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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________to ______________
Commission file number 0-12743
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PARK COMMUNICATIONS, INC.
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(Exact name of the registrant as specified in its charter)
Delaware 16-0986694
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Terrace Hill, Ithaca, NY 14850
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (607) 272-9020
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - Par Value $.16 2/3 Per Share
(Title of Class)
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. [XX]
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
--- ---
As of February 15, 1995, the aggregate market value of the shares of
voting stock held by non-affiliates of the registrant was $132,382,123.
As of February 15, 1995, 23,327,316 shares of Common Stock, $.16 2/3 par
value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
-- not applicable --
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FORM 10-K ANNUAL REPORT - 1994
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . 1-15
Item 2. Properties . . . . . . . . . . . . . . . . . . . 15
Item 3. Legal Proceedings . . . . . . . . . . . . . . . .16-17
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . Not Applicable
PART II
Item 5. Market for the Registrant's Common Stock and
Related Security Holder Matters . . . . . . . . .18-19
Item 6. Selected Financial Data. . . . . . . . . . . . . . 19
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . 20-22
Item 8. Financial Statements and Supplementary Data. . . 22-38
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . Not Applicable
PART III
Item 10. Directors and Executive Officers of the Registrant.39-41
Item 11. Executive Compensation . . . . . . . . . . . . . .41-46
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . .46-48
Item 13. Certain Relationships and Related Transactions . . 48
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . 49-55
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 56
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PART I
Item 1. Business
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As of January 31, 1995, Park Communications, Inc. owned and operated
through its subsidiaries nine television stations, eleven AM and eleven FM
radio stations, 30 daily newspapers, 17 Sunday newspapers, 28 non-daily
newspapers and 46 non-daily controlled distribution publications. The
Company's operations are located in 21 states. As discussed below, the Company
has entered into an agreement to be acquired by a private investment concern
for approximately $711.4 million. As used herein the "Company" means Park
Communications, Inc., its Subsidiaries and Predecessors unless the context
otherwise requires.
The Company was incorporated in Delaware in 1971, as the holding and
management company for various communications properties previously acquired by
companies owned by Roy H. Park. As discussed below, Mr. Park died on October
25, 1993. Since its incorporation, the Company has increased its ownership of
communications properties by means of acquisitions. The first television
acquisition by a Park company was station WNCT-TV in Greenville, North Carolina
in 1962. The first Park radio operations were WNCT-AM, acquired in 1963, and
WNCT-FM, put on the air in 1963, both also in Greenville, North Carolina. The
first Park newspaper acquisition was the Daily Sun, located in Warner Robins,
Georgia, in 1972. The Company's most recent broadcast acquisition occurred in
November 1993, when it purchased its ninth television station, KALB-TV in
Alexandria, Louisiana, a VHF station affiliated with the NBC network. See
"Business--Federal Regulation of Television and Radio Broadcasting" on pages
6-11 of this report.
In 1977, the Company became the first owner of 21 broadcasting
licenses, the maximum then allowed by law. In every year since 1977, the
Company has made one or more newspaper acquisitions, with the exceptions of
1990, 1993 and 1994. In December 1993, the Company sold 33 of its smaller
publications in 13 communities in 9 states. Included were 11 dailies (four
with Sunday editions), 7 paid weeklies, 13 free-distribution shoppers and 2
monthlies. The dailies had a combined circulation of 37,675, each with less
than 6,000 paid circulation. The sale of these publications was designed to
allow the Company to focus its resources on larger publications.
Prior to October 26, 1983, the Company was wholly owned by Mr. Park.
On that date, the Company made a public offering of 2,219,625 shares
(retroactively adjusted for stock splits) of the Company's Common Stock,
representing 9.5% of the total shares outstanding as of the close of business
on February 15, 1995. On March 11, 1986, pursuant to a public offering, the
Company issued 6-7/8% Convertible Subordinated Debentures due March 15, 2011
(the "Debentures") in the principal amount of $50 million. As discussed below,
on January 9, 1995, the Debentures were called for redemption, and all
Debentures were, in lieu of redemption, converted into Company Common Stock.
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Roy H. Park died on October 25, 1993. At the time of his death, Mr.
Park was the Company's Chairman of the Board of Directors and Chief Executive
Officer, and the owner of approximately 89.7% of the Company's outstanding
Common Stock. On December 10, 1993, Mr. Park's widow, Dorothy D. Park, was
issued letters testamentary by the Surrogate's Court of Tompkins County, New
York (File No. 93a180-P), authorizing and empowering her to act as the Personal
Representative of Mr. Park's estate (the "Estate") to do and perform all acts
requisite to the proper administration and disposition of the Estate under the
laws of New York. As the Personal Representative of the Estate, Mrs. Park has
the power, subject to the provisions of Mr. Park's will, applicable state law
and Mrs. Park's fiduciary duties and obligations as Personal Representative, to
control the shares of the Company previously held by Mr. Park, which power
includes but is not limited to the power to vote and dispose of such shares.
On March 25, 1994, at a Special Meeting of the Company's Board of
Directors, Mrs. Park, as Personal Representative of the Estate, informed the
Company of the Estate's decision to sell the Company Common Stock held by the
Estate. In response to this announcement, the Board voted to seek a sale of
the entire Company. The Company subsequently engaged an investment banking
firm, Goldman, Sachs & Co., to assist it in this regard.
On October 25, 1994, after an extensive auction process, the Company
entered into an agreement to be acquired by a private investment concern, Park
Acquisitions, Inc. ("PAI"), headed by investors Donald R. Tomlin, Jr. and Dr.
Gary B. Knapp, for approximately $711.4 million, subject to certain adjustments
discussed below. Based on 23,327,316 shares of the Company's Common Stock
issued and outstanding as of February 15, 1995, the purchase price will
constitute approximately $30.50 per share.
On January 9, 1995, the Company issued a notice of redemption to the
holders of all of its issued and outstanding Debentures. As of that date,
Debentures in the principal amount of $45,351,000 were outstanding. Pursuant
to the terms of the Indenture governing the Debentures, and as stated in the
notice, Debenture holders could, in lieu of redemption, elect to convert their
Debentures into Common Stock at the rate of 52.1739 shares per $1,000 face
value of the Debentures. As of the close of business on February 15, 1995, all
of the Debentures had been converted into Company Common Stock, resulting in an
additional 2,366,056 shares outstanding and a total of 23,327,316 shares
outstanding as of the close of business on that date. Although cash was paid
in lieu of fractional shares, the amount paid was immaterial. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in Item 7 below. As required by
the Merger Agreement (defined below), PAI and its wholly owned subsidiary, Park
Acquisitions, Inc. ("PAS"), consented to the redemption of the Debentures. As
a result of the conversion of the Debentures, the Estate owned or controlled
approximately 80.10% of the issued
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and outstanding Common Stock of the Company as of the close of business on
February 15, 1995.
Under the Agreement and Plan of Merger Among PAI, PAS and the Company
dated as of October 25, 1994, as amended (the "Merger Agreement"), the Company
is prohibited from making certain significant expenditures. Moreover, the
Company is obligated to have at least $138 million cash on its books at closing
of the transaction. If such amount is not on the Company's books at closing,
the purchase price will be reduced by any shortfall. If the Company has more
than $150 million cash on its books at closing, such excess amounts will be
distributed to the Company's shareholders. However, the Company views this
possibility as unlikely.
Although the foregoing limitations on expenditures would preclude the
Company from making any future acquisitions, if for whatever reason the Company
is not sold or if PAI consents to such expenditures, future acquisitions could
be financed from a variety of sources, including subordinated debt issued to
sellers, current cash flow from operations, bank borrowings and the Company's
available cash. If future acquisitions were to be made, it is unlikely that
the Company would issue Common Stock as consideration for such acquisitions,
although the Company might do so depending on future circumstances.
The sale of the Company is contingent upon, among other things,
receiving approval of the transaction by the Company's stockholders and
receiving the consent of the Federal Communications Commission ("FCC") to the
transfer of control of the Company and its broadcast licenses to PAI. Pursuant
to the terms of the Stockholder's Agreement among PAI, PAS, and Dorothy D.
Park, as Personal Representative of the Estate, the Estate has given a proxy to
PAI and PAS to vote the Estate-held shares of the Company in favor of the
transaction. On November 7, 1994, the Company and PAI filed with the FCC an
application for consent to the transfer of control of the Company and its
broadcast licenses to PAI (FCC File Nos. BTCCT-941107KJ, et seq.). To the
Company's knowledge, only three objections to the transfer were submitted to
the FCC by December 22, 1994, the final date for receipt of such objections.
One party has requested leave to withdraw its petition to deny. Permitting
withdrawal of that petition to deny, or reviewing the merits of that petition,
regardless of whether leave to withdraw is granted, is in the discretion of the
FCC. While review of these objections by the FCC could extend the time related
to the granting of FCC consent, the Company does not believe that any of the
objections will result in a denial of consent to the transfer. See "Item 3.
Legal Proceedings," below.
The Company's industry segments are television broadcasting, radio
broadcasting and newspaper publishing. Financial information for these
segments is detailed in and by reference to Note 7 under the caption "Notes to
Consolidated Financial Statements" (pages 35-36) of the Company's 1994
financial statements set forth in Item 8 herein.
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TELEVISION BROADCASTING
The Company owns and operates six VHF and three UHF television stations. A
listing of the television stations, their network affiliations and the markets
they serve is set forth below:
WBMG-TV (CBS) Birmingham, Alabama
WTVQ-TV (ABC) Lexington, Kentucky
KALB-TV (NBC) Alexandria, Louisiana
WUTR-TV (ABC) Utica, New York
WNCT-TV (CBS) Greenville, North Carolina
WDEF-TV (CBS) Chattanooga, Tennessee
WJHL-TV (CBS) Johnson City, Tennessee
WTVR-TV (CBS) Richmond, Virginia
WSLS-TV (NBC) Roanoke, Virginia
All nine of the Company's stations are affiliated with national television
networks under standard two-year contracts and each has been affiliated with
the same network continuously since its acquisition by the Company. A network
contract is typically continued for successive two-year terms, unless the
Company or the network exercises its respective right thereunder to cancel such
contract.
Under standard network contracts, networks offer to affiliated stations a
variety of sponsored and unsponsored programs which the affiliated stations
must refuse before they can be offered to any other television station in the
same market. Of approximately 152 hours of television broadcasting per week
for each of the Company's stations, approximately 95 hours are network
programs. When not carrying network programs, the Company's stations broadcast
programs produced by the station (most of which are news and public affair
programs) and programs such as movies or syndicated programs acquired from
independent sources.
The principal source of television revenue for the Company is the sale of
time to advertisers. Advertising is sold in time increments and is priced on
the basis of a station's audience ratings. The ratings of a local station
affiliated with a national television network can be affected by the network's
programming. A time sale may involve all or part of a program, or spot
announcements within or between programs.
COMPETITION--TELEVISION BROADCASTING
The Company's television stations compete for revenues with other
advertising media such as newspapers and magazines distributed within their
broadcasting area, other television and radio stations serving the same or
nearby areas and billboard advertising. Other sources of present and potential
competition include CATV, pay cable, Multichannel Multipoint Distribution
Service ("MMDS" or "Wireless Cable"), video cassette recordings,
satellite-to-home broadcasting (including Direct Broadcast Satellite or "DBS"
service), Local Multipoint Distribution
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Service ("LMDS"), low-power television, and the participation of telephone
companies in the provision of "video dialtone" transmission service for the
delivery of video programming by wire.
In June 1994, two parties with direct broadcast satellite ("DBS")
authorizations, Hughes Communications Galaxy, Inc. ("Hughes") under the trade
name DIRECTV, Inc., and United States Satellite Broadcasting Company ("USSB"),
initiated DBS service from a new high-powered satellite. In August 1994,
Hughes and USSB launched a second satellite, which is now operational. Hughes
and USSB currently provide over 150 channels of digital DBS service to
subscribers. The Federal Communications Commission ("FCC") has approved or is
considering applications to combine DBS authorizations. In December 1994, two
DBS permittees, EchoStar Satellite Corporation and Directsat Corporation,
merged their DBS authorizations upon approval from the FCC, and expect to
commence service as early as fall 1995. Also, Advanced Communications
Corporation has applied for authority to assign its DBS authorizations to TEMPO
DBS, Inc., whose affiliate TEMPO Satellite, Inc., is a DBS permittee. TEMPO
DBS, Inc. hopes to initiate DBS service in 1996. Three other parties hold
authorizations to provide DBS service, but which have not yet launched their
proposed satellites. The Company cannot predict the competitive effect of DBS
operations on the terrestrial television broadcast industry in general or the
Company's operations in particular.
The Company's television broadcasting operations are dependent on a number
of factors, including the general strength of the economy, population growth,
overall advertising revenues, ability to provide attractive programming,
ratings, relative efficiency compared to other advertising media, technological
capabilities and governmental regulations and policies.
RADIO BROADCASTING
The Company owns and operates eleven AM and eleven FM radio stations in
eleven markets in eleven states. A listing of the radio stations and the
markets they serve is set forth below:
WNLS-AM/WTNT-FM Tallahassee, Florida
KWLO-AM/KFMW-FM Waterloo, Iowa
KJJO-AM/FM Minneapolis, Minnesota
WPAT-AM/FM serving the Greater New York City Area
WHEN-AM/FM Syracuse, New York
WNCT-AM/FM Greenville, North Carolina
KWJJ-AM/FM Portland, Oregon
WNAX-AM/FM Yankton, South Dakota
WDEF-AM/FM Chattanooga, Tennessee
WTVR-AM/FM Richmond, Virginia
KEZX-AM/FM Seattle, Washington
The Company's radio stations employ various formats for their programming.
The Company creates its own formats and
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purchases formats from various outside sources. The formats are adapted to
the characteristics of each market.
Substantially all of the Company's radio broadcasting revenues are derived
from advertising.
COMPETITION--RADIO BROADCASTING
The Company's radio stations compete for revenues with other advertising
media such as newspapers and magazines distributed within their broadcasting
area, other radio and television stations serving the same or nearby areas and
billboard advertising. In addition, in January 1995, the FCC adopted rules to
allocate spectrum for satellite digital audio radio service ("DARS").
Satellite DARS systems potentially could provide for regional or nationwide
distribution of radio programming with fidelity comparable to compact disks.
The FCC will consider service and licensing regulations in a further rulemaking
proceeding. Four applications for licenses to provide satellite DARS are
currently pending before the FCC. In a rulemaking proceeding, the FCC is
considering a proposed spectrum allocation for satellite DARS. There also are
four applications on file at the FCC for satellite DARS licenses. Further, the
FCC has undertaken an inquiry into the terrestrial broadcast of DARS signals.
As is the case with television, the Company's radio broadcasting operations are
dependent on a number of factors, including the general strength of the
economy, population growth, overall advertising revenues, an ability to provide
attractive programming, ratings, relative efficiency compared to other
advertising media, technological capabilities and governmental regulations and
policies.
FEDERAL REGULATION OF TELEVISION AND RADIO BROADCASTING
The Company's television and radio broadcasting operations are subject to
the jurisdiction of the FCC under the Communications Act of 1934, as amended
(the "Act"). Under authority of the Act, the FCC, among other things, assigns
frequency bands for broadcasting; determines the particular frequencies,
location and power of stations; issues, renews, revokes and modifies station
licenses and related authorizations; regulates equipment used by stations; and
adopts and implements regulations and policies which directly or indirectly
affect the ownership, operation and profitability of broadcast stations. For
example, the FCC has imposed limitations on the amount of commercialization of
television programs produced for children ages 12 and under. Recently, the FCC
also increased the penalties to be imposed on stations for non-compliance with
the FCC's equal employment opportunity policies, but suspended its imposition
of the new forfeiture schedule pending examination of whether the proper
procedures had been followed in its development.
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LIMITATIONS ON OWNERSHIP OF THE COMPANY'S STOCK AND OTHER MATTERS
The Act prohibits the assignment or transfer of broadcasting licenses,
including the transfer of control of any corporation holding such licenses,
without the prior approval of the FCC. The Act also would prohibit the Company
from continuing to control broadcast licenses if, in the absence of FCC
approval, any officer or more than one-fourth of the directors were aliens, or
if more than one-fourth of the Company's capital stock were acquired or voted
directly or indirectly by alien individuals, corporations, or governments, or
if the Company otherwise fell under alien influence or control in a manner
determined by the FCC to be contrary to the public interest.
Since the number of AM, FM and TV broadcast stations is limited by FCC
rules, any purchaser of the Company's Common Stock who currently has an
interest in one or more AM, FM or TV stations, attributable to such person
under the FCC rules, could possibly violate those rules if that person were to
acquire an interest in the Company that resulted in the attribution of the
Company's broadcast holdings to the stockholder. Generally speaking broadcast
holdings are attributed to (a) any officer, director, partner or joint venturer
of a broadcast licensee, or to an individual licensee; and (b) a stockholder
with 5% or greater stock interest in a broadcast licensee provided, however,
that if the stockholder is a mutual fund, bank trust department, insurance
company or other qualifying investment entity, a 10% or greater interest
results in attribution to the stockholder.
In addition, if the purchaser of the Company's Common Stock has an
attributable interest in either a cable television company or daily newspaper
and acquires an attributable interest in the Company, violation of FCC rules
could result, depending upon the location of the cable system or daily
newspaper in relation to the broadcast stations controlled by the Company.
As discussed above, Roy H. Park, the sole majority shareholder of the
Company, died on October 25, 1993. See the discussion under "Item 1. Business"
(page 2) above. Consent to the transfer of control of the Company (and its
broadcast licensee subsidiaries) to Mr. Park's widow, Dorothy D. Park, as
Personal Representative of the Estate of Roy H. Park, was granted by the FCC on
January 27, 1994. On November 7, 1994, an application was filed with the FCC
seeking its consent to the transfer of control of the Company (and its
broadcast licensee subsidiaries) from Dorothy D. Park, Personal Representative
of the Estate of Roy H. Park to Park Acquisitions, Inc. ("PAI"). To the
Company's knowledge, only three objections to the transfer were submitted to
the FCC by December 22, 1994, the final date for receipt of such objections.
The Company or PAI, as appropriate, have filed responses to pleadings filed by
David Lampel and by WVGO License Limited Partnership and its general partner,
Benchmark Radio Acquisition Fund III Limited Partnership (collectively,
"Benchmark"). It was determined that a response to the third objection was
unnecessary. Benchmark subsequently requested leave to withdraw its petition
to deny. Permitting
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withdrawal of the petition to deny, or reviewing the merits of that petition
to deny, regardless of whether leave to withdraw is granted, is in the
discretion of the FCC. The transfer application and the opposing pleadings
have not yet been resolved by the FCC, and the Company cannot estimate when FCC
action on the application might be expected.
BROADCAST LICENSES
Broadcast licenses are granted for specific periods of time, and upon
application, are renewable for additional terms. If a competing application is
filed, or if a substantial and material question of fact is raised, or if for
any reason the FCC is unable to determine that renewal of a license would serve
the public interest, convenience and necessity, the FCC is required to hold a
hearing on the renewal application. Petitions to deny license renewals and
other applications are authorized to be filed against licensees and applicants.
Such petitions can be used by interested parties, including members of the
public, to raise issues before the FCC. All of the Company's nine television
broadcast stations have been granted renewal of their broadcast licenses for
five year terms. In an order released February 9, 1995, by the FCC Mass Media
Bureau, the application for renewal of the license of the Company's television
station in Birmingham, WBMG-TV, was granted on the condition that the station
submit annual reports to the FCC describing the station's affirmative action
efforts. Absent a decision by the FCC to reconsider the Bureau's order, either
sua sponte or upon request of an interested party, such order will become final
40 days from its release. Twenty of the Company's 22 radio broadcast stations
have been granted renewal of their broadcast licenses for seven year terms.
The licenses for KEZX AM/FM, Seattle, Washington, following FCC determination
of shortfalls in the stations' equal employment opportunity ("EEO") plan,
recently were renewed for a short term period ending February 1, 1995, in order
to facilitate FCC monitoring of the stations' EEO program. The renewals also
were conditioned on the submission of annual reports to the FCC describing the
stations' affirmative action efforts. Applications for renewal of the
KEZX-AM/FM licenses were filed on October 3, 1994, and remain pending, with no
objections to the renewals having been filed. Under Section 307(c) of the Act,
the stations are authorized to continue operating until a final decision on the
renewal applications is made.
There is currently pending before the U.S. Court of Appeals for the
District of Columbia Circuit an appeal from an FCC order denying informal
objections filed on behalf of Lindsay Television, Inc. ("LTI"). Such
objections related to the license renewal applications of 47 television
stations in Maryland, Virginia, and the District of Columbia, including the
Company's stations in Roanoke, Virginia (WSLS-TV) and Richmond, Virginia
(WTVR-TV). The Company believes it is highly unlikely that LTI will prevail in
its appeal or that the proceeding will have a material adverse effect on the
Company's results of operations, financial condition, equity, liquidity and
capital resources. See "Item 3. Legal Proceedings," below.
