuant to Section 3.5. 9. Article 6 of the Plan ("Distributions to Participants") is amended by renumbering Section 6.8 as Section 6.9 and inserting the following new section immediately after Section 6.7: 6.8 Direct Rollovers: (a) Notwithstanding any other provision of the Plan, for distributions made on or after January 1, 1993, a Distributee (as hereinafter defined) may elect, at any time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution (as hereinafter defined) paid directly to an Eligible Retirement Plan (as hereinafter defined) specified by the Distributee. (b) An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include (i) any distribution that is one of a series of substantially equal periodic payments -5- 6 (not less frequently than annually) made for the life or life expectancy of the Distributee or the joint lives or life expectancies of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten years or more, (ii) any distribution to the extent such distribution is required by Section 401(a)(9) of the Code, and (iii) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code that is a defined contribution plan within the meaning of Section 414(i) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to a Participant's surviving Spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (d) A Distributee includes a Participant, the Participant's Spouse, or a Participant's former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code. 10. The last sentence of Section 10.2(n) of the Plan (relating to the definition of Includable Compensation for purposes of the annual addition limitations under Code section 415) is deleted and replaced by the following sentences: The annual Includable Compensation of an Employee taken into account for any purpose for any Plan Year will not exceed -6- 7 $200,000 for any Plan Year ending before January 1, 1994, as adjusted in regulations prescribed by the Secretary of the Treasury, and will not exceed $150,000 for any Plan Year beginning after December 31, 1993, as adjusted in regulations prescribed by the Secretary of the Treasury. For purposes of applying the $200,000 and $150,000 limits set forth in the preceding sentence, if an Employee is a Highly Compensated Employee who is either (i) a 5-percent owner, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the 10 most highly compensated Employees ranked on the basis of Compensation paid by the Controlled Group during the year, such Highly Compensated Employee and the members of his family (as hereafter defined) will be treated as a single employee and the Compensation of each member of the family will be aggregated with the Compensation of the Highly Compensated Employee. The limitation on Compensation will be allocated among such Highly Compensated Employee and his family members in proportion to each individual's Compensation. For purposes of this Section 10.2(n), the term "family" means an Employee's spouse and any lineal descendants who are under age 19 at the end of the Plan Year in question. 11. Section 10.2(u) of the Plan (relating to the definition of "Compensation" for discrimination testing purposes) is amended in its entirety to read as follows: (u) "Compensation" means the wages as defined in Code section 3401(a) for purposes of income tax withholding at the source (but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or services performed) that are paid to a Participant by the Participating Employers. In addition, Compensation includes any contributions made by the Participating Employers on behalf of an Employee pursuant to a deferral election under the Plan or under any other employee benefit plan containing a cash or deferred -7- 8 arrangement under Code section 401(k) and any amounts that would have been received as cash but for an election to receive benefits under a cafeteria plan meeting the requirements of Code section 125. The annual Compensation of an Employee taken into account for any purpose will not exceed $200,000 for any Plan Year ending before January 1, 1994, as adjusted in regulations prescribed by the Secretary of the Treasury, and will not exceed $150,000 for any Plan Year beginning after December 31, 1993, as adjusted in regulations prescribed by the Secretary of the Treasury. For purposes of applying the $200,000 and $150,000 limits set forth in the preceding sentence, if an Employee is a Highly Compensated Employee who is either (i) a 5-percent owner, determined in accordance with Code section 414(q) and the Treasury Regulations promulgated thereunder or (ii) one of the 10 most highly compensated Employees ranked on the basis of Compensation paid by the Controlled Group during the year, such Highly Compensated Employee and the members of his family (as hereafter defined) will be treated as a single employee and the Compensation of each member of the family will be aggregated with the Compensation of the Highly Compensated Employee. The limitation on Compensation will be allocated among such Highly Compensated Employee and his family members in proportion to each individual's Compensation. For purposes of this Section 10.2(u), the term "family" means an Employee's spouse and any lineal descendants who are under age 19 at the end of the Plan Year in question. 