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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995
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
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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
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(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
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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. [ ]
The aggregate market value of the registrant's voting stock held by
nonaffiliates on January 31, 1996, based on the closing price for the
registrant's Series A Common Stock on such date as reported on the New York
Stock Exchange, was approximately $1,109,387,351. *
Shares of Common Stock outstanding at January 31, 1996: 38,258,754 shares.
(Consisting of 28,978,861 shares of Series A Common Stock and 9,279,893 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 8, 1996 are incorporated by reference
into Part III (Items 10, 11, 12 and 13).
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A. H. BELO CORPORATION
FORM 10-K/A
TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART II
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . 7
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 12
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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ITEM 1. BUSINESS
A. H. Belo Corporation (the "Company" or "Belo") owns and operates seven
network-affiliated VHF television stations in the top 60 U.S. television
markets and the largest daily newspaper in the Dallas-Fort Worth metropolitan
area. The Company's broadcast group reaches 8 percent of all U.S. television
households and its principal newspaper, The Dallas Morning News, has the
country's seventh largest Sunday circulation (800,147) and eighth largest daily
circulation (534,197). The Company believes the success of its media franchises
is built upon providing local news, information and community service of the
highest caliber. These principles have attracted and built relationships with
viewers, readers and advertisers and have guided the Company's success for 154
years.
Three of the Company's seven stations are in the top 12 television markets:
WFAA (ABC) Dallas-Fort Worth; KHOU (CBS) Houston; and KIRO (UPN)
Seattle-Tacoma. These major metropolitan areas are among the fastest growing in
the country. All of the Company's stations are ranked either number one or two
in overall sign-on/sign-off audience delivery, with the exception of KIRO,
which was acquired by the Company in 1995. The Company, through its subsidiary
Belo Productions, Inc. and a partnership with Universal Press Syndicate,
produces and distributes original programming to its station group and to
various outside purchasers.
The Dallas Morning News is one of the leading newspaper franchises in
America, based on its high circulation and volume of advertising. The Dallas
Morning News' success is founded upon the highest standards of journalistic
excellence, with a special emphasis on local news, information and community
service. The newspaper's outstanding reporting and editorial initiatives have
earned six Pulitzer Prizes since 1986. In late 1995 and early 1996, the
Company expanded its publishing division by acquiring two daily newspapers
serving Bryan-College Station, Texas and Owensboro, Kentucky. The Company also
publishes nine other community newspapers in the Dallas-Fort Worth suburban
area and operates a commercial printing business.
Note 13 to the Consolidated Financial Statements contains information about
the Company's industry segments for the years ended December 31, 1995, 1994 and
1993.
TELEVISION BROADCASTING
The Company's television broadcast operations began in 1950 with the
acquisition of WFAA in Dallas-Fort Worth shortly after the station commenced
operations. In 1984, the Company significantly expanded its television
broadcast operations with the purchase of its four stations in Houston,
Sacramento, Hampton-Norfolk and Tulsa. In June 1994 and February 1995, the
Company acquired its stations in New Orleans and Seattle, respectively.
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The following table sets forth information for each of the Company's stations
and their markets:
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NUMBER OF STATION
COMMERCIAL STATION AUDIENCE
MARKET YEAR NETWORK STATIONS IN RANK IN SHARE IN
MARKET RANK(1) STATION ACQUIRED AFFILIATION CHANNEL MARKET(2) MARKET(3) MARKET(4)
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Dallas-Fort Worth . . 8 WFAA 1950 ABC 8 13 1 20%
Houston . . . . . . . 11 KHOU 1984 CBS 11 13 1* 16%
Seattle-Tacoma . . . 12 KIRO 1995 UPN 7 8 4* 8%
Sacramento . . . . . 21 KXTV 1984 ABC 10 9 2 14%
Hampton-Norfolk . . . 40 WVEC 1984 ABC 13 7 1* 18%
New Orleans . . . . . 41 WWL 1994 CBS 4 7 1 28%
Tulsa . . . . . . . . 59 KOTV 1984 CBS 6 7 2 19%
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* Tied with one or more other stations in the market.
(1) Market rank is based on the relative size of the television market or
Designated Market Area ("DMA") among the 211 generally recognized DMAs in
the United States, based on November 1995 Nielsen estimates.
(2) Represents the number of television stations (both VHF and UHF)
broadcasting in the market, excluding public stations and national cable
channels.
(3) Station rank is derived from the station's rating which is based on
November 1995 Nielsen estimates of the number of television households
tuned to the Company's station for the Sunday-Saturday, 7:00 a.m. to 1:00
a.m. period ("sign-on/sign-off") as a percentage of the number of
television households in the market.
(4) Station audience share is based on November 1995 Nielsen estimates of the
number of television households tuned to the Company's station as a
percentage of the number of television households with sets in use in the
market for the sign-on/sign-off period.
Generally, rates for national and local spot advertising sold by the Company
are determined by each station, which receives all of the revenues, net of
agency commissions, for that advertising. Rates are influenced both by the
demand for advertising time and the popularity of the station's programming.
Commercial television stations generally fall into one of three categories.
The first category of stations historically consisted of stations affiliated
with one of the three major national networks (ABC, CBS and NBC). In recent
years, Fox has effectively evolved into the fourth major network. The second
category is comprised of stations affiliated with newer national networks, such
as United Paramount Network ("UPN") and the WB (Warner Brothers) Television
Network. The third category includes independent stations that are not
affiliated with any network and that rely principally on local and syndicated
programming.
Three of the Company's stations are affiliated with ABC, three are
affiliated with CBS and one is affiliated with UPN. Each of the Company's
network affiliation agreements provides the affiliated station with the right
to broadcast all programs transmitted by the network with which the station is
affiliated. In return, the network has the right to sell most of the
advertising time during such broadcasts. Each station receives a specified
amount of network compensation for broadcasting network programming, with the
exception of the Company's UPN affiliate. To the extent a station's preemptions
of network programming exceed a designated amount, such compensation may be
reduced. Such payments are also subject to decreases by the network during the
term of an affiliation agreement under other circumstances with provisions for
advance notice and right of termination by the station in the event of a
reduction in such payments. The Company has renegotiated its affiliation
agreements with both CBS and ABC, resulting in an increase in the compensation
paid by each network to the Company in return for a long-term extension of each
of the agreements. Final documentation of the new ABC affiliation agreements
has not been completed although the Company is receiving its increased
compensation under the new agreements.
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 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.
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NEWSPAPER PUBLISHING
The Company's principal newspaper, The Dallas Morning News, was established
in 1885. It is published seven days a week. In 1963, the Company acquired its
suburban newspaper operation. In late 1991, after years of intense competition,
The Dallas Morning News' principal newspaper competitor, the Dallas Times
Herald, ceased operations and the Company purchased its assets. In late 1995
and early 1996, the Company expanded its publishing division by acquiring two
daily newspapers serving Bryan-College Station, Texas and Owensboro, Kentucky.
The following table sets forth information concerning the Company's daily
newspaper operations:
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CIRCULATION(1)
NEWSPAPER LOCATION DAILY SUNDAY
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The Dallas Morning News . . . . . . . . Dallas, TX 534,197 800,147
Bryan-College Station Eagle . . . . . . Bryan-College Station, TX 20,381 26,326
Owensboro Messenger-Inquirer . . . . . Owensboro, KY 32,363 33,398
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(1) Average paid circulation for the six months ended September 30, 1995,
according to the unaudited Publisher's Statement of the Audit Bureau of
Circulations, an independent agency (the "Audit Bureau").
The Dallas Morning News provides coverage of local, state, national and
international news. The Dallas Morning News is distributed throughout the
Southwest, though its circulation is concentrated primarily in the twelve
counties surrounding Dallas.
The Dallas Morning News strives to serve the public interest by maintaining
a strong and independent voice in matters of public concern. It is the policy
of the Company to allocate such resources as may be necessary to maintain
excellence in news reporting and editorial comment in The Dallas Morning News.
The Dallas Morning News serves a large readership in its primary market.
Average paid circulation for the six months ended September 30, 1995, was
534,197 daily, up 1.8 percent from the 1994 average daily circulation of
524,567. Sunday's average paid circulation was 800,147, up slightly from the
six months ended September 30, 1994 average of 797,206.
The basic material used in publishing The Dallas Morning News is newsprint.
The average unit cost of newsprint consumed during 1995 was sharply higher than
that of the prior year due to market-wide price increases throughout the year.
The Company expects the full-year effect of the 1995 newsprint price increases
to result in even higher newsprint expense in 1996. The Company cannot predict
at this time whether newsprint prices will increase further in 1996. At
present, newsprint is purchased from nine suppliers. During 1995, the
Company's three largest providers of newsprint supplied approximately one-half
of the newspaper's requirements, but the Company is not dependent on any one of
them. Management believes its sources of newsprint, along with alternate
sources that are available, are adequate for its current needs.
DFW Suburban Newspapers, Inc. publishes six paid and two free newspapers for
suburban communities in the Dallas-Fort Worth metropolitan area. These
publications are delivered either one or two days a week. 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., which, in addition to printing the suburban
newspapers, is the site of the Company's commercial printing operations. The
Company also publishes a newspaper twice-a-week and a free weekly in Rockwall,
Texas.
COMPETITION
The success of broadcast operations depends on a number of factors,
including the general strength of the economy, the ability to provide
attractive programming, audience ratings, relative cost efficiency in reaching
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audiences as compared to other advertising media, technical capabilities and
governmental regulations and policies. The Company's television broadcast
stations compete for advertising revenues directly with other media such as
newspapers (including those owned and operated by the Company), other
television stations, radio stations, cable television systems, outdoor
advertising, magazines and direct mail advertising.
The four major national television networks are represented in each
television market in which the Company has a television broadcast station.
Competition for advertising sales and local viewers within each market is
intense, particularly among the network-affiliated television stations.
The entry of local telephone companies into the market for video programming
services, as permitted under the Telecommunications Act of 1996, (the "1996
Act"), can be expected to have a significant impact on competition in the
television industry. The Company is unable to predict the effect that these or
other technological and related regulatory changes will have on the broadcast
television industry or the future results of the Company's operations.
The Dallas Morning News competes for advertising with television and radio
stations (including a television station owned and operated by the Company),
magazines, direct mail, cable television, billboards and other newspapers
(including other newspapers owned and operated by the Company). Also competing
with The Dallas Morning News is the Fort Worth Star-Telegram, owned by The Walt
Disney Company.
REGULATION OF TELEVISION BROADCASTING
The Company's television broadcasting operations are subject to the
jurisdiction of the Federal Communications Commission ("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, foreign governments or their
representatives, or by corporations formed under the laws of foreign countries.
The Act previously would have prohibited the Company's subsidiaries from
continuing as broadcast licensees if any officer or more than one-fourth of the
directors of the Company were aliens. The 1996 Act, however, eliminated the
restriction on alien officers and directors.
Prior to the passage of the 1996 Act, television broadcast licenses were
granted for a period of five years. Renewal applications were granted without a
hearing if there were no competing applications or issues raised by petitioners
to deny such applications that would cause the FCC to order a hearing. If
competing applications were filed, a full comparative hearing was required.
Under the 1996 Act, the statutory restriction on the length of a broadcast term
was amended to allow the FCC to grant broadcast licenses for terms of up to
eight years. The 1996 Act also requires renewal of a broadcast license if the
FCC finds that (1) the station has served the public interest, convenience, and
necessity; (2) there have been no serious violations of either the Act or the
FCC's rules and regulations by the licensee; and (3) there have been no other
serious violations which taken together constitute a pattern of abuse. In
making its determination, the FCC cannot consider whether the public interest
would be better served by a person other than the renewal applicant. Under the
1996 Act competing applications for the same frequency may be accepted only
after the Commission has denied an incumbent's application for renewal of
license.
An application for renewal of the broadcast license for WFAA, which expired
August 1, 1993, is pending before the FCC. The station's license is, by
statute, continued pending action thereon. The current license
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expiration dates for each of the Company's other television broadcast stations
are as follows: KHOU, August 1, 1998; KIRO, February 1, 1999; KXTV, December 1,
1998; WVEC, October 1, 1996; WWL, June 1, 1997; and KOTV, June 1, 1998.
FCC ownership 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 1996 Act eliminated a statutory
prohibition against common ownership of television broadcast stations and cable
systems serving the same area, but left the FCC rule in place. The 1996 Act
also stipulates that the FCC should not consider the repeal of the statutory
ban in any review of its applicable rules. The Company's ownership of The
Dallas Morning News and WFAA, which are both located in the Dallas-Fort Worth
area and serve the same market area, predates the adoption of the FCC's rules
regarding cross-ownership, and the Company's ownership of The Dallas Morning
News and WFAA has been "grandfathered" by the FCC.
The FCC ownership rules affect the number, type and location of newspaper,
broadcast and cable television properties that the Company might acquire in the
future. For example, under current rules, the Company generally could not
acquire any daily newspaper, broadcast or cable television properties in a
market in which it now owns or has an interest deemed attributable under FCC
rules in a television station, except that the FCC's rules and policies (as
modified in the 1996 Act) provide that waivers of these restrictions would be
available to permit the Company's acquisition of radio stations in any of the
markets in which the Company currently owns television stations (other than
Tulsa) or of "satellite" television stations located within a parent station's
grade B service contour which rebroadcast all or most of the parent station's
programming.
The FCC has instituted proceedings looking toward possible relaxation of
certain of its rules regulating television station ownership and changes in the
standards used to determine what type of interests are considered to be
attributable under its rules. In addition, the 1996 Act directs the FCC to (a)
eliminate the restrictions on the number of television stations (nationwide)
that a person or entity may directly or indirectly own, operate or control or
have a cognizable interest in and raise the limitation on the aggregate
audience reach of commonly owned stations from 25 percent to 35 percent of the
total national audience, and (b) conduct a rule making proceeding to determine
whether to modify its limitations on the number of television stations that one
entity may own or have an interest in within the same television market.
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 eliminated its former rules which restricted network
participation in program production and syndication. The FCC also recently
eliminated the prime time access rule ("PTAR"), effective August 30, 1996. The
PTAR currently limits the ability of some stations within the fifty largest
television markets to broadcast network programming (including syndicated
programming previously broadcast over a network) during prime time hours. The
elimination of PTAR could increase the amount of network programming broadcast
over a station affiliated with ABC, NBC or CBS. The U.S. Supreme Court refused
to review a lower court decision that upheld FCC action invalidating most
aspects of the Fairness Doctrine, which 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 Commission is currently considering proposals for stricter
children's programming requirements. Most significant among the
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FCC's suggested new rules is a requirement that broadcasters provide a specific
hourly minimum amount of children's programming on a regular basis. Although
the FCC has not yet proposed an explicit quantitative requirement, it has
called for comment on various examples, such as a three to five hour-per-week
minimum obligation.
The FCC also has adopted various regulations to implement certain provisions
of the Cable Television Consumer Protection and Competition Act of 1992 ("1992
Cable Act") which, among other matters, includes provisions respecting the
carriage of television stations' signals by cable television systems and
requiring mid-license term review of television stations' equal employment
opportunity practices. Certain provisions of the 1992 Cable Act, including the
provisions respecting cable systems' carriage of local television stations, are
the subject of pending judicial review proceedings. Moreover, the 1992 Cable
Act was amended in certain important respects by the 1996 Act. Most notably,
the 1996 Act repeals the cross-ownership ban between cable and telephone
entities and the FCC's current video dial tone rules. These provisions, among
others, foreshadow significant future involvement in the provision of video
services by telephone companies.
The FCC recently proposed the adoption of rules for implementing digital
advanced television ("ATV") service in the United States. Implementation of
digital ATV would improve the technical quality of television signals
receivable by viewers and give television broadcasters the flexibility to
provide new services, including high-definition television ("HDTV")
simultaneously with multiple programs of standard definition television
("SDTV") and data transmission. Within the next few months, the FCC is
expected to release two additional proposals that address, respectively, the
ATV broadcasting standard and an ATV channel allotment and assignment plan. As
currently proposed, each existing broadcaster would be loaned, for a finite
transition period, a second channel on which to transmit ATV signals
simultaneously with the current analog television broadcast. At the end of the
transition, analog TV transmissions would cease and the ATV channels might be
reassigned to a smaller segment of the broadcasting spectrum, and the vacated
spectrum would be reallocated and auctioned for use by other radio services.
Recent debates in Congress, however, call into question whether the
transition to ATV will proceed as planned. Several senators favor giving the
FCC the authority -- or even requiring the Commission -- to auction the second
channels. Such authority or direction could be contained in budget legislation
or a stand-alone spectrum law. The Company cannot predict the effect of
existing and proposed federal regulations and policies on its broadcast
business.
The foregoing does not purport to be a complete summary of all the
provisions of the Act or the regulations and policies of the FCC thereunder.
Proposals for additional or revised regulations and requirements are pending
before and are being considered by Congress and federal regulatory agencies
from time to time. Also, various of the foregoing matters are now, or may
become, the subject of court litigation, and the Company cannot predict the
outcome of any such litigation or the impact on its broadcast business.
EMPLOYEES
As of December 31, 1995, the Company had 3,489 full-time employees. An
additional 173 employees were added on January 1, 1996 following the Owensboro
acquisition. Of the total workforce of 3,662, Belo has 234 employees, located
principally at its Dallas, Texas; Seattle, Washington; and New Orleans,
Louisiana television stations, that are represented by various employee unions.
The Company believes its relations with all of its employees are good.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is an owner and operator of seven network-affiliated television
stations and an established newspaper publisher. The Company's television
broadcast operations began in 1950 with the acquisition of WFAA in Dallas. In
1984, the Company expanded its broadcast operations through the acquisition of
four television stations in Houston, Sacramento, Hampton-Norfolk and Tulsa. In
June 1994 and February 1995, the Company acquired television stations in New
Orleans and Seattle, respectively. The Company's principal newspaper is The
Dallas Morning News. In December 1995, the Company purchased a daily newspaper
in Bryan-College Station, Texas. Comparability of year-to-year results and
financial condition are affected by these acquisitions. In the first quarter
of 1996, the Company acquired a daily newspaper in Owensboro, Kentucky and sold
its interest in its programming distribution partnership, Maxam Entertainment.
The Company depends on advertising as its principal source of revenues. As
a result, the Company's operations are sensitive to changes in the economy,
particularly in the Dallas-Fort Worth metropolitan area. The Company also
derives revenues, to a much lesser extent, from the circulation revenue of its
newspaper operations and from compensation paid by the networks to its
television stations for broadcasting network programming.
CONSOLIDATED RESULTS OF OPERATIONS
1995 Compared to 1994
The Company recorded 1995 net earnings of $66,576,000 or $1.68 per share,
compared to $68,867,000 or $1.70 per share in 1994. Results for 1995 include a
non-recurring charge for early retirement costs of $1,254,000 (2 cents per
share) and a non-recurring gain of $2,406,000 ($1,564,000 after tax, or 4 cents
per share) on the sale of the Company's remaining investment in Stauffer
Communications, Inc. ("Stauffer") stock. Excluding these non-recurring items,
1995 adjusted net earnings were $1.66 per share. Net earnings for 1994
included the reversal of $631,000 of accrued music license fees (1 cent per
share) and a net after-tax charge of $1,567,000 (4 cents per share) for the
donation of Stauffer stock to a charitable foundation. The donation of
Stauffer stock included a $9,271,000 gain on the write-up of the shares to fair
market value, less a charge of $16,675,000 for the subsequent donation of the
shares, and a related income tax benefit of $5,837,000. Excluding these
non-recurring items, adjusted 1994 net earnings were $1.73 per share.
Interest expense in 1995 was $29,987,000 compared to $16,112,000 in 1994. A
significant portion of this increase resulted from the increase in average
interest rates in 1995 to approximately 6.3 percent from 4.8 percent in 1994.
Additionally, higher debt levels as a result of the two recent broadcast
acquisitions (KIRO in Seattle, Washington in February 1995 for $162,500,000 and
WWL in New Orleans, Louisiana in June 1994 for $110,000,000) contributed to the
increase in 1995 interest expense. Other, net for 1995 included the gain on
the sale of the Company's remaining investment in Stauffer stock while 1994
included the charge for the donation of Stauffer shares to a charitable
foundation. The effective tax rate for 1995 of 40 percent is higher than the
1994 effective tax rate of 36.2 percent due to the tax benefit associated with
the Stauffer stock donation in 1994.
1994 Compared to 1993
The Company recorded 1994 net earnings of $68,867,000 or $1.70 per share,
compared to $51,077,000 or $1.26 per share in 1993. Results for 1993 included
a $6,599,000 increase (16 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
the Company recorded a $2,249,000 (6 cents per share) adjustment to deferred
taxes following an increase in the federal income tax rate. Earnings in 1993
also included a $5,822,000 (9 cents per share) non-recurring restructuring
charge related primarily to the write-off of goodwill and a reduction in the
carrying value of production assets associated with the Company's suburban
newspaper operations. The Company also recorded a reversal of accrued music
license fees in 1993 of $3,349,000 (5 cents per share). Excluding these items,
adjusted net earnings for 1993 were $1.20 per share.
Interest expense in 1994 was $16,112,000 compared to $15,015,000 in 1993.