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LIMITATION ON ACQUISITIONS
Under FCC rules, limits are placed on an applicant's ownership, operation
or control of television and radio broadcast stations, and the transferability
of such licenses and facilities is restricted. Currently, one entity may have
an attributable interest in 12 television stations nationwide. As to radio
station ownership, one entity may have an attributable interest in 20 AM and 20
FM stations nationwide. Local limits vary according to market size, and in
some circumstances, market share. In markets with 14 or fewer stations, one
entity may own up to three stations, with no more than two in the same service,
and only if the number of commonly owned stations is less than 50% of the total
number of stations in the market. In markets with 15 or more stations, one
entity may own up to 4 stations with no more than 2 in the same service, as
long as the total combined audience share is less than 25% of the market. The
Company owns no more than one station in each service in each of its markets.
Accordingly, assuming compliance with the restrictions on market share and
compliance with other ownership limitations, the Company would be qualified
under this rule to acquire additional radio stations in its existing markets.
FCC rules also place certain limits on common ownership, operation and
other interests in (a) television and radio broadcast stations serving the same
area ("one to a market" rule), (b) broadcast stations and newspapers serving
the same area, and (c) television broadcast stations and cable systems serving
the same area. The Company owns three radio-television station combinations
(AM-FM-TV) that have been "grandfathered" -- i.e., allowed to continue
notwithstanding the one-to-a-market rule -- because their acquisition by the
Company predated the promulgation of the rule. These stations are located in
Greenville, NC, Richmond, VA, and Chattanooga, TN. Grandfathering rights are
not ordinarily transferrable, absent a wavier, however, and PAI has advised the
FCC that the Company will divest itself of the six affected radio stations
within one year after closing, if its application to acquire the Company is
approved.
FCC rules affect the number, type and location of newspaper, broadcast and
cable properties that the Company might acquire in the future. Under current
rules, the Company might not be permitted to acquire any daily newspapers or
broadcast or cable television properties (other than LPTV) in a market in which
it now owns one or more FCC regulated properties. These rules do not require
any change in the Company's present ownership of newspapers and broadcast
stations.
POSSIBLE NEW REGULATORY AND TECHNOLOGICAL DEVELOPMENTS, AND NEW LEGISLATION
The Congress and the FCC have under consideration and may in the future
consider and adopt new laws, regulations and policies regarding a wide variety
of matters which could, directly or indirectly, affect the operation and
ownership of the Company's broadcast properties. Such matters include, for
example, a
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recently broadened review by the FCC of its limitations on television
ownership, as noted above. Related to this proceeding is another in which the
FCC has invited comment on various proposals to modify its "attribution" rules.
Attribution essentially is the definition of the kinds of ownership or other
interests that trigger application of the FCC's radio and television ownership
rules. Among the proposals under consideration is one to increase the general
attribution benchmark for voting stock from five to ten percent. (See
"Limitations on Ownership of the Company's Stock and Other Matters," above.)
Also, under re-examination is the license renewal process, including the
legitimate renewal expectancy of an incumbent broadcast licensee as well as the
standards to be applied to both contested and non-contested renewal
applications and the adverse weight, if any, to be given to multi-station or
multi-media or other communications ownership interests. Also various
programming and advertising questions and licensee employment practices are
being considered. In addition, the economic position and practices of the
major television networks vis-a-vis program producers, distributors and
affiliated stations are current matters of controversy. Other matters which
could affect the Company's broadcast properties include: the proposed
"privatization" of public broadcasting; technological innovations, including
development of standards for high definition television production and
broadcasting (HDTV) and digital audio broadcasting (DAB), affecting the mass
communications industry; regulations governing satellite-to-home broadcasting;
greater involvement of telephone companies in the provision of video services;
technical and allocations matters such as the allocation of channels for
additional radio and television broadcast stations, including low-power and
television translator stations, which could cause electrical interference to
and loss of audience and revenues for existing broadcast stations; and the
provision of MMDS services, and potentially LMDS, that may provide television
programming in competition with the Company's operations. The Company cannot
predict the outcome or effect of these various matters. However, they could
affect the Company's revenues and profits from broadcasting, either adversely
or favorably.
On December 4, 1992, the Cable Television Consumer Protection and
Competition Act of 1992 (the "Act") reregulating the cable industry became
effective. In addition to imposing regulation of rates charged to cable
subscribers, the new cable law imposes certain restrictions and obligations on
the carriage of television signals by cable operators. The signal carriage, or
"must carry," provisions of the Act require cable operators to carry the
signals of qualified local commercial and non-commercial television stations
and certain low power television stations. The Act also includes a
retransmission consent provision that prohibits cable operators and other
multi-channel video programming providers from carrying broadcast station
signals without obtaining their consent in certain circumstances. Every three
years, television broadcasters must make a choice between whether to proceed
under the must carry rules or whether to waive that right to mandatory, but
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uncompensated, carriage and instead negotiate a grant of retransmission
consent permitting the cable system to carry the station's signal, in most
cases in exchange for some form of consideration from the cable operator. A
challenge to the validity of the FCC's must carry rules was presented to the
United States Supreme Court, which remanded the case to a lower court for
further consideration. Federal courts of appeals previously have declared
former versions of must carry provisions to be unconstitutional.
The Act also codified the FCC's existing EEO regulations and reporting
forms used by television broadcast stations. In addition, pursuant to the
Act's requirements, the FCC has adopted new rules providing for a review of the
EEO performance of each television station at the mid-point in its license term
(in addition to a review at the time of renewal). Such a review will give the
FCC an opportunity to inform the licensee of any improvements in recruiting
practices that may be needed as a result of the review. See the discussion
under the caption "Broadcast Licenses" on page 8 above.
Pursuant to the United States FY 1994 Budget Reconciliation act, broadcast
stations (as well as other spectrum users) are required to pay to the federal
government a fee for use of the broadcast spectrum. Fees will range from $200
- - $900 for radio stations and from $4,000 - $18,000 for television stations.
Imposition of these fees has not had and will not have a material effect on the
Company.
NEWSPAPER PUBLISHING
The Company publishes paid circulation newspapers, both daily and
non-daily, as well as controlled distribution publications ("shoppers"). A
listing of the Company's newspaper and advertising publications owned as of
January 31, 1995, and the communities in which they are published, is set forth
below:
Georgia
Dailies: The Daily Sun (Warner Robins)*
Controlled: Daily Sun Extra (Warner Robins)/Robins Rev-up (Warner Robins)
Idaho
Daily: South Idaho Press (Burley)*
Non-Dailies: The Wood River Journal (Hailey)/Minidoka County News
Controlled: The News Review (Burley)/The Sunrise Shopper (Burley)
Illinois
Daily: Effingham Daily News/Macomb Journal*
* Publishes Sunday newspaper
-11-
<PAGE>
Controlled: The Weekly Advertiser (Effingham)/Business News (Macomb)
Indiana
Dailies: The Evening News (Jeffersonville)/The Pilot-News (Plymouth)
Non-Dailies: Bremen Enquirer/Nappanee Advance News/Bourbon News- Mirror
Controlled: Clark County Journal (Jeffersonville)/Farm & Home News
(Plymouth)/Nappanee Farm & Home News (Plymouth)/Golden Opportunities (Monthly)
(Jeffersonville)
Kentucky
Daily: Commonwealth Journal (Somerset)*
Non-Dailies: The Carlisle Mercury/The Grayson Journal- Enquirer/The Greenup
County News/Grayson County News-Gazette (Leitchfield)/Sentinel Echo
(London)/The Morehead News/Menifee County News (Morehead)/Olive Hill
Times/News-Democrat & Leader (Russellville)/McCreary County Record (Somerset)
Controlled: The Mercury Plus (Carlisle)/The Grayson County Advertiser
(Leitchfield)/The County Neighbor (Somerset)/Shopping News (Morehead)/The Logan
Advertiser (Russellville)/Lake Cumberland Shopper (Somerset)
Michigan
Daily: The Daily Reporter (Coldwater)
Controlled: The Extra (Coldwater)
Minnesota
Daily: The Pioneer (Bemidji)*
Non-Daily: The Blackduck American (Blackduck)
Controlled: The Advertiser, The Mid-Week Advertiser (Bemidji)/The Blackduck
Shopper
New York
Dailies: Register Star (Hudson)*/Union-Sun & Journal (Lockport)/The Daily
Courier-Observer (Massena)/The Journal Register (Medina)/The Journal
(Ogdensburg)*
Non-Dailies: Albion Advertiser/St. Lawrence Plaindealer (Canton)/The Chatham
Courier
Controlled: Tri-County News (Lockport)/Eastern Niagara Edition
(Medina)/Pennysaver (Medina)/TV Signals (Medina)/Rural News
(Ogdensburg)/Columbia Views (Hudson)
North Carolina
Dailies: Citizen News-Record (Aberdeen)*/The Sampson Independent
(Clinton)*/The Concord Tribune*/The Daily News (Eden)/Bladen Daily Journal
(Elizabethtown)/The Daily Independent (Kannapolis)*/The Robesonian
(Lumberton)*/The McDowell News
*Publishes Sunday newspaper
-12-
<PAGE>
(Marion)/The News Herald (Morganton)*/The Richmond County Daily Journal
(Rockingham)*/Statesville Record & Landmark*
Non-Dailies: News-Herald (Ahoskie)/Mecklenburg Gazette (Davidson)/Gates County
Index (Gatesville)/Northampton News (Jackson)/Mooresville Tribune/Commonwealth
(Scotland Neck)/The North Carolina Beacon (Research Triangle Park)/The Valdese
News
Controlled: The Golf Outlook (Aberdeen)/Golden Opportunities (Ahoskie)/Sampson
County Shopping Guide and TV Schedule (Clinton)/The Cabarrus Observer Nugget
(Concord/Kannapolis)/The Edge (Concord/ Kannapolis) The Virginia Carolina
Beacon (Eden)/The Southeastern Times (Elizabethtown)/The Robeson Mid- Weekly
(Lumberton)/McDowell Express (Marion)/The Old Fort Post (Marion)/Shoppers Guide
(Mooresville/Davidson)/The Burke County Observer (Morganton)/Murfreesboro
Advantage/The Journal Advantage (Rockingham)/Landmark Observer (Statesville)
North Dakota
Daily: The Daily Journal (Devils Lake)
Controlled: The Country Peddler (Devils Lake)
Oklahoma
Dailies: News Capital & Democrat (McAlester)*/Sapulpa Daily Herald*
Non-Dailies: Hartshorne Sun
Controlled: Southeast Oklahoma Shopping News (McAlester)/Herald Extra
(Sapulpa)
Virginia
Dailies: The Journal Messenger (Manassas)/The News-Virginian (Waynesboro)
Controlled: The Journal Extra (Manassas)/Shenandoah Shopper (Waynesboro)
Daily newspapers are published in 30 markets in 12 states, and Sunday
newspapers are published in 17 markets in 8 states. The Company's dailies are
the only dailies of general circulation published in each of their respective
cities or towns, which are generally areas of small or medium populations.
However, other dailies published in adjacent or nearby locations also are
generally circulated in some of these markets. Each daily newspaper maintains
separate news reporting and editorial staffs.
Non-daily newspapers are published one or more times per week.
Non-dailies are published in 28 markets in 8 states. Many of the markets where
non-dailies are published are too small to support a daily newspaper. In
almost all cases, such markets are close to cities where the Company publishes
daily newspapers.
Shoppers are generally distributed free, on a weekly basis. They contain
certain local and classified advertising with little originally produced news
or editorial comment. The Company publishes shoppers in many of the markets
where it also publishes
* Publishes Sunday newspaper
-13-
<PAGE>
daily or non-daily newspapers. Shoppers typically are distributed to
non-subscribers of a Company daily or non-daily newspaper and allow the Company
to cover an entire market with advertising contained in its publications.
In December, 1993, the Company sold 33 of its smaller publications in 13
communities in 9 states. Included were 11 dailies (4 with Sunday editions), 7
paid weeklies, 13 free-distribution shoppers and 2 monthlies. The dailies had
a combined circulation of 37,675, each with less than 6,000 paid circulation.
The sale of these publications was designed to allow the Company to focus its
resources on larger publications.
The Company's daily and non-daily newspapers are published primarily for
home delivery and are generally sold by independent carriers and circulation
dealers. The Company's shoppers are distributed free of charge, by various
delivery methods, including third-class mail.
All publications are produced using photocomposition technology and
printed using an offset method. Automated text editing and classified
advertising systems are in operation at all of the newspapers.
The basic raw material of publishing operations is newsprint. The Company
purchases newsprint under contract with 18 suppliers in the United States and
Canada, the 5 largest of which provide approximately 94% of the tonnage used by
the Company. In accordance with the industry practice the Company's newsprint
contracts generally have one-year terms and provide for tonnage at prices
determined from time to time by the suppliers. The Company believes that its
newsprint sources of supply under existing arrangements are adequate and that
there are adequate alternative sources of supply.
Substantially all of the Company's publishing revenues are derived from
advertising and circulation.
Advertising rates and rate structures vary among the publications and are
based, among other things, on circulation and type of advertising (whether
classified, national or retail). Substantially all of the total publication
advertising revenues are derived from local retailers and classified
advertisers.
COMPETITION--NEWSPAPERS
While the Company's daily newspapers are the only daily newspapers of
general circulation published in their respective cities or towns, each of
these publications competes in varying degrees with other newspapers having a
regional or national circulation as well as with magazines, radio, television
and other advertising media. In addition, certain of the Company's daily
newspapers compete within their own markets with other daily newspapers of
general circulation published in adjacent or nearby cities and towns. There
are no local television stations in any of the Company's 30 daily newspaper
markets. Most of the
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<PAGE>
Company's non-daily newspapers and shoppers also compete with other advertising
media in their respective markets.
EMPLOYEES
The Company currently employs approximately 2,100 full-time persons, of
whom 590 are in its television operations, 1,220 are in its newspaper
operations, 260 are in its radio operations and 30 are in the Ithaca, N.Y.
headquarters. Two broadcasting operations have a total of approximately 14
full-time employees represented by unions. The Company has never experienced a
strike or work stoppage, and believes it has good relations with its employees.
Item 2. Properties
- --------------------
The Company uses equipment, buildings and land at each of the locations
listed above in "Item 1. Business" under the headings "Television
Broadcasting," "Radio Broadcasting," and "Newspaper Publishing." For a
discussion of the acquisition of properties by certain of the Company's
operating subsidiaries from RHP Incorporated, a company currently controlled by
the Company's Chairman, see "Item 13. Certain Relationships and Related
Transactions," below. No one location's property is material to the Company's
overall operations.
The Company's television stations are located in offices and studio
buildings of typically 8,000 square feet. All nine buildings are owned by the
Company. These stations transmit from antennas located on towers ranging from
840 feet to 2,300 feet above average terrain. Of the nine towers, the Company
owns eight and leases one tower under a lease expiring in 2015.
The Company's radio stations are typically located in 3,000 to 4,000
square foot offices and studio buildings. Of its eleven radio locations, nine
are owned and two are leased under leases expiring in 1999 and 2001.
Generally, the tower and antenna are located at a distance from the office and
studio, to obtain a height advantage. The Company's radio station towers range
from 150 feet to 2,000 feet above average terrain. Of 22 towers, the Company
owns 18 towers and leases four towers under leases expiring in various years
from 1996 through 2003.
The Company's daily newspaper operations are typically housed in 10,000
square foot, one-story buildings. Of the 30 daily newspaper buildings, 28 are
owned and two are leased under leases expiring in 1996 and 2003. All of the
Company's daily newspapers own their own printing presses, with the exception
of one daily newspaper, which leases its press.
The Company does not anticipate any material difficulties in renewing the
leases referred to above. The Company believes that its properties are
generally adequate for its operations, although opportunities to upgrade
facilities are continuously reviewed.
-15-
<PAGE>
Item 3. Legal Proceedings
- -------------------------
As noted above under the caption "Broadcast Licenses", in an order
released February 9, 1995, by the FCC Mass Media Bureau, the application for
renewal of the license of the Company's television station in Birmingham,
WBMG-TV, was granted on the condition that the station submit annual reports to
the FCC describing the station's affirmative action efforts. Absent a decision
by the FCC to reconsider the Bureau's order, either sua sponte or upon request
of an interested party, such order will become final 40 days from its release.
Even if the FCC were to reconsider the Bureau's order, management believes that
the station's license ultimately will be renewed, without a material adverse
effect on the Company's results of operations, financial condition, equity,
liquidity and capital resources.
On January 31, 1994, the licenses held by Roy H. Park Broadcasting of
Washington, Inc. (a wholly owned subsidiary of the Company), to operate radio
stations KEZX-AM and KEZX-FM, Seattle, Washington, were renewed for a short
term period ending February 1, 1995, with the requirement that annual reports
be submitted relating to the station's Equal Employment Opportunity Program.
Applications for renewal of the KEZX-AM/FM licenses were filed on October 3,
1994, and remain pending, with no objections to the renewals having been filed.
Under Section 307(c) of the Communications Act of 1934, as amended, the
stations are authorized to continue operating until final a decision on the
renewal applications is made.
As noted above (see "Limitations on Ownership of the Company's Stock and
Other Matters"), the currently pending application for transfer of control of
the Company and its broadcast subsidiary licensees has, to the Company's
knowledge, been opposed by only three parties, although one party, WVGO License
Limited Partnership and its general partner, Benchmark Radio Acquisition Fund
III Limited Partnership, has requested leave to withdraw its petition to deny.
Permitting withdrawal or reviewing the merits of that petition, regardless of
whether leave to withdraw is granted, is in the discretion of the FCC. The
Company cannot estimate when FCC action on the application might be expected.
There is currently pending before the U.S. Court of Appeals for the
District of Columbia Circuit an appeal from an FCC order denying informal
objections filed on behalf of Lindsay Television, Inc. ("LTI"). LTI, having
been denied a permit to construct a new television station at Charlottesville,
Virginia on the grounds that its proposed facility would cause interference to
the National Radio Astronomy Observatory at Green Bank, West Virginia,
challenged the license renewal applications of 47 television stations in
Maryland, Virginia, and the District of Columbia, including the Company's
stations in Roanoke, Virginia (WSLS-TV) and Richmond, Virginia (WTVR-TV). LTI
asserted that it was being unfairly singled out inasmuch as the renewal
applicants had not had to demonstrate that their stations
-16-
<PAGE>
would not cause similar interference. The FCC rejected LTI's arguments and
dismissed the informal objections on May 11, 1994. On June 10, 1994, LTI
appealed to the Court of Appeals. The FCC has filed an opposing brief in
which, inter alia, it argues that LTI lacks standing to challenge the grants of
the renewal applications. The case is scheduled for oral argument on March 27,
1995. The Company believes it is highly unlikely that LTI will prevail in its
appeal or that the proceeding will have a material adverse effect on the
Company's results of operations, financial condition, equity, liquidity and
capital resources.
The Company is not a party to any other lawsuit or proceeding which, in
the opinion of management, is likely to have a material adverse effect on the
Company's results of operations, financial condition, equity, liquidity and
capital resources.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable.
-17-
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
- ----------------------------------------------------------
The Company's Common Stock has traded in the over-the-counter market and has
been quoted on NASDAQ (symbol PARC) since its initial public offering in
October, 1983. On January 22, 1985, the Common Stock commenced trading in the
NASDAQ National Market System. As of the close of business on February 15,
1995, there were 558 holders of record of the Company's Common Stock; the
latest trading price of the Company's Common Stock was $28.75 on that date.
The following table sets forth for the periods indicated and as reported by
NASDAQ and as adjusted to give retroactive effect to the three-for-two stock
splits in the form of 50% stock dividends distributed in August, 1985, and
September, 1989, the range of high and low bid quotations through January 21,
1985, and the high and low sale prices subsequent to the January 22, 1985,
inclusion of the Common Stock in the NASDAQ National Market System.
Calendar Year High Low
1983 10 1/4 8 1/4
1984 12 7/8 8 1/4
1985 16 5/8 11 3/4
1986 23 14 5/8
1987 24 3/8 16
1988 19 7/8 16 3/8
1989 25 17 3/8
1990 22 1/4 10 1/4
1991 16 1/2 13 1/4
1992 18 1/4 14
1993
First Quarter 20 1/4 17 1/4
Second Quarter 20 1/2 18
Third Quarter 20 18
Fourth Quarter 24 19
1994
First Quarter 23 3/4 19
Second Quarter 24 21 1/4
Third Quarter 24 7/8 23
Fourth Quarter 29 25 7/8
Market makers for Park Communications, Inc., as of December 31, 1994, are: The
Goldman, Sachs Group, L.P.; First Albany Corporation; Wechsler & Krumholz,
Inc.; Herzog, Heine, Geduld, Inc.; Morgan Stanley & Co., Inc.; Mayer &
Schweitzer Inc.; Nash Weiss/Div. of Shatkin Investments; Neuberger & Berman;
Rauscher Pierce Pefsnes, Inc.; Troster Singer Corp.; and Weeden and Co., Inc.
The Company has never declared or paid any dividends and has no present
intention of doing so. Pursuant to the terms of the Merger Agreement with PAI,
the Company has agreed not to pay any dividends or make certain significant
expenditures prior to closing of the sale of the Company to PAI. If for
whatever
-18-
<PAGE>
reason the Merger Agreement is terminated, the declaration of dividends in
the future would be within the discretion of the Company's Board of Directors,
who would review such dividend policy from time to time. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in Item 7 below.