12. Section 16.7 of the Plan is amended in its entirety to read as follows: 16.7 Governing Law. The Plan will be construed and governed in all respects in accordance with applicable federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Texas, including without limitation, the Texas statute of -8- 9 limitations, but without giving effect to the principles of conflicts of laws of such State. 13. Appendix A to the Plan ("Participating Employers") is amended to delete Dallas - Ft. Worth Suburban Newspapers, Inc. as a Participating Employer as of April 1, 1994, and to add as Participating Employers the following Controlled Group Members: Belo Production, Inc. (as of April 1, 1994); DFW Printing Company, Inc. (as of April 1, 1994); DFW Suburban Newspapers, Inc. (for the period beginning on April 1, 1994, and ending on December 31, 1994); and WWL-TV, Inc. (as of June 1, 1994). 14. The amendments set forth in paragraphs 1, 2, 3, 4, 5, 6 and 12 will be effective as of January 1, 1995. The amendments set forth in paragraph 7, 8 and 9 will be effective as of January 1, 1993. The amendment set forth in paragraphs 10 and 11 will be effective as of January 1, 1994. The amendment set forth in paragraph 13 will be effective as of April 1, 1994. Executed this 14th day of December, 1994. A. H. BELO CORPORATION By /s/ Michael J. McCarthy _______________________ -9- EX-10.3.(22) 7 8TH AMEND EMPLOYEE SAVING AND INVESTMENT PLAN 1 EXHIBIT 10.3 (22) EIGHTH AMENDMENT TO A. H. BELO CORPORATION EMPLOYEE SAVINGS AND INVESTMENT PLAN A. H. Belo Corporation, a Delaware corporation, pursuant to authorization of its Board of Directors, adopts the following amendments to the A. H. Belo Corporation Employee Savings and Investment Plan (the "Plan"). 1. Section 1.30 of the Plan ("Year of Service") is amended by the addition of the following paragraph: Notwithstanding the foregoing, in determining whether an Employee of Third Avenue Television, Inc., a Delaware corporation ("Third Avenue"), has completed a Year of Service for purposes of eligibility to participate under Section 2.1, each such Employee who became an employee of Third Avenue on February 1, 1995, and who immediately prior to that date was an employee of KIRO, Inc., a Washington corporation ("KIRO"), will receive credit for an Hour of Service for each hour for which the Employee was paid or entitled to payment by KIRO or any affiliate of KIRO determined in accordance with Section 1.17 and will receive credit for his period of employment with KIRO or any affiliate of KIRO calculated in the same manner as if it had been employment with a Controlled Group Member. 2. Section 2.1 of the Plan ("Eligibility to Participate") is amended by the addition of the following sentence: In addition, each Employee of Third Avenue Television, Inc. who completed a Year of Service and attained age 21 on or 2 before January 31, 1995, will become a Participant on February 1, 1995. 3. Appendix A to the Plan ("Participating Employers") is amended by the addition of the following corporation: Third Avenue Television, Inc. (as of February 1, 1995) 4. The foregoing amendments will be effective from and after February 1, 1995. Executed at Dallas, Texas, this 22nd day of February, 1995. A. H. BELO CORPORATION By /s/ Michael J. McCarthy _______________________ EX-10.3(30) 8 7TH AMEND G.B. DEALEY RETIREMENT PLAN 1 EXHIBIT 10.3 (30) SEVENTH AMENDMENT TO THE G. B. DEALEY RETIREMENT PENSION PLAN (As Amended and Restated Effective January 1, 1988) A. H. Belo Corporation, a Delaware corporation, pursuant to authorization of its Board of Directors, adopts the following amendments to the G. B. Dealey Retirement Pension Plan (the "Plan"). 1. Section 1.3 of the Plan is amended in its entirety to read as follows: 1.3 "Applicable Interest Rate" means the interest rate or rates that would be used by the Pension Benefit Guaranty Corporation, as of the first day of the Plan Year in which a distribution is made, for purposes of determining the lump sum present value of the Participant's benefit under the Plan if the Plan had terminated on the first day of such Plan Year with insufficient assets to provide benefits guaranteed by the Pension Benefit Guaranty Corporation on that date. 2. The second sentence of Section 1.11 of the Plan (relating to the definition of Compensation) is amended in its entirety to read as follows: In addition, the Compensation paid to an Employee who is a "highly compensated employee" as defined in Code section 414(q) and the Treasury Regulations thereunder will be further reduced by the following items: amounts 2 includible in the Employee's income by reason of the grant or exercise of a stock option, amounts includible in the Employee's income under Code section 83 with respect to restricted stock and any other amounts includible in the