The increase from 1993 to 1994 was due primarily to higher debt levels
associated with the purchase of the New Orleans station, offset by savings from
lower interest rates. Average interest rates on total debt were 4.8 percent
and 5.4 percent in 1994
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and 1993, respectively. Other, net for 1994 included the net charge for the
Stauffer transaction while 1993 included a gain on the sale of two parcels of
non-operating real estate. The effective tax rate for 1994, including the tax
benefit from the Stauffer stock donation, was 36.2 percent. The 1993 effective
rate of 41.1 percent included the increase in deferred tax expense associated
with the increase in the federal income tax rate, partially offset by the
reversal of certain tax accruals due to other aspects of the tax legislation.
Excluding these unusual items, the comparable effective tax rates for 1994 and
1993 were 38.9 percent and 39.5 percent, respectively.
BROADCASTING
1995 Compared to 1994
Broadcast revenues in 1995, which include 11 months of revenue for the
Seattle station, were $322,642,000. These revenue totals represent an increase
of 25 percent (3.3 percent on a same-station basis) over 1994 revenues of
$258,040,000, which included seven months of revenue for the New Orleans
station. The Company's television broadcast subsidiaries contributed 43.9
percent of total 1995 revenues compared to 41.1 percent in 1994.
Revenues in all broadcast advertising categories, with the exception of
political advertising, were higher during 1995 compared to 1994, both as
reported and on a same-station basis. Political advertising revenues in 1994
were strong due to several active gubernatorial and senate races, while 1995
political activity was relatively slow. Local advertising revenues increased
by 28.5 percent overall (6.8 percent on a same-station basis), primarily due
to increases at the Dallas, Hampton-Norfolk and New Orleans stations. The
Company's Sacramento station, which changed its network affiliation during 1995
and experienced a sizable shift from local to national advertising, showed a
slight decline in local advertising revenues. Automobile advertising was a
significant factor in the stations' local market gains. National advertising
revenues increased in 1995 over 1994 as well, primarily during the first half
of the year. However, the majority of the 20.6 percent increase in national
advertising in 1995 was due to the addition of the Seattle station in February
and a full-year effect of the New Orleans station. On a same-station basis,
national revenues were up 2.1 percent year-to-year. The most significant
increases in national advertising occurred at the Sacramento and
Hampton-Norfolk stations, although all other Company stations demonstrated a
slight increase in national advertising revenues as well. Network compensation
payments increased in 1995 following the renegotiation of the Company's network
affiliation contracts in the latter part of 1994.
Broadcast earnings from operations were $83,921,000 in 1995 compared to
$81,319,000 in 1994, an increase of 3.2 percent (2.7 percent on a same-station
basis). Broadcast earnings from operations in 1995 included 11 months of the
Seattle station's operations while 1994 results included seven months of the
New Orleans station's operations. Operating margins in 1995 and 1994 were 26
percent and 31.5 percent, respectively. On a same-station basis, margins in
1995 and 1994 were 32.1 percent and 32.3 percent, respectively. Higher 1995
operating costs and lower margins were due in part to significant increases in
news and programming costs as the Seattle station began developing a new format
when its affiliation changed from CBS to UPN. Salaries, wages and employee
benefits increased 35.7 percent over 1994 due to the addition of the Seattle
station and the full-year effect of the New Orleans station. On a same-station
basis, these costs increased 4.7 percent due to merit increases and more
employees. Other production, distribution and operating costs for 1995
increased only marginally over 1994 on a same-station basis. Depreciation and
amortization expenses increased in 1995 due to the broadcast acquisitions in
mid-1994 and early 1995.
1994 Compared to 1993
Broadcast revenues in 1994, which included seven months of revenue for the
New Orleans station were $258,040,000, an increase of 23.4 percent over 1993
revenues of $209,083,000. The Company's television broadcast subsidiaries
contributed 41.1 percent of total 1994 revenues compared to 38.4 percent in
1993.
Each station contributed to the increase in revenues during 1994 with
improvement in every revenue category. Local advertising revenues, which
improved 25.5 percent overall (12.7 percent on a same-station basis), were up
most significantly at the Dallas, Houston and Tulsa stations. Automobile
advertising was a significant factor in each of the stations' local market
gains in 1994. National revenues benefited from the
8
<PAGE> 11
broadcast of the 1994 Winter Olympics on the Company's CBS-affiliated stations,
but were offset somewhat by revenue 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. Network compensation increases from the renegotiation of the
Company's network affiliation agreements began in the third quarter of 1994.
Broadcast earnings from operations were $81,319,000 in 1994 compared to
$63,317,000 in 1993. Broadcast earnings from operations in 1994 included seven
months of the New Orleans station's operations. Also included in broadcast
earnings from operations in 1994 and 1993 were increases in 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, broadcast earnings from operations for 1994 and 1993 were
$80,688,000 and $59,968,000, respectively. The increase was due to revenue
improvements, 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 performance-based 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 increased contract rates for several syndicated program
packages and costs to produce a new local morning show and weekly news show at
the Dallas station. 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 expenses increased as a result of the acquisition of the New
Orleans station.
NEWSPAPER PUBLISHING
1995 Compared to 1994
In 1995, newspaper publishing revenues represented 55.6 percent of total
revenues, compared to 58.8 percent in 1994. Although publishing revenues
increased 10.8 percent in 1995 from 1994, they decreased as a percent of total
revenues due to broadcast acquisitions. Advertising revenues account for
approximately 88 percent of publishing revenues, while circulation revenues
represent approximately 10 percent. Other publishing revenues, primarily
commercial printing, contribute the remainder.
Newspaper advertising volume for The Dallas Morning News, the Company's
principal newspaper, is measured in column inches. Volume for the last three
years was as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------------------
In thousands 1995 1994 1993
--------------------------------------------------------------------
Full-run ROP inches (1):
<S> <C> <C> <C>
Classified 2,125 2,189 2,069
Retail 1,429 1,524 1,661
General 254 271 262
--------------------------------------------------------------------
Total 3,808 3,984 3,992
--------------------------------------------------------------------
</TABLE>
(1) Full-run ROP inches refers to the number of column inches of display
and classified advertising that is printed and distributed in all
editions of the newspaper.
Revenues from newspaper publishing in 1995 were $409,099,000, an increase of
10.8 percent over 1994 revenues of $369,366,000. Due to dramatically higher
newsprint prices in 1995, a series of advertising rate increases were put into
effect during the year at The Dallas Morning News. These rate increases
resulted in higher revenues in the three major advertising categories despite
the volume declines that resulted from the higher rates. Classified
advertising linage was down 2.9 percent from 1994 while revenues were up 18.6
percent. Retail advertising revenues increased 4.2 percent due to higher
rates, while volumes were lower by 6.2 percent. General advertising revenues
improved 7.9 percent, although auto and bank advertising volumes decreased
significantly, contributing to the overall 6.3 percent decline in linage.
Preprint revenues increased 9.3 percent in
9
<PAGE> 12
1995 from 1994 due to increased activity from electronics retailers. The
Dallas Morning News' circulation revenues increased 8.8 percent over 1994 due
to an increase in daily single copy prices and the full-year effect of 1994
increases in home delivery and Sunday single copy prices. Circulation volume
increased slightly in 1995 over 1994.
Despite significant increases in newsprint prices, newspaper publishing
earnings from operations for 1995 were $69,999,000, up 5.2 percent over 1994
earnings of $66,568,000. Operating margins were 17.1 percent in 1995 compared
to 18 percent in 1994. Revenue increases were partially offset by total
operating costs that were 12 percent higher than 1994. Newsprint, ink and
other supplies expense in 1995 increased 29.2 percent over last year. Driving
this increase were market-wide newsprint price increases. The average cost per
ton in 1995 at The Dallas Morning News increased 44.2 percent over 1994. A
reduction in tons used during 1995 helped offset the effect of these price
increases to some extent. Reductions in newsprint usage came as a result of
better waste control, fewer news columns, lower ad linage and promotional space
and the elimination of a Sunday magazine. All other cost categories for the
newspaper publishing segment increased only slightly due to efforts to control
costs to offset the effect of the newsprint price increases.
The Company expects 1996 newsprint, ink and other supplies expense to
increase over 1995, due to the full-year effect of the 1995 newsprint price
increases. The Company anticipates that the higher expense will be offset by
advertising rate increases implemented in the second half of 1995 and at the
beginning of 1996. The Company cannot predict at this time the effect of
proposed newsprint price increases for 1996.
1994 Compared to 1993
Revenues from newspaper publishing in 1994 were $369,366,000, an increase of
10 percent over 1993 revenues of $335,651,000. Classified and general
advertising revenues at The Dallas Morning News contributed the majority of
the increase in year-to-year revenue gains. Linage in these two categories
increased 5.8 percent and 3.3 percent, respectively, which, combined with rate
increases, resulted in an increase in classified and general advertising
revenues of $27,580,000. Strong demand for employment advertising and a strong
automotive market accounted for the improvement in classified linage. The
telecommunications industry was a significant component of the general
advertising increase. Retail ROP revenues for 1994 decreased slightly when
compared to 1993 due to volume declines of 8.3 percent, offset by a rate
increase. The retail volume declines were primarily attributable to a shift by
certain department stores to preprints, revenues from which increased 15.6
percent over 1993. 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.
Newspaper publishing earnings from operations in 1994 were $66,568,000
compared to $44,293,000 in 1993. Earnings from operations in 1993 included the
$5,822,000 restructuring charge related to the Company's suburban newspaper
operations. Excluding this one-time charge, comparable 1993 earnings from
operations were $50,115,000. The 32.8 percent increase in 1994 from adjusted
1993 earnings from operations was due to the revenue increase, partially offset
by a 6 percent increase in operating expenses. Salaries, wages and employee
benefits increased in 1994 due to more employees, 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 a Sunday single copy price increase also contributed to higher 1994
expense. Depreciation expense increased due to a full year's depreciation of
The Dallas Morning News' North Plant expansion project that was completed in
late 1993. Newsprint expense was only slightly higher in 1994 compared to 1993.
The increase was primarily due to slightly higher consumption, which was offset
somewhat by lower average prices.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations is the Company's primary source of
liquidity. During 1995, net cash provided by operations was $96,601,000,
compared to $138,785,000 in 1994. The decrease was due primarily to changes in
working capital. One of the most significant working capital changes was in
the value of on-hand
10
<PAGE> 13
inventory at the end of 1995, due to both higher newsprint tonnage in inventory
and substantially higher prices. The timing of accounts payable and income tax
payments also contributed significantly to the decrease in 1995 net cash
provided by operations. Net cash provided by operations was sufficient to fund
capital expenditures, common stock dividends and a portion of current year
stock repurchases.
On February 1, 1995, the Company acquired KIRO in Seattle, Washington. The
purchase price was $162,500,000 in cash, plus transaction costs. KIRO was
purchased using funds from the Company's revolving credit agreement described
below. On December 26, 1995, the Company again used the revolving credit
agreement to complete the acquisition of the Bryan- College Station Eagle. On
January 1, 1996, the Company acquired the Owensboro Messenger-Inquirer by
issuing notes payable to the seller. These notes are due in various
installments over the next four years.
The Company is a party to an $800,000,000 variable rate revolving credit
agreement with a syndicate of 14 banks led by managing agents Citicorp
Securities, Inc., The First National Bank of Chicago and Texas Commerce Bank
National Association. At December 31, 1995, borrowings under the agreement
were $480,000,000. The agreement expires and the debt thereunder matures on
July 28, 2000 with an extension to July 28, 2001 at the request of the Company
and with the consent of the participating banks. The agreement requires the
Company to maintain, as of the end of each quarter and measured over the
preceding four quarters, (i) a Senior Leverage Ratio (as defined in the
agreement) not exceeding 5.0 to 1.0, (ii) a Total Leverage Ratio (as defined
in the agreement) not exceeding 5.5 to 1.0 and (iii) a Fixed Charge Coverage
Ratio (as defined in the agreement) of not less than 1.2 to 1.0. The agreement
also limits cumulative stock repurchases to $100,000,000. 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, 1995, $71,000,000 in short-term notes were outstanding. Total
debt outstanding increased by $227,000,000 from December 31, 1994, primarily
due to acquisitions and share repurchases.
Because substantially all of the Company's outstanding debt is currently at
floating interest rates, the Company is subject to interest rate volatility.
Weighted average interest rates at the end of 1995 were approximately 6.1
percent.
During 1995, the Company spent $63,400,000 to repurchase treasury stock at
an average price of $31.28 per share. The Company has in place a stock
repurchase program authorizing the purchase of up to $2,500,000 of Company
stock annually, and the Company has authority to purchase an additional
3,591,200 shares under another Board authorization.
At December 31, 1995, the Company's ratio of long-term debt to total
capitalization was 58.9 percent, compared to 46.3 percent at the end of 1994.
The change during 1995 was due to additional borrowings to finance acquisitions
and the effect on debt and shareholders' equity of the share repurchases.
Capital expenditures in 1995 were $40,830,000. Capital projects included
additional production equipment and major building renovations at The Dallas
Morning News, the completion of a building and studio remodeling project at the
Company's Houston station and the purchase of broadcast equipment for other
stations. The Company expects to finance future capital expenditures using
cash generated from operations and, when necessary, borrowings under the
revolving credit agreement. Total capital expenditures in 1996 are expected to
be approximately $45,000,000 and relate primarily to additional newspaper
publishing equipment, the renovation of certain operating facilities and the
purchase of certain broadcast equipment. As of December 31, 1995, required
future payments for capital expenditures in 1996 were $7,881,000.
The Company paid dividends of $12,279,000 or 31 1/2 cents per share on
Series A and Series B Common Stock outstanding during 1995 compared to
$11,984,000 or 30 cents per share in 1994. The Company expects to pay higher
dividends in 1996 due to an increase in the quarterly dividend rate beginning
in the second quarter of 1996 and an increase in shares outstanding upon
consummation of an equity offering discussed below.
The Company believes its current financial condition and credit
relationships are adequate to fund current obligations and near-term growth.
The Company has filed a registration statement relating to a public offering of
5,000,000 shares of Series A Common Stock. It is expected that the net
proceeds from the offering will be used to repay existing debt to provide
liquidity for general corporate purposes, including possible future
acquisitions.
11
<PAGE> 14
OTHER MATTERS
In early 1996, Congress passed the Telecommunications Act of 1996 (the "1996
Act"), the most comprehensive overhaul of the country's telecommunications laws
in more than 60 years. The 1996 Act requires the FCC to take various actions
to implement its provisions. During the debate prior to the passage of the
1996 Act, Congress considered whether to grant the FCC authority to auction the
second channels necessary for the implementation of digital advanced
television. The 1996 Act did not grant the FCC such authority, but such
authority could be contained in future budget legislation or in a stand-alone
spectrum law. In addition, actions by the FCC, Congress and the courts in
recent years have significantly affected the telecommunications industry in
various ways. See "Regulation of Television Broadcasting". The Company
expects that these regulatory changes and the resolution of uncertainties will
have an impact on future revenues and earnings from continuing operations which
could be material, although the Company is unable to determine whether the
overall impact from these events will be favorable or unfavorable.
NEW ACCOUNTING STANDARD
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets
to Be Disposed Of". This Statement established accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and goodwill
related to those assets to be held and used and for long-lived assets and
certain identifiable intangibles to be disposed of. SFAS No. 121 will be
effective beginning in 1996. Management does not anticipate that the adoption
of SFAS No. 121 will have any effect on the consolidated financial position of
the Company.
INFLATION
The net effect of inflation on the Company's revenues and earnings from
operations has not been material in the last few years.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) The financial statements listed in the Index to Financial Statements
included in the Table of Contents are filed as part of this report.
(2) The financial schedules required by Regulation S-X are either not
applicable or are included in the information provided in the Notes to
Consolidated Financial Statements, which are filed as part of this
report.
(3) Exhibits
Exhibits marked with an asterisk (*) are incorporated by reference to
documents previously filed by A.H. Belo Corporation with the
Securities and Exchange Commission, as indicated. Exhibits marked
with a tilde (~) are management contracts or compensatory plan
contracts or arrangements filed pursuant to Item 601 (b)(10)(iii)(A)
of Regulation S-K. All other documents are filed with this report.
3.1 Certificate of Incorporation of the Company
3.2 Certificate of Correction to Certificate of Incorporation dated
May 13, 1987
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988
12
<PAGE> 15
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*3.5 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 3, 1995 (Exhibit 3.5 to the Company's Annual
Report on Form 10-K dated February 28, 1996 (the "1995 Form
10-K"))
3.6 Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
3.7 Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988
*3.8 Bylaws of the Company, effective February 22, 1995 (Exhibit 3.7
to the Company's Annual Report on Form 10-K dated March 8, 1995
(the "1994 Form 10-K"))
4.1 Certain rights of the holders of the Company's Common Stock are
set forth in Exhibits 3.1-3.8 above
*4.2 Specimen Form of Certificate representing shares of the
Company's Series A Common Stock (Exhibit 4.2 to the Company's
Annual Report on Form 10-K dated March 18, 1993 (the "1992 Form
10-K"))
*4.3 Specimen Form of Certificate representing shares of the
Company's Series B Common Stock (Exhibit 4.3 to the Company's
Annual Report on Form 10-K dated March 20, 1989)
*4.4 Form of Rights Agreement as Amended and Restated, as of February
28, 1996 between the Company and Chemical Mellon Shareholder
Services, L.L.C., a New York banking corporation (Exhibit 4.4 to
the 1995 Form 10-K)
10.1 Contracts relating to television broadcasting:
(1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC
*(2) Form of Agreement for Affiliation between KXTV in
Sacramento, California and ABC (Exhibit 10.1(2) to the 1995
Form 10-K)
(3) Contract for Affiliation between KHOU-TV in Houston, Texas
and CBS
(4) Contract for Affiliation between WWL-TV in New Orleans,
Louisiana and CBS
10.2 Financing agreements:
*(1) Loan Agreement dated October 1, 1985, between City of
Arlington Industrial Development Corporation and
Dallas-Fort Worth Suburban Newspapers, Inc. (Exhibit
10.5(2) to the Company's Annual Report on Form 10-K dated
March 19, 1992 (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 (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 (Exhibit 10.4(1) to the Second Quarter
1994 Form 10-Q)
*(4) First Amendment to Credit Agreement dated as of July 28,
1995 (Exhibit 10.4(1) to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1995)
13
<PAGE> 16
EXHIBIT
NUMBER DESCRIPTION
------ -----------
* (5) Amendment and Waiver Agreement dated as of August 5, 1994,
by and between the Company and The Sanwa Bank, Limited,
Dallas Agency (Exhibit 10.4(4) to the 1994 Form 10-K)
10.3 Compensatory plans:
*~(1) Management Security Plan (Exhibit 10.4(1) to the 1991 Form
10-K)
*~(2) 1986 Long-Term Incentive Plan (Exhibit 10.4(7) to the 1991
Form 10-K)
*~(3) Amendment No. 1 to 1986 Long-Term Incentive Plan (Exhibit
10.4(8) to the 1991 Form 10-K)
*~(4) Amendment No. 2 to 1986 Long-Term Incentive Plan (Exhibit
10.3(9) to the 1992 Form 10-K)
*~(5) Amendment No. 3 to 1986 Long-Term Incentive Plan (Exhibit
10.3(10) to the 1993 Form 10-K)
*~(6) Amendment No. 4 to 1986 Long-Term Incentive Plan (Exhibit
10.3(11) to the 1993 Form 10-K)
*~(7) Amendment No. 5 to 1986 Long-Term Incentive Plan (Exhibit
10.3(12) to the 1993 Form 10-K)
*~(8) Amendment No. 6 to 1986 Long-Term Incentive Plan (Exhibit
10.3(13) to the 1992 Form 10-K)
*~(9) Amendment No. 7 to 1986 Long-Term Incentive Plan (Exhibit
10.3(9) to the 1995 Form 10-K)
*~(10) The A. H. Belo Corporation Employee Savings and Investment
Plan Amended and Restated February 2, 1996 (Exhibit
10.3(10) to the 1995 Form 10-K)
*~(11) The G. B. Dealey Retirement Pension Plan (as Amended and
Restated Generally Effective January 1, 1989) (Exhibit
10.3(11) to the 1995 Form 10-K)
*~(12) Master Trust Agreement, effective as of July 1, 1992,
between A. H. Belo Corporation and Mellon Bank, N. A.
(Exhibit 10.3(26) to the 1993 Form 10-K)
*~(13) A. H. Belo Corporation Supplemental Executive Retirement
Plan (Exhibit 10.3(27) to the 1993 Form 10- K)
*~(14) Trust Agreement dated February 28, 1994, between the
Company and Mellon Bank, N. A. (Exhibit 10.3(28) to the
1993 Form 10-K)
*~(15) Summary of A. H. Belo Corporation Executive Compensation
Plan (Exhibit 10.3(15) to the 1995 Form 10-K)
*~(16) A. H. Belo Corporation 1995 Executive Compensation Plan
(Exhibit 10.3(16) to the 1995 Form 10-K)
*~(17) A. H. Belo Corporation Employee Thrift Plan, effective
January 1, 1995 (Exhibit 10.3(17) to the 1995 Form 10-K)
*~(18) First Amendment to A.H. Belo Corporation Employee Thrift
Plan (Exhibit 10.3(18) to the 1995 Form 10-K)
*~(19) Second Amendment to A. H. Belo Corporation Employee Thrift
Plan (Exhibit 10.3(19) to the 1995 Form 10-K)
*~(20) Master Defined Contribution Trust Agreement by and between
A. H. Belo Corporation and Mellon Bank, N.A. (Exhibit
10.3(20) to the 1995 Form 10-K)
*~(21) First Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(21) to the 1995 Form 10-K)
14
<PAGE> 17
EXHIBIT
NUMBER DESCRIPTION
------ -----------
*~(22) Second Amendment to Master Defined Contribution Trust
Agreement (Exhibit 10.3(22) to the Form 10-K)
*21 Subsidiaries of the Company (Exhibit 21 to the 1995 Form 10-K)
23 Consent of Ernst & Young LLP
*27 Financial Data Schedule (Exhibit 27 to the 1995 Form 10-K)
(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.