Item 6. Selected Financial Data
- -------------------------------
SELECTED FINANCIAL DATA
(CONSOLIDATED)
Year Ended December 31
1994 1993 1992 1991 1990
Gross Revenue $184,864 172,072 159,870 $149,180 $159,634
Net income 27,305 18,780 17,223 11,855 18,850
Net earnings per
share -- primary $ 1.32 $ .91 $ .83 $ .57 $ .91
Total assets 366,786 342,621 324,837 305,891 298,956
Long-term debt, excluding
current maturities 49,248 54,368 54,028 54,660 56,153
Weighted average shares
outstanding 20,744 20,702 20,700 20,700 20,700
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<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------------
1994 COMPARED TO 1993
In calendar 1994, the Company's gross revenue increased $12,800,000 (7%)
compared to 1993. The television division's gross revenue increased
$15,300,000 (24%), due first, to strong gains in local/regional, national and
political advertising, and second, to the acquisition in November, 1993 of
KALB-TV in Alexandria, Louisiana. The radio division's gross revenue increased
$5,400,000 (22%) due to strong improvement in local/regional and national
advertising. The newspaper division's gross revenue decreased $7,900,000 (9%)
because the operating revenues of the Company's smaller newspapers that were
sold in December, 1993 are not included in 1994.
Operating income before depreciation and amortization increased
$14,100,000 (30%) compared to 1993. Management of the Company relies on this
line item for monitoring cash flows and trends in operating results and pricing
of Company acquisitions historically have been based on a multiple of this line
item. The television division's operating income increased $8,200,000 (35%)
due to the reasons discussed above. The newspaper division's operating income
increased $3,800,000 (20%) primarily due to increases in advertising revenues
at the Company's newspapers and control of operating expenses. The radio
division's operating income increased $2,100,000 (48%) due to the reasons
discussed above.
The net income for 1994 increased $8,500,000 (45%) compared to the same
period in 1993.
Operating cash flow (net income plus depreciation and amortization)
increased $8,200,000 (24%) in 1994 from 1993.
1993 COMPARED TO 1992
In calendar 1993, the Company's gross revenue increased $12,200,000 (8%)
compared to 1992. The television division's gross revenue increased $6,400,000
(11%), primarily due to strong improvement in local/regional advertising, and
partially due to the acquisition in November, 1993, of KALB-TV in Alexandria,
Louisiana. The radio division's gross revenue increased $3,700,000 (17%),
primarily due to improved local/regional advertising and partially due to the
acquisition in October, 1992, of WNLS-AM/WTNT-FM in Tallahassee, Florida. The
newspaper division's gross revenue increased $2,200,000 (3%).
Operating income before depreciation and amortization increased $4,100,000
(10%) compared to calendar year 1992. The television division's operating
income increased $4,100,000 (22%) due to the reasons discussed above. The
radio division's operating income increased $800,000. The newspaper division's
operating income decreased $800,000 (4%).
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<PAGE>
Net income for calendar 1993 increased $1,600,000 (9%) from 1992 due to
the reasons discussed above.
Operating cash flow (net income plus depreciation and amortization)
increased $2,300,000 (7%).
LIQUIDITY
For the calendar year 1994, the net cash provided by operating activities
was $41,600,000. The net cash provided by investing and financing activities
was $21,300,000 during 1994. As of December 31, 1994, the Company had
$143,500,000 in cash, cash equivalents, and short-term investments. The
Company's current ratio (comparison of current assets to current liabilities),
a key indicator of liquidity, was a strong 9.9 to 1 as of December 31, 1994.
The Company expects that in calendar 1995, net cash provided by operating
activities will enable it to fund known investing and financing activity
requirements.
Previously, the Company's dividend policy has been to retain its earnings
for use in its business and not to pay cash dividends. On October 25, 1994,
the Company entered into an agreement to sell the Company through an all-cash
merger to a private investment concern for a total purchase price of
$711,427,000. A portion of the purchase price will be paid from the proceeds
of a $573,427,000 loan to be made to the acquiror; the remainder of the
purchase price ($138,000,000) will be derived from cash on the Company's books
at closing of the acquisition. Under the terms of the merger agreement
relating to the proposed acquisition, as amended, the Company is obligated to
ensure that such amount will be on the Company's books at closing; if such
amount is not on the Company's books at closing, the purchase price will be
reduced by the amount of any shortfall, which could, in turn, reduce the per
share price received by the Company's shareholders. The Company is also
obligated to refrain from making dividends, distributions and certain
significant expenditures prior to the closing date, unless consented to by PAI.
In this regard, PAI consented to the redemption of the Company's outstanding
Debentures. However, in lieu of redemption, all outstanding Debentures were
converted into Company Common Stock and, although cash was paid in lieu of
fractional shares, the amount paid in lieu of fractional shares was immaterial.
In addition, with respect to the Debentures which were converted, the Company
was not obligated to pay accrued interest on such Debentures. While the
Company believes that its cash flows will be sufficient to meet its liquidity
needs, if such cash flows are insufficient, the Company may be required to meet
its liquidity needs through its available cash, thereby resulting in a
reduction of the purchase price for the Company.
If the acquisition is not consummated, the Company might seek to sell to
another purchaser or might seek to sell the Company's assets to one or more
purchasers (e.g., selling one or
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<PAGE>
more divisions or particular properties). Depending upon how such a
transaction were structured, the Company's liquidity could be significantly
affected.
Over the last three calendar years inflation affected the Company's
performance in terms of higher costs for wages, salaries and equipment. The
Company, however, was able to offset these rising costs in part by increasing
advertising and circulation rates at most newspapers and by raising the
effective advertising rates in most television and radio broadcasting stations.
Management does not anticipate that inflation will have a material effect on
the Company's operations during the calendar year 1995.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
The Consolidated Financial Statements of the Company and its
subsidiaries as of December 31, 1994, are included on the following pages.
Supplementary data is not applicable.
-22-
<PAGE>
PARK COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994
-23-
<PAGE>
Report of Ernst & Young LLP Independent Auditors
Board of Directors and Shareholders
Park Communications, Inc.
We have audited the accompanying consolidated balance sheets of Park
Communications, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of income and retained earnings, and cash flows for
each of the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Park
Communications, Inc. at December 31, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for income taxes, as required by FASB
Statement No. 109, "Accounting for Income Taxes."
Ernst & Young LLP
Syracuse, New York
January 27, 1995
-24-
<PAGE>
- -------------------------------------------------
Park Communications, Inc. and Subsidiaries
Consolidated Balance Sheets
- -------------------------------------------------
(Dollars in Thousands Except Share and Per Share
Amounts)
Assets December 31
1994 1993
Current Assets:
Cash, cash equivalents and short-term investments. $143,500 $116,552
Accounts receivable, less allowance for doubtful
accounts of $1,598 in 1994 and $1,399 in 1993... 22,235 21,006
Inventory......................................... 1,170 1,201
Film contracts.................................... 2,446 2,485
Consulting/non-compete contracts.................. 825 915
Other............................................. 3,597 3,807
Total current assets............................ 173,773 145,966
Property, Plant and Equipment:
Land and improvements............................. 13,431 12,685
Buildings and leasehold improvements.............. 31,522 28,329
Newspaper equipment............................... 23,752 22,101
Broadcast equipment............................... 61,455 59,897
Furniture and fixtures............................ 10,535 9,723
Autos and trucks.................................. 3,956 3,474
144,651 136,209
Less accumulated depreciation and amortization.... (68,909) (64,346)
75,742 71,863
Intangible assets, net.............................. 109,797 116,096
Film contracts...................................... 2,777 2,431
Consulting/non-compete contracts.................... 3,390 4,503
Other assets........................................ 1,307 1,762
$366,786 $342,621
The accompanying notes are an integral part of the consolidated financial
statements.
-25-
<PAGE>
- -------------------------------------------------
Park Communications, Inc. and Subsidiaries
Consolidated Balance Sheets
- -------------------------------------------------
(Dollars in Thousands Except Share and Per Share Amounts)
Liabilities and Shareholders' Equity December 31
1994 1993
Current Liabilities:
Current maturities of long-term debt............. $ 713 $ 2,762
Current maturities of film contracts............. 2,521 2,410
Accounts payable................................. 2,539 3,052
Consulting/non-compete contracts................. 877 936
Interest......................................... 944 1,066
Income taxes..................................... 2,959 4,347
Accrued liabilities.............................. 4,027 3,964
Deferred income.................................. 2,909 2,781
Total current liabilities...................... 17,489 21,318
Long-term debt..................................... 49,248 54,368
Consulting/non-compete contracts................... 3,718 4,591
Deferred income taxes.............................. 10,601 8,738
Total liabilities.............................. 81,056 89,015
Commitments (See Note 10)
Shareholders' Equity:
Common stock-par value $ .16 2/3 per share:
Authorized 32,000,000 shares
Issued and outstanding 20,961,205 shares in
1994 and 20,708,977 in 1993................ 3,494 3,452
Paid in capital.................................. 18,701 13,924
Retained earnings................................ 263,535 236,230
Total shareholders' equity........................ 285,730 253,606
$366,786 $342,621
The accompanying notes are an integral part of the consolidated financial
statements.
-26-
<PAGE>
- -------------------------------------------------
Park Communications, Inc. and Subsidiaries
Consolidated Statements of Income and Retained Earnings
- -------------------------------------------------
(Dollars in Thousands Except Per Share Amounts)
Year Ended December 31
1994 1993 1992
Revenue:
Broadcasting.......................... $108,054 $ 87,321 $ 77,286
Newspapers............................ 76,810 84,751 82,584
Gross revenue....................... 184,864 172,072 159,870
Less agency and national
representative commissions.......... 15,961 12,763 11,331
Net revenue......................... 168,903 159,309 148,539
Operating expenses:
Cost of sales......................... 58,767 62,517 59,214
Selling, general and administrative... 48,931 49,726 46,347
107,698 112,243 105,561
Operating income before depreciation
and amortization................... 61,205 47,066 42,978
Depreciation and amortization:
Depreciation.......................... 8,142 7,775 6,913
Amortization.......................... 3,743 4,330 4,705
Amortization of excess of cost over net
assets acquired..................... 2,558 2,682 2,467
14,443 14,787 14,085
Operating income.................... 46,762 32,279 28,893
Interest expense........................ (3,722) (3,730) (3,835)
Interest income......................... 5,659 4,952 5,516
Other expense........................... (1,475) (470) (473)
Income before income taxes....... 47,224 33,031 30,101
Provision for income taxes.............. 19,919 14,251 12,878
NET INCOME.......................... 27,305 18,780 17,223
Retained earnings, beginning of year.... 236,230 217,450 200,227
RETAINED EARNINGS, end of year...... $263,535 $236,230 $217,450
Earnings per share:
Primary............................. $ 1.32 $ .91 $ .83
Fully diluted....................... $ 1.27 $ .90 $ .83
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
- -------------------------------------------------
Park Communications, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
- -------------------------------------------------
(Dollars in Thousands) Year Ended December 31
1994 1993 1992
Operating Activities:
Net income.....................................$ 27,305 $ 18,780 $ 17,223
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................ 14,443 14,787 14,085
Amortization of film contract rights and
consulting/non-complete contracts included
in operating expenses....................... 4,194 3,842 4,004
Payments on film contract liabilities........ (2,955) (2,757) (2,718)
Payments on consulting/non-compete contracts. (932) (1,225) (1,183)
Provision for losses on accounts receivable.. 897 919 622
Provision for deferred income taxes.......... 982 272 (92)
Loss (gain) on sale of property, plant
and equipment............................... 48 291 (27)
Changes in operating assets and liabilities
net of effects from the purchase and
disposal of companies:
Accounts receivable....................... (2,126) (1,738) (79)
Inventory and other assets................ 636 (187) 967
Accounts payable and accrued liabilities.. (1,055) (1,139) 818
Deferred income.......................... 128 169 268
Net cash provided by operating activities 41,565 32,014 33,888
Investing Activities:
Purchase of short-term investments.............(241,954) (62,586) (125,563)
Proceeds from short-term investments........... 277,843 66,929 107,750
Purchases of property, plant and equipment..... (12,517) (5,621) (5,147)
Purchases of acquired companies, net of cash
acquired..................................... --- (19,184) (22,303)
Proceeds from sale of property, plant, and
equipment ................................... 448 86 284
Proceeds from sale of companies ............... --- 6,336 ---
Net cash provided by (used in) investing
activities................................ 23,820 (14,040) (44,979)
Financing Activities:
Principal payments on long-term debt........... (2,757) (2,570) (1,846)
Proceeds from issuance of common stock......... 209 144 ---
Net cash (used) by financing activities... (2,548) (2,426) (1,846)
Increase (decrease) in cash and cash
equivalents................................. 62,837 15,548 (12,937)
Cash and cash equivalents, beginning of year.... 21,232 5,684 18,621
Cash and cash equivalents, end of year..........$ 84,069 $ 21,232 $ 5,684
Summary:
Cash and cash equivalents as above.............$ 84,069 $ 21,232 $ 5,684
Short-term investments......................... 59,431 95,320 99,663
$143,500 $116,552 $105,347
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE>
Park Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany accounts and transactions have been eliminated.
Cash Equivalents and Short-Term Investments
Cash equivalents are investments with maturities of three months or less
when purchased. Short-term investments, primarily GEC, GMAC, and Goldman
Sachs commercial paper, are investments with maturities in excess of
three months. At December 31, 1994 all investments are due to mature
within one year.
Effective January 1, 1994 the Company adopted FASB No. 115 "Accounting for
Certain Investments in Debt and Equity Securities". Under the new rules,
management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities are classified as held to maturity when the
Company has the positive intent and ability to hold the securities to
maturity. The investments at December 31, 1994 are classified as
securities held to maturity. These investments are stated at amortized
cost, which approximates their estimated fair value. Such amortization
along with interest on investments is included in interest income.
Inventory Valuation
Broadcast inventories are stated at the lower of cost (first-in;
first-out method) or market.
Newspaper inventories, consisting primarily of newsprint, are stated at
the lower of cost (primarily last-in; first-out method) or market. The
effect of using the last-in; first-out method (compared with the first-in;
first-out inventory method) is not considered significant.
Property, Plant, Equipment and Depreciation
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is provided on the straight-line method
over the estimated useful lives of the asset except for leasehold
improvements, which are amortized on the straight-line method over the
lease period. Accelerated methods are used for income tax reporting
purposes whenever available. Deferred income taxes are provided for this
timing difference between financial and income tax reporting methods.
Film Contract Rights
Film contract rights and the related liabilities are recorded at full
contract prices when purchased. The costs are charged to operations based
on the usage of films.
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<PAGE>
Consulting/Non-Compete Contracts Certain
subsidiary companies have consulting/non-compete contracts expiring
through 2010. Costs are amortized on a straight-line basis over the terms
of the related agreements.
Intangible Assets
Intangible assets are stated at cost and consist of advertising contracts,
network contracts, subscription lists, other intangibles (primarily
newspaper morgues, FCC licenses and audience valuations), and excess of
cost over net assets acquired. Intangible assets other than excess of
cost over net assets acquired, are being amortized by the straight-line
method over estimated lives ranging primarily from 7 to 40 years.
Network contracts ($8,238,000) acquired prior to October 31, 1970 were
assigned a cost upon acquisition and are not being amortized since, in the
opinion of management, there has been no diminution of value of these
acquired contracts.
Excess of cost ($1,214,000) of businesses acquired prior to October 31,
1970 is not being amortized since, in the opinion of management, there has
been no diminution of value of these acquired businesses. Excess of cost
incurred since October 31, 1970 is being amortized by the straight-line
method over a period of 40 years.
The carrying value of goodwill and other intangible assets are reviewed if
the facts and circumstances suggest that they may be impaired. If this
review indicates that goodwill or other intangibles will not be
recoverable, as determined based on future expected cash flows or other
fair market value determinations, the company's carrying value of the
goodwill or other intangibles is reduced.
Income Taxes
Effective January 1, 1993 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
FASB Statement No. 109, "Accounting for Income Taxes." The cumulative
effect of the accounting change was not material to net income for 1993.
Deferred Income
Deferred income is recorded on subscriptions prepaid by customers. Such
income is recognized when earned.
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<PAGE>
Earnings Per Share
Earnings per share of common stock is computed on the weighted average
number of common shares outstanding during each year. (dollars and shares
in thousands except per share amounts):
Year Ended December 31
1994 1993 1992
Primary:
Average Shares.......................... 20,744 20,702 20,700
Net income.............................. $ 27,305 $ 18,780 $ 17,223
Per Share amount........................ $ 1.32 $ .91 $ .83
Fully diluted:
Average shares
outstanding............................ 20,744 20,702 20,700
Assumed conversion
of 6.875% convertible
subordinated debentures................ 2,571 2,608 -- (a)
Totals..................................... 23,315 23,310 20,700
Net income................................. $ 27,305 $ 18,780 $ 17,223
Add 6.875% convertible
subordinated debenture
interest, net of taxes.................. 2,238 2,267 -- (a)
Totals..................................... $ 29,543 $ 21,047 $ 17,223
Per share amount........................... $ 1.27 $ .90 $ .83
(a) Conversion of 6.875% convertible subordinated
debentures would increase earnings per share.
-31-
<PAGE>
2. Intangible Assets
Intangible assets are comprised of the following (dollars in thousands):
December 31,
1994 1993
Advertising contracts................ $ 16,223 $ 16,223
Network contracts.................... 10,688 10,688
Subscription lists................... 26,017 26,017
Other intangibles.................... 30,956 30,956
Excess of cost over net assets
acquired............................ 102,813 102,811
186,697 186,695
Less accumulated amortization........ 76,900 70,599
$ 109,797 $ 116,096
3. Acquisitions and Dispositions
The Company acquired one television station in Louisiana in 1993, and one
television station in Kentucky, two radio stations in Florida, four news-
paper publications in Kentucky, Illinois, and North Carolina in 1992.
All of the acquisitions, which were not significant, were accounted for as
purchases and, accordingly, their results of operations since acquisition
have been included in the consolidated financial statements. Pro-forma
financial information is not presented as results of operations prior to
acquisition are not significant.
The excess of cost over net assets acquired amounted to $809,000 in 1993 and
$9,242,000 in 1992 and is being amortized over 40 years.
On December 31, 1993 the Company sold newspaper publications in 13 of its
smaller markets. Of these, 11 were daily newspapers, all with paid
circulation under 6,000. The impact of the sale of these publications was
not material to net income in 1993.
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<PAGE>
4. Long-Term Debt
The Company's long-term debt is comprised of the following (dollars
in thousands):
December 31
1994 1993
6 7/8% Convertible subordinated
debentures due March 15, 2011 (a).........$ 45,351 $ 49,995
Subordinated notes of certain news-
paper subsidiaries due to former
owners (b)................................ 744 1,193
Promissory notes (b)....................... 1,400 3,708
Film contracts, due in varying amounts
through 1999.............................. 4,987 4,644
Total debt............................. 52,482 59,540
Less: Current maturities of long term debt 713 2,762
Current maturities of film contracts 2,521 2,410
Long-term debt.......................$ 49,248 $ 54,368
(a) On March 11, 1986, the Company issued $50,000,000 principal amount of 6
7/8% convertible subordinated debentures due March 15, 2011 (the
"debentures"). The debentures are convertible at anytime prior to
maturity, unless previously redeemed, into shares of common stock of the
Company at a conversion ratio of 52.1739 shares of common stock for each
$1,000 principal amount of debentures. The debentures were called for
redemption by the Company on January 9, 1995 (see Note 10).
(b) The subordinated notes are payable in various installments through 1998
with interest primarily from 6% to 9%. Substantially all subordinated
debt is collateralized by property, plant and equipment or capital stock
of the acquired company. The promissory notes are payable in various
installments through 1998 with interest primarily from 5% to 8%.
Cash payments of interest were $3,788,000 in 1994, $3,787,000 in 1993 and
$3,822,000 in 1992.
The Company's long-term debt has a carrying value of $52,482,000 and a
fair market value of $71,926,000 at December 31, 1994. The fair market
value of the Company's long-term debt is determined primarily based on the
quoted market price of the Company's convertible subordinated debentures
(See Note 10).
The aggregate annual maturities on long-term debt, including film
contracts, payable over the next five years are as follows (dollars in
thousands):
Year Amount
1995................ $3,234
1996................ 1,814
1997................ 1,278
1998................ 783
1999................ 22
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<PAGE>
5. Income Taxes
Federal and state income tax expense is summarized as follows (dollars
in thousands):
Year Ended December 31
1994 1993 1992
Federal:
Current............................ $ 15,820 $ 11,488 $ 10,670
Deferred........................... 786 240 (146)
16,606 11,728 10,524
State:
Current............................ 3,117 2,491 2,300
Deferred........................... 196 32 54
3,313 2,523 2,354
Total income tax expense............. $ 19,919 $ 14,251 $ 12,878
Deferred tax expense results from timing differences arising primarily
from the use of accelerated depreciation methods for tax purposes.