Employee's income by reason of an award (other than an annual bonus award) under the Company's 1986 Long Term Incentive Plan, the 1995 Executive Compensation Plan or any successor executive compensation plan, as such plans may be amended and in effect from time to time. 3. The first sentence of the second paragraph of Section 1.11 (relating to the definition of Compensation), as previously amended by the Fourth Amendment to the Plan, is further amended in its entirety to read as follows: For purposes of determining benefit accruals for any Plan Year beginning after December 31, 1988, and ending before January 1, 1994, the Compensation of an Employee will not exceed $200,000, and for purposes of determining benefit accruals for any Plan Year beginning after December 31, 1993, the Compensation of any Employee will not exceed $150,000, as both such dollar limits are adjusted by the Secretary of the Treasury. 4. The fourth paragraph of Section 1.11 (relating to the definition of Compensation), as added by the Second Amendment to the Plan, is amended in its entirety to read as follows: If Compensation for any prior Plan Year is taken into account in determining an Employee's benefits for the current Plan Year, the Compensation for such prior Plan Year is subject to the applicable annual compensation limit in effect for that prior Plan Year. For this purpose, for years beginning before January 1, 1990, the applicable -2- 3 annual compensation limit is $200,000. In addition, if Compensation for any Plan Year beginning prior to January 1, 1994, is used to determine benefit accruals in a Plan Year beginning on or after January 1, 1994, the annual compensation limit for that prior Plan Year will be $150,000, as adjusted for that prior Plan Year by the Secretary of the Treasury. 5. The fifth sentence of Section 1.14 of the Plan (relating to the definition of Credited Service) is amended in its entirety to read as follows: Notwithstanding the foregoing, for purposes of determining the amount of an Employee's Accrued Benefit under Article 5, Credited Service earned by an Employee while employed by a Controlled Group Member that is not a Participating Employer will not be taken into account, and Credited Service during any period prior to January 1, 1982, during which the Employee was eligible to participate in the Plan but elected not to participate will be disregarded. 6. Section 1.33 of the Plan is amended in its entirety to read as follows: (a) with respect to a married Participant who dies before January 1, 1995, a monthly annuity for the life of the deceased Participant's surviving spouse that is equal to the Actuarial Equivalent of the Participant's Accrued Benefit determined as of the date of his death and (b) with respect to a married Participant who dies on or after January 1, 1995, a monthly annuity for the life of the deceased Participant's surviving spouse in the amount described in Section 8.1. -3- 4 7. Article 1 of the Plan is amended by the addition of the following new definition and all references in the Plan to a Participant's current or surviving spouse are amended to conform to the new definition: 1.38 "Spouse" means the individual to whom a Participant was legally married on the earlier of his Benefit Commencement Date or the date of his death. 8. Clause (iv) of Section 2.2(a) of the Plan (relating to employees ineligible to participate) is amended in its entirety to read as follows: (iv) he is a leased employee required to be treated as an Employee under Code section 414(n) or he is classified by a Participating Employer as an independent contractor whose compensation for services is reported on a form other than Form W-2 or any successor form for reporting wages paid to employees; 9. Clause (ii) of Section 4.1(b) of the Plan (relating to accelerated vesting) is amended in its entirety to read as follows: (ii) on his death prior to January 1, 1995, while he is an Employee, or -4- 5 10. Section 5.5 of the Plan is amended in its entirety to read as follows: 5.5 Disability Benefit. A Participant who has a Disability prior to attaining age 65 and prior to his termination of employment will continue to accrue a benefit during the period of his Disability only if (i) he returns to regular employment with a Participating Employer immediately following the termination of his Disability or (ii) he has attained Early Retirement Age at the time his Disability terminates and he elects to retire and immediately begin receiving retirement benefits under the Plan. For purposes of determining the amount of the benefit accrued during Disability, the Participant's Compensation will be deemed to be his annualized rate of Compensation as of the date of his Disability, and the Participant will earn Credited Service during the period in which he receives Disability benefits. A Participant who becomes totally and permanently disabled (as hereafter defined) before attaining age 65 and before his termination of employment and who is not eligible for benefits under the Company's long-term