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/Michael D. Perry
----------------------------------
Michael D. Perry
Senior Vice President
& Chief Financial Officer
Dated: April 8, 1996
15
<PAGE> 18
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Certificate of Incorporation of the Company
3.2 Certificate of Correction to Certificate of Incorporation dated
May 13, 1987
3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock of the Company dated April 16, 1987
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company dated May 4, 1988
3.6 Amended Certificate of Designation of Series A Junior
Participating Preferred Stock of the Company dated May 4, 1988
3.7 Certificate of Designation of Series B Common Stock of the
Company dated May 4, 1988
10.1(1) Form of Agreement for Affiliation between WFAA-TV in
Dallas, Texas and ABC
10.1(3) Contract for Affiliation between KHOU-TV in Houston, Texas
and CBS
10.1(4) Contract for Affiliation between WWL-TV in New Orleans,
Louisiana and CBS
23 Consent of Ernst & Young LLP
<PAGE> 1
EXHIBIT 3.1
[STATE OF DELWARE SECRETARY OF STATE LETTERHEAD]
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF A.H. BELO CORPORATION FILED IN THIS OFFICE ON THE SECOND DAY
OF MARCH, A.D. 1987, AT 12 O'CLOCK P.M.
[DELAWARE SECRETARY OF STATE SEAL] /s/ MICHAEL HARKINS
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 1148366
870610132 DATE: 3/02/1987
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
A.H. BELO CORPORATION
ARTICLE ONE
The name of the corporation is A.H. Belo Corporation.
ARTICLE TWO
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE THREE
The nature of the business or purpose to be conducted or promoted by
the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE FOUR
The aggregate number of shares of stock which the corporation shall
have the authority to issue is 35,000,000 shares, of which 5,000,000 shares
shall be Preferred Stock, par value $1.00 per share, and 30,000,000 shares
shall be Common Stock, par value $1.67 per share.
The following is a statement of the designations and the powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, in respect of the shares of Preferred Stock and Common Stock or any
series of any class of stock of the corporation, and of the authority expressly
granted hereby to the Board of Directors of the corporation to fix by
resolution or resolutions any of such designations and powers, preferences and
rights, and qualifications, limitations and restrictions thereof that may be
desired but which shall not be fixed by this Certificate of Incorporation.
(A) Common Stock. The Board of Directors of the
corporation is hereby expressly vested with authority to issue
30,000,000 shares of Common Stock, par value $1.67 per share, from
time to time. Shares of Common Stock, upon issuance, shall be fully
paid and nonassessable. Such dividends (payable in cash, stock or
otherwise) as may be determined by the Board of Directors may be
declared and paid on the Common Stock from time to time out of any
funds legally available therefor. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the corporation, the remaining assets and funds of the corporation
available for distribution to holders of Common Stock shall be
distributed among the holders of the Common Stock according to their
respective shares.
(B) Preferred Stock. The Board of Directors of the
corporation is hereby expressly vested with authority to issue
5,000,000 shares of Preferred Stock, par value $1.00 per share, in
series, and by filing a
<PAGE> 3
certificate of designations pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, and to fix the designations, powers, preferences, and rights
of each such series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as the
Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption,
including the date or date upon or after which they shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution or winding up of
the corporation, and the relative rights of priority, if any, of
payment of shares of that series;
(h) Any other relative rights, preferences and limitations
of that series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the shares of Common Stock with respect
to the same dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares
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<PAGE> 4
of all series of Preferred Stock in accordance with the respective
preferential amounts (including unpaid cumulative dividends, if any)
payable with respect thereto.
Shares of Preferred Stock which have been redeemed or
converted, or which have been issued and reacquired in any manner and
retired, shall have the status of authorized and unissued Preferred
Stock and may be reissued by the Board of Directors as shares of the
same or any other series, unless otherwise provided with respect to any
series in the resolution or resolutions of the Board of Directors
creating such series.
(C) General. The Board of Directors may in its discretion
issue from time to time authorized but unissued shares for such
consideration as it may determine, and holders of Common Stock and
Preferred Stock shall have no preemptive rights, as such holders, to
purchase any shares or securities of any class, including treasury
shares, which may at any time be issued or sold or offered for sale by
the corporation.
At each election of directors, every stockholder entitled to
vote at any meeting shall have the right to vote, in person or by
proxy, the number of shares owned by him for as many persons as there
are directors to be elected. Cumulative voting of shares of stock of
the corporation, whether Common Stock or Preferred Stock, is hereby
prohibited.
The corporation shall be entitled to treat the person in whose
name any share or other security is registered as the owner thereof,
for all purposes, and shall not be bound to recognize any equitable or
other claim to or interest in such share or other security on the part
of any other person, whether or not the corporation shall have notice
thereof.
ARTICLE FIVE
The name and mailing address of the sole incorporator is:
Guy H. Kerr
3600 RepublicBank Dallas Tower
Dallas, Texas 75201-3989
ARTICLE SIX
The number of directors constituting the initial Board of Directors is
fourteen (14); however, hereafter the Bylaws of the corporation shall fix the
number from time to time. The name and mailing address of each person who is to
serve as a director until the first annual meeting of the stockholders or until
a successor is elected and qualified are as follows:
Name Address
---- -------
Robert W. Decherd 5323 Falls Road
Dallas, Texas 75220
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<PAGE> 5
James P. Sheehan 6310 Meadowcreek Drive
Dallas, Texas 75240
Ward L. Huey, Jr. 4340 Rheims Place
Dallas, Texas 75205
Burl Osborne 7609 Southwestern Blvd.
Dallas, Texas 75225
John W. Bassett, Jr. 602 Rosemary Lane
Roswell, New Mexico 88201
Joe M. Dealey 4332 Arcady
Dallas, Texas 75205
Dealey D. Herndon 2903 Tarry Trail
Austin, Texas 78703
Lester A. Levy 12114 Vendome Place
Dallas, Texas 75230
James M. Moroney, Jr. 4425 Bordeaux
Dallas, Texas 75205
Reece A. Overcash, Jr. P. O. Box 222822
Dallas, Texas 75222
William H. Seay 4512 Belclaire
Dallas, Texas 75205
William T. Solomon 3830 Windsor Lane
Dallas, Texas 75205
Thomas B. Walker, Jr. 4332 Belclaire
Dallas, Texas 75205
J. McDonald Williams 4004 Euclid
Dallas, Texas 75205
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<PAGE> 6
ARTICLE SEVEN
The corporation is to have perpetual existence.
ARTICLE EIGHT
The Board of Directors may exercise all such powers and do all such
lawful acts and things as are not by statute, the Bylaws, or this Certificate
of Incorporation directed or required to be exercised and done by the
stockholders.
ARTICLE NINE
The initial Bylaws of the corporation shall be adopted by the Board of
Directors. The power to alter, amend or repeal the corporation's Bylaws, and to
adopt new Bylaws, is hereby vested in the Board of Directors, subject, however,
to repeal or change by the affirmative vote of the holders of at least
two-thirds of the outstanding shares entitled to vote thereon. Notwithstanding
any other provisions of this Certificate of Incorporation, or any provision of
law which might otherwise permit a lesser vote or no vote, the affirmative vote
of the holders of at least two-thirds of the voting power of all of the
then-outstanding shares of the voting stock, voting together as a single class,
shall be required to alter, amend, or repeal this Article Nine.
ARTICLE TEN
The corporation reserves the right to amend, alter or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred upon officers, directors,
and stockholders herein are granted subject to this reservation.
ARTICLE ELEVEN
Except as otherwise provided in this Certificate of Incorporation, for
purposes of Sections 251, 253, 271, 275, and 311 of the Delaware General
Corporation Law (or any successor provisions of Delaware law), where
applicable the affirmative vote of the holders of at least two-thirds,
rather than a majority, of the outstanding stock, or any class or series
thereof, entitled to vote in accordance therewith shall be required.
Notwithstanding any other provisions of this Certificate of Incorporation, or
any provision of law which might otherwise permit a lesser vote or no vote, but
in addition to any affirmative vote of the holders of any particular class or
series of voting stock required by law, this Certificate of Incorporation or
any Preferred Stock Designation, the affirmative vote of the holders of at
least two-thirds of the voting power of all of the then-outstanding shares of
the voting stock, voting together as a single class, shall be required to
alter, amend, or repeal this Article Eleven.
ARTICLE TWELVE
The stockholder vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this Article Twelve.
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<PAGE> 7
Section A.
(1) Except as otherwise expressly provided in Section B of this
Article Twelve:
(i) any merger or combination of the corporation
or any Subsidiary (as hereinafter defined) with (a) any
Interested Stockholder (as hereinafter defined), or (b) any
other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
corporation or any Subsidiary having an aggregate Fair Market
Value (as hereinafter defined) of $25,000,000 or more; or
(iii) the issuance or transfer by the corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or any
Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate Fair Market Value of $25,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of any Interested Stockholder or any Affiliate of
any Interested Stockholder; or
(v) any reclassification of securities (including
any reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the corporation
with any of its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving any Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder;
shall require the affirmative vote of the holders of at least eighty
percent (80%) of all of the then outstanding shares of capital stock
of the corporation entitled to vote generally in the election of
directors (hereinafter in this Article Twelve referred to as the
"Voting Stock"), voting together as a single class (it being
understood that, for purposes of this Article Twelve, each share of
Preferred Stock shall have the number of votes granted to it pursuant
to any designation of the rights, powers and preferences of any class
or series of Preferred Stock made pursuant to Article Four of this
Certificate of Incorporation (a "Preferred Stock Designation"). Such
affirmative vote shall be required notwithstanding any other
provisions of this Certificate of Incorporation
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<PAGE> 8
or any provision of law or of any agreement with any national securities
exchange which might otherwise permit a lesser vote or no vote, but such
affirmative vote shall be required in addition to any affirmative vote of the
holders of any particular class or series of the Voting Stock required by law,
this Certificate of Incorporation or any Preferred Stock Designation.
(2) The term "Business Combination" as used in this Article Twelve
shall mean any transaction which is referred to in any one or more of
subparagraphs (i) through (v) of paragraph A(l).
Section B. The provisions of Section A of this Article Twelve shall
not be limited to any particular Business Combination, and a Business
Combination shall require only such affirmative vote as is required by law, any
other provision of this Certificate of Incorporation, any Preferred Stock
Designation, or any agreement with any national securities exchange, if, in
the case of a Business Combination that does not involve any cash or other
consideration being received by the stockholders of the corporation solely in
their respective capacities as stockholders of the corporation, the condition
specified in the following paragraph B(l) is met, or, in the case of any other
Business Combination, the conditions specified in either of the following
paragraphs B(l) and B(2) are met:
(1) The Business Combination shall have been approved by a
majority of the Continuing Directors (as hereinafter defined), it being
understood that this condition shall not be capable of satisfaction unless
there is at least one Continuing Director; or
(2) All of the following conditions shall have been met:
(i) the consideration to be received by holders of shares
of a particular class of outstanding Voting Stock shall be in cash or
in the same form as the Interested Stockholder has paid for shares of
such class of Voting Stock within the two-year period ending on and
including the date on which the Interested Stockholder became an
Interested Stockholder (the "Determination Date"). If within such
two-year period the Interested Stockholder has paid for shares of any
class of Voting Stock with varying forms of consideration, the form of
consideration to be received per share by holders of shares of such
class of Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock acquired by
the Interested Stockholder within such two-year period.
(ii) the aggregate amount of the cash and the Fair Market
Value, as of the date (the "Consummation Date") of the consummation of
the Business Combination, of the consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the highest of the following
(it being intended that the requirements of this paragraph B(2)(ii)
shall be required to be met with respect to all shares of Common
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<PAGE> 9
Stock outstanding whether or not the Interested Stockholder has
previously acquired any shares of Common Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of Common Stock acquired by it within the
two-year period immediately prior to the first public
announcement of the proposal of the Business Combination
(the "Announcement Date"), or in the transaction in which
it became an Interested Stockholder, whichever is higher; plus
interest compounded annually from the Determination Date
through the Consummation Date at the prime rate of interest
of InterFirst Bank Dallas, N.A., Dallas, Texas (or such other
major bank headquartered in the City of Dallas as may be
selected by the Continuing Directors) from time to time in
effect in the City of Dallas, less the aggregate amount of
any cash dividends paid, and the Fair Market Value of any
dividends paid in form other than cash, on each share of
Common Stock from the Determination Date through the
Consummation Date in an amount up to but not exceeding the
amount of interest so payable per share of Common Stock; or
(b) the Fair Market Value per share of Common
Stock on the Announcement Date or on the Determination Date,
whichever is higher; or
(c) (if applicable) the price per share equal to
the Fair Market Value per share of the Common Stock determined
pursuant to paragraph B(2)(ii)(b) above, multiplied by the
ratio of (1) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Stockholder for any shares of
Common Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (2) the Fair
Market Value per share of Common Stock on the first day in such
two-year period upon which the Interested Stockholder
acquired any shares of Common Stock; or
(d) an amount per share determined by
multiplying the earnings per share of Common Stock for the
four full consecutive fiscal quarters of the corporation
immediately preceding the Consummation Date of such Business
Combination by the then price/earnings multiple (if any) of
such Interested Stockholder as customarily computed and
reported in the financial community; provided, that for the
purposes of this paragraph B(2)(ii)(d), if more than one
person constitutes the Interested Stockholder involved in the
Business Combination, the price/earnings multiple (if any) of
the person having the highest price/earnings multiple shall
be used for the computation in this paragraph B(2)(ii)(d).
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<PAGE> 10
(iii) the aggregate amount of the cash and the Fair Market Value as
of the Consummation Date of the Business Combination of consideration other than
cash to be received per share by holders of shares of any other class of
outstanding Voting Stock shall be at least equal to the highest of the following
(it being intended that the requirements of this paragraph B(2)(iii) shall be
required to be met with respect to every class of outstanding Voting Stock
whether or not the Interested Stockholder has previously acquired any shares of
a particular class of Voting Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it
within the two-year period immediately prior to the
Announcement Date or in the transaction in which it became an
Interested Stockholder, whichever is higher, plus interest
compounded annually from the Determination Date through the
Consummation Date at the prime rate of interest of InterFirst
Bank Dallas, N.A., Dallas, Texas (or such other major bank
headquartered in the City of Dallas as may be selected by the
Continuing Directors) from time to time in effect in the City
of Dallas, less the aggregate amount of any cash dividends
paid and the Fair Market Value of any dividends paid in form
other than cash, on each share of Voting Stock from the
Determination Date through the Consummation Date in an amount
up to but not exceeding the amount of interest so payable
per share of Voting Stock; or
(b) (if applicable) the highest preferential
amount per share to which the holders of shares of such class
of Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
corporation; or
(c) the Fair Market Value per share of such
class of Voting Stock on the Announcement Date or on the
Determination Date, whichever is higher; or
(d) (if applicable) the price per share equal to
the Fair Market Value per share of such class of Voting Stock
determined pursuant to paragraph B(2)(ii)(c) above,
multiplied by the ratio of (1) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by
it within the two-year period immediately prior to the
Announcement Date to (2) the Fair Market Value per share of
such class of Voting Stock on the first day in such two-year
period upon which the Interested Stockholder acquired any
shares of such class of Voting Stock.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the Consummation Date of such Business Combination:
(a) except as approved by a majority of the Continuing
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<PAGE> 11
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred Stock, if any, (b) there
shall have been (1) no reduction in the annual rate of dividends paid
on the Common Stock (except as necessary to reflect any subdivision of
the Common Stock), except as approved by a majority of the Continuing
Directors, and (2) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors, and (c) such
Interested Stockholder shall have not become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an
Interested Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage
provided by the corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (or any subsequent provisions replacing such
Act, rules or regulations) shall be mailed to public stockholders of
the corporation at least thirty (30) days prior to the consummation of
such Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
Section C. For the purposes of this Article Twelve:
(1) A "person" shall mean any individual, firm, corporation, or
other entity.
(2) "Interested Stockholder" shall mean any person (other than the
corporation or any Subsidiary and other than any one or a group or more than
one Continuing Director) who or which:
(i) is the beneficial owner, directly or indirectly, of
more than ten per cent of the voting power of the outstanding Voting
Stock; or
(ii) is an Affiliate of the corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of ten per cent or
more of the voting power of the then-outstanding Voting Stock; or
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<PAGE> 12
(iii) is an assignee of or has otherwise succeeded to any
shares of the Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of
1933.
For the purposes of determining whether a person is an Interested
Stockholder pursuant to paragraph C(2) immediately above, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of paragraph C(3) below, but shall not include any other
shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants
or options, or otherwise.
(3) A person shall be a "beneficial owner" of any Voting Stock
which:
(i) such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or indirectly; or
(ii) such person or any of its Affiliates or Associates
has (a) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (b) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(4) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on February 22, 1984.
(5) "Subsidiary" means any corporation of which a majority of any
class of equity securities is owned, directly or indirectly, by the
corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph C(2) the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
securities is owned, directly or indirectly, by the corporation.
(6) "Continuing Director" means any member of the Board of
Directors of the corporation (the "Board") who is unaffiliated with the
Interested Stockholder and was a member of the Board prior to the time that the
Interested Stockholder became an Interested Stockholder, and any
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<PAGE> 13
successor of a Continuing Director who is unaffiliated with the Interested
Stockholder and is recommended to succeed a Continuing Director by a majority of
the Continuing Directors then on the Board.
(7) "Fair Market Value" means: (i) in the case of stock, the
highest closing price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the 30-day period preceding the
date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use or, if no such quotations
are available, the Fair Market Value on the date in question of a share of such
stock as determined by the Board in good faith; and (ii) in the case of
property other than cash or stock, the Fair Market Value of such property on
the date in question as determined by the Board in good faith.
(8) In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to be received"
as used in paragraphs B(2)(ii) and B(2)(iii) of this Article Twelve shall
include the shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
Section D. A majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such determination as is hereinafter in this
Section D specified to be made by the Board) shall have the power to determine,
on the basis of information known to them after reasonable inquiry, all facts
necessary to determine compliance with this Article Twelve, including, without
limitation, (1) whether a person is an Interested Stockholder, (2) the number
of shares of Voting Stock beneficially owned by any person, (3) whether a
person is an Affiliate or an Associate of another, (4) whether the applicable
conditions set forth in paragraph B(2) have been met with respect to any
Business Combination, and (5) whether the assets which are the subject of any
Business Combination referred to in paragraph A(l)(ii) have, or the
consideration to be received for the issuance or transfer of securities by the
corporation or any Subsidiary in any Business Combination referred to in
paragraph A(l)(iii) has, an aggregate Fair Market Value of $25,000,000 or more.
Section E. Nothing contained in this Article Twelve shall be construed
to relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
Section F. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the
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<PAGE> 14
holders of any particular class or series of the Voting Stock required
by law, this Certificate of Incorporation or any Preferred Stock
Designation, the affirmative vote of the holders of at least 80% of
the voting power of all of the then-outstanding shares of the Voting
Stock, voting together as a single class, shall be required to alter,
amend or repeal this Article Twelve.
ARTICLE THIRTEEN
Meetings of stockholders may be held within or without the State of
Delaware as the Bylaws may provide. Elections of directors need not be
by written ballot.
ARTICLE FOURTEEN
No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the corporation may be taken without a
meeting, and the power of stockholders to consent in writing, without a
meeting, to the taking of any action is specifically denied.
ARTICLE FIFTEEN
No director of the corporation shall be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of the foregoing provisions of this Article
Fifteen by the stockholders of the corporation shall not adversely affect any
right or protection of a director of the corporation existing at the time of
such repeal or modification.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this Certificate of Incorporation, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly I have hereunto set my hand this 25th day of
February, 1987.
/s/ GUY H. KERR
-------------------------
Guy H. Kerr
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<PAGE> 15
THE STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
Guy H. Kerr, known to me to be the person whose name is subscribed to the
foregoing instrument, and being by me first duly sworn, declared to me that the
statements therein contained are true and correct and that he executed the same
as his act and deed for purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 25th day of February,
1987.
/s/ MARY ANN HENDRIX
-----------------------------------
(SEAL) Notary Public in and for Dallas
County, Texas
My Commission Expires
July 11, 1987
- -------------------------
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<PAGE> 1
EXHIBIT 3.2
PAGE 1
STATE OF DELAWARE
[LOGO]
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
CORRECTION OF A.H. BELO CORPORATION FILED IN THIS OFFICE ON THE THIRTEENTH DAY
OF MAY, A.D. 1987, AT 10 O'CLOCK A.M.