The items comprising the differences in taxes on income computed at the
U.S. statutory rate and the amount provided by the Company are as
follows (dollars in thousands):
Year Ended December 31
1994 1993 1992
Computed tax expense at
U.S. statutory rate................ $ 16,529 $ 11,562 $ 10,234
Increase in tax expense
resulting from:
State income taxes, net of
federal income tax benefit 2,153 1,640 1,554
Amortization not tax
deductible...................... 879 928 839
Miscellaneous, net................ 358 121 251
Total income tax expense........ $ 19,919 $ 14,251 $ 12,878
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<PAGE>
Significant components of the Company's deferred tax liabilities and
assets are as follows (dollars in thousands):
December 31
Components of deferred taxes: 1994 1993
Tax over book depreciation and amortization..... $10,728 $ 8,861
Allowance for doubtful accounts and other....... (699) (660)
Net deferred tax liabilities.................... $10,029 $ 8,201
Classification of deferred taxes:
Non-current liabilities......................... $10,601 $ 8,738
Current assets.................................. (572) (537)
$10,029 $ 8,201
Total cash payments of federal and state income taxes were $ 20,011,000
in 1994, $14,030,000 in 1993, and $12,769,000 in 1992.
6. Leases
Certain operating facilities and equipment (see Note 8) are leased under
noncancellable operating agreements. Certain of the leases require the
Company or its subsidiaries to pay property taxes, insurance and
maintenance costs.
Lease expense related to the above and charged to operations was
approximately $1,743,000 in 1994, $2,019,000 in 1993 and $1,953,000 in
in 1992.
The aggregate minimum rentals through dates of expiration amount to
approximately $4,266,000 and the amounts payable over the next five
years are as follows (dollars in thousands):
Year Amount
1995............$ 606
1996............ 450
1997............ 381
1998............ 344
1999............ 249
7. Business Segments
The Company operates in three business segments: television
broadcasting, radio broadcasting and newspaper publishing. Television
and radio broadcasting operations involve the sale of time to
advertisers, network revenue and other revenue arising primarily from
programming and production. Newspaper operations involve the
publication and distribution of both paid daily and paid non-daily
newspapers and advertising publications (shoppers) from which revenues
are derived primarily from the sale of advertising linage and
circulation revenue.
-35-
<PAGE>
Financial information by business segment is as follows (dollars in
thousands):
Year Ended December 31
1994 1993 1992
Gross Revenue:
Television broadcasting............ $ 77,749 $ 62,460 $ 56,107
Radio broadcasting................. 30,305 24,861 21,179
Newspaper publishing............... 76,810 84,751 82,584
$184,864 $172,072 $159,870
Operating income before depreciation
and amortization:
Television broadcasting............ $ 31,328 $ 23,126 $ 19,028
Radio broadcasting................. 6,499 4,390 3,549
Newspaper publishing............... 23,378 19,550 20,401
$ 61,205 $ 47,066 $ 42,978
Depreciation and amortization:
Television broadcasting............ $ 5,219 $ 4,194 $ 3,360
Radio broadcasting................. 3,408 3,699 3,477
Newspaper publishing............... 5,816 6,894 7,248
$ 14,443 $ 14,787 $ 14,085
Additions to property, plant and
equipment:
Television broadcasting............. $ 7,794 $ 11,956 $ 9,668
Radio broadcasting.................. 1,251 957 2,243
Newspaper publishing................ 3,472 1,525 2,252
$ 12,517 $ 14,438 $ 14,163
Identifiable assets:
Television broadcasting............. $ 84,114 $ 81,733 $ 56,413
Radio broadcasting.................. 47,446 47,742 50,168
Newspaper publishing................ 92,653 97,583 114,827
Corporate........................... 142,573 115,563 103,429
$366,786 $342,621 $324,837
Operating income before depreciation and amortization is gross revenue less
agency and national representative commissions and operating expenses.
Interest expense, interest income, income taxes and other income (expense) have
been excluded in computing operating income before depreciation and
amortization. Depreciation and amortization by segment are shown separately.
Identifiable assets by industry segment represent those assets used in the
Company's operation in that segment. Corporate assets consist principally of
cash, cash equivalents and short-term investment.
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<PAGE>
8. Related Party Transactions
The Company, in the ordinary course of business, leases and rents certain
operating facilities and equipment (included in Note 6) from RHP
Incorporated and its subsidiaries. RHP Incorporated is wholly owned by
the Estate of Roy H. Park, the Chairman of the Board of the Company, and
by a marital trust for the benefit of the Chairman of the Board of the
Company. Such lease and rent payments were $977,000 in 1994, $1,265,000
in 1993, and $1,273,000 in 1992. In connection with these operating
facilities, in 1994 the Company purchased ten buildings and one tower from
RHP Incorporated and its subsidiaries at the appraised fair market value
of $4,415,000.
Additionally, certain officers of the Company are compensated by RHP
Incorporated for the performance of part-time management services.
During 1994, the Company placed $85,298 of promotional advertising with
Park Outdoor Advertising of New York, Inc. which is controlled by Roy H.
Park, Jr., a Director of the Company.
9. Shareholders Equity
During 1994 and 1993, the Company issued 9,950 and 8,810 shares
respectively of Common Stock under the terms of its Employee Stock
Purchase Plan. The issuance increased the value of Common Stock
outstanding by $1,658 in 1994 and $1,468 in 1993. The issuance increased
paid-in-capital by $207,602 in 1994 and $143,483 in 1993. The Employee
Stock Purchase Plan was terminated by the Company effective December 31,
1994.
During 1994, the conversion of $4,644,000 principal amount of convertible
subordinated debentures into 242,278 shares of Common Stock increased the
value of Common Stock outstanding by $40,388 and increased paid-in-capital
by $4,568,766.
10. Pending Merger and Debenture Redemption
On October 25, 1994, the Company entered into an agreement to sell the
Company to Park Acquisitions, Inc. ("PAI"), a private investment concern
headed by investors Donald R. Tomlin and Dr. Gary B. Knapp, for a total
purchase price of $711,427,000. The purchase price represents a per share
price of $30.50 per share, based upon 23,327,373 shares outstanding, which
number represents the sum of the number of outstanding shares as of
December 31, 1994, and the maximum number shares to be issued upon the
conversion of the Company's 6 7/8% Convertible Subordinated Debentures due
on March 15, 2011 (the "Debentures") at or prior to closing. The
Debentures were called for redemption on January 9, 1995 at a redemption
price of 101.38 percent of the principal amount of the Debenture being
redeemed, plus accrued interest from September 15, 1994, through February
15, 1995, the date of redemption; in lieu of redemption, the Debentures
may be converted into Company common stock. A portion of the purchase
price will be paid from the proceeds of a $573,427,000 loan to be made to
the acquiror by The Retirement Systems of Alabama; the remainder of the
purchase price ($138,000,000) will be derived from cash on the Company's
books at closing of the acquisition.
Under the terms of the Agreement and Plan of Merger dated October 25, 1994
among PAI, Park Acquisitions Subsidiary, Inc. ("PAS") and the Company, as
amended (the "Merger Agreement"), the Company is obligated to ensure that
it will have a minimum of $138,000,000 cash on its books at closing of the
acquisition after payment of all fees and costs related to the
transaction; which will approximate $8,000,000 and are payable only on the
closing of the transaction; if such amount is not on the Company's books
at closing, the purchase price for the Company will be reduced
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<PAGE>
by the amount of any shortfall. In the event the Company has more than
$150,000,000 cash on its books at closing after payment of all fees and
costs related to the transaction, such excess amount will be paid to the
Company's stockholders; however, the Company views this possibility as
unlikely. The Company is also obligated to refrain from making dividends,
distributions and certain significant expenditures prior to that date.
The acquiror has indicated its intention to retain the Company's current
management and employees.
The acquisition is contingent upon, among other things, approval of the
transaction by the Company's stockholders and approval by the Federal
Communications Commission (the "FCC") of the transfer of control of the
Company and its broadcast licenses to the acquiror. On November 7, 1994,
the Company and PAI filed with the FCC their respective applications for
approval of the transfer of control of the Company and its broadcast
licenses to PAI in connection with the acquisition of the Company by PAI.
To the Company's knowledge, only three objections to the transfer of
control were made to the FCC by December 22, 1994, the final date for
receipt of such objections. While review by the FCC of these objections
could extend the time related to the grant of FCC consent, the Company
does not believe that any of the objections will result in a denial of
such consent to the transfer. The estate of the company's founder, Roy H.
Park (the "Estate"), currently owns or controls approximately 88.6% of the
Company's issued and outstanding common stock (assuming conversion into
common stock of the Company's convertible Debentures held or controlled by
the Estate and no other conversions of Debentures other than those
converted as of December 31, 1994). Assuming conversion of all Debentures
prior to the closing, the Estate would own or control approximately 80.1%
of the Company's issued and outstanding common stock. The Estate has
agreed to vote in favor of the transaction and has given a proxy to PAI to
vote all of the Estate's shares in favor of the merger pursuant to the
terms of a "Stockholder's Agreement" dated October 25, 1994, among PAI,
PAS and the Estate. The Stockholder's Agreement and proxy terminate upon
termination of the Merger Agreement.
Under the Merger Agreement, the Company's Board of Directors has retained
the right to vote in favor of a "superior acquisition proposal". However,
in such an event, the Company would be required to pay a termination fee
of between $5,000,000 and $7,500,000 to PAI as set forth in the Merger
Agreement.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
-----------------------------------------------------------------
Not Applicable.
-38-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
DIRECTORS OF THE COMPANY
The following tabulation sets forth: (1) each Director; (2) the date each
Director was first elected a director of the Company; (3) the date each
Director's term expires; (4) the principal occupation of each for at least the
last five years; (5) other positions each has held with the Company and (6) the
age of each Director.
Director
Name and Principal Occupation or Employment Since/Term
For Past Five Years Age Expires
- ------------------------------------------------------------------------------
Dorothy D. Park - Chairman of the Board since November 82 10-13-71/4-11-95*
1993 and Secretary of the Company since 1971. Mrs. Park
is the widow of Roy H. Park, former Chairman of the Board
and Chief Executive Officer of the Company, who died on October
25, 1993. Mrs. Park is also a Director, President and Secretary
of RHP Incorporated. See "Item 13. Certain Relationships and
Related Transactions" herein.
Wright M. Thomas - Director since 1983, President and 59 8-22-83/4-11-95*
Chief Operating Officer of the Company since July 1987 and
Assistant Secretary of the Company since 1974. He was
Treasurer of the Company from August 1983 to May 1994;
Executive Vice President of the Company from April 1986 to
July 1987; Senior Vice President - Finance from July 1979
to April 1986; and Vice President - Finance from 1974 -
1979. Prior to that time, he was employed by INA
Corporation and Coopers & Lybrand. Mr. Thomas is also a
Director, Vice President and Assistant Secretary of RHP
Incorporated. See "Item 13. Certain Relationships and
Related Transactions" herein.
Harry F. Byrd, Jr. - Former United States Senator 80 8-22-83/4-11-95*
from the Commonwealth of Virginia 1965-1983. He owns two
daily newspapers and four weekly newspapers in Virginia. He
is also a Director of O'Sullivan Corporation in Virginia.
J. Markham Green - Limited Partner with The Goldman 51 7-29-93/4-11-95*
Sachs Group, L.P. since November 1992. Prior to that he was
General Partner with The Goldman Sachs Group L.P., and was
Co-Head of its Financial Services Industry Group from 1989
through November 1992. Mr. Green is a Director of
Transworld Music Corporation and of Global Capital
Reinsurance.
John F. McNair III - Retired President and Chief 67 11-4-83/4-11-95*
Executive Officer of Wachovia Bank of North Carolina and
Wachovia Corporation. He had been employed by the
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<PAGE>
Director
Name and Principal Occupation or Employment Since/Term
For Past Five Years Age Expires
- ------------------------------------------------------------------------------
Wachovia Corporation and its operating banks from 1968
through 1989. Mr. McNair has been a Director of The
Piedmont Natural Gas Company and a Director and President
of the North Carolina Railroad Company since July 1993.
He is also Chairman of the Board of the Research
Triangle Foundation.
Roy H. Park, Jr. - Chairman, President, Chief 56 11-29-93/4-11-95*
Executive Officer and owner of Park Outdoor Advertising of
New York, Inc. From 1981 until 1988, when he purchased Park
Outdoor Advertising of New York, Inc., he was employed by
Park Outdoor Advertising, Inc., and was its President and
Chief Executive Officer from 1984 to 1988 and was Vice
President from 1981 to 1984. Mr. Park is the son of
Dorothy D. Park and the late Roy H. Park. He is also a
Director and Senior Vice President of RHP Incorporated. See
"Item 13. Certain Relationships and Related Transactions"
herein. Mr. Park is Chairman of the Board of the Outdoor
Advertising Council of New York, Inc.
* Under the Company's by-laws, directors generally serve until their
successors are elected at the following annual meeting of the Company's
shareholders (typically held on the second Tuesday of April, unless the Board
otherwise decides). In view of the pending sale of the Company, it is not
expected that the Company will have an annual meeting in 1995. However, if for
whatever reason the sale of the Company is delayed or does not occur, the
Company's shareholders will be notified promptly of the date of the annual
meeting and will be provided with information relevant to that meeting.
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<PAGE>
OTHER OFFICERS OF THE COMPANY
Information regarding other officers of the Company is set forth below:
Name and Principal Occupation or Employment
For Past Five Years Age
- -----------------------------------------------------------------------------
W. Randall Odil - Has been Vice President-Television since October 52
1986. From February 1982 to October 1986, he was Vice President and
General Manager of the Company's WSLS-TV Station in Roanoke,
Virginia. Prior to February 1982, he was employed by WBKO-TV in
Bowling Green, Kentucky for 20 years in various positions, including
Vice President-Sales/Station Manager from 1978 to February 1982.
Rick A. Prusator - Has been Vice President-Radio since August 1991. 42
From August 1989 to August 1991 he was Vice President of Park
Broadcasting-Western Radio Division. He was Vice President and
General Manager of the Company's WNAX-AM Station in Yankton, South
Dakota, from February 1985 to August 1991. He was General Manager of
KYNT/KKYA in Yankton, South Dakota, from 1984 to February 1985. Prior
to February 1984, he was employed by Leighton Enterprises, Inc. from
1978 to December 1983, and was its Vice President of Iowa operations
from 1981 to December 1983.
Robert J. Rossi - Has been associated with the Company's newspaper 67
publishing business since 1974. He was Vice President-Newspapers from
1974 through 1978 and was a consultant to the Company from 1978
through October 1983. In October 1983, he became General Manager and
Editor of the Company's daily newspaper in Blytheville, Arkansas, and
regional coordinator of the Company's Central Newspaper Division. In
January 1986, he rejoined the Company's central management group as
Vice President-Newspapers.
Randel N. Stair - Has been the Chief Financial Officer and Treasurer 44
since May 1994. He has been Vice President-Controller of the Company
since 1980, Assistant Secretary since 1983 and Vice President of Park
Newspapers, Inc., a subsidiary of the Company, since 1979. Prior to
joining the Company he was employed by Multimedia, Inc., as Assistant
Corporate Controller.
Item 11. Executive Compensation
- -------------------------------
SUMMARY COMPENSATION TABLE
The following table sets forth the total cash and non-cash
compensation for the five most highly compensated executive
officers.
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<PAGE>
Annual Compensation
--------------------------------
(a) (b) (c) (d)
Name and Principal Positions Year Salary/1 Bonus
- -----------------------------------------------------------------
Wright M. Thomas 1994 241,384/2 --
President, Chief Operating Officer 1993 184,440 --
and Assistant Secretary 1992 177,977 --
W. Randall Odil 1994 165,972 58,911
Vice President-Television 1993 162,150 25,799
1992 157,977 24,607
Rick A. Prusator 1994 126,074 21,071
Vice President - Radio 1993 110,212 3,609
1992 99,644 23,071
Robert J. Rossi 1994 162,589 36,999
Vice President-Newspapers 1993 162,630 --
1992 158,415 18,766
Randel N. Stair 1994 126,621 10,000
Vice President-Chief Financial 1993 122,258 --
Officer, Controller, Treasurer 1992 119,087 10,000
Assistant Secretary
/1 Amounts are after voluntary salary reductions associated with the election
to treat health insurance premiums on a pre-tax basis.
/2 Pursuant to a deferred compensation arrangement with the Company, Wright M.
Thomas may elect to defer a portion of his annual salary, not to exceed the
greater of $30,000 or 25% of his salary. Such deferred compensation is payable
with interest in installments on retirement or termination of employment. Such
deferred compensation is included in this category.
PENSION PLAN TABLE
W. Randall Odil, Vice President-Television, was a participant in a pension
plan during 1994 of one of the Company's subsidiaries, Roy H. Park Broadcasting
of Roanoke, Inc., where he formerly was employed. The Pension Plan Table below
shows his estimated annual benefits payable under the Plan at retirement, based
on estimated levels of the average final salary and years of service.
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ROY H. PARK BROADCASTING OF ROANOKE, INC.
RETIREMENT PLAN
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFITS PAYABLE
YEARS OF SERVICE
Average
Final Salary 10 yrs 15 yrs 20 yrs 25 yrs
- -----------------------------------------------------
$ 20,000 $ 4,000 $ 6,000 $ 8,000 $10,000
40,000 8,000 12,000 16,000 20,000
60,000 12,000 18,000 24,000 30,000
80,000 16,000 24,000 32,000 40,000
100,000 20,000 30,000 40,000 50,000
120,000 24,000 36,000 48,000 60,000
140,000 28,000 42,000 56,000 70,000
The annual pension benefits to be awarded to Mr. Odil under the Plan will be
based on Mr. Odil's average annual salary during his employment with the
Company. For purposes of determining Mr. Odil's benefits under the Plan, the
average annual salary computation assumes that Mr. Odil would be compensated as
if he were still an employee of Roy H. Park Broadcasting of Roanoke, Inc., and
is not based upon his compensation as set forth in the Summary Compensation
Table. Based upon the foregoing assumption, his salary would be $123,243 as of
December 31, 1994, and he has 12 years of credited service.
The benefits in the Pension Plan Table are computed based on straight-life
annuity amounts. The benefits listed in the Pension Plan Table are not subject
to any deductions for Social Security or any other offset amounts.
Effective February 1, 1995, the retirement plan was amended to increase the
formula used to calculate benefits. The impact of this change on Mr. Odil's
benefits has not been determined. The Company is obligated to pay a
supplemental retirement benefit to Mr. Odil in the event of premature
termination of his employment before earning a full retirement benefit. The
benefit would be paid in one of three ways, as elected by Mr. Odil. The cost
of the benefit under each method of payment would be the same and would be
approximately $190,000 if Mr. Odil's employment terminated in 1995.
Pursuant to a contingent retirement agreement, Wright M. Thomas is entitled
to receive certain annual payments in the event of retirement at age 65 if he
is then employed by the Company. The size of such payments will be based on
approximately 50% of his average annual salary during the five year period
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immediately preceding retirement, less the annual amount of retirement income
payable to him under the Federal Social Security Act or any other similar plan
which is a substitute for that Act that may be established under federal law.
Although his future salary cannot be predicted with any level of certainty, if
the payments under this plan would have been based on his salary during the
previous five years, such amount would be approximately $81,000 per year during
his lifetime.
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
Effective July 1, 1994, the Company entered into an employment agreement
with Wright M. Thomas, which provides for (1) an annual salary of $250,000 for
three years, and (2) a three-year non- competition/consultation period with a
fee of $100,000 per year. In the event of Mr. Thomas' premature termination of
employment for specified reasons, including termination by the Company other
than for cause, Mr. Thomas will be paid liquidated damages equal to his salary
for the remaining term of the agreement, offset by compensation from other
employment and subject to coordination with the non-competition/consultation
period.
Pursuant to the Company's Retention Incentive Plan, W. Randall Odil, Rick
A. Prusator, Robert J. Rossi and Randel N. Stair would each be entitled to a
retention bonus if employed on the closing date of a sale of the Company. Each
officer's bonus would equal his annual salary. The Plan would also provide
severance benefits to an officer upon (1) involuntary termination of employment
for reasons other than cause within 2 years after a sale, or (2) refusal of a
position that is not comparable to the officer's current position or that
requires a move of more than 35 miles. The severance benefit would be the
greater of the officer's annual salary or one-twelfth of his annual salary for
each year of service.
Under the Company's home purchase program, an eligible officer may elect
to have the Company buy his home if the officer's employment is involuntarily
terminated (other than for cause) within 2 years after a sale of the Company
and the officer obtains a new job which requires him to move. The Company will
buy the house for the average of three appraisals. The program is not designed
to provide additional compensation to the officer. Wright M. Thomas, W.
Randall Odil, Rick A. Prusator, and Randel N. Stair are eligible for the home
purchase program.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1994, the Compensation Committee consisted of two
non-employee directors, John F. McNair III and Harry F. Byrd, Jr. In addition,
Dorothy D. Park, as the
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Company's Chairman of the Board, is an ex officio member of the Compensation
Committee. There were no interlocking relationships between members of the
Compensation Committee and directors or officers of the Company. As discussed
more fully below under "Certain Relationships and Related Transactions," during
fiscal year 1994 the Company leased and rented certain operating facilities and
equipment from RHP Incorporated, which is wholly owned by the Estate of Roy H.