disability plan will be fully vested in his Accrued Benefit without regard to his years of Credited Service and will be entitled to receive a monthly benefit beginning on the first day of the month immediately following the date of his disability in an amount equal to his Accrued Benefit determined as of such date. The amount of such disability benefit will not be actuarially reduced to reflect the fact that it is being paid prior to the Participant's Normal Retirement Date. A Participant will be totally and permanently disabled for purposes of this paragraph only if he is eligible to receive disability benefits under the Social Security Act. A Participant who is eligible to receive a monthly benefit under this paragraph will continue to receive such benefit only if he submits evidence to the Committee, in such form and at such times as the Committee may reasonably request, that he continues to qualify for disability benefits under the Social Security Act. -5- 6 11. The definition of Change in Control that appears in Section 5.7(b) is amended in its entirety to read as follows: (b) Change in Control Defined. For purposes of this Section, the term "Change in Control" means the first to occur of the events described in (i) through (iv) below, unless the Board has adopted a resolution prior to or promptly following the occurrence of any such event stipulating, conditionally, temporarily or otherwise, that any such event will not result in a change in control of the Company: (i) the commencement of, or first public announcement of the intention of any person or group (within the meaning of Section 3(b) of and Rule 13d-5(b) promulgated under the Securities Exchange Act of 1934, as amended, respectively) to commence, a tender offer or exchange offer (other than an offer by the Company or any Subsidiary) for all, or any part of, the common stock of the Company (including, if issued and outstanding, Series A Common Stock and Series B Common Stock, hereinafter referred to as "Common Stock"); (ii) the public announcement by the Company or by any group (as defined in clause (i) above), entity or person (other than the Company, any Subsidiary (as hereinafter defined), or any savings, pension or other benefit plan for the benefit of employees of the Company or any Subsidiary) which, through a transaction or series of transactions has acquired, directly or indirectly, beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 30% of the total number of shares of Common Stock that such group, entity or person has become such a beneficial owner; (iii) the approval by the Company's shareholders (or, if such approval is not required, the consummation) of a merger in which the Company does not -6- 7 survive as an independent publicly owned corporation, a consolidation, or a sale, exchange, or other disposition of all or substantially all the Company's assets; or (iv) a change in the composition of the Board during any period of two consecutive years such that individuals who at the beginning of such period were members of the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company's shareholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period. For purposes of the foregoing definition, the term "Subsidiary" means any corporation, partnership, joint venture or other entity in which at the time the Company owns or controls, directly or indirectly, not less than 50% of the total combined voting power or equity interests represented by all classes of stock issued by such corporation, partnership, joint venture or other entity. 12. Article 5 of the Plan is amended by the addition of the following new Section 5.12: 5.12 Direct Rollovers. (a) Distributions after 1992. Notwithstanding any other provision of the Plan, for distributions made on or after January 1, 1993 a Distributee (as hereinafter defined) may elect, at any time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution (as hereinafter defined) paid directly to an Eligible Retirement Plan (as hereinafter defined) specified by the Distributee. (b) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any -7- 8 portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include (i) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life or life expectancy of the Distributee or the joint lives or life expectancies of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten years or more, (ii) any distribution to the extent such distribution is required by Code section 401(a)(9), and (iii) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described in Code section 408(a), an individual retirement annuity described in Code section 408(b), an annuity plan described in Code section 403(a), or a Qualified Plan that is a Defined Contribution Plan, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to a Participant's surviving Spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (d) Distributee. A Distributee includes a Participant, the Participant's Spouse, or a Participant's former spouse who is an alternate payee under a qualified domestic relations order, as defined in Code section 414(p). 