[SEAL] /s/ MICHAEL HARKINS
-----------------------------------
Michael Harkins, Secretary of State
AUTHENTICATION: 1235306
DATE: 05/13/1987
<PAGE> 2
CERTIFICATE OF CORRECTION
FILED TO CORRECT A CERTAIN ERROR IN
THE CERTIFICATE OF INCORPORATION OF
A.H. BELO CORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON MARCH 2, 1987
A.H. Belo Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
1. That the name of the corporation as set forth in the
Certificate of Incorporation referred to below is A.H. Belo Corporation.
2. That a Certificate of Incorporation was filed with the
Secretary of State of Delaware on March 2, 1987, and that such certificate
requires correction as permitted by subsection (f) of Section 103 of The
General Corporation Law of the State of Delaware.
3. That the inaccuracy or defect of such certificate to be
corrected is as follows:
A space between "A." and "H." was inadvertently left out of
the corporation name in Article 1.
4. That Section 1 of the certificate is corrected to read as
follows:
1. The name of the corporation is A. H. Belo
Corporation.
<PAGE> 3
IN WITNESS WHEREOF, A.H. Belo Corporation has caused this certificate
to be signed by its officers as set forth below this 7th day of May, 1987.
A.H. Belo Corporation
By: /s/ JAMES P. SHEEHAN
--------------------------------
Title: President
--------------------------------
Attest: /s/ MICHAEL J. MCCARTHY
- -------------------------------
By: Michael J. McCarthy
- -------------------------------
Title: Secretary
- -------------------------------
<PAGE> 1
EXHIBIT 3.3
PAGE 1
[STATE OF DELAWARE OFFICE OF SECRETARY OF STATE LETTERHEAD]
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
STOCK DESIGNATION OF A.H. BELO CORPORATION FILED IN THIS OFFICE ON THE
TWENTY-SECOND DAY OF APRIL, A.D. 1987, AT 10 O'CLOCK A.M.
/s/ MICHAEL HARKINS
-----------------------------------
[SEAL] Michael Harkins, Secretary of State
AUTHENTICATION: 1211596
DATE: 04/23/1987
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CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
A.H. BELO CORPORATION
A.H. Belo Corporation (the "Corporation"), pursuant to
Sections 103 and 151(g) of the General Corporation Law of the State of
Delaware, hereby certifies that the following resolution was adopted by the
Board of Directors of the Corporation pursuant to authority expressly vested in
it by the provisions of the Certificate of Incorporation of the Corporation:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation in accordance with the provisions
of the Certificate of Incorporation, the Board of Directors hereby creates a
series of Preferred Stock, par value $1.00 per share, of the Corporation and
hereby states the designation and number of shares, and fixes the relative
rights and preferences thereof, as follows:
Preferred Stock-Series A:
I. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting such series
shall be 150,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than that of
the shares then outstanding.
II. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking prior
and superior to the shares of Series A Preferred Stock with respect to
dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock and of any other junior
stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or
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fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10 or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock, par value $1.67 per share, of the Corporation
(the "Common Stock") or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph
(A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per
share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series A Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the
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record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued buy unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
III. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time on or after the Distribution Date declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, holders of Series A
Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent
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they are entitled to vote with holders of Common stock as set forth
herein) for taking any corporate action.
IV. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section II are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to
the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good
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faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section IV, purchase or otherwise acquire such
shares at such time and in such manner.
V. Reacquired Shares. Shares of Series A Preferred Stock
which have been redeemed, or which have been issued and reacquired in any
manner and retired, shall have the status of authorized and unissued Preferred
Stock and may be reissued by the Board of Directors as shares of the same or
any other series.
VI. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any
time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
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VII. Consolidation, Merger, etc. In case the
corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case the shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
VIII. Redemption.
(A) The shares of Series A Preferred Stock shall be
redeemable, at the option of the Board of Directors of the
Corporation, in whole but not in part, out of funds legally available
therefor, upon at least 30 days' Notice of Redemption pursuant to
paragraph (B) of this Section VIII, at the following times:
(i) at any time as there shall be outstanding
less than 150,000 shares of Series A Preferred Stock. For
purposes of this clause (i), shares of Series A Preferred
Stock (x) owned by the Corporation or any of its direct or
indirect subsidiaries, or (y) as to which Notice of Redemption
pursuant to paragraph (B) of this Section VIII has previously
been duly mailed, shall not be considered to be outstanding;
(ii) at any time after the Board of Directors
shall have adopted a resolution recommending the liquidation,
dissolution or winding up of the Corporation and directing
that the question of such liquidation, dissolution or winding
up be submitted to a vote at a meeting of stockholders.
(B) Whenever shares of Series A Preferred Stock are to be
redeemed, the Corporation shall mail a notice ("Notice of
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Redemption") by first-class mail, postage prepaid, to each holder of
record of shares of Series A Preferred Stock to be redeemed and to the
transfer agent for the Series A Preferred Stock. The Notice of
Redemption shall be addressed to the holder at the address of the
holder appearing on the stock transfer books of the Corporation
maintained by the transfer agent for the Series A Preferred Stock. The
Notice of Redemption shall include a statement of (i) the redemption
date, (ii) the redemption price, (iii) the number of shares of Series
A Preferred Stock to be redeemed, (iv) the place or places where
shares of the Series A Preferred Stock are to be surrendered for
payment of the redemption price, (v) that the dividends on the shares
to be redeemed will cease to accrue on such redemption date, and (vi)
the provision under which redemption is made. No defect in the Notice
of Redemption or in the mailing thereof shall affect the validity of
the redemption proceedings, except as required by law. From the date
on which a Notice of Redemption shall have been given as aforesaid and
the Corporation shall have deposited with the transfer agent for the
Series A Preferred Stock a sum sufficient to redeem the shares of
Series A Preferred Stock as to which Notice of Redemption has been
given, with irrevocable instructions and authority to pay the
redemption price to the holders thereof, or if no such deposit is
made, then upon such date fixed for redemption (unless the corporation
shall default in making payment of the redemption price), all rights
of the holders thereof as stockholders of the Corporation by reason of
the ownership of such shares (except their right to receive the
redemption price thereof, but without interest), shall terminate, and
such shares shall no longer be deemed outstanding. The Corporation
shall be entitled to receive, from time to time, from the transfer
agent for Series A Preferred Stock the interest, if any, on such
monies deposited with it and the holders of any shares so redeemed
shall have no claim to any such interest. In case the holder of any
shares so called for redemption shall not claim the redemption price
for his shares within one year after the date of redemption, the
transfer agent for the Series A Preferred Stock shall; upon demand,
pay over the Corporation such amount remaining on deposit and the
transfer agent for the Series A Preferred Stock shall thereupon be
relieved of all responsibility to the holder of such shares and such
holder of the shares of the Series A Preferred Stock so called for
redemption shall look only to the Corporation for the payment thereof.
(C) Each share of the Series A Preferred Stock to be
redeemed pursuant to paragraph (A) of this Section VIII shall be
redeemed at a redemption price equal to, subject to the provision for
adjustment hereinafter set forth, 100 times the "current per share
market price" of the Common
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Stock on the date of the mailing of the Notice of Redemption plus an
amount equal to accrued and unpaid dividends on such shares (whether
or not earned or declared) to the redemption date. In the event the
Corporation shall at any time on or after the Distribution Date
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under
the preceding sentence shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
The "current per share market price" on any date shall be
deemed to be the average of the closing price per share of such Common
Stock for the 10 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date. The closing price for each
day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the Common Stock is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in
use or, if on any such date the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Corporation. If on
such date no such market maker is making a market in the Common Stock,
the fair value of the Common Stock on such date as determined in good
faith by the Board of Directors of the Corporation shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to
trading is open
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for the transaction of business or, if the Common Stock is not listed
or admitted to trading an any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions
in the State of New York are not authorized or obligated by law or
executive order to close.
(D) Except as set forth under Section IV hereof and
except as set forth above with respect to redemptions, nothing
contained herein shall limit any legal right of the Corporation to
purchase or otherwise acquire any shares of series A Preferred Stock
in privately negotiated transactions or in the over-the-counter market
or otherwise.
IX. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights Of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single series.
IN WITNESS WHEREOF, this Certificate of Designation is
executed on behalf of the Corporation as of the 16th day April of 1987.
A.H. BELO CORPORATION
By:/s/ MICHAEL J. McCARTHY
-------------------------------
Title: Senior Vice President
----------------------------
ATTEST :
BY:/s/ ROBERT S. NORVELL
------------------------------
Title: Vice President, Treasurer
-------------------------
and Assistant Secretary
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EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
A. H. Belo Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the corporation
held on February 24, 1988, resolutions were duly adopted setting forth proposed
amendments of the Certificate of Incorporation of the corporation, declaring
said amendments to be advisable and calling a meeting of the stockholders of
the corporation for consideration thereof. The proposed amendments, in the
form adopted by the Board of Directors of the corporation, are as set forth in
items 1 through 8 of Appendix A to this Certificate.
SECOND: That at the next annual meeting of the stockholders of the
corporation thereafter duly convened and held, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware, the
necessary number of shares as required by statute and by the corporation's
Certificate of Incorporation were voted in favor of the amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of the corporation shall not be reduced under
or by reason of said amendments.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
duly executed by its Chairman of the Board and attested to by its Secretary,
and caused its corporate seal to be affixed hereto as of the 4th day of May,
1988.
A. H. BELO CORPORATION
By: /s/ ROBERT W. DECHERD
-------------------------------
Chairman of the Board
[Corporate Seal]
ATTEST: /s/ MICHAEL J. McCARTHY
----------------------------
Secretary
<PAGE> 2
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
On the 29th day of April, 1988, before me personally appeared Robert
W. Decherd, the Chairman of A. H. Belo Corporation, to me known to be the
person described in and who executed the foregoing instrument, and acknowledged
that he executed the same in the capacity indicated, that it is the act and
deed of such corporation, and that the facts stated therein are true.
/s/ DEAN H. BLYTHE
------------------------------
Notary Public
My Commission Expires: /s/ DEAN H. BLYTHE
3-12-90 ------------------------------
- ---------------------- Print Name
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APPENDIX A
AMENDMENTS TO
THE CERTIFICATE OF INCORPORATION
OF
A. H. BELO CORPORATION
1. The first paragraph of Article Four shall be deleted and the following
information shall be added:
SECTION 1. Authorized Shares.
The aggregate number of shares of stock that the corporation shall
have the authority to issue is one hundred fifty-five million (155,000,000)
shares, of which five million (5,000,000) shares shall be Preferred Stock (the
"Preferred Stock"), par value $1.00 per share, and one hundred fifty million
(150,000,000) shares shall be Common Stock (the "Common Stock"), par value
$1.67 per share.
The Common Stock may be issued as a single class, without series, or
if so determined from time to time by the Board of Directors, either in whole
or in part in two or more series. Unless and until a Certificate of Designation
is filed an is effective with respect to two or more series, all shares of
Common Stock shall be of one class without series and shall be denominated
Common Stock. Upon the filing with the Secretary of State of a Certificate of
Designation providing for the issuance of either Series B Stock or Series C
Stock, each share of Common Stock outstanding or held in the treasury
immediately prior to such filing shall be converted without any action by the
holder thereof into one share of Series A Stock and each certificate
representing outstanding shares of Common Stock shall thereafter be deemed to
represent a like number of shares of Series A Stock.
If shares of Common Stock are issued in two or more series, (a) fifty
million (50,000,000) shares shall be denominated Series A Common Stock (herein
called "Series A Stock"). The remaining shares of Common Stock may be issued as
shares of Series B Common Stock (herein called "Series B Stock"), and/or Series
C Common Stock (herein called "Series C Stock"). After completion of the
initial distribution of Series B Stock, the corporation shall not issue any
additional shares of Series B Stock except for shares issued in connection with
(i) stock splits, stock dividends, and other similar distributions, (ii) the
exercise of stock options outstanding as of January 1, 1988, (iii) the grant of
restricted shares and the exercise of stock options granted under the
corporation's 1986 Long Term Incentive Plan, (iv) the corporation's Employee
Stock Purchase Plan, and (v) any employee benefit plan created pursuant to
section 401(k) of the Internal Revenue Code of 1986, as amended, or any
successor provision. Subject to the foregoing, the Board of Directors shall
have the authority to fix the number of shares constituting any such
series, and to increase or decrease the number of shares of any series prior to
or after the issuance of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
<PAGE> 4
series shall be so decreased, the shares constituting such decrease shall
resume the status of authorized but unissued shares of Common Stock.
2. The second paragraph of Article Four shall be inserted as follows
below:
The following is a statement of the designations and the
powers, preferences and rights, and the qualifications, limitations or
restrictions thereof, in respect of the shares of Preferred Stock and
Common Stock or any series of any class of stock of the corporation,
and of the authority expressly granted hereby to the Board of
Directors of the corporation to fix by resolution or resolutions any
of such designations and powers, preferences and rights, and
qualifications, limitations and restrictions thereof that may be
desired but which shall not be fixed by this Certificate of
Incorporation.
3. Paragraph (A) of Article Four shall be deleted and the following
Section 2 shall be inserted:
SECTION 2. Common Stock - Series A, Series B, and Series C.
A. Powers, Preferences, and Rights
The Board of Directors shall have the authority to fix or to alter the
powers, designations, preferences, and relative, participation, optional, or
other special rights, if any, and the qualifications, limitations, or
restrictions thereof, if any, of the Series D Stock or Series C Stock; provided
that in no such case shall the powers, preferences, and rights of the Series B
Stock or Series C Stock be greater than those provided for herein; and provided
further that in no such case shall the voting rights of the Series B Stock or
the Series C Stock be other than as provided for herein or in the resolution or
resolutions of the Board of Directors providing for the issuance of the Series
B Stock or the Series C Stock. The Board of Directors may make changes in the
rights, powers, and preferences of the Series B Stock and the Series C Stock,
provided that in no such case may the rights, powers, and preferences of any
such series be greater than those described herein. Except as otherwise
required by law or expressly provided for in or pursuant to the authority
provided in this Certificate of Incorporation or any resolution or resolutions
providing for the issuance of Series B Stock or Series C Stock, the rights,
powers, and preferences of the Series A Stock, the Series B Stock, and the
Series C Stock and the qualifications, limitations, or restrictions thereof,
shall be in all respects identical.
B. Voting Rights
1. If there shall be only one series of Common Stock
outstanding, each share of Common Stock shall entitle the holder
thereof to one (1) vote.
2. If two or more series of Common Stock are issued and
outstanding, each share of Series A Stock shall entitle the holder
thereof to one (1) vote, each share of Series B Stock shall entitle
the holder thereof to not less than one (1) vote nor more than ten
(10) votes, and each share of Series C Stock shall entitle the holder
thereof to not less than one-tenth (1/10) of a vote nor more than one
(1) vote, on all matters
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submitted to a vote of stockholders. Such voting rights shall be set
forth in a Certificate of Designation to be filed with respect to
such series. Except as set forth herein or in any resolution or
resolutions of the Board of Directors providing for the issuance of
any series of Preferred Stock, all actions submitted to a vote of
stockholders shall be voted on by the holders of Series A Stock,
Series B Stock, and Series C Stock (as well as the holders of any
series of Preferred Stock, if any, entitled to vote thereon) voting
together as a single class.
3. If two or more series of Common Stock are issued and
outstanding, the holders of shares of Series A Stock, Series B Stock,
and Series C Stock shall each be entitled to vote separately as a
class with respect to (i) amendments to this Certificate of
Incorporation that alter or change the powers, preferences, or special
rights of their respective series so as to affect them adversely, and
(ii) such other matters as require class votes under the Delaware
General Corporation Law.
4. Except as otherwise provided by law or pursuant to
this Article Four or by resolution or resolutions of the Board of
Directors providing for the issuance of any series of Preferred Stock,
the holders of the Series A Stock, Series B Stock, and Series C Stock
shall have sole voting power for all purposes, each holder of the
Series A Stock, Series B Stock, and Series C Stock being entitled to
vote as provided in this paragraph B of Section 2 and in the
resolution or resolutions of the Board of Directors providing for the
issuance of the Series B Stock or the Series C Stock.
C. Dividends
1. If no shares of a particular series of Common Stock
are outstanding, the Board of Directors may declare and distribute a
stock dividend payable in shares of that series to the holders of any
other class or series of stock then outstanding.
2. If and when dividends on the Series A Stock, Series B
Stock, or Series C Stock are declared payable from time to time by the
Board of Directors as provided in this subparagraph C.2, whether
payable in cash, in property, or in shares of stock of the
corporation, the holders of Series A Stock, the holders of Series B
Stock, and the holders of Series C Stock shall be entitled to share
equally, on a per share basis, in such dividends, subject to the
limitations described below. Notwithstanding the above, dividends
declared and payable in cash on shares of (i) Series A Stock may be
greater than dividends declared and payable in cash on shares of
Series B Stock or on shares of Series C Stock, (ii) Series C Stock may
be greater than dividends declared and payable in cash on shares of
Series A Stock or on shares of Series B Stock, and (iii) Series B
Stock may be greater than dividends declared and payable in cash on
shares of Series C Stock. Except for dividends permitted by
subparagraph C.1, if dividends are declared that are payable in shares
of Series A Stock, Series B Stock, or Series C Stock, such dividends
shall be payable at the same rate on all series of stock and the
dividends payable in shares of Series A Stock shall be payable only to
holders of Series A Stock, the dividends payable in shares of Series B
Stock shall be payable only to holders of Series B Stock, and the
dividends payable in shares of Series C
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<PAGE> 6
Stock shall be payable only to holders of Series C Stock. If the
corporation shall in any manner split, divide, or combine the
outstanding shares of Series A Stock, Series B Stock, or Series C
Stock, the outstanding shares of the other such series of Common Stock
shall be proportionally split, divided, or combined in the same manner
and on the same basis as the outstanding shares of Series A Stock,
Series B Stock, or Series C Stock, as the case may be, that have been
split, divided, or combined.
3. Subject to provisions of law and the preferences of
the Preferred Stock and of any other stock ranking prior to the Series
A Stock, the Series B Stock, or the Series C Stock as to dividends,
the holders of the Series A Stock, the Series B Stock, and the Series
C Stock shall be entitled to receive dividends at such times and in
such amounts as may be determined by the Board of Directors and
declared out of any funds lawfully available therefor, and shares of
Preferred Stock of any series shall not be entitled to share therein
except as otherwise expressly provided in the resolution or
resolutions of the Board of Directors providing for the issuance of
such series.
D. Conversion of Series B Stock by Holder
1. The holder of each share of Series B Stock shall have
the right at any time, or from time to time, at such holder's option,
to convert such share into one fully paid and nonassessable share of
Series A Stock on and subject to the terms and conditions hereinafter
set forth.
2. In order to exercise the conversion privilege, the
holder of any shares of Series B Stock to be converted shall present
and surrender the certificate or certificates representing such shares
during usual business hours at any office or agency of the corporation
maintained for the transfer of Series B Stock and shall deliver a
written notice of the election of the holder to convert the shares
represented by such certificate or any portion thereof specified in
such notice. Such notice shall also state the name or names (with
address) in which the certificate or certificates for shares of Series
A Stock issuable on such conversion shall be registered. If required
by the corporation, any certificate for shares surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the corporation, duly executed by the holder of such
shares or his duly authorized representative. Each conversion of
shares of Series B Stock shall be deemed to have been effected on the
date (the "conversion date") on which the certificate or certificates
representing such shares shall have been surrendered and such notice
and any required instruments of transfer shall have been received as
aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Series A Stock shall be
issuable on such conversion shall be, for the purpose of receiving
dividends and for all other corporate purposes whatsoever, deemed to
have become the holder or holders of record of the shares of Series A
Stock represented thereby on the conversion date.
3. As promptly as practicable after the presentation and
surrender for conversion, as herein provided, of any certificate for
shares of Series B Stock, the corporation shall issue and deliver at
such office or
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<PAGE> 7
agency, to or upon the written order of the holder thereof,
certificates for the number of shares of Series A Stock issuable upon
such conversion. Subject to the provisions of paragraph F of this
Section 2, in case any certificate for shares of Series B Stock shall
be surrendered for conversion of only a part of the shares represented
thereby, the corporation shall deliver at such office or agency, to or
upon the written order of the holder thereof, a certificate or
certificates for the number of shares of Series B Stock represented by
such surrendered certificate that are not being converted. The
issuance of certificates for shares of Series A Stock issuable upon
the conversion of shares of Series B Stock by the registered holder
thereof shall be made without charge to the converting holder for any
tax imposed on the corporation in respect of the issue thereof. The
corporation shall not, however, be required to pay any tax that may be
payable with respect to any transfer involved in the issue and
delivery of any certificate in a name other than that of the
registered holder of the shares being converted, and the corporation
shall not be required to issue or deliver any such certificate unless
and until the person requesting the issue thereof shall have paid to
the corporation the amount of such tax or has established to the
satisfaction of the corporation that such tax has been paid.
