<PAGE>
Form 10-K
Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required)
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the fiscal year ended December 31, 1994 Commission File number: 0-15367
OUTLET COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 05-0425681
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 Kenney Drive
Cranston, Rhode Island 02920
(Address of principal executive offices)
Registrant's telephone number, including area code: (401) 455-9200
----------------
Securities registered pursuant to Section 12(b) of the Act: None
------
Securities registered pursuant to Section 12(g) of the Act: Class A Common
--------------
Stock, par value $.01 per share
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of the
registrant (assuming, for this purpose, that persons who are not parties to the
registrant's stockholders' agreement are non-affiliates), as of March 24, 1995,
was approximately $69,662,750.
The number of shares of the registrant's Class A Common Stock, par value $.01
per share, outstanding as of March 24, 1995, was 6,579,631.
The Exhibit Index for this document appears on page 26 hereof.
----
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Document
--------
(1) Annual Report to Stock- Part II and Part IV
holders of Outlet Communications,
Inc. for the year ended December 31,
1994 (the "Annual Report"), as dis-
tributed on or before March 31, 1995.
With the exception of Pages of the
Annual Report specifically incor-
porated by reference herein, the
Annual Report is not deemed to be
filed as a part of this report on
Form 10-K.
(2) Portions of the Registrant's Part III
Proxy Statement to be filed on or
before April 10, 1995 for the annual
meeting to be held on May 2, 1995.
<PAGE>
PART I
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Item 1. Business.
---------
Introduction
Outlet Communications, Inc., a Delaware corporation (the "Company"), is a
holding company that owns all of the issued and outstanding shares of stock
of Outlet Broadcasting, Inc., a Rhode Island corporation ("Outlet
Broadcasting"), and Atlin Communications, Inc., a Delaware corporation
("Atlin"). The operations of Outlet Broadcasting consist of three owned
television stations along with one television station operated under a local
marketing agreement. The owned stations include two NBC network-affiliated
VHF television stations and one independent UHF television station.
The two VHF television stations are WJAR(TV), based in Cranston, Rhode
Island, which serves the Providence-New Bedford market area and WCMH(TV),
which is located in Columbus, Ohio and serves that market. The UHF
television station is WNCN(TV) (formerly WYED-TV) which is located in
Clayton, North Carolina and broadcasts in the Raleigh-Durham (Fayetteville,
Goldsboro and Rocky Mount), North Carolina market area. Outlet Broadcasting
acquired WNCN(TV) on August 10, 1994. As of January 11, 1995 WNCN(TV)
became an affiliate of The WB Television Network.
Since April 18, 1994, Outlet Broadcasting has also operated independent
UHF television station WWHO(TV), Chillicothe, Ohio, under a local marketing
agreement with that station's licensee. Outlet Broadcasting serves as a
broker for the sale of that station's advertising time and provides it with
certain programming and operating capabilities. In return, Outlet
Broadcasting retains a substantial percentage of WWHO(TV)'s net operating
income to the extent that it exceeds cumulative net operating losses. This
station, as of January 11, 1995, also became an affiliate of The WB
Television Network.
Outlet Broadcasting also offers production services to advertisers and
others on an occasional basis. This activity does not generate significant
revenues. Atlin is currently an inactive corporation.
Television
Outlet Broadcasting's television broadcasting revenues are derived from
regional and national spot advertising, from local advertising, and from
network compensation.
Advertising rates charged by a television station are based primarily upon
the population and number of television sets in the area served by the
station, as well as the station's ability to attract audiences as reflected
in surveys made by the A.C. Nielsen Company ("Nielsen") of the number of
sets tuned to the station at various times. Nielsen measures ratings within
specific geographic markets by dividing the nation into Designated Market
Areas ("DMA").
<PAGE>
Advertising rates are highest during the most desirable viewing hours,
with corresponding reductions during other hours. The rates for national
spot and local advertising are determined by each station. Katz
Communications, Inc. is the Company's national sales representative firm.
Local advertising time is sold by each station's own sales force.
Effective September 1, 1994, Outlet Broadcasting and NBC reached an
understanding whereby Outlet Broadcasting's VHF television stations will
retain their NBC network affiliations for a period of six years. The
affiliations give Outlet Broadcasting's VHF television stations the right to
rebroadcast all programs transmitted by the NBC network. For each hour of
programming that is rebroadcast by the affiliate, the network pays the
affiliate a fee, which varies in amount depending on the time of day during
which the program is broadcast. Although the hourly rates of network
compensation are fixed, the total amount of network compensation received by
each affiliated station is subject to the number of network program hours
rebroadcast by that station.
Network programs are produced either by the networks themselves or by
independent production companies and are primarily transmitted via satellite
by the network to its affiliated stations for rebroadcast. Each of Outlet
Broadcasting's television stations also acquires programs from non-network
sources and produces its own programs for broadcast.
Approximately 62% of the television programming aired on WJAR(TV) is
provided by NBC and approximately 25% is provided by or licensed from
independent third parties. The Columbus station, WCMH(TV), receives 52% of
its programming from NBC and 34% is provided by or licensed from independent
third parties. The remaining portion of Outlet Broadcasting's VHF
television station programming consists principally of local programs, such
as news, public affairs and children's programs, produced by the individual
television stations.
Another factor affecting television revenues is the increase in straight
barter and cash-plus-barter arrangements. Under such arrangements national
program distributors retain up to 50% of advertising time available, which
would otherwise be available for sale by the stations to national
advertisers. While these arrangements reduce the cost of new programming
because the value of the advertising time withheld is credited against its
cost, they also result in decreased revenues to stations and introduce new
competitors to the advertising market.