13. The last sentence of Section 6.9, Section 6.10 and Section 6.11 (relating to benefits payable to Participants employed by sold businesses) is deleted. -8- 9 14. The last sentence of Section 8.4 of the Plan ("Designation of a Beneficiary") is amended in its entirety to read as follows: If a Participant has not designated a Beneficiary or is not survived by a designated Beneficiary, the death benefit under the Plan will be payable, to his surviving Spouse, if any, otherwise equally among his surviving children, if any, and if the Participant is not survived by a Spouse or children, to his then living parents, and if none of the above are then living, to his estate. 15. Article 8 of the Plan is amended in its entirety to read as follows: ARTICLE 8 DEATH BENEFITS FOR SPOUSES 8.1 Death Benefit. The Spouse of a Participant (including without limitation a Participant who terminated employment before January 1, 1995) who has a vested interest in his Accrued Benefit and dies after December 31, 1994, and prior to his Benefit Commencement Date will receive a Qualified Preretirement Survivor Annuity in an amount determined under this Section. Payments to the Spouse that begin before the Participant's Normal Retirement Date will be actuarially adjusted in the manner set forth in Section 8.2. The death benefit, if any, payable to the Spouse of a Participant who dies after his Benefit Commencement Date will be determined under the form of benefit elected by the Participant with the consent of the Spouse, if required under Section 7.2. -9- 10 (ii) the payments the Spouse would have received under the Qualified Joint and Survivor Annuity if the Participant had terminated employment with an immediate Qualified Joint and Survivor Annuity on the day before his death or (ii) if the Participant either (A) had attained age 55 while an Employee on or before December 31, 1994, or (B) had terminated employment before January 1, 1995, but had attained age 55 at the time of his termination of employment, payments that are the Actuarial Equivalent of the Participant's Accrued Benefit determined as of December 31, 1994, or the date of his termination of employment, whichever is earlier. (b) Death On or Before Age 55. If a Participant dies on or before attaining age 55, the payments to his Spouse under the Qualified Preretirement Survivor Annuity will be equal to the payments the Spouse would have received if the Participant (i) had terminated employment on the date of his death (if he was an Employee on the date of his death); (ii) had survived to age 55; (iii) had received at age 55 an immediate Qualified Joint and Survivor Annuity in the amount elected by the Participant prior to his death; and (iv) had died on the day after attaining age 55. (c) Death after Divorce. If a married Participant becomes divorced, he will be treated as having waived the Qualified Preretirement Survivor Annuity with respect to his former spouse, and his former spouse will not be entitled to any death benefit under the Plan except to the extent provided in a qualified domestic relations order described in Code section 414(p). 8.2 Commencement of Benefit. The surviving Spouse may elect to begin receiving payments on the first day of any month following the later of (i) the month in which the Participant would have attained age 55 or (ii) the month in which the Participant died. The early retirement factors set forth in Section 5.2 will be applied to determine the monthly amount of the Qualified Preretirement Survivor Annuity payable to the surviving Spouse as of any date that precedes the Participant's Normal Retirement Date. 8.3 Form of Benefit. The normal form of death benefit under this Article will be a monthly annuity for the life of -10- 11 the Spouse. If, however, the Actuarially Equivalent present value of the monthly death benefit does not exceed $3,500, then the Committee will distribute the death benefit to the Spouse in the form of an immediate lump sum payment that is the Actuarial Equivalent of the death benefit. 8.4 Certain Spouses. A former spouse will be treated as the current spouse or the surviving spouse of a Participant to the extent provided under a qualified domestic relations order as described in Code section 414(p). If, however, the qualified domestic relations order provides for a portion of the Participant's retirement benefit (either through separate accounts or a percentage of the benefit) to be distributed to the former spouse, the Participant will not be deemed to be a married Participant for purposes of this Article with respect to the portion of the benefit awarded to his former spouse. 8.5 Cost of Coverage. The Participant's benefit under the Plan will not be reduced by the cost of providing the death benefits for his Spouse described in this Article. 