4. Upon any conversion of shares of Series B Stock into
shares of Series A Stock pursuant hereto, no adjustment with respect
to dividends shall be made; only those dividends shall be payable on
the shares so converted as have been declared and are payable to
holders of record of shares of Series B Stock on a date prior to the
conversion date with respect to the shares so converted; and only
those dividends shall be payable on shares of Series A Stock issued
upon such conversion as have been declared and are payable to holders
of record of shares of Series A Stock on or after such conversion
date.
5. In case of any consolidation or merger of the
corporation as a result of which the holders of Series A Stock shall
be entitled to receive cash, stock, other securities, or other
property with respect to or in exchange for Series A Stock or in case
of any sale or conveyance of all or substantially all of the property
or business of the corporation as an entirety, a holder of a share of
Series B Stock shall have the right thereafter to convert such share
into the kind and amount of cash, shares of stock, and other
securities and properties receivable upon such consolidation, merger,
sale, or conveyance by a holder of one share of Series A Stock and
shall have no other conversion rights with regard to such share. The
provisions of this subparagraph D.5 shall similarly apply to
successive consolidations, mergers, sales, or conveyances.
6. Shares of the Series B Stock converted into Series A
Stock shall be retired and shall resume the status of authorized but
unissued shares of Series B Stock.
7. Such number of shares of Series A Stock as may from
time to time be required for such purpose shall be reserved for
issuance upon conversion of outstanding shares of Series B Stock and
of shares of Series B Stock issuable upon exercise of options.
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<PAGE> 8
E. Termination of Series B or Series C Stock
1. All outstanding shares of Series B Stock shall
automatically, without any further act or deed on the part of the
corporation or any other person, be converted into shares of Series A
Stock on a share-for-share basis
a. if, as a result of the existence of the
Series B Stock, the Series A Stock is excluded from trading on
the New York Stock Exchange, the American Stock Exchange, and
other national securities exchanges and is also excluded from
quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or any other national
quotation system then in use; or
b. at the option of the corporation:
(i) at any time when the Board of
Directors and the holders of a majority of
the outstanding shares of the Series B Stock
approve the conversion of all of the Series B
Stock into Series A Stock; or
(ii) if the Board of Directors, in
its sole discretion, elects to effect a
conversion (X) in order to avoid the
exclusion of the Series A Stock from trading
on a national securities exchange or the
exclusion of the Series A Stock from
quotation on NASDAQ or such other national
quotation system then in use, or (Y) due to
requirements of federal or state law, in any
such case, as a result of the existence of
the Series B Stock.
2. All outstanding shares of Series C Stock shall
automatically, without any further act or deed on the part of the
corporation or any other person, be converted into shares of Series A
Stock on a share-for-share basis
a. if, as a result of the existence of the
Series C Stock, the Series A Stock is excluded from trading on
the New York Stock Exchange, the American Stock Exchange, and
all other national securities exchanges and is also excluded
from quotation on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or any other
national quotation system then in use; or
b. at the option of the corporation:
(i) at any time when the Board of
Directors and the holders of a majority of
the outstanding shares of the Series C Stock
approve the conversion of all of the Series C
Stock into Series A Stock; or
(ii) if the Board of Directors, in
its sole discretion, elects to effect a
conversion (X) in order to avoid the
exclusion of the Series A Stock from trading
on a national securities exchange or the
exclusion of the Series A Stock
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<PAGE> 9
from quotation on NASDAQ or such other
national quotation system then in use, or (Y)
due to requirements of federal or state law,
in any such case, as a result of the
existence of the Series C Stock.
3. Upon any automatic conversion of Series B Stock of
Series C Stock pursuant to this paragraph E, each certificate
representing outstanding shares of Series B Stock or Series C Stock,
as the case may be, shall thereafter be deemed to represent a like
number of shares of Series A Stock or Common Stock, as the case may
be.
F. Limitations on Transfer of Series B Stock
1. No record or beneficial owner of shares of Series B
Stock may transfer, and the corporation shall not register the
transfer of, such shares of Series B Stock, whether by sale,
assignment, gift, bequest, appointment, or otherwise, except to a
"Permitted Transferee" as provided herein.
a. In the case of a holder of record of the
Series B Stock (the "Series B Holder") who is a natural person
and the beneficial owner of the shares of Series B Stock to be
transferred, Permitted Transferees shall include only the
following:
(i) The spouse of such Series B
Holder, any lineal descendant of a great-
grandparent of such Series B Holder, or any
spouse of such lineal descendent (herein
collectively referred to as "such Series B
Holder's Family Members");
(ii) The trustee or trustees of a
trust (including a voting trust) for the sole
benefit of such Series B Holder and/or one or
more of such Series B Holder's Family
Members, except that such trust may also
grant a general or special power of
appointment to one or more of such Series B
Holder's Family Members and may permit trust
assets to be used to pay taxes, legacies, and
other obligations of the Trust or the estates
of one or more of such Series B Holder's
Family Members payable by reason of the death
of any of such Family Members; provided,
however, if at any time such trust ceases to
meet the requirements of this subparagraph
(ii), all shares of Series B Stock then held
by such trustee or trustees shall immediately
and automatically, without further act or
deed on the part of the corporation or any
person, be converted into Series A Stock on a
share-for-share basis, and stock certificates
formerly representing such shares of Series B
Stock shall thereupon and thereafter be
deemed to represent a like number of shares
of Series A Stock;
(iii) A corporation wholly owned by
such Series B Holder and/or such Series B
Holder's Family Members or a partnership in
which all of the partners are, and all of the
partnership interests are owned by, such
Series B
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<PAGE> 10
Holder and/or such Series B Holder's Family
Members provided that if by reason of any
change in the ownership of such stock or
partners or partnership interests, such
corporation or partnership would no longer
qualify as a Permitted Transferee of such
Series B Holder, all shares of Series B Stock
then held by such corporation or partnership
shall immediately and automatically, without
further act or deed on the part of the
corporation or any other person, be converted
into shares of Series A Stock on a
share-for-share basis, and stock certificates
formerly representing such shares of Series B
Stock shall thereupon and thereafter be
deemed to represent a like number of shares
of Series A Stock;
(iv) An organization established by
the Series B Holder of such Series B Holder's
Family Members, contributions to which are
deductible for federal income, estate, or
gift tax purposes (a "Charitable
Organization") and a majority of whose
governing board at all times consists of the
Series B Holder and/or one or more of the
Permitted Transferees of such Series B
Holder, or any successor to such Charitable
Organization meeting such definition;
provided that if by reason of any change in
the composition of the governing board of
such Charitable Organization, such Charitable
Organization shall no longer qualify as a
Permitted Transferee of such Series B Holder,
all shares of Series B Stock then held by
such Charitable Organization shall
immediately and automatically, without
further act or deed on the part of the
corporation or any other person, be converted
into shares of Series A Stock on a
share-for-share basis, and stock certificates
formerly representing such shares of Series B
Stock shall thereupon and thereafter be
deemed to represent the like number of shares
of Series A Stock; and
(v) The executor, administrator, or
personal representative of the estate of a
deceased Series B Holder or guardian or
conservator of a Series B Holder adjudged
disabled or incompetent by a court of
competent jurisdiction, acting in his
capacity as such.
b. In the case of a Series B Holder holding the
shares of Series B Stock as trustee pursuant to a trust other
than a trust described in subparagraph F.1.c below, Permitted
Transferees shall include only the following:
(i) any successor trustee of such
trust who is described in subparagraph
F.1.b.(ii) below, or who is not and will not
thereby become, an Interested Stockholder of
the corporation (as defined in Article
Twelve, Section C.(2) hereof); and
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<PAGE> 11
(ii) the person who established such
trust and any Permitted Transferee of such
person, determined in accordance with
paragraph (a) above.
c. In the case of a Series B Holder holding the
shares of Series B Stock as trustee pursuant to a trust that
was irrevocable on the Record Date (a "Transferor Trust"),
Permitted Transferees shall include only the following:
(i) any successor trustee of such
Transferor Trust who is described in
subparagraph F.1.c.(ii) or (iii) below, or
who is not, and will not thereby become, an
Interested Stockholder of the corporation (as
defined in Article Twelve, Section C.(2)
hereof);
(ii) any person to whom or for whose
benefit the principal or income may be
distributed either during or at the end of
the term of such Transferor Trust whether by
power of appointment or otherwise, and any
Permitted Transferee of such person,
determined pursuant to paragraph (a) above;
and
(iii) any Family Member of the person
who established such Transferor Trust.
d. In the case of a record (but not beneficial)
owner of the Series B Stock as a nominee for the person who
was the Beneficial owner thereof on the Record Date (as
defined below), Permitted Transferees shall include only such
beneficial owner and a Permitted Transferee of such beneficial
owner.
e. In the case of a Series B Holder that is a
partnership and the beneficial owner of the shares of Series B
Stock proposed to be transferred, Permitted Transferees shall
include only:
(i) any partner of such partnership
who was also a partner of such partnership on
the Record Date;
(ii) any person transferring shares
of Series B Stock to such partnership after
the Record Date (provided, however, that such
transferor may not receive shares of Series B
Stock in excess of the shares transferred by
the transferor to such partnership); and
(iii) any Permitted Transferee of
such person referred to in subparagraph
F.1.e(i) or F.1.e(ii) above (not in excess of
the number of shares that such person is
entitled to receive pursuant to this
subparagraph F.1.e).
f. In the case of a Series B Holder that is a
corporation and the beneficial owner of the shares proposed to
be transferred, Permitted Transferees shall include only:
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<PAGE> 12
(i) any stockholder of such
corporation on the Record Date who receives
shares of Series B Stock pro rata to his
stock ownership in such corporation through a
dividend or through a distribution made upon
liquidation of such corporation;
(ii) any person transferring shares
of Series B Stock to such corporation after
the Record date (provided, however, that such
transferor may not receive shares of Series B
Stock in excess of the shares transferred by
the transferor to such corporation);
(iii) Any Permitted Transferee of
such stockholder or person referred to in
subparagraph F.1.f(i) or (ii) above (not in
excess of the number of shares that such
stockholder or person is entitled to receive
pursuant to this subparagraph F.1.f); and
(iv) the survivor of a merger or
consolidation of such corporation if those
persons who owned beneficially sufficient
shares entitled to elect at least a majority
of the entire board of directors of such
constituent corporation immediately prior to
the merger or consolidation own beneficially
sufficient shares entitled to elect at least
a majority of the board of directors of the
surviving corporation, provided that if by
reason of any change in the ownership of such
stock such surviving corporation would no
longer qualify as a Permitted Transferee, all
shares of Series B Stock then held by such
surviving corporation shall immediately and
automatically, without further act or deed on
the part of the corporation or any other
person, be converted into shares of Series A
Stock on a share-for-share- basis, and stock
certificates formerly representing such
shares of Series B Stock shall thereupon and
thereafter be deemed to represent a like
number of shares of Series A Stock.
For purposes of subparagraph F.1.f, a mutual company
shall be treated as a corporation, and the persons holding
voting interests therein shall be treated as stockholders.
g. In the case of a Series B Holder who is the
executor or administrator of the estate of a deceased Series B
Holder or guardian or conservator of the estate of a disabled
or incompetent Series B Holder, Permitted Transferees shall
include only a Permitted Transferee of such deceased,
disabled, or incompetent Series B Holder.
2. Notwithstanding anything to the contrary set forth
herein, any Series B Holder may pledge such holder's shares of Series
B Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee, provided that
such shares shall not be transferred to or registered in the name of
the pledgee and shall remain subject to the provisions of this
paragraph F. In the event
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<PAGE> 13
of foreclosure or other similar action by the pledgee, such pledged
shares of Series B Stock may only be transferred to a Permitted
Transferee of the pledgor or converted into shares of Series A Stock,
as the pledgee may elect.
3. For purposes of this paragraph F:
a. The relationship of any person that is
derived by or through legal adoption shall be considered a
natural one;
b. Each joint owner of shares of Series B Stock
shall be considered a Series B Holder of such shares;
c. A minor for whom shares of Series B stock are
held pursuant to a Uniform Gifts to Minors Act or similar law
shall be considered a Series B Holder of such shares;
d. Unless otherwise specified, the term "person"
means both natural person and legal entities; and
e. The "Record Date" is the date for determining
the persons to whom the Series B Stock is initially
distributed by the corporation as a dividend on the Common
Stock.
4. Any purported transfer of shares of Series B Stock
not permitted hereunder shall result in the conversion of the
transferee's shares of Series B Stock into shares of Series A Stock,
effective on the date on which certificates representing such shares
are presented for transfer on the stock transfer record books of the
corporation; provided, however, that if the corporation should
determine that such shares were not so presented for transfer within
20 days after the date of such sale, transfer, assignment, or other
disposition, the transfer date shall be the actual date of such sale,
transfer, assignment, or other disposition as determined in good faith
by the Board of Directors or its appointed agent. The corporation
may, as a condition to the transfer or the registration of transfer of
shares of Series B Stock to a purported Permitted Transferee, require
the furnishing of such affidavits or other proof as it deems necessary
to establish that such transferee is a Permitted Transferee. If no
indication to the contrary is supplied at the time shares of Series B
Stock are presented for transfer, the transfer shall be presumed by
the corporation to be a transfer to a person other than the Permitted
Transferee.
G. Registration of Series B Stock
1. Shares of Series B Stock shall be registered in the
name(s) of the beneficial owner(s) thereof (as hereafter defined) and
not in "street" or "nominee" names; provided, however, certificates
representing shares of Series B Stock issued as a stock dividend on
the corporation's then outstanding Common Stock may be registered in
the same name and manner as the certificates representing the shares
of Common Stock with respect to which the shares of Series B Stock
were issued. For the purposes of paragraphs F and G of this Section
2, the term "beneficial owner(s)" of any shares of Series B Stock
shall mean the person or
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<PAGE> 14
persons who possess the power to vote or dispose, or to direct the
voting or disposition of such shares and "beneficially owned" shares
shall refer to shares owned by such a beneficial owner.
2. The corporation shall note on the certificates
representing the shares of Series B Stock that there are restrictions
on transfer and registration of transfer imposed by paragraphs F and G
of this Section 2.
H. Priority of Preferred Stock
The Series A Stock, Series B Stock, and Series C Stock are subject to
all the powers, rights, privileges, preferences, and priorities of the
Preferred Stock as may be stated herein and as shall be stated and expressed in
any resolution or resolutions adopted by the Board of Directors providing for
the issuance of any series of Preferred Stock, pursuant to authority expressly
granted to and vested in it by the provisions of this Article Four.
I. Liquidation, Dissolution, or Winding Up
In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary (sometimes referred to as
liquidation), after payment or provision for payment of the debts and other
liabilities of the corporation and the preferential amounts to which the
holders of any stock ranking prior to the Series A Stock, the Series B Stock,
and the Series C Stock in the distribution of assets shall be entitled upon
liquidation, the holders of the Series A Stock, the Series B Stock, and the
Series C Stock and holders of any other stock ranking on a parity with the
Series A Stock, the Series B Stock, and the Series C Stock in the distribution
of assets upon liquidation shall be entitled to share pro rata in the remaining
assets of the corporation according to their respective interests.
4. Paragraph (B) of Article Four is hereby redesignated as SECTION 3.
Preferred Stock.
5. Paragraph (C) of Article Four is hereby redesignated as SECTION 4.
General. The first sentence of the second paragraph of Paragraph (C)
shall be deleted.
6. Article Nine shall be amended to read as shown below.
ARTICLE NINE
"The initial Bylaws of the corporation shall be adopted by
the Board of Directors. The power to alter, amend, or repeal the
corporation's Bylaws, and to adopt new Bylaws, is hereby vested in the
Board of Directors, subject, however, to repeal or change by the
affirmative vote of the holders of at least two-thirds of the voting
power of all of the outstanding shares entitled to vote thereon.
Notwithstanding any other provisions of this Certificate of
Incorporation, or any provision of law which might otherwise permit a
lesser vote or no vote, the affirmative vote of the holders of at
least two-thirds of the voting power of all of
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<PAGE> 15
the then outstanding shares of the voting stock, voting together as a
single class, shall be required to alter, amend, or repeal this
Article Nine."
7. Article Eleven shall be amended to read as show below.
ARTICLE ELEVEN
"Except as otherwise provided in this Certificate of
Incorporation, for purposes of Sections 251, 253, 271, 275, and 311 of
the Delaware General Corporation Law (or any successor provisions of
Delaware law), where applicable the affirmative vote of the holders of
at least two-thirds, rather than a majority, of the voting power of
all of the outstanding shares of stock entitled to vote in accordance
therewith shall be required. Notwithstanding any other provisions of
this Certificate of Incorporation, or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of
voting stock required by law, this Certificate of Incorporation or any
Certificate of Designation, the affirmative vote of the holders of at
least two-thirds of the voting power of all of the then outstanding
shares of the voting stock, voting together as a single class, shall
be required to alter, amend, or repeal this Article Eleven."
8. The paragraph from Article Twelve immediately following Section
A(1)(i)-(v) shall be amended to read as shown below.
"shall require the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of all the then outstanding shares
of capital stock of the corporation entitled to vote generally in the
election of directors (hereinafter in this Article Twelve referred to
as the "Voting Stock"), voting together as a single class (it being
understood that, for purposes of this Article Twelve, each share of
stock shall have the number of votes granted to it pursuant to Article
Four of this Certificate of Incorporation or any designation of the
rights, powers and preferences of any class or series of stock made
pursuant to Article Four (a "Certificate of Designation"). Such
affirmative vote shall be required notwithstanding any other
provisions of this Certificate of Incorporation or any provision of
law or of any agreement with any national securities exchange which
might otherwise permit a lesser vote or no vote, but such affirmative
vote shall be required in addition to any affirmative vote of the
holders of any particular class or series of the Voting Stock required
by law, this Certificate of Incorporation or any Certificate of
Designation."
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<PAGE> 1
EXHIBIT 3.6
AMENDED
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
A. H. BELO CORPORATION
A. H. Belo Corporation (the "Corporation"), pursuant to Sections 103
and 151 of the General Corporation Law of the State of Delaware, hereby
certifies the following:
(1) No shares of the series A Junior Participating Preferred Stock
of A. H. Belo Corporation have been issued.
(2) Pursuant to the authority vested in the Board of Directors by
the Corporation's Certificate of Incorporation, the Board of Directors, at a
meeting duly convened and held on the 4th day of May, 1988, adopted the
following resolution:
RESOLVED, that the Certificate of Designation of Series A Junior
Participating Preferred Stock of A. H. Belo Corporation is hereby
amended pursuant to the amendments attached hereto as Appendix A.
(3) The Series A Junior Participating Preferred Stock designated
pursuant to a Certificate of Designation dated April 16, 1987, and filed with
the Secretary of State of the State of Delaware on April 22, 1987, shall
continue to be designated "Series A Junior Participating Preferred Stock."
IN WITNESS WHEREOF, the Certificate of Amendment to Certificate of
Designation is executed on behalf of the Corporation as of May 4, 1988.
A. H. Belo Corporation
Attest:
By: /s/ MICHAEL J. McCARTHY By: /s/ ROBERT W. DECHERD
----------------------------- ----------------------------------
Title: Secretary Title: Chairman of the Board and CEO
------------------- ------------------------------
<PAGE> 2
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
On the 29th day of April, 1988, before me personally appeared
Robert W. Decherd, the Chairman of A. H. Belo Corporation, to me known to be the
person described in and who executed the foregoing instrument, and acknowledged
that he executed the same in the capacity indicated, that it is the act and
deed of such corporation, and that the facts stated therein are true.
/s/DEAN H. BLYTHE
---------------------
Notary Public
My commission expires: Dean H. Blythe
3-12-90 ---------------------
- ---------------------- Print Name
<PAGE> 3
APPENDIX A
Amendments to Certificate
of Designation
of
Series A Junior Participating Preferred Stock
of
A. H. Belo Corporation
The Certificate of Designation of the Series A Junior Participating
Preferred Stock of A. H. Belo Corporation dated April 16, 1987, and filed with
the Secretary of State of the State of Delaware on April 22, 1987, is amended
as follows:
1. Section I is amended by adding a new sentence at the end of
this Section to read as follows:
"For purposes of this Certificate of Designation, 'Common Stock' shall
mean the common stock, par value $1.67 per share, of the Corporation,
or if such Common Stock shall be issued and outstanding in series, the
Series A Common Stock, Series B Common Stock, and/or Series C Common
Stock."
2. The first sentence of Section VIII (C) is amended in its
entirety to read as follows:
"(C) Each share of Series A Preferred Stock to be redeemed pursuant
to Paragraph A of this Section VIII shall be redeemed at a redemption
price equal to, subject to the provision for adjustment hereinafter
set forth, one hundred times the 'current per share market price' of
Series A Common Stock, or if no Series A Common Stock is outstanding,
the Common Stock, on the date of the mailing of the Notice of
Redemption plus an amount equal to accrued and unpaid dividends on
such shares (whether or not earned or declared) to the redemption
date."