Park, by Mr. Park's widow, Dorothy D. Park, and by a marital trust for the
benefit of Mrs. Park. Mrs. Park is currently the personal representative of
Mr. Park's Estate. Such lease and rental payments were $977,000 in 1994. On
November 30, 1994, certain of the Company's operating subsidiaries purchased
eleven properties from RHP Incorporated for $4,415,000, which properties
previously had been leased by the Company. The price for these acquisitions
was based on independent appraisals and approved by the Company's outside
directors. In addition, also as discussed under "Certain Relationships and
Related Transactions," the Company placed promotional advertising through a
division of RHP Incorporated. The total amount of discounts retained by RHP
Incorporated for services provided to the Company during fiscal year 1994 was
$46,515. As discussed below, Dorothy D. Park is currently a Director,
President and Secretary of RHP Incorporated; Roy H. Park, Jr. is a Director
and Senior Vice President of RHP Incorporated and Wright M. Thomas is a
Director, Vice President and Assistant Secretary of RHP Incorporated. Also
during 1994, the Company's radio stations in Syracuse, New York paid $85,298
for advertising from Park Outdoor Advertising of New York, Inc. which is
controlled by Roy H. Park, Jr.
DIRECTORS' MEETINGS AND COMPENSATION
The Board of Directors meets on a regularly scheduled basis. During
fiscal 1994 the Board met on 10 occasions. Each of the Directors attended at
least seventy-five percent of the aggregate number of meetings of the full
board and the respective committees thereof on which such Director served.
The Board of Directors has assigned certain responsibilities to
committees. The Audit Committee recommends the appointment of the independent
public accountants and consults with the independent public accountants on a
periodic basis on matters relating to internal financial controls and
procedures. The current members of the Audit Committee are Harry F. Byrd, Jr.
(Chairman), John F. McNair III, and Dorothy D. Park. The Board of Directors has
not created a Nominating Committee.
The Compensation Committee reviews and approves the compensation of
executive officers. The Compensation Committee is currently composed of two
outside directors, John F. McNair III
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(Chairman) and Harry F. Byrd, Jr. In addition, under the Company's Bylaws,
the Company's Chairman of the Board is an ex officio member of the Compensation
Committee.
The Audit Committee met once during 1994. The Compensation Committee met
five times during 1994.
For their services on the Board, non-employee directors are paid $12,000
per year and also receive $600 for each meeting attended, and an additional
$400 for each committee meeting attended.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
- ---------------------------------------------------------------
OWNERSHIP BY CERTAIN BENEFICIAL OWNERS OF MORE THAN 5% OF COMMON
STOCK.
Name and Address
of Beneficial No. of Shares Percent
Owner Beneficially Owned of Class
- -----------------------------------------------------------------
Dorothy D. Park 18,686,755* 80.11%*
P.O. Box 550
Ithaca, NY 14851
* Mrs. Park is the Personal Representative of the Estate of Roy H. Park (the
"Estate"), former Chairman of the Board and Chief Executive Officer of the
Company. As of the close of business on February 15, 1995, the Estate held
approximately 80.10% of the Company's outstanding Common Stock. Of the shares
listed above, 18,684,505 are held by Mrs. Park in her capacity as Personal
Representative of the Estate. As Personal Representative of Mr. Park's
Estate, Mrs. Park has the power, subject to the provisions of Mr. Park's will,
applicable state law and her fiduciary duties and obligations as Personal
Representative, to control the shares of the Company previously held by Mr.
Park, which power includes but is not limited to the power to vote and dispose
of such shares. As noted below in Item 14, pursuant to the terms of the
Stockholder's Agreement among the Estate, PAI and PAS, dated October 25, 1994,
the Estate has given PAI a proxy to vote the Estate-held shares in favor of the
Merger Agreement. The proxy will remain in effect so long as the Merger
Agreement remains in effect.
Under Mr. Park's will, an amount of shares previously held by Mr. Park
equal to 51% of the Company's outstanding Common Stock was bequeathed to Park
Foundation, Inc., a North Carolina
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non-profit corporation ("Park Foundation"). Mrs. Park is the Chairman and
Secretary and one of three current members of the Board of Directors of Park
Foundation. The other two Directors of Park Foundation are Wright M. Thomas
(President, Chief Operating Officer and a Director of the Company) and Adelaide
Park Gomer, daughter of Dorothy D. Park and the late Roy H. Park. Park
Foundation has consented to the decision to sell the Estate- held shares.
After payment of all debts, expenses of estate administration, and estate,
legacy, succession, transfer and like taxes of the estate, the residue of Mr.
Park's Estate, if any, is also bequeathed to Park Foundation. If the Merger is
consummated, in lieu of the disposition of the Estate-held shares described
above, the proceeds of such shares will be distributed in accordance with
applicable law. On June 9, 1994, Mrs. Park, in her capacity as surviving
spouse of Mr. Park, exercised her right of election granted under New York law
N.Y. E.P.T.L. S.5- 1.1-A. By making the election, Mrs. Park is entitled to
her "elective share" of the Estate as determined under that statute, a portion
of which will be satisfied by a contribution from Park Foundation. By virtue
of Park Foundation's contribution to her elective share, Mrs. Park may receive
a portion of the proceeds from the sale of the Estate-held shares, although the
amount of proceeds, if any, to which she would be entitled cannot be determined
at this time.
COMMON STOCK OWNED BY DIRECTORS AND OFFICERS
AS OF FEBRUARY 15, 1995
Name of Beneficial No. of Shares Percent
Owners Beneficially Owned of Class
- --------------------------------------------------------------------------
Dorothy D. Park* - Chairman of the Board
and Secretary 18,686,755 80.11%
Wright M. Thomas - Director, President,
Chief Operating Officer, and
Assistant Secretary 3,210 --
Harry F. Byrd, Jr. - Director 6,750 --
J. Markham Green - Director -- --
John F. McNair III - Director 2,250 --
Roy H. Park, Jr. - Director 1,000 --
W. Randall Odil - Vice President - Television 478 --
Rick A. Prusator - Vice President - Radio 100 --
Robert J. Rossi - Vice President - Newspapers 1,145 --
Randel N. Stair - Vice President - Chief Financial
Officer, Controller, Treasurer and
Assistant Secretary 925 --
All Directors and Officers as a Group 18,702,613 80.17%
* Dorothy D. Park is Personal Representative of the Estate of Roy H. Park and
18,684,505 of the shares listed above represent
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<PAGE>
shares held by her in that capacity. See "Ownership By Certain Beneficial
Owners of More Than 5% of Common Stock" above.
With the exception of Dorothy D. Park, no director is considered to be the
beneficial owner of more than 1% of the Company's outstanding Common Stock.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
The Company, in the ordinary course of business, leased and rented certain
operating facilities and equipment from RHP Incorporated, which is wholly owned
by the Estate of Roy H. Park, by Mr. Park's widow, Dorothy D. Park, and by a
marital trust for the benefit of Mrs. Park. In her capacity as Personal
Representative of the Estate of Roy H. Park, Mrs. Park controls the shares
formerly owned by Mr. Park. In addition, Mrs. Park is a Director, President
and Secretary of RHP Incorporated, Roy H. Park, Jr. is a Director and Senior
Vice President of RHP Incorporated and Wright M. Thomas is a Director, Vice
President and Assistant Secretary of RHP Incorporated. Such lease and rental
payments were $977,000 in 1994. On November 30, 1994, certain of the Company's
operating subsidiaries purchased eleven properties from RHP Incorporated for
$4,415,000, which properties previously had been leased by the Company. The
price for these acquisitions was based on independent appraisals and approved
by the Company's outside directors. In addition, the Company places
promotional advertising through Agricultural Advertising and Research, Inc., a
recognized advertising agency which is a division of RHP Incorporated. For
advertising placed through Agricultural Advertising and Research, Inc., the
agency receives the standard advertising discount given by the media on
advertising placed, and refunds up to two-thirds of the discount to the
particular company placing the promotional advertising. Such net advertising
discounts retained by RHP Incorporated were $46,515 in 1994. Also during 1994,
the Company's radio stations in Syracuse, New York paid $85,298 for advertising
from Park Outdoor Advertising of New York, Inc., which is controlled by Roy H.
Park, Jr.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- ----------------------------------------------------------------
(a.) 1. Financial Statements and Report of Independent Auditors
set forth in Item 8 herein.
2. Financial Statement Schedules Included
in this Annual Report on Form 10-K
II - Valuation and qualifying accounts and reserves
for the years ended December 31, 1994, 1993
and 1992
All other schedules are inapplicable and, therefore,
have been omitted.
3. Exhibits
2.1 - Agreement and Plan of Merger dated as of October 25, 1994, among
Park Acquisitions, Inc., Park Acquisitions Subsidiary, Inc., and Park
Communications, Inc., filed as Exhibit 2.0 of the Company's Form 10-Q filed on
November 9, 1994, File No. 0-12743, and incorporated herein by reference.
2.2 - Agreement Regarding Cash balance and Amendment No. 1 to the
Agreement and Plan of Merger dated as of October 25, 1994, among Park
Acquisitions, Inc., Park Acquisitions Subsidiary, Inc. and Park Communications,
Inc., filed as Exhibit 2.1 of the Company's Form 8-K filed on January 12, 1995,
File No. 0-12743, and incorporated herein by reference.
2.3 - List of contents of all schedules to the Agreement and Plan of
Merger among Park Acquisitions, Inc., Park Acquisitions Subsidiary, Inc. and
Park Communications, Inc., filed as Exhibit 2.2 of the Company's Form 8-K filed
on January 12, 1995, File No. 0-12743, and incorporated herein by reference.
3.1 - Certificate of Incorporation as Amended, filed as Exhibit 3.1 of
the Company's Registration Statement on Form S-1 filed on September 1, 1983,
File No. 2-86258 and incorporated herein by reference. Amendment to
Certificate of Incorporation dated June 30, 1989 filed as Exhibit 4.1 of the
Company's Registration Statement on Form S-8 filed on March 29, 1993, File No.
33-60238, and incorporated herein by reference.
3.2 - By-laws as amended and adopted on July 12, 1994.
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<PAGE>
4.1 - Certificate of Incorporation (included as Exhibit 3.1) filed as
Exhibit 4.1 of the Company's Registration Statement on Form S-1 filed on
September 1, 1983, File No. 2-86258 and incorporated herein by reference.
Amendment to Certificate of Incorporation dated June 30, 1989 (included in
Exhibit 3.1), filed as Exhibit 4.1 of the Company's Registration Statement on
Form S-8 filed on March 29, 1993, File No. 33-60238 and incorporated herein by
reference. By-laws as amended and adopted on July 12, 1994, and filed as
Exhibit 3.2 herein.
4.2 - Form of Indenture, dated as of March 1, 1986, to Wachovia Bank
and Trust Company, N.A., Trustee, filed as Exhibit 4.2 of the Company's
Registration Statement on Form S-1 filed on February 26, 1986, File No. 33-3588
and incorporated herein by reference.
4.3 - Form of Debenture, filed as Exhibit 4.3 of the Company's
Registration Statement on Form S-1 (Amendment No. 1) filed on March 4, 1986,
File No. 33-3588 and incorporated herein by reference.
4.4 - Specimen of Common Stock certificate, filed as Exhibit 4.4 of
the Company's Registration Statement on Form S-1 filed on February 26, 1986,
File No. 33-3588 and incorporated herein by reference.
4.5 - The Company hereby agrees to file upon request of the Securities
and Exchange Commission a copy of all instruments, not otherwise filed, with
respect to long-term debt of the Company or any of its subsidiaries for which
the total amount of debt authorized under such instrument does not exceed 10%
of the total assets of the Company and its subsidiaries on a consolidated
basis.
10.1 - Television broadcasting network affiliation agreements and
consents to assignment to the Company or its subsidiaries of such agreements
listed below, filed as Exhibit 10.1 (a) through (k) of the Company's
Registration Statement on Form S-1 filed on September 1, 1983, File No. 2-86258
and incorporated herein by reference.
(a) Contract for Affiliation between WNCT-TV in Greenville, NC
and CBS
(b) Consent to Assignment of WNCT-TV Affiliation to Roy H. Park
Broadcasting, Inc.
(c) Contract for Affiliation between WDEF-TV in Chattanooga, TN
and CBS
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<PAGE>
(d) Consent to Assignment of WDEF-TV Affiliation to Roy H. Park
Broadcasting, Inc.
(e) Contract for Affiliation between WJHL-TV in Johnson City,
TN and CBS
(f) Consent to Assignment of WJHL-TV Affiliation to Roy H. Park
Broadcasting of the Tri-Cities, Inc.
(g) Contract for Affiliation between Havens & Martin, Inc. in
Richmond, VA and CBS
(h) Consent to Assignment for WTVR-TV Affiliation to Roy H.
Park Broadcasting of Virginia, Inc.
(i) Contract for Affiliation between WUTR-TV in Utica, NY and
ABC
(j) Contract for Affiliation between WSLS-TV in Roanoke, VA and
NBC
(k) Contract for Affiliation between WBMG-TV in Birmingham, AL
and CBS
10.2 - Television broadcasting network affiliation agreement and
consent to assignment to a subsidiary of the Company of such agreement listed
below, filed as Exhibit 10.2 (a) through (b) of the Company's 1991 Annual
Report on Form 10-K filed on March 13, 1992, File No. 0-12743 and incorporated
herein by reference.
(a) Contract for affiliation between WTVQ-TV in Lexington, KY
and ABC
(b) Consent to assignment of WTVQ-TV affiliation to Park
Broadcasting of Kentucky, Inc.
10.3 - Television broadcasting network affiliation agreement and
consent to assignment to a subsidiary of the Company of such agreement listed
below, filed as Exhibit 10.3 (a) and (b) of the Company's 1993 Annual Report on
Form 10-K filed on March 31, 1994, File No. 0-12743 and incorporated herein by
reference.
(a) Contract for affiliation between KALB-TV in Alexandria, LA.
and NBC.
(b) Consent to assignment of KALB-TV affiliation to Park
Broadcasting of Louisiana, Inc.
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<PAGE>
10.4 - FCC television license renewal certificates listed below, filed
as Exhibit 10.3 (a) through (c) of the Company's 1992 Annual Report on Form
10-K filed on March 25, 1993, File No. 0-12743 and incorporated herein by
reference.
(a) WJHL-TV
(b) WDEF-TV
(c) WTVQ-TV
10.5 - FCC radio license renewal certificates listed below, filed as
exhibit 10.11 (a) through (d) of the company's 1988 Annual Report on Form 10-K
filed on March 28, 1989, File No. 0-12743 and incorporated herein by
reference.
(a) WTVR-AM
(b) WTVR-FM
(c) WNCT-AM
(d) WNCT-FM
10.6 - FCC television license renewal certificate.
(a) WUTR-TV
10.7 - FCC radio license renewal certificates listed below, filed as
exhibit 10.12 (a) through (d) of the Company's 1989 Annual Report on Form 10-K
filed on March 29, 1990, File No. 0-12743 and incorporated herein by
reference.
(a) WDEF-AM
(b) WDEF-FM
(c) KWLO-AM
(d) KFMW-FM
10.8 - FCC radio license renewal certificates listed below, filed as
exhibit 10.10 (a) through (e) of the Company's 1990 Annual Report on Form 10-K
filed on March 26, 1991, File No. 0-12743 and incorporated herein by
reference.
(a) KJJO-AM (formerly KZOW-AM)
(b) KJJO-FM
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(c) KWJJ-AM
(d) KWJJ-FM
(e) WNAX-AM
10.9 - FCC radio license renewal certificates listed below, filed as
Exhibit 10.9 (a) through (d) of the Company's 1991 Annual Report on Form 10-K
filed on March 13, 1992, File No. 0-12743 and incorporated herein by
reference.
(a) WHEN-AM
(b) WHEN-FM (formerly WRHP-FM)
(c) WPAT-AM
(d) WPAT-FM
10.10 - FCC television license renewal certificates listed below, filed
as Exhibit 10.10 (a) through (c) of the Company's 1991 Annual Report on Form
10-K filed on March 13, 1992, File No. 0-12743 and incorporated herein by
reference.
(a) WNCT-TV
(b) WTVR-TV
(c) WSLS-TV
10.11 - FCC radio license renewal certificate listed below, filed as
Exhibit 10.11 (a) of the Company's 1991 Annual Report on Form 10-K filed on
March 13, 1992, File No. 0-12743 and incorporated herein by reference.
(a) WNAX-FM (Formerly WQHG-FM and KBCM-FM)
10.12 - FCC authorization to operate television station WBMG-TV,
Birmingham, Alabama, beyond the license expiration date pending final
determination on license renewal application received by the FCC on November
26, 1991, filed as Exhibit 10.12 (a) of the Company's 1992 Annual Report on
Form 10-K filed on March 25, 1993, File No. 0-12743 and incorporated herein by
reference.
10.13 - FCC television license renewal and consent to assignment for
station listed below, filed as Exhibit 10.13(a) of the Company's 1993 Annual
Report on Form 10-K filed on March 31, 1994, File No. 0-12743, and incorporated
herein by reference.
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<PAGE>
(a) KALB-TV
10.14 - FCC authorization to operate radio stations listed below beyond
the license expiration date pending final determination on license renewal
application received by the FCC on October 3, 1994.
(a) KEZX-AM
(b) KEZX-FM
10.15 - FCC radio license renewal certificates and consents to
assignment for stations listed below, filed as Exhibits 10.15(a) and 10.15(b)
of the Company's Annual Report on Form 10-K filed on March 31, 1994, File No.
0-12743, and incorporated herein by reference.
(a) WNLS-AM (formerly WYYN-AM)
(b) WTNT-FM
10.16 - Contingent retirement arrangement with W.M. Thomas, filed as
Exhibit 10.10 of the Company's Registration Statement on Form S-1 filed on
September 1, 1983, File No. 2-86258 and incorporated herein by reference.
10.17 - FCC consent to transfer control from Roy H. Park to Dorothy D.
Park, Personal Representative of the Estate of Roy H. Park, filed as Exhibit
10.19 of the Company's Annual Report on Form 10-K filed on March 31, 1994, File
No. 0-12743, and incorporated herein by reference.
10.18 - Stockholder's Agreement, dated as of October 25, 1994, among
Dorothy D. Park, as Personal Representative of the Estate of Roy H. Park, Park
Acquisitions, Inc., and Park Acquisitions Subsidiary, Inc., filed as Exhibit
10.0 of the Company's Form 10-Q filed on November 9, 1994, File No. 0-12743,
and Incorporated herein by reference.
10.19 - Employment Agreement effective as of July 1, 1994, by and
between the Company and Wright M. Thomas.
10.20 - Form of Retention Incentive Plan effective May 1, 1994, by and
between the Company and each of W. Randall Odil, Rick A. Prusator, Robert J.
Rossi and Randel N. Stair.
10.21 - Form of Home Purchase Program between the Company and each of
Wright M. Thomas, W. Randall Odil, Rick A. Prusator and Randel N. Stair.
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21.1 - List of subsidiaries of the Company.
27 - Financial Data Schedule.
99.1 - Form of Notice provided to holders of the Company's issued and
outstanding 6 - 7/8% Convertible Subordinated debentures (due March 15, 2011),
filed as Exhibit 99.0 of the Company's Form 8-K filed on January 12, 1995, File
No. 0-12743 and incorporated herein by reference.
(b) No reports on Form 8-K were filed for the three months
ended December 31, 1994.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PARK COMMUNICATIONS, INC.
Date: February 24, 1995 /s/ Dorothy D. Park
----------------------- -----------------------------
Dorothy D. Park
Chairman of the Board of
Directors and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- ----------------------- ------------------------ -------
/s/Dorothy D. Park Chairman of the Board 2/24/95
- ----------------------- and Secretary
Dorothy D. Park
/s/Harry F. Byrd, Jr. Director 2/24/95
----------------------
Harry F. Byrd, Jr.
/s/J. Markham Green Director 2/24/95
- -----------------------
J. Markham Green
/s/John F. McNair III Director 2/24/95
- -----------------------
John F. McNair III
/s/Wright M. Thomas President, Chief Operating 2/24/95
- ----------------------- Officer, Assistant
Wright M. Thomas Secretary and Director
/s/Roy H. Park, Jr. Director 2/24/95
- -----------------------
Roy H. Park, Jr.
/s/Randel N. Stair Vice President - Chief 2/24/95
----------------------- Financial Officer,
Randel N. Stair Controller, Treasurer
and Assistant Secretary
(Principal Financial Officer)
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<PAGE>
<PAGE> INDEX
EXHIBIT INDEX
Exhibit
-------
(a) Exhibits
3.2 - By-laws as amended and adopted on July 12, 1994.
10.6 - FCC television license renewal certificate.
(a) WUTR-TV
10.14 - FCC authorization to operate radio stations listed below beyond
the license expiration date pending final determination on license renewal
application received by the FCC on October 3, 1994.
(a) KEZX-AM
(b) KEZX-FM
10.19 - Employment Agreement effective as of July 1, 1994, by and between
the Company and Wright M. Thomas.
10.20 - Form of Retention Incentive Plan effective May 1, 1994, by and
between the Company and each of W. Randall Odil, Rick A. Prusator, Robert J.
Rossi and Randel N. Stair.
10.21 - Form of Home Purchase Program between the Company and each of
Wright M. Thomas, W. Randall Odil, Rick A. Prusator and Randel N. Stair.
21.1 - List of subsidiaries of the Company.
27 - Financial Data Schedule.
(b) Financial Statement Schedules
Schedule II - Valuation of qualifying accounts and reserves
EXHIBIT 3.2
- -----------
PARK COMMUNICATIONS, INC.