16. Section 10.2(j), relating to the definition of Compensation for purposes of the maximum benefit limitations of the Internal Revenue Code, is amended by the addition of the following sentences: The Includable Compensation of an Employee for any Plan Year beginning after December 31, 1988, and ending before January 1, 1994, the Compensation of an Employee will not exceed $200,000, and for any Plan Year beginning after December 31, 1993, the Includable Compensation of any Employee will not exceed $150,000, as both such dollar limits are adjusted by the Secretary of the Treasury. If an Employee's Compensation is determined with respect to a period of time that contains fewer than 12 calendar months, then the annual compensation limit is an amount equal to the annual compensation limit for the calendar year in which the -11- 12 compensation period begins multiplied by the ratio obtained by dividing the number of full months in the period by 12. In determining the Includable Compensation of an Employee for purposes of the adjusted $200,000 limitation or $150,000 limitation, as applicable, the rules of Code section 414(q)(6) will apply, except in applying such rules, the term "family" will include only the spouse of an Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the year. If, as a result of the application of such rules, the adjusted $200,000 limitation or $150,000 limitation, as applicable, is exceeded, then (except for purposes of determining the portion of Includable Compensation up to the integration level), the limitation will be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this Section prior to the application of this limitation. 17. Sections 14.1 and 14.2 of the Plan are amended in their entirety to read as follows: 14.1 Right to Amend the Plan. (a) In General. The Company reserves to the Compensation Committee of the Board of Directors the right to amend the Plan at any time and from time to time to the extent it may deem advisable or appropriate, provided that (i) no amendment will increase the duties or liabilities of the Trustee without its written consent; (ii) no amendment will cause a reversion of Plan assets to the Participating Employers not otherwise permitted under the Plan; (iii) no amendment will have the effect of reducing the percentage of the vested and nonforfeitable interest of any Participant in his Account nor will the vesting provisions of the Plan be amended unless each Participant with at least three years of Credited Service (including years of Credited Service disregarded pursuant to the reemployment provisions (if any) of Article 4) is permitted to elect to continue to have the prior vesting provisions apply to him, within 60 days after the latest of the date on which the amendment is adopted, -12- 13 the date on which the amendment is effective, or the date on which the Participant is issued written notice of the amendment; and (iv) no amendment will be effective to the extent that it has the effect of decreasing a Participant's Account balance or eliminating an optional form of distribution as it applies to an existing Account balance. (b) Authority of the Board. The Company also reserves to the Board of Directors the right to amend the Plan at any time and from time to time to the extent it may deem advisable or appropriate, subject to the limitations on amendments set forth in subsection (a). 14.2 Amendment Procedure. Any amendment to the Plan will be made only pursuant to action of the Board or of the Compensation Committee of the Board. A certified copy of the resolutions adopting any amendment and a copy of the executed amendment will be delivered to the Trustee, the Committee and the Company. Upon such action by the Board or the Compensation Committee of the Board, the Plan will be deemed amended as of the date specified as the effective date by such action or in the instrument of amendment. The effective date of any amendment may be before, on or after the date of such action, except as otherwise set forth in Section 14.1. 18. The last sentence of the first paragraph of Section 10.3(j), relating to the aggregate benefit limitation under the Internal Revenue Code, is amended in its entirety to read as follows: A Participant's Projected Annual Benefit will be reduced, if necessary, without any further action on the part of the Participating Employers , the Board of Directors or the Committee, to meet this limitation. -13- 14 19. Section 15.5 of the Plan is amended in its entirety to read as follows: 15.5 Prevention of Discrimination on Early Termination. (a) Limitation Concerning Highly Compensated Employees. In the event that (i) the value of the Accrued Benefit of a Participant who is a Highly Compensated Employee or a Highly Compensated Former Employee (as such terms are hereafter defined) equals or exceeds 1% of the value of all Accrued Benefits under the Plan on the date payment of such Participant's benefits is to commence, and (ii) after payment of such Participant's Accrued Benefit the value of Plan assets is less than 110% of the value of the Plan's current liabilities as defined in Code section 412(l)(7), such Participant's Accrued Benefit will be paid in a form that produces annual payments not in excess of the payments that would be made under a single life annuity that is the Actuarial Equivalent of such Participant's normal form of Retirement Pension. For purposes of this Section, the term "Highly Compensated Employee" has the meaning set forth in Code section 414(q), and the term "Highly Compensated Former Employee" has the meaning set forth in Code section 414(q)(9). (b) Benefits on Plan Termination. In the event the Plan is terminated, benefits will be paid in a manner that does not violate the nondiscrimination requirements of Code section 401(a)(4) and the applicable regulations. 