3. The second paragraph of Section VIII (C) is amended in its
entirety to read as follows:
"The 'current per share market price' of the Common Shares on any date
shall be deemed to be the average of the daily closing prices per
share of such Common Shares (or, in the event issued and outstanding,
Series A Common Shares) for the 10 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case reported in
the principal consolidated transaction reporting system with respect
to securities listed or
<PAGE> 4
admitted to trading on the New York Stock Exchange or, if the Common
Shares (or, in the event issued and outstanding, Series A Common
Shares) are not listed or admitted on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Common Shares (or, in the event issued and
outstanding, Series A Common Shares) are listed or admitted to
trading, or, if the Common Shares (or, in the event issued and
outstanding, Series A Common Shares) are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or
such other system then is use, or, if on any such date the Common
Shares (or, in the event issued and outstanding, Series A Common
Shares) are not quoted by any organization, the average of the closing
bid and asked prices as furnished by a professional market maker making
a market in the Common Shares (or, in the event issued and outstanding,
Series A Common Shares) selected by the Board of Directors of the
Corporation. If on such date no such market maker is making a market
in the Common Shares (or, in the event issued and outstanding, Series A
Common Shares) the fair value of the Common Shares (or, in the event
issued and outstanding, Series A Common Shares) on such date as
determined in good faith by the Board of Directors of the Corporation
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Shares (or,
in the event issued and outstanding, Series A Common Shares) are listed
or admitted to trading is open to the transaction of business or, if
the Common Shares (or, in the event issued and outstanding, Series A
Common Shares) are not listed or admitted to trading on any national
securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of Texas are not authorized
or obligated by law or executive order to close.
2
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF DESIGNATION
OF
SERIES B COMMON STOCK
OF
A.H. BELO CORPORATION
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
A. H. Belo Corporation, a corporation organized and existing under the
laws of the State of Delaware, does hereby certify that, pursuant to the
authority vested in its Board of Directors by Article Four of the corporation's
Certificate of Incorporation, the Board of Directors, at a meeting duly
convened and held on the 4th day of May, 1988, adopted the following resolution
creating a series of its Common Stock, par value $1.67 per share, designated as
Series B Common Stock:
RESOLVED, that a series of the class of the corporation's
authorized Common Stock, par value $1.67 per share, be and hereby is
created, and that the designation and amount thereof and the voting
power, preferences and relative, participating, optional and other
special rights of such series, and the qualifications, limitations and
restrictions thereof are as set forth on Appendix A attached hereto.
IN WITNESS WHEREOF, A. H. Belo Corporation has caused this Certificate
of Designation to be duly executed by its Chairman of the Board and attested to
by its Secretary, and caused its corporate seal to be affixed hereto as of the
4th day of May, 1988.
A. H. BELOW CORPORATION
By: /s/ ROBERT W. DECHERD
---------------------------------
Chairman of the Board
[Corporate Seal]
ATTEST: /s/ MICHAEL J. McCARTHY
-----------------------------
Secretary
<PAGE> 2
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
On the 29th day of April, 1988, before me personally appeared Robert
W. Decherd, the Chairman of A. H. Belo Corporation, to me known to be the
person described in and who executed the foregoing instrument, and acknowledged
that he executed the same in the capacity indicated, that it is the act and
deed of such corporation, and that the facts stated therein are true.
/s/ DEAN H. BLYTHE
----------------------------------
Notary Public
My Commission Expires: Dean H. Blythe
3-12-90 ----------------------------------
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2
<PAGE> 3
APPENDIX A
DESIGNATION OF SERIES B COMMON STOCK
Section 1. Designation and Amount. The shares of such series shall be
designated as the "Series B Common Stock" (the Series B Stock") and the number
os shares constituting such series shall be fifteen million (15,000,000), which
number may be increased or decreased by the Board of Directors without a vote
of stockholders; provided, however, that such number may not be increased above
the number of shares of Series B Stock permitted pursuant to the provisions of
Article Four, Section 1 of the Certificate of Incorporation, or decreased below
the number of shares of Series B Stock then outstanding.
Section 2. Voting Rights. Each share of Series B Stock shall entitle
the holder thereof to ten (10) votes on all matters submitted to a vote of
stockholders. Except as set forth herein and in the Certificate of
Incorporation, all actions submitted to a vote of stockholders shall be voted
on by the holders of Series A Common Stock (the "Series A Stock"), and Series B
Stock (as well as the holders of any other series of Common Stock and any
series of Preferred Stock, if any, entitled to vote thereon), voting together
as a single class. The holders of shares of Series B Stock shall be entitled to
vote separately as a class with respect to (i) amendments to the Certificates
of Incorporation that alter or change the powers, preferences, or special
rights of the Series B Stock so as to affect them adversely, and (ii) such
other matters as require class votes under the General Corporation Law of the
State of Delaware.
Section 3. Dividends. If and when dividends on the Series A Stock,
Series B Stock or Series C Common Stock (if any) are declared payable from time
to time by the Board of Directors as provided in Article Four, Section 2,
subparagraph C.2 of the Certificate of Incorporation, whether payable in cash,
in property, or in shares of stock of the corporation, the holders of Series A
Stock, the holders of Series B Stock, and the holders of Series C Common Stock
(if any) shall be entitled to share equally, on a per share basis, in such
dividends, subject to the limitations described below. Notwithstanding the
above, dividends declared and payable in cash on shares of (i) Series A Stock
may be greater than dividends declared and payable in cash on shares of Series
B Stock or on shares of Series C Common Stock (if any), (ii) Series C Common
Stock (if any) may be greater than dividends declared and payable in cash on
shares of Series A Stock or on shares of Series B Stock, and (iii) Series B
Stock may be greater than dividends declared and payable in cash on shares of
Series C Common Stock (if any). Except for dividends permitted by Article Four,
Section 2, subparagraph C.1 of the Certificate of Incorporation, if dividends
are declared that are payable in shares of Series A Stock, Series B Stock, or
Series C Common Stock, such dividends shall be payable at the same rate on all
series of stock and the dividends payable in shares of Series A Stock shall be
payable only to holders of Series A Stock, the
<PAGE> 4
dividends payable in shares of Series B Stock be payable only to holders of
Series B Stock, and the dividends payable in shares of Series C Common Stock
(if any) shall be payable only to holders of Series C Common Stock (if any). If
the corporation shall in any manner split, divide, or combine the outstanding
shares of Series A Stock, Series B Stock, or Series C Common Stock (if any),
the outstanding shares of the other such series of Common Stock shall be
proportionally split, divided, or combined in the same manner and on the same
basis as the outstanding shares of Series A Stock, Series B Stock, or Series C
Common Stock (if any), as the case may be, that have been split, divided, or
combined.
Subject to provisions of law and the preferences of the Preferred
Stock and of any other stock ranking prior to the Series A Stock, the Series B
Stock, or the Series C Common Stock (if any) as to dividends, the holders of
the Series A Stock, the Series B Stock and the Series C Common Stock (if any)
shall be entitled to received dividends at such times and in such amounts as
may be determined by the Board of Directors and declared out of any funds
lawfully available therefor, and shares of Preferred Stock of any series shall
not be entitled to share therein except as otherwise expressly provided in the
resolution or resolutions of the Board of Directors providing for the issuance
of such series.
Section 4. Conversion of Series B Stock by Holder.
A. The holder of each share of Series B Stock shall have
the right at any time, or from time to time, at such holder's option,
to convert such shares into one fully paid and nonassessable share of
Series A Stock on and subject to the terms and conditions hereinafter
set forth.
B. In order to exercise the conversion privilege, the
holder of any shares of Series B Stock to be converted shall present
and surrender the certificate or certificates representing such shares
during usual business hours at any office or agency of the corporation
maintained for the transfer of Series B Stock and shall deliver a
written notice of the election of the holder to convert the shares
represented by such certificate or any portion thereof specified in
such notice. Such notice shall also state name or names (with address)
in which the certificate or certificates for shares of Series A Stock
issuable on such conversion shall be registered. If required by the
corporation, any certificate for shares surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory
to the corporation, duly executed by the holder of such shares or his
duly authorized representative. Each conversion of shares of Series B
Stock shall be deemed to have been effected on the date (the
"conversion date") on which to certificate or certificates
representing such shares shall have been surrendered and such notice
and any required instruments of transfer shall have been received as
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<PAGE> 5
aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Series A Stock shall be
issuable on such conversion shall be, for the purpose of receiving
dividends and for all other corporate purposes whatsoever, deemed to
have become the holder or holders of record of the shares of Series A
Stock represented thereby on the conversion date.
C. As promptly as practicable after the presentation and
surrender for conversion, as herein provided, of any certificate for
shares of Series B Stock, the corporation shall issue and deliver at
such office or agency, to or upon the written order of the holder
thereof, certificates for the number of shares of Series A Stock
issuable upon such conversion. Subject to the provisions of Section 6
below, in case any certificate for shares of Series B Stock shall be
surrendered for conversion of only a part of the shares represented
thereby, the corporation shall deliver at such office or agency, to or
upon the written order of the holder thereof, a certificate or
certificates for the number of shares of Series B Stock represented by
such surrendered certificate that are not being converted. The
issuance of certificates for shares of Series A Stock issuable upon
the conversion of shares of Series B Stock by the registered holder
thereof shall be made without charge to the converting holder of any
tax imposed on the corporation in respect of the issue thereof. The
corporation shall not, however, be required to pay any tax that may be
payable with respect to any transfer involved in the issue and
delivery of any certificate in a name other than that of the
registered holder of the shares being converted, and the corporation
shall not be required to issue or deliver any such certificate unless
and until the person requesting the issue thereof shall have paid to
the corporation the amount of such tax or has established to the
satisfaction of the corporation that such tax has been paid.
D. Upon any conversion of shares of Series B Stock into
shares of Series B Stock into shares of Series A Stock pursuant
hereto, no adjustment with respect to dividends shall be made; only
those dividends shall be payable on shares of Series A Stock issued
upon such conversion as have been declared and are payable to holders
of record of shares of Series A Stock on or after such conversion
date.
E. In case of any consolidation or merger of the
corporation as a result of which the holders of Series A Stock shall
be entitled to receive cash, stock, other securities, or other
property with respect to or in exchange for Series A Stock or in case
of any sale or conveyance of
-3-
<PAGE> 6
all or substantially all of the property or business of the
corporation as an entirety, a holder of a share of Series B Stock
shall have the right thereafter to convert such share into the kind
and amount of cash, shares of stock, and other securities and
properties receivable upon such consolidation, merger, sale, or
conveyance by a holder of one share of Series A Stock and shall have
no other conversion rights with regard to such share. The provisions
of this paragraph 4.E shall similarly apply to successive
consolidations, mergers, sales or conveyances.
F. Shares of the Series B Stock converted into Series A
Stock shall be retired and shall resume the status of authorized but
unissued shares of Series B Stock.
G. Such number of shares of Series A Stock as may from
time to time be required for such purpose shall be reserved for
issuance upon conversion of outstanding shares of Series B Stock and
of shares of Series B Stock issuable upon exercise of options.
Section 5. Termination of Series B Stock.
A. All outstanding shares of Series B Stock shall
automatically, without any further act or deed on the part of the
corporation or any other person, be converted into shares of Series A
Stock on a share-for-share basis.
(a) if, as a result of the existence of the Series B
Stock, the Series A Stock is excluded from trading on the New York
Stock Exchange, the American Stock Exchange, and other national
securities exchanges and is also excluded from quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any other national quotation system then in use; or
(b) at the option of the corporation:
(i) at any time when the Board of Directors and
the holders of a majority of the outstanding
shares of the Series B Stock approve the
conversion of all of the Series B Stock into
Series A Stock; or
(ii) if the Board of Directors, in its sole
discretion, elects to effect a conversion (X)
in order to avoid the exclusion of the Series
A Stock from trading on a national securities
exchange or the exclusion of the Series A
Stock from quotation on NASDAQ or such other
national quotation system then in use, or (Y)
due to requirements of federal or
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<PAGE> 7
state law, in any such case, as a result of
the existence of the Series B Stock.
B. Upon any automatic conversion of Series B Stock
pursuant to this Section 5, each certificate representing outstanding
shares of Series B Stock shall thereafter be deemed to represent a
like number of shares of Series A Stock.
Section 6. Limitations on Transfer of Series B Stock.
A. No record or beneficial owner of shares of Series B
Stock may transfer, and the corporation shall not register the
transfer of, such shares of Series B Stock , whether by sale,
assignment, gift, bequest, appointment, or otherwise, except to a
"Permitted Transferee" as provided herein.
(a) in the case of a holder of record of the Series B
Stock (the "Series B Holder") who is a natural person and the
beneficial owner of the shares of Series B Stock to be transferred,
Permitted Transferees shall include only the following:
(i) The spouse of such Series B Holder,
any lineal descendant of a great-
grandparent of such Series B Holder,
or any spouse of such lineal
descendant (herein collectively
referred to as "such Series B
Holder's Family Members");
(ii) The trustee or trustees of a trust
(including a voting trust) for the
sole benefit of such Series B Holder
and/or one or more of such Series B
Holder's Family Members, except that
such trust may also grant a general
or special power of appointment to
one or more of such Series B
Holder's Family Members and may
permit trust assets to be used to
pay taxes, legacies, and other
obligations of the Trust or the
estates of one or more of such
Series B Holder's Family Members
payable by reason of the death of
any of such Family Members;
provided, however, if at any time
such trust ceases to meet the
requirements of this subparagraph
(ii), all shares of Series B Stock
then held by such trustee or
trustees shall immediately and
automatically, without further act
or deed on the part of the
corporation or any other person, be
converted into Series A Stock on a
share-for-share basis, and stock
certificates formerly representing
such shares of Series B Stock shall
thereupon and thereafter be deemed
to represent a like number of shares
of Series A Stock;
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<PAGE> 8
(iii) A corporation wholly owned by such
Series B Holder and/or such Series B
Holder's Family Members or a
partnership in which all of the
partners are, and all of the
partnership interests are owned by,
such Series B Holder and/or such
Series B Holder's Family Members,
provided that if by reason of any
change in the ownership of such
stock or partners or partnership
interests, such corporation or
partnership would no longer qualify
as a Permitted Transferee of such
Series B Holder, all shares of
Series B Stock then held by such
corporation or partnership shall
immediately and automatically,
without further act or deed on the
part of the corporation or any other
person, be converted into shares of
Series A Stock on a share-for-share
basis, and stock certificates
formerly representing such shares of
Series B Stock shall thereupon and
thereafter be deemed to represent a
like number of shares of Series A
Stock;
(iv) An organization established by the
Series B Holder or such Series B
Holder's Family Members,
contributions to which are
deductible for federal income,
estate, or gift tax purposes (a
"Charitable Organization") and a
majority of whose governing board at
all times consists of the Series B
Holder and/or one or more of the
Permitted Transferees of such Series
B Holder, or any successor to such
Charitable Organization meeting such
definition; provided that if by
reason of any change in the
composition of the governing board
of such Charitable Organization,
such Charitable Organization shall
no longer qualify as a Permitted
Transferee of such Series B Holder,
all shares of Series B Stock then
held by such Charitable Organization
shall immediately and automatically,
without further act or deed on the
part of the corporation or any other
person, be converted into shares of
Series A Stock on a share-for-share
basis, and stock certificates
formerly representing such shares of
Series B Stock shall thereupon and
thereafter be deemed to represent
the like number of shares of Series
A Stock; and
(v) The executor, administrator, or
personal representative of the
estate of a deceased Series B Holder
or the guardian or conservator of a
Series B Holder adjudged disabled or
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<PAGE> 9
incompetent by a court of competent
jurisdiction, acting in his capacity as such.
(b) In the case of a Series B Holder holding the shares
of Series B Stock as trustee pursuant to a trust other than a trust
described in subparagraph (c) below, permitted Transferees shall
include only the following:
(i) any successor trustee of such trust who is
described in subparagraph (b)(ii) below, or
who is not and will not thereby become, an
Interested Stockholder of the corporation (as
defined in Article Twelve, Section C.(2) of
the Certificate of Incorporation); and
(ii) the person who established such trust and any
Permitted Transferee of such person,
determined in accordance with paragraph (a)
above.
(c) In the case of a Series B Holder holding the shares
of Series B Stock as trustee pursuant to a trust that was irrevocable
on the Record Date (a "Transferor Trust"), Permitted Transferees shall
include only the following:
(i) any successor trustee of such Transferor
Trust who is described in subparagraph (c)(ii) or (iii) below,
or who is not, and will not thereby become, an Interested
Stockholder of the corporation (as defined in Article Twelve,
Section C.(2) of the Certificate of Incorporation);
(ii) any person to whom or for whose benefit the
principal or income may be distributed either during or at the
end of the term of such Transferor Trust whether by power of
appointment or otherwise, and any Permitted Transferee of such
person, determined pursuant to paragraph (a) above; and
(iii) any Family Member of the person who
established such Transferor Trust.
(d) In the case of a record (but not beneficial) owner of
the Series B Stock as nominee for the person who was the beneficial
owner thereof on the Record Date (as defined below), Permitted
Transferees shall include only such beneficial owner and a Permitted
Transferee of such beneficial owner.
(e) In the case of a Series B Holder that is a
partnership and the beneficial owner of the shares of Series B Stock
proposed to be transferred, Permitted Transferees shall include only:
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<PAGE> 10
(i) any partner of such partnership who
was also a partner of such partnership on the Record
Date;
(ii) any person transferring shares of
Series B Stock to such partnership after the Record
Date (provided, however, that such transferor may not
receive shares of Series B Stock in excess of the
shares transferred by the transferor to such
partnership); and
(iii) any Permitted Transferee of such
person referred to in subparagraph (e)(i) or (e)(ii)
above (not in excess of the number of shares that
such person is entitled to receive pursuant to this
subparagraph (e)).
(f) In the case of a Series B Holder that is a
corporation and the beneficial owner of the shares proposed to be
transferred, Permitted Transferees shall include only:
(i) any stockholder of such corporation
on the Record Date who receives shares of Series B
Stock pro rata to his stock ownerships in such
corporation through a dividend or through a
distribution made upon liquidation of such
corporation;
(ii) any person transferring shares of
Series B Stock to such corporation after the Record
Date (provided, however, that such transferor may not
receive shares of Series B Stock in excess of the
shares transferred by the transferor to such
corporation);
(iii) any Permitted Transferee of such
stockholder or person referred to in subparagraph
(f)(i) or (ii) above (not in excess of the number of
shares that such stockholder of person is entitled to
receive pursuant to this subparagraph (f)); and
(iv) the survivor of a merger or
consolidation of such corporation if those persons
who owned beneficially sufficient shares entitled to
elect at least a majority of the entire board of
directors of such constituent corporation immediately
prior to the merger or consolidation own beneficially
sufficient shares entitled to elect at least a
majority of the entire board of directors of the
surviving corporation, provided that if by reason of
any change in the ownership of such stock such
surviving corporation would no longer qualify as a
Permitted Transferee, all shares of Series B Stock
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<PAGE> 11
then held by such surviving corporation shall
immediately and automatically, without further act or
deed on the part of the corporation or any other
person, be converted into shares of Series A Stock on
a share-for-share basis, and stock certificates
formerly representing such shares of Series B Stock
shall thereupon and thereafter be deemed to represent
a like number of shares of Series A Stock.
For purposes of this subparagraph (f), a mutual company shall
be treated as a corporation, and the persons holding voting interest
therein shall be treated as stockholders.
(g) In the case of a Series B Holder who is the executor
or administrator of the estate of a deceased Series B Holder or
guardian or conservator of the estate of a disabled or incompetent
Series B Holder, Permitted Transferees shall include only a Permitted
Transferee of such deceased, disabled or incompetent Series B Holder.
B. Notwithstanding anything to the contrary set forth
herein, any Series B Holder may pledge such holder's shares of Series
B Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to the pledgee, provided that
such shares shall not be transferred to or registered in the name of
the pledgee and shall remain subject to the provisions of this Section
6. In the event of foreclosure or other similar action by the pledgee,
such pledged shares of Series B Stock may only be transferred to a
Permitted Transferee of the pledgor or converted into shares of Series
A Stock, as the pledgee may elect.
C. For purposes of this Section 6:
(a) The relationship of any person that is
derived by or through legal adoption shall be considered a
natural one;
(b) Each joint owner of shares of Series B Stock
shall be considered a Series B Holder of such shares;
(c) A minor for whom shares of Series B Stock are
held pursuant to a Uniform Gifts to Minors Act or similar law
shall be considered a Series B Holder of such shares;
(d) Unless otherwise specified, the term "person"
means both natural persons and legal entities, and
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<PAGE> 12
(e) The "Record Date" is the date for determining
the persons to whom the Series B Stock is initially
distributed by the corporation as a dividend on the Common
Stock.
D. Any purported transfer of shares of Series B Stock
not permitted hereunder shall result in the conversion of the
transferee's shares of Series B Stock into shares of Series A Stock,
effective on the date on which certificates representing such shares
are presented for transfer on the stock transfer record books of the
corporation; provided, however, that if the corporation should
determine that such shares were not so presented for transfer within
20 days after the date of such sale, transfer, assignment, or other
disposition, the transfer date shall be the actual date of such sale,
transfer, assignment, or other dispositions determined in good faith
by the Board of Directors or its appointed agent. The corporation may,
as a condition to the transfer or the registration of transfer of
shares of Series B Stock to a purported Permitted Transferee, require
the furnishing of such affidavits or other proof as it deems necessary
to establish that such transferee is a Permitted Transferee. If no
indication to the contrary is supplied at the time shares of Series B
Stock are presented for transfer, the transfer shall be presumed by
the corporation to be a transfer to a person other than a Permitted
transferee.