(a Delaware corporation)
BYLAWS
As adopted by the Board of Directors on July 12, 1994.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
I. OFFICES
1. Registered Office ------------------------- 1
2. Additional Offices ------------------------ 1
II. MEETINGS OF STOCKHOLDERS
1. Time and Place ---------------------------- 1
2. Annual Meeting ---------------------------- 1
3. Notice of Annual Meeting ------------------ 1
4. Special Meetings -------------------------- 2
5. Notice of Special Meeting ----------------- 2
6. List of Stockholders ---------------------- 2
7. Presiding Officer; Order of
Business -------------------------------- 2
8. Quorum; Adjournments ---------------------- 3
9. Voting ------------------------------------ 4
10. Action by Consent ------------------------- 5
III. DIRECTORS
1. General Powers; Number; Tenure ------------ 5
2. Vacancies --------------------------------- 6
3. Removal; Resignation ---------------------- 6
4. Place of Meetings ------------------------- 6
5. Annual Meeting ---------------------------- 6
6. Regular Meetings -------------------------- 6
7. Special Meetings -------------------------- 6
8. Quorum; Vote Required for
Action; Adjournments -------------------- 7
9. Compensation ------------------------------ 7
10. Action by Consent ------------------------- 7
11. Meetings by Telephone or Similar
Communications -------------------------- 7
IV. COMMITTEES
1. Audit Committee --------------------------- 7
2. Compensation Committee -------------------- 8
3. Executive Committee ----------------------- 8
4. Other Committees -------------------------- 8
5. Powers ------------------------------------ 8
6. Procedure; Meetings ----------------------- 9
7. Quorum ------------------------------------ 9
8. Vacancies; Changes; Discharge ------------- 9
9. Compensation ------------------------------ 10
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10. Action by Consent ------------------------- 10
11. Meetings by Telephone or Similar
Communications -------------------------- 10
V. NOTICES
1. Form; Delivery ---------------------------- 10
2. Waiver ------------------------------------ 10
VI. OFFICERS
1. Designations ------------------------------ 11
2. Term of Office; Removal ------------------- 11
3. Compensation ------------------------------ 11
4. The Chairman of the Board ----------------- 11
5. The President ----------------------------- 12
6. The Vice Presidents ----------------------- 12
7. The Secretary ----------------------------- 12
8. The Assistant Secretary ------------------- 13
9. The Treasurer ----------------------------- 13
10. The Assistant Treasurer ------------------- 13
VII. INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
1. Persons Entitled to Indemnification ------- 14
2. Indemnification --------------------------- 14
3. Advancement ------------------------------- 15
4. Contribution ------------------------------ 15
5. Non-Exclusivity of Indemnification -------- 16
6. Amendment to Delaware Law ----------------- 16
VIII. AFFILIATED TRANSACTIONS AND INTERESTED
DIRECTORS
1. Affiliated Transactions ------------------- 16
2. Determining Quorum ------------------------ 17
IX. STOCK CERTIFICATES
1. Form; Signatures -------------------------- 17
2. Registration of Transfer ------------------ 18
3. Registered Stockholders ------------------- 18
4. Record Date ------------------------------- 18
5. Lost, Stolen or Destroyed
Certificates ---------------------------- 19
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X. GENERAL PROVISIONS
1. Dividends --------------------------------- 19
2. Reserves ---------------------------------- 19
3. Fiscal Year ------------------------------- 19
4. Seal -------------------------------------- 19
5. Inspection of Books ----------------------- 20
XI. AMENDMENTS -------------------------------- 20
SECRETARY'S CERTIFICATE ------------------------ 20
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BYLAWS
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of
PARK COMMUNICATIONS, INC.
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ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be at: c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Additional Offices. The Corporation's principal office shall
be in the City of Ithaca, County of Tompkins, State of New York. The
Corporation may also have offices at such other places, both within and without
the State of Delaware, as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may
be held at such time and place, within or without the State of Delaware, as the
Board of Directors may fix from time to time and as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual Meeting. Annual meetings of stockholders, commencing
with the year 1994, shall be held on the second Tuesday of April, if not a
legal holiday, or, if a legal holiday, then on the next secular day following,
at 9:30 A.M., or at such other date and time as shall, from time to time, be
designated by the Board of Directors and stated in the notice of the meeting.
At such annual meeting, the stockholders shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written notice of the annual
meeting, stating the place, date and time thereof, shall be given to each
stockholder entitled to vote at such meeting not less than 10 (unless a longer
period is required by law) nor more than 60 days prior to the meeting.
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Section 4. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or the
Certificate of Incorporation, may be called by the Chairman of the Board and
shall be called by the President or Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of the
stockholders owning a majority of the shares of capital stock of the
Corporation issued and outstanding and entitled to vote on the matters to be
presented at such meeting. Such requests shall state the purpose or purposes
of the proposed meeting. Business transacted at all special meetings shall be
confined to the object stated in the call.
Section 5. Notice of Special Meeting. Written notice of a special
meeting, stating the place, date and time thereof and the purpose or purposes
for which the meeting is called, shall be given to each stockholder entitled to
vote at such meeting at such address as appears on the books of the corporation
not less than 10 (unless a longer period is required by law) nor more than 60
days prior to the meeting.
Section 6. List of Stockholders. The officer in charge of the stock
ledger of the Corporation or the transfer agent shall prepare and make, at
least 10 days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, at a
place within the city where the meeting is to be held, which place, if other
than the place of the meeting, shall be specified in the notice of the meeting.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present in person thereat.
Section 7. Presiding Officer; Order of Business.
(a) Meetings of stockholders shall be presided over by the Chairman
of the Board or, if the Chairman of the Board is not present, by the President,
or, if the President is not present, by a Vice-President, or, if a
Vice-President is not present, by such person who may have been chosen by the
Board of Directors, or, if none of such persons is present, by a chairman to be
chosen by the stockholders owning a majority of the shares of capital stock of
the Corporation issued and outstanding and entitled to vote at the meeting and
who are present in person or represented by proxy. The Secretary of the
Corporation, or, if the Secretary is not present, an Assistant Secretary, or,
if an
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Assistant Secretary is not present, such person as may be chosen by the Board
of Directors, shall act as secretary of meetings of stockholders, or, if none
of such persons is present, the stockholders owning a majority of the shares of
capital stock of the Corporation issued and outstanding and entitled to vote at
the meeting and who are present in person or represented by proxy shall choose
any person present to act as secretary of the meeting.
(b) The following order of business, unless otherwise ordered at the
meeting, shall be observed as far as practicable and consistent with the
purposes of the meeting:
1. Call of the meeting to order.
2. Presentation of proof of mailing of the notice of the meeting and, if
the meeting is a special meeting, the call thereof.
3. Presentation of proxies.
4. Announcement that a quorum is present.
5. Reading and approval of the minutes of the previous meeting.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a
meeting called for that purpose.
8. Consideration of the specific purpose or purposes for which the
meeting has been called (other than the election of directors), if the meeting
is a special meeting.
9. Transaction of such other business as may properly come before the
meeting.
10. Adjournment.
Section 8. Quorum; Adjournments. The holders of a majority of the shares
of capital stock of the Corporation issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall be necessary to, and
shall constitute a quorum for, the transaction of business at all meetings of
the stockholders, except as otherwise provided by statute, the Certificate of
Incorporation or these Bylaws. If, however, a quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present
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in person or represented by proxy, shall, by a majority vote of the shares held
by such stockholders, have the power to adjourn the meeting from time to time,
without notice of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, until a quorum
shall be present or represented. Even if a quorum shall be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall, by a majority
vote of the shares held by such stockholders, have the power to adjourn the
meeting from time to time, without notice of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, until a date which is not more than 30 days after the date of the
original meeting. At any such adjourned meeting, at which a quorum shall be
present in person or represented by proxy, any business may be transacted which
might have been transacted at the meeting as originally called. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote thereat.
Section 9. Voting.
(a) At any meeting of stockholders, every stockholder having voting
power upon the matter in question shall be entitled to vote in person or by
proxy. Except as otherwise provided by law or the Certificate of
Incorporation, each stockholder of record shall be entitled to one vote for
each share of capital stock registered in his name on the books of the
Corporation, except that no share of stock shall be voted on at any election of
directors which has been transferred on the books of the Corporation within
twenty days next preceding the election. The vote for directors, and, upon the
demand of any stockholder, the vote upon any question before the meeting, shall
be by written ballot.
(b) All elections of directors shall be determined by a plurality
vote, and, except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all other matters to be voted upon by
stockholders shall be determined by a vote of a majority of the shares present
in person or represented by proxy at the meeting.
(c) Each stockholder entitled to vote at a meeting of stockholders
may authorize an individual or individuals to act for it by proxy, but no such
proxy shall be voted or acted upon
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after one year from its date, unless the proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law
to support an irrevocable power. A stockholder may revoke any proxy which is
not irrevocable by attending the meeting and voting in person or by filing an
instrument in writing revoking the proxy or another duly executed proxy bearing
a later date with the Secretary of the Corporation.
Section 10. Action by Consent. Any action required or permitted by law
or the Certificate of Incorporation to be taken at any meeting of stockholders
may be taken without a meeting, without prior notice and without a vote, if a
written consent, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
the holders of all shares entitled to vote thereon were present in person or
represented by proxy and voted. Such written consent shall be filed with the
minutes of meetings of stockholders. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not so consented in writing thereto.
ARTICLE III
DIRECTORS
Section 1. General Powers; Number; Tenure. The business of the
Corporation shall be managed by its Board of Directors, which may exercise all
powers of the Corporation and perform all lawful acts and things which are not
by law, the Certificate of Incorporation or these Bylaws directed or required
to be exercised or performed by the stockholders. Within the limits specified
in this Section 1, the number of directors shall be not less than three nor
more than nine members, the exact number within these limits to be determined
from time to time by the Board of Directors; provided, however, that there
shall be a minimum of at least two independent directors on the Board of
Directors at all times. The directors shall be elected at the annual meeting
of the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and shall
qualify. Directors need not be stockholders. The Board of Directors shall
present at each annual meeting, and when called for by vote of the stockholders
at any special meeting of the stockholders, a full and clear statement of the
business and condition of the Corporation.
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Section 2. Vacancies. If any vacancies occur in the Board of Directors,
or if any new directorships are created, they may be filled by vote of a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until the
next annual meeting of stockholders and until his successor is duly elected and
shall qualify. If there are no directors in office, any officer or stockholder
may call a special meeting of stockholders in accordance with the provisions of
the Certificate of Incorporation or these Bylaws, at which meeting such
vacancies shall be filled.
Section 3. Removal; Resignation.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, any director, directors or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
(b) Any director may resign at any time by giving written notice to
the Board of Directors, the Chairman of the Board, the President or the
Secretary of the Corporation. Unless otherwise specified in such written
notice, a resignation shall take effect upon delivery thereof to the Board of
Directors or the designated officer. It shall not be necessary for a resig-
nation to be accepted before it becomes effective.
Section 4. Place of Meetings. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. Annual Meeting. The annual meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular Meetings. Additional regular meetings of the Board of
Directors may be held without notice, at such time and place as may from time
to time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or by the President or Secretary
upon written request by 2 or more directors on at least 5 days' notice to each
director. Any such notice need not state the purpose or purposes of such
meeting except as provided in Article XI.
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Section 8. Quorum; Vote Required for Action; Adjournments. At all
meetings of the Board of Directors, a majority of the directors then in office
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law, the Certificate of Incorporation or these Bylaws.
If a quorum is not present at any meeting of the Board of Directors, the
directors present may adjourn the meeting, from time to time without notice
other than announcement at the meeting, until a quorum shall be present.
Section 9. Compensation. Directors shall be entitled to such
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending directors' meetings as may from time
to time be fixed by the Board of Directors. The compensation of directors may
be on such basis as is determined by the Board of Directors. Any director may
waive compensation for any meeting. Any director receiving compensation under
these provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
Section 10. Action by Consent. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a written consent to such action is signed by all
members of the Board of Directors and such written consent is filed with the
minutes of its proceedings.
Section 11. Meetings by Telephone or Similar Communications. The Board
of Directors may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such meeting shall
constitute presence in person by such director at such meeting.
ARTICLE IV
COMMITTEES
Section 1. Audit Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, shall appoint an Audit Committee
consisting of not more than three members, a majority of which shall be
independent directors. The primary responsibilities of the Audit Committee
shall include overseeing the financial reporting process (including the system
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of internal control), assuring the objectivity of the independent audit, and
performing any functions imposed on such committee under federal or state law,
or by applicable regulations of any securities exchange on which the
Corporation's securities are traded. One of the members of the Audit Committee
shall be designated as the Chairman of the Audit Committee. Each member of the
Audit Committee shall continue as a member thereof until the expiration of his
term as a director, or his earlier resignation, unless sooner removed as a
member or a director.
Section 2. Compensation Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, shall appoint a Compensation
Committee consisting of at least three members, including two independent
directors. The Chairman of the Board shall be an ex officio member of the
Compensation Committee. The primary responsibilities of the Compensation
Committee shall include reviewing the compensation arrangements of the
Company's executive officers and, subject to the review and approval by the
full Board, formulating proposed compensation packages for such officers. One
of the members of the Compensation Committee shall be designated as the
Chairman of the Compensation Committee. Each member of the Compensation
Committee shall continue as a member thereof until the expiration of his or her
term as a director, or his or her earlier resignation, unless sooner removed as
a member or a director.
Section 3. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may appoint an Executive Committee
consisting of one or more directors, one of whom shall be designated as
Chairman of the Executive Committee. During the interval between meetings of
the Board, the Executive Committee shall advise with and aid the officers of
the Corporation in all matters concerning its interests and the management of
its business, and generally perform such duties as may be directed or delegated
by the board of directors from time to time. Each member of the Executive
Committee shall continue as a member thereof until the expiration of his term
as a director, or his earlier resignation, unless sooner removed as a member or
as a director.
Section 4. Other Committees. The Board of Directors, by resolutions
adopted by a majority of the whole Board, may appoint such other committee or
committees as it shall deem advisable and with such functions and duties as the
Board of Directors shall prescribe.
Section 5. Powers. Unless circumscribed by resolution of the Board
appointing the Audit Committee or Compensation Committee and except as other-
wise provided by law or these Bylaws, the Audit Committee and Compensation
Committee shall have
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and may exercise all of the powers and authority of the Board of Directors in
the management of the business and affairs of the Corporation as deemed by the
Audit Committee and Compensation Committee in their respective discretion to be
reasonable and necessary in performing their respective designated functions.
Unless circumscribed by resolution of the Board appointing the Executive
Committee and except as otherwise provided by law or these Bylaws, the
Executive Committee shall have and may exercise all of the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation. Unless otherwise provided by law or these Bylaws, other
committees of the Board shall have such powers as may from time to time be
determined by the Board of Directors; provided, however, that in no event shall
any committee of the Board (including the Executive Committee) have the power
to declare a dividend in cash, property or shares of the Corporation, amend the
certificate of incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease, or exchange of all or
substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amend the Bylaws of the Corporation.
Section 6. Procedure; Meetings. Each committee shall fix its own rules
of procedure and shall meet at such times and at such place or places as may be
provided by such rules or as the members of such committee shall provide. Each
committee shall keep regular minutes of its meetings and deliver such minutes
to the Board of Directors.
The Chairman of each committee, or, in his or her absence, a member
of the relevant committee chosen by a majority of the members present, shall
preside at meetings of such committee, and another member thereof chosen by the
committee shall act as Secretary of the relevant committee.
Section 7. Quorum. A majority of a committee shall constitute a quorum
for the transaction of business, and the affirmative vote of a majority of the
members of the committee shall be required for any action of such com-
mittee; provided, however, that when a committee of one member is authorized
under the provisions of this Article, such one member shall constitute a
quorum.
Section 8. Vacancies; Changes; Discharge. The Board of Directors shall
have the power at any time to fill vacancies in, to change the membership of,
and to discharge any committee.
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Section 9. Compensation. Members of any committee shall be entitled to
such compensation for their services as members of any such committee and to
such reimbursement for any reasonable expenses incurred in attending committee
meetings as may from time to time be fixed by the Board of Directors. Any
member may waive compensation for any meeting. Any committee member receiving
compensation under these provisions shall not be barred from serving the
Corporation in any other capacity and from receiving compensation and
reimbursement of reasonable expenses for such other services.
Section 10. Action by Consent. Any action required or permitted to be
taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a written consent to such action is signed by all members
of the committee and such written consent is filed with the minutes of its
proceedings.
Section 11. Meetings by Telephone or Similar Communications. The members
of any committee designated by the Board of Directors may participate in a
meeting of such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in such
meeting can hear each other and participation in such meeting shall constitute
presence in person at such meeting.
ARTICLE V
NOTICES
Section 1. Form; Delivery. Whenever, under the provisions of law, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice
unless otherwise specifically provided, but such notice may be given in
writing, by mail, addressed to such director or stockholder, at his address as
it appears on the records of the Corporation, with postage thereon prepaid.
Such notices shall be deemed to be given at the time they are deposited in the
United States mail. Notice to a director may also be given personally or by
facsimile sent to his address as it appears on the records of the Corporation.
Section 2. Waiver. Whenever any notice is required to be given under the
provisions of law, the Certificate of Incorporation or these Bylaws, a written
waiver thereof, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed to be
equivalent to such notice. In addition, any stockholder who attends a meeting
of stockholders in person, or is represented at such meeting by proxy, without
protesting at the commencement of the
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meeting the lack of notice thereof to him, or any director who attends a
meeting of the Board of Directors without protesting, at the commencement of
the meeting, such lack of notice, shall be conclusively deemed to have waived
notice of such meeting.
ARTICLE VI
OFFICERS
Section 1. Designations. The officers of the Corporation shall be chosen
by the Board of Directors. The Board of Directors shall choose a Chairman of
the Board and a President from its own number, a Vice-President (or
Vice-Presidents), a Secretary, and a Treasurer, and may choose one or more
Assistant Secretaries and/or Assistant Treasurers and other officers and agents
as it shall deem necessary or appropriate (including a Chief Executive Officer
and a Chief Financial Officer). All officers of the Corporation shall exercise
such powers and perform such duties as shall from time to time be determined by
the Board of Directors. Any number of offices may be held by the same person,
unless the Certificate of Incorporation or these Bylaws otherwise provide.
Section 2. Term of Office; Removal. The officers designated above shall
be chosen by the Board of Directors at its annual meeting after each annual
meeting of stockholders. Each officer of the Corporation shall hold office
until his successor is chosen and shall qualify. Any officer elected or
appointed by the Board of Directors may be removed, with or without cause, at
any time by the affirmative vote of a majority of the directors then in office.
Such removal shall not prejudice the contract rights, if any, of the person so
removed. Any vacancy occurring in any office of the Corporation may be filled
for the unexpired portion of the term by the Board of Directors.
Section 3. Compensation. The salaries of all officers of the Corporation
shall be fixed from time to time by the Board of Directors and no officer shall
be prevented from receiving such salary by reason of the fact that he or she is
also a director of the Corporation.
Section 4. The Chairman of the Board. The Chairman of the Board shall be
an officer of the Corporation and, subject to the direction of the Board of
Directors, shall perform such executive, supervisory and management functions
and duties as may be assigned to him or her from time to time by the Board of
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Directors. He or she shall, if present, preside at all meetings of
stockholders and of the Board of Directors. The Chairman of the Board shall be
ex officio member of all standing committees (except the Audit Committee), and
shall have the general powers and duties of supervision and management usually
vested in the office of chairman of the board of directors of a corporation.
Section 5. The President.
(a) The President shall be the Chief Operating Officer of the
Corporation and, subject to the direction of the Board of Directors, shall have
general charge of the business, affairs and property of the Corporation and
general supervision over its other officers and agents. In general, he shall
perform all duties incident to the office of President and shall see that all
orders and resolutions of the Board of Directors are carried into effect. In
addition to and not in limitation of the foregoing, the President shall be
empowered to authorize any change of the registered office or registered agent
(or both) of the Corporation in the State of Delaware. The President shall
have the general powers and duties of supervision and management usually vested
in the office of president of a corporation.
(b) Unless otherwise prescribed by the Board of Directors, the
President shall have full power and authority on behalf of the Corporation to
attend, act and vote at any meeting of security holders of other corporations
in which the Corporation may hold securities. At such meeting the President
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities which the Corporation might have possessed and
exercised if it had been present. The Board of Directors may from time to time
confer like powers upon any other person or persons.
Section 6. The Vice-Presidents. The Vice-President (or in the event
there be more than one, the Vice-Presidents in the order designated, or in the
absence of any designation, in the order of their election), shall, in the
absence of the President or in the event of his disability, perform the duties
and exercise the powers of the President and shall generally assist the
President and perform such other duties and have such other powers as may from
time to time be prescribed by the Board of Directors.
Section 7. The Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all votes and
the proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for the Executive Committee or other committees, if
required. The Secretary shall give, or cause to be given, notice
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of all meetings of stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may from time to time be prescribed by
the Board of Directors, the Chairman of the Board or the President, under whose
supervision the Secretary shall act. The Secretary shall have custody of the
seal of the Corporation, and the Secretary, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it, and, when so
affixed, the seal may be attested by his or her signature or by the signature
of such Assistant Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation and to attest the
affixing thereof by his or her signature.