20. Section 15.7 of the Plan is amended in its entirety to read as follows: 15.7 Governing Law. The Plan will be construed and governed in all respects in accordance with applicable federal law and, to the extent not preempted by such federal law, in accordance with the laws of the State of Texas, including without limitation, the Texas statute of -14- 15 limitations, but without giving effect to the principles of conflicts of laws of such State. 21. Appendix A to the Plan ("Participating Employers") is amended to delete Dallas - Ft. Worth Suburban Newspapers, Inc. as a Participating Employer as of April 1, 1994, and to add as Participating Employers the following Controlled Group Members: Belo Productions, Inc. (as of April 1, 1994); DFW Printing Company, Inc. (as of April 1, 1994); and WWL-TV, Inc. (as of June 1, 1994). 22. The foregoing amendments will be effective as of the following dates: (a) The amendment set forth in paragraph 10 will be effective as of January 1, 1988. (b) The amendments set forth in paragraphs 16, 18 and 19 will be effective as of January 1, 1989. (c) The amendment set forth in paragraph 12 will be effective as of January 1, 1993. (d) The amendments set forth in paragraphs 1, 3 and 4 will be effective as of January 1, 1994. (e) The amendment set forth in paragraph 5 will be effective as of April 1, 1994. (f) The amendment set forth in paragraph 15 will be effective with respect to any Participant who dies after December 31, 1994. -15- 16 (g) The amendments set forth in paragraphs 2, 6, 7, 8, 9, 11, 13, 14, and 17 will be effective as of January 1, 1995. Executed this 14th day of December, 1994. A. H. BELO CORPORATION By /s/ Michael J. McCarthy ________________________ -16- EX-10.3(31) 9 8TH AMEND G.B. DEALEY RETIREMENT PLAN 1 EXHIBIT 10.3 (31) EIGHTH AMENDMENT TO G. B. DEALEY RETIREMENT PENSION PLAN A. H. Belo Corporation, a Delaware corporation, pursuant to authorization of its Board of Directors, adopts the following amendments to the G. B. Dealey Retirement Pension Plan (the "Plan"). 1. Section 1.14 of the Plan ("Credited Service") is amended by the addition of the following sentence: In determining the Credited Service of an Employee who became an employee of Third Avenue Television, Inc., a Delaware corporation, on February 1, 1995, and who immediately prior to that date was an employee of KIRO, Inc., a Washington corporation ("KIRO"), such Employee will receive credit for his period of employment with KIRO or any affiliate of KIRO, calculated in the same manner as if it had been employment with a Controlled Group Member, for purposes of eligibility to participate in the Plan under Section 2.1 and for purposes of his vested interest in his retirement benefit under Article 4 of the Plan, but not for purposes of determining the amount of his retirement benefit or for any other purpose of the Plan. 2. Section 2.1 of the Plan is amended by the addition of the following sentence: In addition, each Employee of Third Avenue Television, Inc. who completed a year of Credited Service and attained age 21 on or before January 31, 1995, will become a Participant on February 1, 1995. 2 3. Appendix A to the Plan ("Participating Employers") is amended by the addition of the following corporation: Third Avenue Television, Inc. (as of February 1, 1995) 4. The foregoing amendments will be effective from and after February 1, 1995. Executed at Dallas, Texas, this 22nd day of February, 1995. A. H. BELO CORPORATION By /s/ Michael J. McCarthy _______________________ -2- EX-10.4(4) 10 AMENDMENT AGREEMENT 1 EXHIBIT 10.4(4) AMENDMENT AGREEMENT This Amendment and Waiver Agreement ("Agreement") is entered into effective as of August 5, 1994 by and between A. H. Belo Corporation, a Delaware corporation (the "Guarantor"), and The Sanwa Bank Limited, Dallas Agency (the "Bank"). WHEREAS, the Guarantor executed that certain Guaranty dated as of June 2, 1987 in favor of the Bank (the "Guaranty") in connection with that certain Letter of Credit and Reimbursement Agreement dated as of June 2, 1987 between the Bank and Dallas-Fort Worth Suburban Newspapers, Inc.; WHEREAS, effective as of August 5, 1994, the Guarantor terminated that certain Credit Agreement dated as of October 27, 1988 among the Guarantor and certain banks (the "1988 Agreement") and entered into that certain Credit Agreement dated as of August 5, 1994 among the Guarantor and certain banks (the "1994 Agreement"); and WHEREAS, the Guarantor has requested the Bank to amend Section 7(f) of the Guaranty to provide that the covenants, including applicable defined terms, contained in the 1994 Agreement shall be effective with respect to the Guaranty in accordance with the terms hereof; NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Section 7(f) is hereby amended to read in its entirety as follows: (f) Compliance with Certain Covenants. Comply with each of the covenants contained in Article 6 of that certain Credit Agreement dated as of August 5, 1994, among the Guarantor, as borrower, Citicorp Securities, Inc., as syndication agent, The First National Bank of Chicago, as administrative agent, and Texas Commerce Bank National Association, as documentation agent, and certain other banks, attached hereto as Exhibit A (said Agreement, as it may hereafter be amended or waived from time to time, being the "1994 Agreement"). Such covenants contained in the 1994 Agreement are incorporated herein by reference the same as if stated verbatim herein (including, where pertinent, the definitions of defined terms used in such incorporated covenants), it being understood that no material amendment or waiver with respect to such covenants contained in the 1994 Agreement shall be effective with respect to this Guaranty unless both (x) Guarantor shall give the Bank written notice of such amendment or waiver and (y) the Bank shall not object thereto by notifying Guarantor in writing within ten (10) days of Guarantor's notice to the Bank. Guarantor agrees that such covenants contained in the 1994 Agreement will remain applicable and effective for purposes of this Guaranty even after the 1994 Agreement has been terminated. 2 2. From and after the effective date hereof, each reference in the Guaranty, as amended, to the 1994 Agreement shall be deemed to mean the 1994 Agreement as the same may be hereafter amended or modified by any amendment or waiver to the 1994 Agreement that becomes effective with respect to the Guaranty pursuant to Section 7(f) thereof. 3. The Guaranty, as amended or modified hereby, shall remain in full force and effect and is hereby ratified, approved and confirmed in all respects. 4. This Agreement shall not be deemed to (a) be a waiver of or a consent to the modification of or deviation from any other term or condition of the Guaranty or any of the other instruments or agreements referred to therein, or (b) prejudice any other right or rights which the Bank may now have or may have in the future under or in connection with the Guaranty or any of the other instruments, agreements or documents referred to therein. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the 26 day of September, 1994, to be effective as of the date first above written. A. H. BELO CORPORATION By: /s/ VICKY C. TEHERANI Title: VP & TREASURER THE SANWA BANK LIMITED, DALLAS AGENCY By: /s/ ROSS S. SMITH Title: ASSISTANT VICE PRESIDENT 3 EXHIBIT A (See Attached) EX-21 11 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
STATE OF NAME OF CORPORATION INCORPORATION - ------------------- ------------- NEWSPAPER PUBLISHING: The Dallas Morning News, Inc. d/b/a The Dallas Morning News Delaware DFW Printing Company, Inc. Delaware DFW Suburban Newspapers, Inc. d/b/a Arlington News Delaware Garland News Grand Prairie News Irving News Las Colinas Business News Metrocrest News Mid-Cities News Richardson News TELEVISION BROADCASTING: Great Western Broadcasting Corp. d/b/a KXTV, Channel 10 Delaware KHOU-TV, Inc. d/b/a KHOU, Channel 11 Delaware KOTV, Inc. d/b/a KOTV, Channel 6 Delaware Third Avenue Television, Inc. d/b/a KIRO, Channel 7 Delaware WFAA-TV, Inc. d/b/a WFAA, Channel 8 Delaware WVEC Television, Inc. d/b/a WVEC, Channel 13 Delaware WWL-TV, Inc. d/b/a WWL, Channel 4 Delaware Blue Ridge Tower Corporation Texas Hill Tower, Inc. Texas Transtower, Inc. California
Except as noted below, all of the subsidiaries are wholly-owned subsidiaries of the Company. The Company through wholly-owned subsidiaries owns 50% of the outstanding common stock of Hill Tower, Inc.; 50% of the outstanding common stock of Blue Ridge Tower Corporation; and 33 1/3% of the outstanding common stock of Transtower, Inc. EX-23 12 CONSENT OF ERNST & YOUNG 1 Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-30994 and Form S-8 No. 33- 32526) pertaining to the Employee Savings and Investment Plan and Long-Term Incentive Plan of A. H. Belo Corporation of our report dated January 26, 1995, except for Note 13, as to which the date is February 1, 1995, with respect to the consolidated financial statements of A. H. Belo Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 1994. /S/ERNST & YOUNG LLP Dallas, Texas March 10, 1995 EX-27 13 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 9,294 0 103,784 3,959 9,439 130,337 521,978 (209,824) 913,791 83,737 330,400 33,168 0 0 349,367 913,791 0 628,125 0 450,721 46,405 4,506 16,112 107,897 39,030 68,867 0 0 0 68,867 3.41 3.41
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