Section 7. Registration of Series B Stock.
A. Shares of Series B Stock shall be registered in the
name(s) of the beneficial owner(s) thereof (as hereafter defined) and
not in-street" or "nominee" names; provided, however, certificates
representing shares of Series B Stock issued as a stock dividend on
the corporation's then outstanding Common Stock may be registered in
the same name and manner as the certificates representing the shares
of Common Stock with respect to which the shares of Series B Stock
were issued. For the purposes of Sections 6 and 7 hereof, the term
"beneficial owner(s)" of any shares of Series B Stock shall mean the
person or persons who possess the power to vote or dispose, or to
direct the voting or disposition, of such shares and "beneficially
owned" shares shall refer to shares owned by such a beneficial owner.
B. The corporation shall note on the certificates
representing the shares of Series B Stock that there are restrictions
on transfer and registration of transfer imposed by Sections 6 and 7
hereof.
Section 8. Priority of Preferred Stock. The Series B Stock is
subject to all the powers, rights, privileges, preferences, and priorities of
the Preferred Stock as may be stated in the Certificate of Incorporation and as
shall be stated and expressed in any resolution or resolutions adopted by the
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<PAGE> 13
Board of Directors providing for the issuance of any series of Preferred Stock,
pursuant to authority expressly granted to and vested in it by the provisions
of Article Four of the Certificate of Incorporation.
Section 9. Liquidation, Dissolution, or Winding Up. In the
event of any liquidation, dissolution, or winding up of the corporation,
whether voluntary or involuntary (sometimes referred to as liquidation), after
payment or provision for payment of the debts and other liabilities of the
corporation and the preferential amounts to which the holders of any stock
ranking prior to the Series A Stock, the Series B Stock, and the Series C
Common Stock (if any) in the distribution of assets shall be entitled upon
liquidation, the holders of the Series A Stock, the Series B Stock, and the
Series C Common Stock (if any) and the holders of any other stock ranking on
the parity with the Series A Stock, the Series B Stock, and the Series C Common
Stock (if any) in the distribution of assets upon liquidation shall be entitled
to share pro rata in the remaining assets of the corporation according to their
respective interests.
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<PAGE> 1
EXHIBIT 10.1(1)
CONTRACTS RELATING TO TELEVISION BROADCASTING
The Company has renegotiated its affiliation agreements with ABC (the
"Network"), resulting in an increase in the compensation paid by the Network
to the Company in return for long-term extension of each of the agreements.
Final documentation of the new ABC agreements has not been completed,
although the Company is receiving its increased compensation under the new
agreements.
Attached is the most recent draft of the renegotiated Agreement for
Affiliation (the "Agreement") between WFAA-TV in Dallas, Texas and ABC. The
Company anticipates that the final version of the Agreement will not materially
differ from the attached draft.
<PAGE> 2
PRIMARY TELEVISION AFFILIATION AGREEMENT
WFAA-TV, Inc.
Communications Center
606 Young Street
Dallas, TX 75202-4810
TELEVISION STATION: WFAA - Dallas, TX
Gentlemen:
The following shall constitute the agreement between American Broadcasting
Companies, Inc. ("ABC" or "we") and WFAA-TV, Inc. ("you"), in order that your
station may continue to serve the public interest, convenience and necessity.
We and you hereby mutually agree upon the following plan of network cooperation
which shall replace the affiliation agreement between WFAA Television, Inc. and
us dated September 21, 1989 (and subsequently assigned to WFAA-TV, Inc.), as
amended:
I. NETWORK AFFILIATION AND PROGRAM SERVICE
A. PRIMARY AFFILIATION. You agree to serve as our primary
affiliate to broadcast Network Television Programs, in the community to which
your station is licensed by the Federal Communications Commission, subject to
the conditions and limitations set forth herein. As used in this Agreement,
Network Television Programs means television programs which are part of the
network schedule for the then current September to September television season,
broadcast on a national television basis and in the time period established for
such broadcast by ABC. (Network
<PAGE> 3
2
Television Programs will also be referred to herein as "network programs,"
"television programs," "programs" or "programming" or in the singular of such
terms.)
B. FIRST CALL RIGHTS. To enable you to serve as our primary
affiliate, we agree to offer you first call on the right to broadcast Network
Television Programs, in the time period established by ABC for their broadcast,
in the community to which your station is licensed by the Federal
Communications Commission ("First Call Rights"), for reception by the general
public in places to which no admission is charged. Notwithstanding the
foregoing, ABC shall have the right to authorize any television broadcasting
station regardless of the community to which it is licensed by the FCC, to
broadcast any network presentation of a subject we deem to be of immediate
national significance including, but not limited to, a Presidential address.
1. You agree that, within 15 days of the date of our offer of a
First Call Right to a regularly scheduled network program, you
will advise us of your acceptance (if requested to do so by
the terms of our offer) or rejection. With respect to any
network program not regularly scheduled, you will advise us of
your acceptance or rejection of our offer of a First Call
Right within 72 hours (exclusive of Saturdays, Sundays and
holidays) after such offer has been received at your
<PAGE> 4
3
station. However, if the first broadcast referred to in our
offer is scheduled to occur within less than 15 days after the
date of our offer with respect to regularly scheduled network
programs or less than 72 hours after our offer has been
received at your station with respect to network programs not
regularly scheduled, you shall notify us of your acceptance or
rejection of such offer as promptly as possible, but in no
event after the first broadcast time specified in such offer.
Acceptance by you of our offer of a First Call Right shall
constitute your agreement to broadcast subject network program
in accordance with the terms of this Agreement and of our
offer to you. As an ABC primary affiliate, you are obligated
to accept the substantial majority of the ABC network programs
offered to you. Your failure to do so shall constitute a
material breach of this Agreement entitling ABC, in addition
to all other remedies, to terminate this Agreement on fourteen
(14) days written notice to you.
2. You will be offered "First Call Rights" with respect to:
a. Network Sponsored Programs. "Network sponsored
programs", as used in this Agreement, shall mean those Network
Television Programs which contain one or more commercial
announcements paid for by or on behalf of one
<PAGE> 5
4
or more ABC Network advertisers.
You agree to broadcast network sponsored programs in their
entirety, including but not limited to the network commercial
announcements ordered for your station, network
identifications, program promotional material or credit
announcements contained in such programs which you accept,
without interruption or deletion or addition of any kind.
Notwithstanding the foregoing, you may substitute other ABC
promotional announcements in lieu of program promotional
material which is inaccurate as it pertains to your station.
It is also understood that no commercial announcement,
promotional announcement or public service announcement will
be broadcast by you during any interval within a network
program designated by ABC as being for the sole purpose of
making a station identification announcement.
b. Network Sustaining, Cooperative and Spot Carrier
Programs.
i) We will from time to time offer you live or
recorded Network Television Programs identified as
sustaining programs, cooperative programs or spot
carrier programs. Except as set forth below in
subparagraphs (ii) and (iii), you agree to
<PAGE> 6
5
broadcast such programs which you accept in their
entirety without interruption or deletion or addition
of any kind.
ii) The network sustaining programs which we may
offer to you may not, without our prior written
consent, be sold by your station for commercial
sponsorship or interrupted for commercial
announcements or used for any purpose other than
sustaining broadcasting.
iii) You may carry the cooperative or spot carrier
programs on the same basis as regular sustaining
programs or you may offer them for commercial
sponsorship on terms and conditions specified by us
at the time such programs are offered to you.
C. PROGRAM DELIVERY. By means satisfactory to us, we will
arrange, at our own expense, for programs to be delivered to your station.
II. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 1st day
of September, 1994, and shall continue until 3:00 AM, NYT, on the first day of
September, 2004.
<PAGE> 7
6
III. NETWORK STATION COMPENSATION
A. You will be entitled to receive an Annual Compensation
Guarantee (net of affiliation fees and payable monthly in equal installments)
as set forth in subparagraph B for (i) the first year of this agreement and
(ii) for each year thereafter during the term hereof provided that the
following conditions are satisfied in the year immediately preceding each such
year including the first year (subject to your station's rights to reject or
substitute programming pursuant to paragraphs VI(C) (a) and (b) of this
Agreement):
1. your station maintains the same level of clearances of ABC
network programs as it maintained in the 1993-1994 television season
(i.e., the last two quarters of 1993 and the first two quarters of
1994) (the "1994 Season");
2. your station's preemption levels for network programming do
not exceed such preemption levels during the 1994 Season; and
3. Nightline will be cleared on a "live" basis beginning no later
than January 2, 1995;
B. The Annual Compensation Guarantee shall be Four Million Eight
hundred Thousand ($4,800,000) Dollars, provided, that for any period when
Nightline is cleared on a live basis, the Annual
<PAGE> 8
7
Compensation Guarantee shall be Five Million Eight Hundred Thousand ($5,800,000)
Dollars.
C. Your entitlement to the annual compensation guarantee in any
particular year after the first year hereof is dependent on your satisfaction
for the immediately preceding year (including the first year hereof) of the
conditions set out immediately above in subparagraph A. For any year following
a year in which such conditions have been satisfied, your compensation will be
in the amount of the guarantee (plus any additional compensation due under
subparagraph D immediately below). For any year following a year in which such
conditions have not been satisfied, your compensation will be determined
instead solely by the formula set forth in Schedule A attached hereto and made
a part hereof.
D. For any year (including the first year hereof) in which your
annual compensation will be in the amount of the guarantee, your compensation
under the formula set forth in Schedule A will be compared with the guarantee
and if such compensation is greater than such guarantee, you will be paid the
difference as additional compensation for that year.
E. During any year in which the annual compensation guarantee set
forth in subparagraphs A and B above does not apply, we reserve the right to
reevaluate and change at any time (a) the network station rate set forth in
Schedule A, (b) the percentage(s)
<PAGE> 9
8
set forth in the Table in Schedule A, or (c) your network weekly deduction, by
notice to you in writing to such effect ninety (90) days prior to the effective
date of any such change. If the effect of such changes would be to decrease
your annual network compensation under Schedule A by more than 25%, you may, if
you so elect, terminate this affiliation agreement by giving us prior written
notification within forty-five (45) days after the date of our notice to you.
IV. NETWORK NON-DUPLICATION PROTECTION
You shall be entitled to network non-duplication protection
provided as and to the extent set forth in Rider One to this Agreement, which
is attached hereto and made a part hereof.
V. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein,
shall mean the substitution of a special commercial in place of a regularly
scheduled network commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at
our request, furnish such personnel and equipment as may be necessary
to (a) broadcast cut-in announcements from your station alone, or (b)
originate from your station cut-in announcements to one or more other
stations, without regard to whether or not your station is requested
to broadcast said cut-in announcement(s). Notwithstanding anything
contained in
<PAGE> 10
9
this Agreement, you may refuse to broadcast any such cut-in
announcement in the community to which your station is licensed by the
FCC if, in your opinion, it is not in the public interest, convenience
or necessity, but you shall nevertheless furnish such personnel and
equipment as may be necessary to originate such cut-in announcement(s)
from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized
by us and then only in accordance with the instructions furnished to
you. You will be supplied, as promptly as possible, with the material
and instructions for these announcements.
3. We may cancel any order for cut-in announcements without
liability on our part, provided we do so upon not less than
twenty-four (24) hours' notice to you, failing which, we will pay you
the compensation you would have received if the announcement(s) had
continued as scheduled for twenty-four (24) hours following receipt by
you of such notice of cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the applicable table set
forth in Schedule B hereto and hereby made a part hereof.
<PAGE> 11
10
B. LOCAL TAG SERVICES. "Local Tag Announcements", as used herein,
shall mean a visual commercial announcement, made by you on behalf of a local
dealer of a network advertiser, not exceeding ten seconds of a one-minute
network commercial announcement or five seconds of a thirty-second network
commercial announcement projected by means of a slide and not utilizing more
than two (2) slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at
our request, furnish such personnel and equipment as may be necessary
to broadcast "local tag announcements".
2. Local tag announcements shall be broadcast in accordance with
our instructions. The network advertiser shall supply to you or
purchase from you, as promptly as possible, the slide(s) for each
local tag announcement. Local tag announcements shall not be
accompanied by oral announcements unless the network advertiser shall
make direct requests of you therefor and shall have assumed sole
responsibility for payment of such oral announcements.
3. We may cancel any order for local tag announcements without
liability on our part provided we do so upon not less than twenty-four
(24) hours' notice to you, failing which we will pay you the
compensation you would have received if the local tag announcement(s)
had continued as scheduled for
<PAGE> 12
11
twenty-four (24) hours following receipt by you of such notice of
cancellation.
4. For each local tag announcement which you broadcast, we shall
compensate you in accordance with the applicable table set forth in
Schedule B hereto and hereby made a part hereof.
VI. GENERAL
A. We may at any time, upon notice to you, substitute for any
scheduled network program another network program, except that if such other
network program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a network sponsored program in which event you shall be compensated
in accordance with Section III of this Agreement.
B. Nothing contained in this Agreement shall be construed to
prevent or hinder us, at any time upon notice to you as soon as practicable,
from cancellling one or more network programs, whether sponsored or sustaining,
in which event you shall receive no compensation for any such canceled network
sponsored program(s).
C. With respect to network programs offered or already accepted
pursuant to this Agreement, nothing herein contained shall be construed to
prevent or hinder you from exercising your rights
<PAGE> 13
12
under Federal Communications Commission rules to:
a) reject or refuse network programs which you reasonably believe
to be unsatisfactory, unsuitable or contrary to the public interest;
or
b) substitute a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected
or for which you have substituted a program which is of greater local or
national importance. With respect to programs already accepted hereunder, you
shall give us prompt telegraphic notification of any such refusal, rejection or
substitution no later than fourteen (14) days prior to the air date of such
programming, except where the nature of the substitute program makes such
notice impracticable (e.g., coverage of breaking news or other unscheduled
events), in which case you agree to give us as much advance notice as possible
under the circumstances. Such notice shall include a statement of the reason(s)
you believe that a rejected or refused network program is unsatisfactory,
unsuitable or contrary to the public interest, and/or that a substituted
program is of greater local or national importance.
In addition to all other remedies, we shall have the right, upon
thirty (30) days' notice, to terminate your "First Call
<PAGE> 14
13
Rights" on any series of Network programs already accepted hereunder and
withdraw all future episodes of that series if one or more individual program
episode(s) is pre-empted by you for any reason other than those set forth in (a)
and (b) above.
We shall also have the right, upon thirty (30) days' notice, to
terminate your "First Call Rights" concerning any series of Network programs
already accepted hereunder and to withdraw all future episodes of that series
if three or more individual program episodes are pre-empted by you in any
thirteen-week period, whether or not such pre-emptions are for the reasons set
forth in (a) and (b) above. Such thirteen-week periods shall be measured
consecutively from the first broadcast date of the program series in question.
We reserve the right not to offer you the "First Call Rights" for the
next broadcast season on any series of Network program as to which we have
terminated your "First Call Rights" and withdrawn future episodes of that
series pursuant to this Paragraph and which has been placed by ABC on another
station serving your market.
D. You will submit to us in writing, upon forms provided by us
for that purpose, such reports covering network programs broadcast by your
station as ABC may request from time to time. To verify your carriage of
network commercial announcements, identifications and program promotional
material, we may require
<PAGE> 15
14
delivery by you, within five (5) days of our request, copies of your official
station logs, air checks or broadcast tapes.
E. Neither you nor we shall incur any liability hereunder because
of our failure to deliver, or your failure to broadcast, any or all network
programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing to deliver
or broadcast.
F. You agree to notify us of any application made to the
Federal Communications Commission to modify your station's transmitter
location, power, frequency or hours of operation within ten (10) days of the
filing of such application. In the event that the transmitter location, power,
frequency or hours of operation of your station are changed at any time so that
your station is of less value to us as a network outlet than it is as of the
effective date of this agreement, including but not limited to, as a result of
additional overlap of your station's broadcast signal with that of another ABC
affiliate, we will have the right to terminate this Agreement upon thirty (30)
days' advance written notice.
G. Unless we exercise our right of termination set forth in this
paragraph, this Agreement shall be binding on any assignee or transferee of
your station's license. You agree not to assign or
<PAGE> 16
15
to transfer any of the rights or privileges granted to you under this Agreement
without our prior consent in writing, which consent shall not be unreasonably
withheld. You also agree that if any application is made to the Federal
Communications Commission pertaining to an assignment or a transfer of control
of your license, or any interest therein, you shall notify us in writing
immediately of the filing of such application. Except as to assignments or
transfers of control comprehended by Section 73.3540(f) of the Rules and
Regulations of the Federal Communications Commission, we shall have the
unilateral right to terminate this Agreement effective as of the effective date
of any assignment or transfer of control (voluntary or involuntary) of your
license or any interest therein, provided ABC shall have given you notice in
writing of such termination within thirty (30) days after we have been advised
that such application for assignment or transfer has been filed with the
Federal Communications Commission. If you fail to notify us of the assignment
or transfer of control of your station's license, we shall have the unilateral
right, as a non-exclusive remedy, to terminate this Agreement within thirty
(30) days of receiving notice of said assignment or transfer or control.
You agree that you shall not consummate any assignment or transfer of
control of your station's license until you have procured and delivered to us,
in form satisfactory to us, the acknowledgment of the proposed assignee or
transferee that, upon
<PAGE> 17
16
consummation of the assignment or transfer of control of your station's
license, the assignee or transferee will assume and perform this Agreement in
its entirety without limitation of any kind. You agree that in view of the
uniqueness of the plan of network cooperation set forth in this Agreement and
the fact that money damages would be inadequate to compensate ABC for the
breach of your obligations hereunder, in addition to all other remedies, ABC
shall be entitled to obtain equitable relief to enforce the obligations set
forth in this paragraph.
H. Your rights under this Agreement are limited to the First Call
Rights to Network Television Programs pursuant to the terms herein. You agree
not to authorize, cause, permit or enable the use of any program which we
supply to you herein for any purpose other than broadcasting by your station
pursuant to the terms herein, in the community to which your station is
licensed by the Federal Communications Commission, for reception by the general
public in places to which no admission is charged. You agree when you are
authorized to tape a program for subsequent broadcast that the recording will
be broadcast not more than once in its entirety and will be erased within six
(6) hours of use. All rights not specifically granted to you by this Agreement
with respect to the broadcast, exhibition or use of Network Television Programs
shall be retained by ABC.
<PAGE> 18
17
I. ABC will continue to offer your station substantially the same
local commercial availabilities at substantially the same times as are
presently offered to ABC affiliates generally, or will provide a comparable
economic benefit to the station.
J. Except with our prior written consent and except upon such
terms and conditions as we may impose, you agree not to authorize, cause,
permit or enable anything to be done whereby a recording on film, tape or
otherwise is made or a recording is broadcast, of a program which has been, or
is being, broadcast on our network, or a rebroadcast is made of the broadcast
transmission of your station during any hours when your station is broadcasting
a program provided by ABC.
K. With respect to any and all promotional material issued by you
or under your direction or control, you agree to abide by any and all
restrictions of which we advise you pertaining to the promotion of a network
program(s) scheduled to be broadcast by you in your community, including, but
without limitation, on-the-air promotion, billboards, and newspaper or other
printed advertisements, announcements or promotions.
L. You agree to maintain for your television station such
licenses, including performing rights licenses as now are or hereafter may be
in general use by television broadcasting stations and necessary for you to
broadcast the television programs which we
<PAGE> 19
18
furnish to you hereunder. We will clear all music in the repertory of ASCAP and
of BMI used in our network programs, thereby licensing the broadcasting of such
music in such programs over your station. You will be responsible for all music
license requirements for any commercial or other material inserted by you
within or adjacent to our network programs in accordance with this agreement.
M. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the
film or tape recordings necessary to deliver the programs to you. Such film or
tape recorded programs shall be used only for a single television broadcast
over your station. Positive prints of film or tape recorded programs are to be
shipped by us, shipping charges prepaid, and you agree to return to us or to
forward to such television station as we designate, shipping charges prepaid,
each print or copy of said film or tape recording received by you hereunder,
together with the original reels and containers furnished therewith. You will
return or forward all prints in the same condition as received by you, ordinary
wear and tear excepted, immediately after a single TV broadcast over your
station. In the event you damage a print of any film or tape recorded program
which is delivered to you, or fail to return or forward the original reels and
containers furnished therewith, as aforesaid, you agree to pay the cost of
replacing the complete print, original reels and/or containers as and when
billed by us.
<PAGE> 20
19
N. No inducements, representations or warranties except as
specifically set forth herein have been made by any of the parties to this
Agreement. This Agreement constitutes the entire contract between the parties
hereto and no provision thereof shall be changed or modified, nor shall this
Agreement be discharged in whole or in part, except by an agreement in writing,
signed by the party against whom the change, modification or discharge is
claimed or sought to be enforced; nor shall any waiver of any of the conditions
or provisions of this Agreement be effective and binding unless such waiver
shall be in writing and signed by the party against whom the waiver is
asserted, and no waiver of any provision of this Agreement shall be deemed to
be a waiver of any preceding or succeeding breach of the same or of any other
provision.