Section 8. The Assistant Secretary. The Assistant Secretary, if any (or
in the event there be more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Secretary or in the event of his or her
disability, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
Section 9. The Treasurer. The Treasurer shall have the custody of the
corporate funds and other valuable effects, including securities, and shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories
as may from time to time be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chairman of the Board, the President and the Board of Directors, at regular
meetings of the Board, or whenever they may require it, an account of all his
or her transactions as Treasurer and of the financial condition of the
Corporation.
Section 10. The Assistant Treasurer. The Assistant Treasurer, if any (or
in the event there shall be more than one, the Assistant Treasurers in the
order designated, or in the absence of any designation, in the order of their
election), shall, in the absence of the Treasurer or in the event of his or her
disability, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as may from time to
time be prescribed by the Board of Directors.
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<PAGE>
ARTICLE VII
INDEMNIFICATION OF
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Persons Entitled To Indemnification. Except as required by
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL"), as in effect from time to time, and by any other relevant provision of
these Bylaws, the DGCL or any other applicable law, the persons entitled to
indemnification under these Bylaws shall include any person (or the heirs,
executors or administrators of such person) who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise (hereinafter called "Indemnitees").
Section 2. Indemnification.
(a) Mandatory Indemnification. As required under Section 145 of the
DGCL, to the extent any person has been successful on the merits or otherwise
in defense of any completed action, suit or proceeding, whether civil,
criminal, administrative or investigative in nature, brought against such
person by reason of the fact that such person is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, the
Corporation shall indemnify such person against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith.
(b) Permissive Indemnification. In addition to mandatory indemnification
under section 145 of the DGCL, as set forth above, the Corporation shall
indemnify the Indemnitees, and each of them, in each and every situation where,
under Section 145 of the DGCL, the Corporation is not obligated, but is
nevertheless permitted or empowered, to make such indemnification, in such
amounts and to the fullest extent permitted under applicable law.
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<PAGE>
(c) Requisite Finding. Prior to the making of any permissive
indemnification pursuant to the foregoing paragraph, the Corporation shall
promptly make or cause to be made a determination as to whether each Indem-
nitee acted in good faith and in a manner such Indemnitee reasonably believed
to be in or not opposed to the best interests of the Corporation, and, in the
case of any criminal action or proceeding, had no reasonable cause to believe
that such Indemnitee's conduct was unlawful. Such determination may be made
(i) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, (ii) if such
a quorum is not obtainable, or even if a quorum is obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
Section 3. Advancement. Except as otherwise provided in this Article
VII, costs, charges and expenses (including attorney's fees) incurred in any
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the corporation in advance of the final disposition of such matter, if the
indemnified person undertakes to repay such amount in the event it is
ultimately determined, as provided herein, that such person is not entitled to
indemnification. Notwithstanding the foregoing, no advance shall be made by
the Corporation if a determination is reasonably and promptly made by the board
of directors by a majority vote of a quorum of disinterested directors, or (if
such a quorum is not obtainable or, even if obtainable, a quorum of
disinterested directors so directs) by independent legal counsel in a written
opinion, that, based upon the facts known to the board or counsel at the time
such determination is made, such person acted in bad faith and in a manner that
such person did not believe to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal proceeding, that such person
believed or had reasonable cause to believe his conduct was unlawful. In no
event shall any advance be made in instances where the board or independent
legal counsel reasonably determines that such person deliberately breached his
or her duty to the Corporation or its shareholders.
Section 4. Contribution. In order to provide just and equitable
contribution in circumstances where indemnification pursuant to this Article is
held by a court of competent jurisdiction to be unavailable to an Indemnitee in
whole or in part, the Corporation shall, in such event, after taking into
account, among other things, contributions by other directors and officers of
the Corporation pursuant to indemnification agreements and otherwise, and, in
the absence of personal enrichment, acts of intentional fraud or dishonesty or
criminal conduct on the part of the Indemnitee, contribute to the payment
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<PAGE>
of the Indemnitee's losses to the extent that after other contributions are
taken into account, such losses exceed: (i) in the case of a director of the
Corporation or any of its subsidiaries who is not an officer of the Corporation
or any of such subsidiaries, the amount of fees paid to him or her for serving
as a director during the 12 months preceding the commencement of the suit,
proceeding, or investigation; or (ii) in the case of a director of the
Corporation or any of its subsidiaries who is also an officer of the
Corporation or any of such subsidiaries, the amount set forth in clause (i)
plus 5% of the aggregate cash compensation paid to said director for service in
such office(s) during the 12 months preceding the commencement of the suit,
proceeding, or investigation; or (iii) in the case of an officer of the
Corporation or any of its subsidiaries, 5% of the aggregate cash compensation
paid to such officer for service in such office(s) during the 12 months
preceding the commencement of such suit, proceeding, or investigation.
Section 5. Non-Exclusivity of Indemnification. The indemnification and
advancement of expenses by, or granted pursuant to, this Article shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding
such office.
Section 6. Amendment to Delaware Law. If the Delaware General
Corporation Law is amended after the date of these Bylaws to further provide
for the indemnification of the Indemnitees, then the indemnification of the
Indemnitees shall be permitted to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
ARTICLE VIII
AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1. Affiliated Transactions. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
which authorizes the contract or transaction or solely because his or their
votes are counted for such purpose, if:
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<PAGE>
(a) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved or ratified by the Board of Directors, a
committee thereof, or the stockholders.
Section 2. Determining Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction.
ARTICLE IX
STOCK CERTIFICATES
Section 1. Form; Signatures.
(a) Every holder of stock in the Corporation shall be entitled to
have a certificate, signed by or in the name of the Corporation by the
President and the Secretary or an Assistant Secretary of the Corporation,
stating that the Corporation is organized under the laws of Delaware,
exhibiting the number, class and par value (and series, if any) of shares owned
by him. Such signatures and seal may be facsimile. In case any officer who
has signed, or whose facsimile signature was placed on, a certificate shall
have ceased to be such officer before such certificate is issued, it may
nevertheless be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.
(b) All stock certificates representing shares of capital stock which
are subject to restrictions on transfer or to other restrictions shall have
conspicuously noted thereon such notation to such effect as may be required by
law or determined by the Board of Directors.
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<PAGE>
Section 2. Registration of Transfer. Upon surrender to the Corporation
or any transfer agent of the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or its transfer
agent to issue a new certificate to the person entitled thereto, to cancel the
old certificate and to record the transaction upon its books.
Section 3. Registered Stockholders.
(a) Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive right of a person who is registered on its
books as the owner of shares of its capital stock to receive dividends or other
distributions, to vote as such owner, and to hold liable for calls and
assessments any person who is registered on its books as the owner of shares of
its capital stock. The Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any other
person.
(b) If a stockholder desires that notices and/or dividends shall be
sent to a name or address other than the name or address appearing on the stock
ledger maintained by the Corporation (or by the transfer agent or registrar, if
any), such stockholder shall have the duty to notify the Corporation (or the
transfer agent or registrar, if any) in writing, of such desire. Such written
notice shall specify the alternate name or address to be used.
Section 4. Record Date. In order that the Corporation may determine the
stockholders of record who are entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful
action, or to make a determination of the stockholders of record for any other
proper purpose, the Board of Directors may, in advance, fix a date as the
record date for any such determination. Such date shall not be more than 60
nor less than 10 days before the date of such meeting, nor more than 60 days
prior to the date of any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting taken pursuant to Section 8 of Article
II; provided, however, that the Board of Directors may fix a new record date
for the adjourned meeting.
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<PAGE>
Section 5. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation which is claimed to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Corporation a bond in such sum, or other security in such form, as
it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate claimed to have been lost, stolen
or destroyed.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate of
Incorporation and applicable law, dividends upon the outstanding capital stock
of the Corporation may be declared by the Board of Directors at any regular or
special meeting, pursuant to law, and may be paid in cash, in property or in
shares of the Corporation's capital stock.
Section 2. Reserves. The Board of Directors shall have full power,
subject to the provisions of law and the Certificate of Incorporation, to
determine whether any, and, if so, what part, of the funds legally available
for the payment of dividends shall be declared as dividends and paid to the
stockholders of the Corporation. The Board of Directors, in its sole
discretion, may fix a sum which may be set aside or reserved over and above the
paid-in capital of the Corporation for working capital or as a reserve for any
proper purpose, and may, from time to time, increase, diminish or vary such
fund or funds.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be as
determined from time to time by the Board of Directors.
Section 4. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words Corporate
Seal and Delaware.
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<PAGE>
Section 5. Inspection of Books. The Board of Directors shall determine
from time to time whether, and, if allowed, when and under what conditions and
regulations the accounts and books of the Corporation (except such as may by
statute be specifically open to inspection) or any of them shall be open to the
inspection of the stockholders, and the stockholders' rights in this respect
are and shall be limited accordingly.
ARTICLE XI
AMENDMENTS
The Board of Directors shall have the power to make, alter and repeal
these Bylaws, and to adopt new bylaws, by an affirmative vote of a majority of
all members of the Board of Directors, provided that notice of the proposal to
make, alter or repeal these Bylaws, or to adopt new bylaws, must be included in
the notice of the meeting of the Board of Directors at which such action takes
place.
SECRETARY'S CERTIFICATE
I, Dorothy D. Park, Secretary of Park Communications, Inc., a Delaware
corporation (the "Corporation"), DO HEREBY CERTIFY that the foregoing is a true
and correct copy of the Corporation's Bylaws as adopted by the Board of
Directors of the Corporation on July 12, 1994.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Corporate
Seal of the Corporation this 22nd day of August 1994.
/s/ Dorothy D. Park
-----------------------------
Dorothy D. Park
Secretary
[Corporate Seal]
-20-
EXHIBIT 10.6(a)
- ----------------
FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
- ------------------
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300
[POSTAGE STAMP]
POSTAGE AND FEES PAID
FEDERAL COMMUNICATIONS
COMMISSION
FCC 615
ROY H. PARK BC OF UTICA-ROME, INC.
WUTR TV Station
PO BOX 20, SMITH HILL RD.
UTICA, NY 13503
LICENSE RENEWAL AUTHORIZATION
- -----------------------------
THIS IS TO NOTIFY YOU THAT YOUR APPLICATION FOR RENEWAL OF LICENSE WAS
GRANTED ON 08-10-94 FOR A TERM EXPIRING ON 06-01-99.
CHANNEL: CHAN-20
THIS IS YOUR LICENSE RENEWAL AUTHORIZATION FOR STATION WUTR
LOCATION: UTICA, NY
THIS IS ALSO THE RENEWAL CERTIFICATE FOR YOUR CURRENTLY AUTHORIZED AUXILIARY
SERVICES.
THIS CARD MUST BE POSTED WITH THE STATION'S LICENSE CERTIFICATE AND
SUBSEQUENT MODIFICATIONS.
ORIGINAL
FCC 372 (7/87) NOTIFICATION
EXHIBIT 10.14(a)
- ----------------
FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
- ------------------
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300
[POSTAGE STAMP]
POSTAGE AND FEES PAID
FEDERAL COMMUNICATIONS
COMMISSION
FCC 615
ROY H. PARK B/C OF WASHINGTON, INC.
KEZX AM STATION
2615 4th Avenue, Ste 150
SEATTLE, WA 98121
THIS IS TO NOTIFY YOU OF ACCEPTANCE FOR FILING OF APPLICATION BR -941003UB
RECEIVED ON 10/03/94 FOR RENEWAL OF LICENSE
FREQUENCY: 1150KHZ
LOCATION: SEATTLE, WA
OPERATION BEYOND THE LICENSE EXPIRATION DATE IS AUTHORIZED PENDING FINAL
DETERMINATION ON YOUR APPLICATION.
POST THIS CARD WITH YOUR LICENSE.
FCC 372 (7/87) NOTIFICATION
EXHIBIT 10.14(b)
- ----------------
FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
- ------------------
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300
[POSTAGE STAMP]
POSTAGE AND FEES PAID
FEDERAL COMMUNICATIONS
COMMISSION
FCC 615
ROY H. PARK BROADCASTING OF WASH
KEZX-FM FM STATION
P.O. BOX 61309
SEATTLE, WA 98121
THIS IS TO NOTIFY YOU OF ACCEPTANCE FOR FILING OF APPLICATION BRH -941003UA
RECEIVED ON 10/03/94 FOR RENEWAL OF LICENSE
FREQUENCY: 98.9MHZ
LOCATION: SEATTLE, WA
OPERATION BEYOND THE LICENSE EXPIRATION DATE IS AUTHORIZED PENDING FINAL
DETERMINATION ON YOUR APPLICATION.
POST THIS CARD WITH YOUR LICENSE.
FCC 372 (7/87) NOTIFICATION
EXHIBIT 10.19
- ------------------
EMPLOYMENT AGREEMENT
This Employment Agreement is effective as of July 1, 1994, (the
"Effective Date"), and entered into this 20th day of July, 1994, by and between
PARK COMMUNICATIONS, INC., a Delaware corporation (the "Company"), with its
principal offices located at Terrace Hill, Ithaca, New York, and WRIGHT M.
THOMAS ("Employee").
The Employee has been employed by the Company since 1974 and has
served as President and Chief Operating Officer since 1987.
The Company recognizes the valuable services rendered by the Employee
to the Company and as an inducement to the Employee to continue to render
valuable services to the Company for the period provided in this Agreement, the
Company wishes to enter into an employment agreement with the Employee.
The Employee is willing to continue in the employ of the Company on a
full-time basis for the period specified below, and upon the other terms and
conditions specified in this Employment Agreement, and to provide consulting
services as specified below.
In consideration of the foregoing premises and recitals and for other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Position, Term and Duties.
1.1 Position and Term. The Company hereby employs the Employee
and the Employee hereby accepts employment as the President and Chief Operating
Officer of the Company for a term that shall commence on the Effective Date and
continue for a term of three years extending until June 30, 1997.
1.2 Duties. The Employee will render such services to the
Company as are customarily rendered by the President and Chief Operating
Officer of comparable communications companies and as may be specified from
time to time by the board of directors (the "Board") or the Chairman of the
Company.
1.3 Exclusive Employment. During the period of his employment
hereunder and except for illness, reasonable vacation periods, and reasonable
leaves of absence, the Employee shall devote all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder;
provided, however, that, with the approval of the Board, from time to time, the
Employee may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations which, in
the Board's judgment, will not present any conflict of interest with the
Company or any of its subsidiaries or affiliates or divisions, or materially
affect the performance of his duties pursuant to this Agreement.
<PAGE>
2. Compensation and Expenses.
2.1 Salary. The Employee's annual salary for each of the three
one-year periods commencing on the Effective Date and the two succeeding
anniversaries of the Effective Date shall be $250,000, which shall be prorated
and payable in cash in accordance with the Company's payroll schedule for
executives, except as otherwise provided below.
2.2 Deferral of Compensation. The timing and form of payment
of the Employee's salary are subject to the Employee's right to elect to defer
a specified portion of his salary pursuant to the terms of the Deferred
Compensation Agreement entered into between the Company and the Employee on May
1, 1986 (the "Deferred Compensation Agreement"), and any deferral election the
Employee made prior to the Effective Date of this Agreement shall continue in
effect.
2.3 Withholding. The compensation payable under this section 2
shall be subject to withholding of applicable employment taxes and other
amounts as may be agreed to by the Company and the Employee for payment of the
Employee's share of the cost of employee benefits or otherwise.
2.4 Expenses. Promptly upon submission of an itemized list of
expenses incurred by the Employee for any business expenses incurred in
conducting the Company's business, including, but not limited to, telephone,
automobiles, entertainment, travel, legal, accounting and consulting services,
the Company shall reimburse the Employee for any such expenses.
2.5 Termination. In the event of the Employee's "Termination,"
as defined in subparagraph 2.5(a) below, the provisions of this paragraph 2.5
shall apply.
(a) For purposes of this Agreement, "Termination" shall
mean only termination of the Employee's employment with the Company prior to
the end of the term of this Agreement, as set forth in paragraph 1.1, under
either of the following circumstances:
(i) by the Company for any reason other than for "Cause"
as defined below, or
(ii) by resignation of the Employee upon the occurrence of
either of the following events:
(1) A material breach by the Company of any
provision of this Agreement; or
(2) A reasonable determination by the Employee
that, as a result of a change in circumstances
significantly affecting his position, he is unable to
exercise the authorities, powers, functions or duties
attached to his position as contemplated by section 1 of
this Agreement.
For purposes of resignation pursuant to clause (ii), the
Employee shall provide at least sixty days' prior written
notice of his resignation.
The term "Cause" means gross misconduct or willful and material breach of
this Agreement by the Employee; provided, however, that no Termination after
a change in control of the Company shall be deemed to be for Cause.
<PAGE>
(b) In the event of the Employee's Termination, subject
to the provisions of this paragraph 2.5 and section 5 of this Agreement, the
Company shall pay the Employee liquidated damages in an amount equal to the
Employee's salary for the remaining term of the Agreement. The Company shall
pay the liquidated damages to the Employee in cash within 120 days of the
Termination.
(c) Notwithstanding the above, in the event of the
Employee's Termination, the Company shall be under no obligation to make the
payments described in this paragraph 2.5 unless, at the time of making the
payment, it receives from the Employee a full release, to the extent permitted
by law, of all claims he had, then has, or in the future may acquire against
the Company and any affiliates of the Company in connection with his
employment.
(d) In the event of the Employee's Termination, the
Employee shall make reasonable efforts to mitigate damages under this paragraph
2.5 by seeking other employment; provided, however, that he shall not be
required to accept a position (i) of substantially different character than his
position with the Company, (ii) that would cause him to violate the provisions
of paragraph 5.3, or (iii) that is in an unreasonable location, given his
personal circumstances. If the Employee obtains other employment before he has
received a payment of liquidated damages under subparagraph 2.5(b), then,
notwithstanding subparagraph 2.5(b), the amount of liquidated damages payable
to the Employee shall equal his salary for the period from the date of his
Termination to the date he commences such other employment. If the Employee
obtains other employment after he has received a payment of liquidated damages
under subparagraph 2.5(b), then, within 120 days of the date he commences such
other employment, the Employee shall repay to the Company the portion of the
liquidated damages equal to his salary (less taxes and other amounts withheld,
if any) for the period from the date he commenced the other employment to the
end of the term of this Agreement. In addition, in the event the Employee is
able to obtain a refund of any employment taxes attributable to the repayment
amount, the Employee shall pay any such refund amount to the Company within 120
days of the date the Employee receives it.
2.6 Other Separation from Service. Notwithstanding any
provision of this Agreement to the contrary, in the event the Employee dies or
becomes disabled prior to June 30, 2000, or separates from service for any
other reason (other than Termination) prior to the end of the term of this
Agreement, no further payments shall be made under this Agreement, other than
(a) the payment of any salary, expenses or consulting fees due and owing
through the date of the Employee's separation from service, (b) any payment
under any employee benefit plan maintained by the Company in which the Employee
participated, or (c) the death benefit described below. For purposes of this
paragraph, the Employee shall not be considered disabled unless he is disabled
within the meaning of the long-term disability coverage maintained on behalf of
the Employee pursuant to section 4. If the Employee dies prior to June 30,
2000, the Employee's surviving spouse, if any, shall be entitled to payments
commencing on the first day of the month following the date of the Employee's
death computed in accordance with the nonqualified retirement agreement entered
into between the Company and the Employee on February 14, 1979 (the "Retirement
Agreement") as if the Employee had retired and begun receiving payments under
the Retirement Agreement on the day before the date of his death.
3. Consultation Period.
<PAGE>
3.1 Term and Services. For the period beginning on the
earlier of July 1, 1997, or the Employee's Termination and ending on June 30,
2000, the Employee shall serve as a consultant to the Company with respect to
such business matters and at such times as the Company may reasonably request.
It is understood that the Employee shall act in the capacity of an independent
contractor to the Company during the consultation period and shall not be
subject to the direction, control, or supervision of the Company with respect
to time spent or procedures followed in the performance of his consulting
services. It is further understood and agreed, however, that the period during
which the Employee performs consulting services shall be considered a period of
employment with the Company for purposes of the Retirement Agreement, but this
period shall not be included in the period over which the Employee's average
net salary is determined.
3.2 Consulting Fee. The Company shall pay the Employee an
annual consulting fee of $100,000, which shall be prorated and payable monthly.
The consulting fee shall ordinarily be paid during the period beginning on July
1, 1997, and ending June 30, 2000; provided, however, that in the event of the
Employee's Termination, if the Employee obtains other employment which reduces
the liquidated damages payable to him pursuant to the mitigation of damages
provision in subparagraph 2.5(d), the period for which the consulting fee is
paid shall begin on the date the Employee commences such other employment.
4. Benefits. The Employee shall be entitled to the annual leave
for vacation, holiday, sickness or other reasons to which employees of his
tenure would be entitled under the standard policies of the Company. The
Employee shall also be entitled to participate in the employee benefit plans,
including the Stock Purchase Plan, but excluding any severance benefit plan,
maintained by the Company in accordance with the terms of such plans. The
Company shall maintain long-term disability coverage for the Employee or enable
the Employee to maintain long-term disability coverage through conversion or
otherwise until June 30, 2000.