O. All notices, demands, requests or other communications which
may be or are required to be given or made by ABC or you pursuant to this
Agreement (except for our program offers and your notices of acceptance or
rejection, if required, of such offers and any other program information or
program administration communications) shall be delivered (postage or fee
prepaid) by first-class mail, express mail, express delivery service or by
facsimile transmission addressed as follows:
(a) If to you:
[station or owner]
[address, phone and fax numbers]
with a copy (which shall not constitute notice) to:
<PAGE> 21
20
[station attorney]
[address, phone and fax numbers]
(b) If to ABC:
Ms. Maureen Lesourd
Senior Vice President
Affiliate Relations
ABC Television Network
77 West 66 Street, 2nd Floor
New York, NY 10023-6298
Phone: 212-456-6493 / Fax: 212-456-7450
with a copy (which shall not constitute notice) to:
Roger Goodspeed, Esq.
Capital Cities/ABC, Inc.
Law & Regulation Department
77 West 66 Street, 16th Floor
New York, NY 10023-6298
Phone: 212-456-7593 / Fax: 212-456-6202
or to such other person, address or facsimile number as you or ABC may
designate by written notice.
P. This Agreement and all questions relating to its validity,
interpretation, performance, and enforcement (including, without limitation,
provisions concerning limitations of action), shall be governed by and
construed in accordance with the laws of the State of New York, notwithstanding
conflict-of-laws doctrines of any state or other jurisdictions to the contrary.
Q. Upon termination of this Agreement, the consent theretofore
granted to broadcast our network programs or use ABC logos or trademarks shall
be deemed immediately withdrawn and you shall have no further rights of any
nature whatsoever in such
<PAGE> 22
21
programs, logos or trademarks.
R. The parties hereto acknowledge that, in view of the uniqueness
of the plan of network cooperation set forth in this Agreement, in the event
that one party's obligations under this Agreement are not performed in
accordance with its terms, the other party would not have an adequate remedy at
law and therefore agree that each party hereto shall be entitled to specific
performance of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
S. You agree to indemnify and hold ABC and its parent
corporation, subsidiaries and their respective officers, directors, agents and
employees, successors and assigns harmless from and against any and all claims
made against us and all damages, liabilities, costs and expenses incurred as a
result of such claims, including reasonable attorney's fees, arising out of the
broadcast by ABC of any material supplied by you to ABC in accordance with this
Agreement, and we agree to indemnify and hold you harmless from and against any
and all claims made against you and all damages, liabilities, costs and
expenses incurred as a result of such claims, including reasonable attorney's
fees, arising out of the broadcast by you of any material provided by ABC to
you in accordance with this Agreement. It is understood that the foregoing
indemnities shall apply only with respect to materials that are broadcast
without change from the form and content in which such materials were
originally provided and in
<PAGE> 23
22
strict conformance to any instructions or limitations given by the party
providing the material. Each party will notify the other promptly of any
litigation or claim to which such indemnity applies and will cooperate fully in
the defense at the other party's request. The provisions of this paragraph
shall survive the expiration or sooner termination of this agreement.
T. Nothing in this Agreement shall create any partnership,
association, joint venture, fiduciary or agency relationship between ABC and
you.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this letter
enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By:
----------------------------------
Accepted this day of
-----
, 19
- ------------------ ---
Licensee: WFAA-TV, Inc.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 24
RIDER ONE
You shall be entitled to network non-duplication protection, as
defined by Rule 76.92 of the Federal Communications Commission Rules, as
follows:
a. The geographic zone of network non-duplication protection
shall be the Area of Dominant Influence ("ADI") (as defined by
Arbitron) in which your station is located, or any lesser zone
pursuant to any geographic restrictions contained in the Federal
Communications Commission rules and regulations, now or as
subsequently modified.
b. Network non-duplication protection shall extend to all ABC
television network programs that you broadcast in accordance with this
agreement. Protection shall not extend to individually pre-empted
programs of an otherwise cleared series.
c. Network non-duplication protection shall begin 48 hours prior
to the live time period designated by us for broadcast of that network
program by your station, and shall end at 12:00 Midnight on the
seventh day following that designated time period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
<PAGE> 25
SCHEDULE A
STATION COMPENSATION
(a) We will pay you within a reasonable period of time after the close of
each four or five week accounting period, as the case may be, for
broadcasting each network sponsored program or portion thereof
hereunder, except those specified in paragraph (b) hereof, which is
broadcast over your station during the live time period* therefor, the
amount resulting from multiplying the following:
(i) Your network station rate of (1) Fifteen
Thousand Fifty ($15,050) Dollars during any
period when your annual compensation
guarantee of Five Million Eight Hundred
Thousand ($5,800,000) Dollars is in effect,
(2) Thirteen Thousand One Hundred Twenty
($13,120) Dollars during any period when
your annual compensation guarantee of Four
Million Eight Hundred Thousand ($4,800,000)
Dollars is in effect, or (3) such other
applicable rate, pursuant to the terms
of Section III of the Agreement; by
(ii) the percentage set forth in the table below
opposite such applicable time period or such
other percentage applicable pursuant to the
terms of Section III of the Agreement; by
<PAGE> 26
(iii) the fraction of an hour substantially
occupied by such program or portion there;
of;
by
(iv) the fraction of the aggregate length of all
commercial availabilities** during such
program or portion thereof occupied by
network commercial announcements***.
* Live time period, as used herein, means the time
period or periods as specified by us in our initial
offer of a network program for the broadcast of such
program over your station.
** Commercial availability, as used herein, means a
period of time made available by us during a network
sponsored program for one or more network commercial
announcements or local cooperative commercial
announcements.
*** Network commercial announcement, as used herein,
means a commercial announcement broadcast over your
station during a commercial availability and paid for
by or on behalf of one or more of our network
advertisers, not including, however, announcements
consisting of billboards, credits, public service
announcements, promotional announcements, and
announcements required by law.
<PAGE> 27
For each network sponsored program or portion thereof, except those specified
in paragraph (b) hereof, which is broadcast by your station during a time
period other than the live time period therefor, we will pay you as if your
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 your station
broadcast such program or portion thereof is
less than that set forth opposite such live
time period, then we will pay you on the
basis of the time period during which your
station broadcast such program or portion
thereof.
(b) Payment For Other Programs
We will establish such compensation arrangements as we and you shall agree upon
prior to the expiration of the applicable periods of time for program
acceptance, as set forth in Paragraph I(B) of this affiliation agreement, for
all network sponsored programs broadcast by your station consisting of:
(i) Sports programs;
(ii) special events programs (including, but not
limited to, special news programs, awards
programs, entertainment specials and
miniseries);
<PAGE> 28
(iii) programs for which we specified a live time
period, which time period straddles any of
the time period categories in the table in
paragraph (a) above; and
(iv) any other programs which we may designate
from time to time.
(c) Deductions
(i) From the amounts we are to pay you for
station compensation hereunder, we shall
throughout the term of this affiliation
agreement deduct during each accounting
period a sum equal to 168% of your station's
network rate, or such other percentage
applicable pursuant to the terms of Section
III of the Agreement, for each week of said
period.
(ii) We will deduct a sum equal to the total of
whatever fees, if any, may have mutually been
agreed upon by you and us with respect to
local cooperative commercial announcements
broadcast during the applicable accounting
period for which your station is being
compensated.
<PAGE> 29
SCHEDULE B
COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S)
A. CUT-IN ANNOUNCEMENTS
I. With respect to programs broadcast by you during the time
period(s) specified by us in our initial offer for such
programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast during the time period(s)
specified by us in our initial offer for such program, we will
pay you the amount resulting from multiplying your network
station rate (set forth in Section II of the agreement) by the
percentage for cut-in announcement(s) set forth in the
applicable Table in Section C below opposite such applicable
time period.
II. With respect to programs broadcast by you with our consent
during time period(s) other than that specified by us in our
initial offer of such programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast by you with our consent
during a time period other than that specified by us in our
initial offer of such program, we will pay you an amount as
set forth in Section A.I. above, except that:
<PAGE> 30
(i) if the percentage set forth in the applicable
Table in Section C below for cut-in announcement(s)
opposite the time period during which your station
actually broadcast the program in which you broadcast
or originated such cut-in announcement(s) is less than
that set forth opposite the applicable time period
specified in our initial offer of such program, then
we will pay you for each cut-in announcement(s) on
the basis of the time period during which your
station actually broadcast such program.
III. With respect to programs broadcast by you in a time period
which straddles any of the time period categories set forth in
the applicable Table in Section C below.
In the event that we offer you a program for broadcast in a
time period which straddles any of the time period categories
set forth in the applicable Table in Section C below, and you
broadcast such program within which you also broadcast or
originate one or more cut-in announcement(s), we will pay you
such amounts as we and you shall have agreed upon prior to
your broadcast or
<PAGE> 31
origination of such cut-in announcement(s).
B. LOCAL TAG ANNOUNCEMENTS
I. With respect to programs broadcast by you during the time
period(s) specified by us in our initial offer for such
programs.
For each local tag announcement you broadcast within a
program, which program is broadcast during the time period(s)
specified by us in our initial offer for such program, we will
pay you the amount resulting from multiplying your network
station rate (set forth in Section II of the agreement) by the
percentage for each local tag announcement set forth in the
applicable Table in Section C below opposite such applicable
time period.
II. With respect to programs broadcast by you with our consent
during time Period(s) other than that specified by us in our
initial offer of such programs.
For each local tag announcement you broadcast within a
program, which program is broadcast by you with our consent
during a time period other than that specified by us in our
initial offer of such program, we will pay you an amount as
set forth in Section B.I. above, except that:
<PAGE> 32
(i) if the percentage set forth in the applicable
Table in Section C below for each local tag
announcement opposite the time period during which
your station actually broadcast the program in which
you broadcast such local tag announcement is less
than that set forth opposite the applicable time
period specified in our initial offer of such
program, then we will pay you for each local tag
announcement on the basis of the time period during
which your station actually broadcast such program.
III. With respect to programs broadcast by you in a time period
which straddles any of the time period categories set forth in
the applicable Table in Section C below. In the event that we
offer you a program for broadcast in a time period which
straddles any of the time period categories set forth in the
applicable Table in Section C below, and you broadcast such
program within which you also broadcast one or more local tag
announcement(s), we will pay you such amounts as we and you
shall have agreed upon prior to your broadcast of such local
tag announcement(s).
<PAGE> 1
EXHIBIT 10.1(3)
CBS TELEVISION NETWORK
A Division of CBS Inc.
AFFILIATION AGREEMENT
-------------
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York,
New York 10019 ("CBS"), and KHOU-TV, INC., P.O. Box 11, Houston, Texas 77001
("Broadcaster"), licensed to operate television station KHOU-TV at Houston,
Texas on channel number 11 ("Affiliated Station"), hereby mutually covenant and
agree, as of the 9th day of December, 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. (See Rider I.)
(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 l(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
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<PAGE> 2
Station's community of license; 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
$7,520* 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.
* Effective February 2, 1996 Affiliated Station's Network Rate will be
increased to $8,750. (See Rider II.)
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<PAGE> 3
Table
<TABLE>
<S> <C>
Monday through Friday
6:00 a.m. - 9:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%
9:00 a.m. - 11:00 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%
</TABLE>
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 (c) hereof.
(c) Payment or 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:
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<PAGE> 4
<TABLE>
<S> <C>
Monday-Friday Daytime Game shows . . . . . . . . . . . . . . . . . 15%
Monday-Friday Continuing Dramas . . . . . . . . . . . . . . . . . 6%
Monday-Friday Late Night Daypart . . . . . . . . . . . . . . . . . 47.8% per telecast for live
clearance or 12.8% per telecast for
delayed clearance
Monday-Friday CBS EVENING NEWS . . . . . . . . . . . . . . . . . . 5%
CBS Sports programs . . . . . . . . . . . . . . . . . . . . . . . 0%
CBS SUNDAY MORNING and FACE THE NATION . . . . . . . . . . . . . . 8%
</TABLE>
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+) Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced according until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(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.
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<PAGE> 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 October
4, 1994 and expiring on February 1, 2011 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 five-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 five 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. In
the event that CBS shall reasonably disapprove of the proposed transferee, 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, and of its reasons for
disapproving of the proposed transferee, 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 any interest in Broadcaster or of Broadcaster's
license for Affiliated Station, and as a condition precedent to such transfer,
procure and deliver to CBS, in form reasonably satisfaction 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.
Broadcaster's obligations to procure the assumption of this Agreement
by any transferee of Affiliated Station as a condition precedent to such
transfer shall be deemed to be of the essence of this Agreement; further,
Broadcaster expressly recognizes that money damages will be inadequate to
compensate CBS for the breach of such obligation, and that CBS shall
accordingly be entitled to equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power,
Frequency or Hours of Operation of Affiliated Station.
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<PAGE> 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 if 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
-6-
<PAGE> 7
announcement or 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 home outside of
Affiliated Station's television market other than "unserved household(s)," as
that term is defined in Section 119(d) of Title 17,
-7-
<PAGE> 8
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 with, any Network
Program
-8-
<PAGE> 9
"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 "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55
miles of said reference
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<PAGE> 10
points; provided, however, that in no case shall the "Network Exclusivity Zone"
include an area within the Designated Market Area ("DMA"), as most recently
determined by the A.C. Nielsen Company, 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 Descramblers solely in connection with
the broadcast rights granted and specified in the Agreement.
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<PAGE> 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
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<PAGE> 12
Agreement and all matters or issues collateral thereto shall 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.
(f) In the event that CBS enters into an affiliation agreement
with respect to any other station (including a CBS Owned television station)
which contains terms more favorable to such other station than those afforded
to Affiliated Station in this Agreement with respect to exclusivity to be
provided against the distribution and exhibition of Network Programs within
such other station's Designated Market Area (as defined by A.C. Nielsen
Company) by any cable television system, MMDS, SMATV, DBS, satellite
distribution system, video dialtone system, telephone company system or any
other non-broadcast distribution or exhibition system now known or hereafter
developed, then CBS shall promptly offer in writing to amend this Agreement to
conform to such more favorable terms. It is expressly understood that this
subparagraph shall have no application to terms in any other CBS affiliation
agreement dealing with matters other than the program exclusivity discussed in
the preceding sentence. It is further understood that, within a reasonable time
of the execution hereof, the CBS Television Network will enter an affiliation
agreement with each of the CBS Owned television stations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
KHOU-TV, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By: /s/ WARD L. HUEY, JR. By: /s/ [ILLEGIBLE]
-------------------------- ------------------------------
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<PAGE> 13
RIDER I
Subject to Section 73.658 of the FCC's rules, Broadcaster agrees that
Affiliated Station will (i) broadcast LATE SHOW WITH DAVID LETTERMAN in the
live time period offered by CBS effective January 2, 1995; (ii) broadcast LATE,
LATE SHOW WITH TOM SNYDER upon its premiere on January 9, 1995 on no more than
a half hour delay from the live time period in which the program is offered by
CBS; (iii) limit one-time-only preemptions of primetime Network programs to no
more than 25 hours per year; and (iv) maintain its clearance of other Network
programs at the level existing as of the date hereof.
RIDER II
It is expressly understood that such Network Rate of $8,750 will generate
$4,500,000 in annual net compensation at full live clearance of the existing
Network program schedule (which shall be understood to exclude twenty five
(25) hours of one-time-only primetime preemptions per year) and normal full
sellout of Network inventory.
<PAGE> 1
EXHIBIT 10.1(4)
CBS TELEVISION NETWORK
A Division of CBS Inc.
AFFILIATION AGREEMENT
-------------
CBS TELEVISION NETWORK, 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 9TH day of DECEMBER,
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. (See Rider I.)
(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 l(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
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<PAGE> 2
Station's community of license; 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
$4,960* 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.
* Effective February 2, 1996 Affiliated Station's Network Rate will be
increased to $5,500. (See Rider II.)
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<PAGE> 3
Table
<TABLE>
<S> <C>
Monday through Friday
6:00 a.m. - 9:00 a.m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
9:00 a.m. - 11:00 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%
</TABLE>
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 (c) hereof.
(c) Payment or 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:
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<PAGE> 4
<TABLE>
<S> <C>
Monday-Friday Daytime Game shows . . . . . . . . . . . . . . . . . 15%
Monday-Friday Continuing Dramas . . . . . . . . . . . . . . . . . 6%
Monday-Friday Late Night Daypart . . . . . . . . . . . . . . . . . 10.0% per telecast for live
clearance or 12.8% per telecast for
delayed clearance
Monday-Friday CBS EVENING NEWS . . . . . . . . . . . . . . . . . . 5%
CBS Sports programs . . . . . . . . . . . . . . . . . . . . . . . 0%
CBS SUNDAY MORNING and FACE THE NATION . . . . . . . . . . . . . . 8%
</TABLE>
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+) Further, CBS agrees
that in the event of such an across-the-board rate reduction, Affiliated
Station's Network Rate shall be reduced according until thirty days after the
effective date of the reduction, at which time, unless an additional
corresponding benefit of equal value has accrued to the station, the Network
Rate shall be restored to the previous level and a retroactive adjustment shall
be made to make up the compensation difference.
(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.
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<PAGE> 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 October
4, 1994 and expiring on February 1, 2011 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 five-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 five 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. In
the event that CBS shall reasonably disapprove of the proposed transferee, 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, and of its reasons for
disapproving of the proposed transferee, 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 any interest in Broadcaster or of Broadcaster's
license for Affiliated Station, and as a condition precedent to such transfer,
procure and deliver to CBS, in form reasonably satisfaction 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.
Broadcaster's obligations to procure the assumption of this Agreement
by any transferee of Affiliated Station as a condition precedent to such
transfer shall be deemed to be of the essence of this Agreement; further,
Broadcaster expressly recognizes that money damages will be inadequate to
compensate CBS for the breach of such obligation, and that CBS shall
accordingly be entitled to equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power,
Frequency or Hours of Operation of Affiliated Station.
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<PAGE> 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 if 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
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<PAGE> 7
announcement or 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 Section 119(d) of Title 17,
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<PAGE> 8
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 with, any Network
Program
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<PAGE> 9
"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 "small market television
station," as defined in Section 76.92 of the FCC rules, the zone within 55
miles of said reference
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points; provided, however, that in no case shall the "Network Exclusivity Zone"
include an area within the Designated Market Area ("DMA"), as most recently
determined by the A.C. Nielsen Company, 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 Descramblers solely in connection with
the broadcast rights granted and specified in the Agreement.
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(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
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Agreement and all matters or issues collateral thereto shall 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.
(f) In the event that CBS enters into an affiliation agreement
with respect to any other station (including a CBS Owned television station)
which contains terms more favorable to such other station than those afforded
to Affiliated Station in this Agreement with respect to exclusivity to be
provided against the distribution and exhibition of Network Programs within
such other station's Designated Market Area (as defined by A.C. Nielsen
Company) by any cable television system, MMDS, SMATV, DBS, satellite
distribution system, video dialtone system, telephone company system or any
other non-broadcast distribution or exhibition system now known or hereafter
developed, then CBS shall promptly offer in writing to amend this Agreement to
conform to such more favorable terms. It is expressly understood that this
subparagraph shall have no application to terms in any other CBS affiliation
agreement dealing with matters other than the program exclusivity discussed in
the preceding sentence. It is further understood that, within a reasonable time
of the execution hereof, the CBS Television Network will enter an affiliation
agreement with each of the CBS Owned television stations.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WWL-TV, INC. CBS TELEVISION NETWORK
A Division of CBS Inc.
By: /s/ WARD L. HUEY, JR. By: /s/ [ILLEGIBLE]
-------------------------- ------------------------------
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RIDER I
Subject to Section 73.658 of the FCC's rules, Broadcaster agrees that
Affiliated Station will (i) broadcast LATE SHOW WITH DAVID LETTERMAN in the
live time period offered by CBS effective September, 1995; (ii) broadcast LATE,
LATE SHOW WITH TOM SNYDER upon its premiere on January 9, 1995 on no more than
an hour and a half delay from the live time period in which the program is
offered by CBS, and will broadcast SNYDER by September, 1996, or earlier should
the time period become available, on no more than a half hour delay from the
live time period in which the program is offered by CBS; (iii) limit
one-time-only preemptions of primetime Network programs to no more than 10
hours per year; and (iv) maintain its clearance of other Network programs at
the level existing as of the date hereof.
RIDER II
It is expressly understood that such Network Rate of $5,500 will generate
$2,200,000 in annual net compensation at full live clearance of the existing
Network program schedule (which shall be understood to exclude CBS THIS
MORNING, Monday - Friday, 7am - 9am, CNYT and ten (10) hours of one-time-only
primetime preemptions per year) and normal full sellout of Network inventory.
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-30994, Form S-8 No. 33-32526, Form S-8 No. 33-61491 and Form
S-8 No. 33-61439) pertaining to the Employee Savings and Investment Plan, Long-
Term Incentive Plan, Employee Thrift Plan, and 1995 Executive Compensation Plan
of A.H. Belo Corporation of our report dated January 24, 1996, with respect to
the consolidated financial statements of A.H. Belo Corporation included in this
amended Annual Report (Form 10-K/A) for the year ended December 31, 1995.
/S/ ERNST & YOUNG LLP
Dallas, Texas
April 1, 1996