5. Employee's Obligations. All payments to the Employee and
continued contributions for benefits under section 4 of this Agreement shall be
subject to the Employee's compliance with the following provisions during the
term of this Agreement and for three full years thereafter.
5.1 Assistance in Litigation. The Employee shall, upon
reasonable notice, furnish such information and proper assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
5.2 Confidential Information. The Employee shall not knowingly
disclose or reveal to any unauthorized person any trade secret or other
confidential information relating to the Company, its subsidiaries or
affiliates, or to any of the businesses operated by them, and the Employee
acknowledges that all such information and all books, records and other
materials used or produced in connection with the conduct of the business of
the Company, its subsidiaries or affiliates constitute the exclusive property
of the Company.
5.3. Non-Competition. The Employee will not directly or
indirectly own greater than a 5 percent equity interest in any class of stock
of, or manage, operate, participate in, be employed by, perform consulting
services for, or otherwise be connected in any manner with, any firm, person,
corporation, or enterprise located within the designated marketing area of any
broadcasting business or the circulation area of any newspaper operated
<PAGE>
by the Company or any affiliate of the Company as of the Effective Date which
would be competitive with the applicable business of the Company or its
affiliates in such area. Any act of competition under this paragraph 5.3
shall be deemed to be other employment for purposes of subparagraph 2.5(d),
if applicable. The Employee recognizes that the possible restrictions on his
activities which may occur as a result of his performance of his obligations
under this paragraph 5.3 are required for the reasonable protection of the
Company and its investments.
5.4. Failure to Comply. If the Employee, for any reason other
than death or disability, shall, without the written consent of the Company,
fail to comply with any provision of this section 5 (when applicable), his
rights to any future payments under this Agreement or the continuation of
Company contributions for benefits under section 4 shall terminate, and the
Company's obligation to make such payments and provide such benefits shall
cease; provided, however, that no failure to comply with any provision of this
section 5 shall be deemed to have occurred unless and until the Employee
receives written notice on behalf of the Board, specifying the conduct alleged
to constitute such failure, and has thereafter continued to engage in such
conduct after a reasonable opportunity and a reasonable period (but in no event
less than sixty days after a receipt of such notice) to refrain from such
conduct.
6. Effect on Existing Agreements and Integration. This Agreement
constitutes the entire agreement between the parties and supersedes all prior
proposals and agreements, written or oral, and all other communications between
the parties relating to the express subject matter of this Agreement; provided,
however, that the Deferred Compensation Agreement and Retirement Agreement
shall continue in effect.
7. Miscellaneous.
7.1. Governing Law. This Agreement shall be construed under and
governed by the laws of the State of New York.
7.2. Assignment. This Agreement shall not be assignable in
whole or in part by either party without the consent of the other, except that
the Company may assign this Agreement, without the Employee's consent, to any
corporation, general partnership or limited partnership into which or with
which it shall merge or consolidate or to which it shall transfer substantially
all of its assets.
7.3. Binding Effect. This Agreement shall inure to the benefit
and bind the successors and assigns of the parties.
7.4. Captions. Captions to the sections and paragraphs of this
Agreement are solely for the convenience of the parties, are not a part of this
Agreement, and shall not be used for the interpretation of any of the
provisions of this Agreement.
7.5. Waiver. Either of the parties may, by written notice to
the other party: (a) extend the time for the performance of any of the
obligations or other actions of the other hereunder; (b) waive any inaccuracies
in the representations or warranties of the other contained herein or in any
document delivered pursuant to this Agreement; (c) waive compliance with any of
the conditions or covenants of the other contained herein; or (d) waive
performance of any of the obligations of the other hereunder. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation any investigation by
<PAGE>
or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained herein. No failure or delay on the part of
any party in exercising any right, privilege, power, or remedy under this
Agreement, and no course of dealing among the parties, shall operate as a
waiver of such right, privilege, power or remedy; nor shall any single or
partial exercise of any right, privilege, power, or remedy under this Agreement
preclude any other or further exercise of such right, privilege, power, or
remedy, or the exercise of any other right, privilege, power, or remedy. No
notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in any similar or other circumstances or
constitute a waiver of the right of the party giving such notice or making such
demand to take any other or further action in any circumstances without notice
or demand.
IN WITNESS WHEREOF, the undersigned parties have executed this
Employment Agreement as of the date first above written.
PARK COMMUNICATIONS, INC.
By: /s/ Dorothy D. Park
___________________________
WRIGHT M. THOMAS
/s/ Wright M. Thomas
_________________________________
EXHIBIT 10.20
- ------------------
PARK COMMUNICATIONS, INC.
RETENTION INCENTIVE PLAN
WHEREAS, the Board of Directors (the "Board") of Park Communications,
Inc. (the "Company") has made a decision to seek the sale of the Company; and
WHEREAS, the Board recognizes that the uncertainty of prospects for
long-range employment may result in the departure or distraction of senior
officers to the detriment of the Company and its shareholders; and
WHEREAS, the Company desires to assure itself of the continued
employment and dedication of its senior officers to the operation of the
Company;
NOW, THEREFORE, to induce the senior officers to remain in the employ
of the Company, the Company hereby establishes the Park Communications, Inc.
Retention Incentive Plan (the "Plan"), to provide retention bonuses and
severance benefits as set forth herein.
Article I
Definitions
-----------
1.1 "Annual Salary" means,
(a) For purposes of determining the amount of a Retention Bonus, an
Officer's annual salary from the Company in effect on the Date of Sale or on
the Effective Date, whichever is greater, or,
(b) For purposes of determining the amount of a Severance Benefit, an
Officer's annual salary from the Company in effect on the date of the Officer's
Termination of Employment or on the Effective Date, or, if an Officer's
Termination of Employment is a result of his refusal to accept a position
because the compensation would not be comparable to his compensation on the
Effective Date, the Officer's annual salary in effect on the day before any
reduction in salary relating to the new position, whichever is greatest.
An Officer's Annual Salary shall be determined before reduction for
employment taxes or any before-tax or after-tax contributions to any employee
benefit plan, policy, or program.
1.2 "Cause" means the termination of an individual's employment for
insubordination, violation of law, a significant violation of the employer's
policy, any act that is materially detrimental to the employer, unethical or
disorderly conduct which is materially injurious to the employer, use of
illegal drugs on employer property, or unauthorized use of alcohol on employer
property.
1.3 "Date of Sale" means the closing date of any Sale.
1.4 "Effective Date" means the effective date of the Plan, May 1, 1994.
<PAGE>
1.5 "Officer" means one of the four highest-paid officers of the Company,
other than the president and chief operating officer, as determined on the
Effective Date.
1.6 "Purchaser" means any single purchaser or any group of affiliated
purchasers that enters into an agreement of Sale with the Company.
1.7 "Sale" means the sale of more than fifty percent (50%) of the stock of the
Company to a Purchaser.
1.8 "Termination of Employment" means
(a) The involuntary termination of an Officer's employment with the
Company for any reason other than Cause within twenty-four (24) months after
the Date of Sale. In the event that an officer of the Purchaser notifies an
Officer, orally or in writing, on or prior to the Date of Sale and on or after
the date of execution of the agreement of Sale between the Purchaser and the
Company that the Officer will not be retained in permanent employment following
the Date of Sale (regardless of whether the Officer may be retained in
employment for a transition period following the Date of Sale), the Officer
will be deemed to have an involuntary termination of employment on the Date of
Sale. For this purpose, permanent employment means employment at will for an
indefinite period.
(b) The voluntary termination of an Officer's employment, on or after the
Date of Sale, following the Officer's refusal of a position with the Company or
any successor entity which would require the Officer to work more than 35 miles
from Ithaca, New York or the compensation or duties of which are not comparable
to those of the Officer's position on the Effective Date. For this purpose, an
Officer's duties will be considered comparable if they remain substantially
unchanged even though, as a result of the Sale, the Company becomes a
subsidiary of another company.
Article II
Benefits
--------
2.1 Retention Bonus. Upon the Date of Sale with respect to an Officer, the
Officer shall be paid a lump sum Retention Bonus equal to his Annual Salary.
2.2 Severance Benefit. In the event of an Officer's Termination of
Employment, the Officer shall receive a Severance Benefit equal to the greater
of (a) his Annual Salary or (b) one-twelfth of his Annual Salary for each
complete 12-month period of service with the Company prior to the date of Sale.
The Severance Benefit shall be paid in a lump sum on the date of an Officer's
Termination of Employment; provided, however, that in the event of an Officer's
voluntary Termination of Employment in accordance with Section 1.8(b) after the
Date of Sale, the Severance Benefit shall be paid on the later of the date of
the Officer's Termination of Employment or the date which is 15 days after the
date the Officer provides notice to the Employer of his intention to terminate
employment. In the event of the death of an Officer after his Termination of
Employment but before payment of his Severance Benefit, any Severance Benefit
payable to the Officer shall be paid to his surviving spouse, if any, or, if he
has no surviving spouse, to his estate.
2.3 Employment Taxes. Benefit payments under the Plan shall be reduced by all
applicable employment taxes required by law to be withheld from the payments.
<PAGE>
Article III
Miscellaneous
-------------
3.1 Amendment. The President of the Company may amend the Plan to conform the
Plan to the terms of any merger agreement with respect to the Company or any
agreement of Sale. In addition, the Company may amend the Plan at any time in
any manner other than as described in the preceding sentence pursuant to a
resolution of the Board. Notwithstanding the foregoing, the Plan may not be
amended in any manner that would:
(a) decrease, offset or defer the payment of benefits under the Plan with
respect to any Officer, or
(b) impair an Officer's right to arbitration under Section 3.8, unless
the affected Officer consents to the amendment in writing.
The Company may terminate the Plan pursuant to a resolution of the
Board on or after the earlier of (a) the date all Officers have received
payment of benefits hereunder, or (b) the date that is twenty-four (24) months
after the Date of Sale (provided that any Officer whose Termination of
Employment occurred on or prior to such date has received payment of all
benefits to which he is entitled hereunder and any and all disputes under
Section 3.7 and 3.8 have been resolved prior to the termination of the Plan).
3.2 Binding on Successors. The Plan shall inure to the benefit of and bind
the successors and assigns of the Company, and references to the Company herein
shall apply to any successor entity.
3.3 Assignment. No Officer or other payee may sell, assign, alienate or
pledge any benefits under this Plan, and the benefits shall not be subject to
garnishment or levy.
3.4 Funding. Benefits shall be paid out of the general assets of the Company
or of any successor entity.
3.5 Governing Law. The Plan shall be construed in accordance with the laws of
the State of New York, to the extent those laws are not preempted by Federal
law, except that the enforcement of the arbitration provisions of Section 3.8
shall be governed by the U.S. Arbitration Act.
3.6 Administration. The Company shall be the named fiduciary with the sole
responsibility for administration of the Plan, subject to Section 3.8. The
Company may delegate to any person or entity any powers or duties of the plan
administrator. Any action by the Company assigning any of its responsibilities
as plan administrator to any officer or employee of the Company shall not
constitute delegation of the plan administrator's responsibilities. The
Company shall have such duties and powers as may be necessary to discharge its
responsibilities hereunder.
3.7 Claim for Benefits. To the extent permitted by law, in the event of any
dispute or controversy regarding a payee's right to payment of benefits under
the Plan, or any failure to pay benefits in a timely manner, regardless of
whether the payee has filed a written claim for benefits, the payee's claim for
benefits shall be deemed denied.
In the event of any dispute or controversy regarding a payee's right
to payment of benefits under the Plan, pending settlement of the dispute
pursuant to Section 3.8, the Company shall pay to the payee all
<PAGE>
disputed amounts, as specified by or on behalf of the payee in a writing
submitted to the President of the Company.
3.8 Arbitration. Any dispute regarding payment of benefits or other denial of
a claim for benefits under Section 3.7 shall be settled exclusively by binding
arbitration in the State of New York in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect.
Judgement may be entered on the arbitrator's award in any court of competent
jurisdiction. In the event that the arbitrator determines that a payee is not
entitled to any portion of a disputed amount previously paid to the payee
pursuant to Section 3.7, the payee shall, within a reasonable amount of time
following the arbitrator's determination, repay to the Company such portion of
the disputed amount together with interest thereon at the then current prime
rate as set forth in the Wall Street Journal.
The Company shall reimburse the payee for all reasonable legal fees
and expenses which the payee may incur in connection with the arbitration
within a reasonable time after the payee provides evidence to the Company of
his payment of any such fees or expenses; provided, however, that, to the
extent that the arbitrator determines that the payee's claim was frivolous, the
payee shall, within a reasonable time after the arbitrator's determination,
reimburse the Company for any amounts previously paid under this sentence.
IN WITNESS WHEREOF, Park Communications, Inc. has caused this Plan to
be executed by its duly authorized officers this 6th day of December, 1994.
PARK COMMUNICATIONS, INC.
/s/ Wright M. Thomas
_________________________
President
ATTEST
/s/ Randel N. Stair
____________________
Assistant Secretary
EXHIBIT 10.21
- ------------------
PARK COMMUNICATIONS, INC.
HOME PURCHASE PROGRAM
This program is designed to protect you from the possibility that you
are unable to sell your home over a lengthy period of time. The program
applies only if you must move away from Ithaca because you lose your job when
the Company is sold.
The Company will agree to purchase your home for an amount equal to
the average of three appraisals by independent appraisers, which the Company
has obtained. In your case, this amount is [$________]. This opportunity to
"put your home to the Company" will be available to you if you are
involuntarily terminated from employment (other than for cause) within two
years after the sale of the Company, and you are offered a new job that
requires you to move out of Ithaca. Involuntary termination of employment has
the same meaning for this program that it has for the Retention Incentive Plan.
You will have one year from your termination date to "put your home to the
Company".
The Company will not be obligated to purchase your home if your new
employer has a home purchase program, regardless of the terms of your new
employer's program.
If the Company buys your home directly, and you are not obligated to
a realtor for any broker's commission for that sale, you will not pay any
broker's commission. That means you will receive the full purchase price for
your home without reduction for a realtor's commission. If you sign a listing
agreement with a broker, you will need to be sure that the agreement says you
will not owe a commission if you sell directly to the Company. You will
probably need to add this provision to the listing agreement, so you should
keep it in mind if you talk to a realtor.
Any closing costs payable on the sale of your house to the Company
will be split between you and the Company in the usual and customary manner for
this area. Therefore, to the extent it is usual and customary in Ithaca for
the buyer to pay certain costs, the Company will pay the buyer's closing costs.
To the extent it is usual and customary for the seller to pay other costs, you
will pay the seller's costs. In Ithaca, it is my understanding that the
following expenses usually are the responsibility of the seller:
(1) Extension of abstract and the final update of abstract ($40
for the final update).
(2) Deed stamps ($4 per $1,000 of valuation)
(3) Tax gains affidavit ($6)
EXHIBIT 21.1
-------------
Corporation State of Incorporation
- ----------------- ----------------------
Roy H. Park Broadcasting, Inc. North Carolina
Contemporary FM, Inc. Oregon
Roy H. Park FM Broadcasting of North Carolina
East Carolina, Inc.
Roy H. Park Radio, Inc. North Carolina
Roy H. Park Broadcasting of Tennessee, Inc. Tennessee
Roy H. Park Broadcasting of Utica-Rome, Inc. New York
Roy H. Park Broadcasting of Washington, Inc. Washington
Roy H. Park Broadcasting of the Tennessee
Tri-Cities, Inc.
Roy H. Park Broadcasting of Syracuse, Inc. New York
Roy H. Park Broadcasting of Minnesota, Inc. Minnesota
Roy H. Park Broadcasting of Roanoke, Inc. Virginia
Roy H. Park Broadcasting of Virginia, Inc. Virginia
Roy H. Park Broadcasting of the Minnesota
Lake Country, Inc.
Roy H. Park Broadcasting of the South Dakota
Midwest, Inc.
Roy H. Park Broadcasting of Oregon, Inc. Oregon
Park Broadcasting, Inc. Delaware
Birmingham Television, Inc. Alabama
The Pilot Company, Inc. Indiana
Park Newspapers of Michigan, Inc. Michigan
Park Newspapers of Sapulpa, Inc. Oklahoma
Park Newspapers of Creek, Inc. Delaware
Park Newspapers of Morganton, Inc. North Carolina
Park Newspapers of Blytheville, Inc Arkansas
Park Newspapers of Newton, Inc. North Carolina
Park Newspapers of Concord, Inc. North Carolina
Park Newspapers of Clinton, Inc. North Carolina
The Concord Tribune, Inc. North Carolina
Park Newspapers of Devils Lake, Inc. North Dakota
State and Aurora Incorporated Oklahoma
Park Newspapers of Marion, Inc. North Carolina
Southside Publications, Inc. Oklahoma
Park Newspapers of Moore County, Inc. North Carolina
Park Newspapers of Northeastern Oklahoma
Oklahoma, Inc.
Park Newspapers of Phillips County, Inc. Arkansas
Park Newspapers of Statesville, Inc. North Carolina
Weekly Publications of Phillips County, Inc. Arkansas
Park Newspapers of Lumberton, Inc. North Carolina
Kannapolis Publishing Company North Carolina
Clinton Newspapers, Inc. North Carolina
Coldwater Reporter Company Michigan
Park Newspapers of Iredell, Inc. Delaware
Park Newspapers, Inc. Delaware
<PAGE>
Corporation State of Incorporation
- ---------------- ----------------------
Park Newspapers of Florida, Inc. Florida
Park Newspapers of St. Lawrence, Inc. New York
Park Newspapers of Georgia, Inc. Georgia
Park Newspapers of Nebraska, Inc. Nebraska
Press Printing Company, Inc. Nebraska
RHP Newspapers, Inc. New York
Lockport Publications, Inc. Delaware
Lockport Union-Sun & Journal, Inc. New York
Park Newspapers of Virgina, Inc. Virgina
Prince William Publishing Company, Virginia
Park Newspapers of Oklahoma, Inc. Oklahoma
McAlester Publishing Company Oklahoma
Park Newspapers of Illinois, Inc. Delaware
Park Newspapers of Norwich, Inc. New York
The Norwich Sun, Inc. New York
Park Newspapers of Perry, Inc. Georgia
Perry Newspapers, Inc. Georgia
The Houston Home Journal, Inc. Georgia
Park Newspapers of Indiana, Inc. Indiana
Park Newspapers of Waynesboro, Inc. Virginia
Park Newspapers of Medina, Inc. New York
Park Newspapers of Clark County, Inc. Indiana
The News & Journal, Inc. Indiana
Park Newspapers of Kentucky, Inc. Kentucky
Park Newspapers of Mooresville, Inc. North Carolina
Park Newspapers of Hudson, Inc. New York
Record Printing & Publishing Company, Inc. New York
Chatham Holdings, Inc. New York
Chatham Courier Company New York
Park Radio of Greater New York New Jersey
Park Newspapers of Honesdale, Inc. Pennsylvania
Park Newspapers of Susquehanna, Inc. Pennsylvania
Park Newspapers of Cimarron, Inc. Oklahoma
Park Newspapers of Minnesota, Inc. Minnesota
Park Broadcasting of Iowa, Inc. Iowa
Park Radio of Iowa, Inc. Iowa
Park Newspapers of Iowa, Inc. Iowa
Park Newspapers of Morehead, Inc. Kentucky
South Idaho Newspapers, Inc. Idaho
Park Newspapers of Idaho, Inc. Idaho
Park Newspapers of Northeastern North Carolina
North Carolina, Inc.
Park Newspapers of Eden, Inc. North Carolina
Park Newspapers of the Cumberlands, Inc. Kentucky
Park Newspapers of Winchester, Inc. Indiana
Mooresville Tribune, Inc. North Carolina
Park Newspapers of Rockingham, Inc. North Carolina
Park Broadcasting of Kentucky, Inc. Kentucky
Effingham Daily News Company Illinois
Park Broadcasting of Florida, Inc. Florida
Park Broadcasting of Louisiana, Inc. Louisiana
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 143
<SECURITIES> 0
<RECEIVABLES> 23,833
<ALLOWANCES> 1,598
<INVENTORY> 1,170
<CURRENT-ASSETS> 173,800
<PP&E> 144,651
<DEPRECIATION> (68,910)
<TOTAL-ASSETS> 366,812
<CURRENT-LIABILITIES> 18,616
<BONDS> 49,248
<COMMON> 3,494
0
0
<OTHER-SE> 282,236
<TOTAL-LIABILITY-AND-EQUITY> 366,812
<SALES> 0
<TOTAL-REVENUES> 184,864
<CGS> 0
<TOTAL-COSTS> 58,770
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,722
<INCOME-PRETAX> 47,224
<INCOME-TAX> 19,919
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.27
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT CHARGED TO CHARGED BALANCE AT
BEGINNING OF COST & AGAINST END
PERIOD EXPENSES ALLOWANCE OF PERIOD
<S> <C> <C> <C> <C> <C>
Year Ended Allowance for $1,182,838 $ 621,894 $ 793,284 $1,011,448
December 31, 1992 Doubtful Accounts
Year Ended Allowance for $1,011,448 $ 919,418 $ 531,716 $1,399,150
December 31, 1993 Doubtful Accounts
Year Ended Allowance for $1,399,150 $ 896,917 $ 697,734 $1,598,333
December 31, 1994 Doubtful Accounts
</TABLE>