<PAGE>
The principal portion of Outlet Broadcasting's UHF television station
programming consists of syndicated shows, children's programs, movies and,
at WWHO(TV), news. Outlet Broadcasting has also entered into an agreement
with The WB Television Network ("WB") for WB to provide network programming
to WWHO(TV). Commencing in January 1995, WB will provide one night of prime
time programming for two hours. A second night of prime-time programming is
scheduled to commence during the third quarter of 1995 along with selected
children's programming. Additional programming will thereafter be provided
in accordance with a schedule of roll-out dates to the extent that WB makes
available such programming for rebroadcast. The initial period of the WB
agreement is for three years and may be extended for additional successive
periods of two years each if agreed upon by the parties.
WNCN(TV) is currently broadcasting WB programming on a temporary basis.
As of October 1, 1995, WNCN(TV) is scheduled to become an NBC network
affiliate.
In order to compensate WB for its programming, Outlet Broadcasting will
pay WB an annual payment based on Outlet Broadcasting's WB affiliated
station television market ratings for prime time broadcast periods of WB
programming. The payments are based on the value and/or profitability added
to each station as a result of its affiliation with WB and equal 25% of such
added value and/or profitability.
The following is a description of each of the television stations operated
by Outlet Broadcasting.
WJAR(TV)
WJAR(TV) is a VHF station affiliated with the NBC network. It is located
in Cranston, Rhode Island but serves the capital city of Providence, Rhode
Island and broadcasts over Channel 10 in the Providence-New Bedford
television market. This market is ranked 46th in the nation in terms of
number of television households in its DMA.
WCMH(TV)
WCMH(TV) broadcasts over Channel 4 in Columbus, the capital city of Ohio,
and is a VHF station affiliated with NBC. The Columbus television market is
ranked 34th in the country in its DMA.
WNCN(TV)
WNCN(TV) is an independent UHF television station, located in Clayton,
North Carolina, that serves the capital city of Raleigh, North Carolina. It
broadcasts over Channel 17 in the Raleigh-Durham (Fayetteville, Goldsboro
and Rocky Mount) North Carolina television market, which is ranked 32nd in
the nation in terms of number of television households in its DMA. Since
January 11, 1995, the station has broadcast programming provided by WB.
<PAGE>
WWHO(TV)
WWHO(TV) is an independent UHF television station that became affiliated
with The WB Television Network as of January 11, 1995. It is located in
Chillicothe, Ohio but serves the capital city of Columbus, Ohio and
broadcasts over Channel 53 in the Columbus-Chillicothe television market
area.
Competition
Outlet Broadcasting's television stations compete for revenues with other
broadcasting stations in their respective markets, as well as with other
advertising media, such as newspapers, magazines, outdoor advertising,
transit advertising, and direct mail.
Competition in the broadcasting industry occurs primarily in individual
markets. Generally, except as set forth below, a television broadcasting
station in one market does not compete with stations in other market areas.
Outlet Broadcasting television stations are located in highly competitive
markets.
Factors that are material to competitive positions include authorized
power, assigned frequency, management experience, network affiliation,
audience characteristics and local program acceptance, as well as strength
of local competition. The broadcasting industry is continuously faced with
technological change and innovation, the possible rise of popularity of
competing entertainment and communications media, changes in labor
conditions, and governmental restrictions or actions of federal regulatory
bodies, including the FCC and the Federal Trade Commission ("FTC"). Any of
such developments could possibly have a material effect on the Company's
operations and profits.
Under present FCC regulations, no additional conventional, full power, VHF
or UHF commercial television stations may be constructed or operated in any
of the markets where the Company's television stations are located except
there is a construction permit for WFDG-TV, Channel 28, New Bedford,
Massachusetts in the Providence market.
There are sources of video programming other than conventional television
stations, the most common being cable television ("CATV"). These other
sources have increased the competition for broadcasting stations by bringing
into their markets distant broadcasting signals not otherwise available to
the stations' audience and also serving as a distribution system for
programs originating on the cable system. Programming is now being
distributed to CATVs by both terrestrial microwave systems and by satellite.
The FCC has also authorized intermediate carriers to pick up the signals of
so-called "superstations" and to deliver them to CATV systems via satellite,
including CATV systems in each of the Company's television markets.
<PAGE>
The Signal Carriage Provisions of the Cable Television Consumer Protection
and Competition Act of 1992 require CATV system operators, under most
conditions, to transmit the broadcast signal of local commercial television
stations. In certain circumstances, the CATV operator is prohibited from
carrying broadcast stations without obtaining the stations' consent. Once
every three years a television broadcaster must choose whether to proceed
under its must carry, but uncompensated, alternative or instead negotiate a
grant of retransmission consent permitting the CATV operator to carry the
station's signal in exchange for consideration from the CATV operator.
Because the Company's television stations enjoy significant viewership, the
stations are carried by most of the cable television systems serving their
market area. In this regard, the VHF stations have, primarily, granted
retransmission consent to their cable operators and in return have obtained,
in certain instances, the right to produce news programs which will be
carried by available channels on such cable systems. The UHF stations have
generally proceeded with cable system operators under the must carry
alternative.
Other sources of competition include subscription television ("STV"), pay
cable, multi-point distribution systems and multichannel multi-point
distribution systems, satellite-fed master antenna systems and home
entertainment systems (including television game devices, video cassette
recorder and playback systems, and video discs). The Company's television
stations also face competition from Direct Broadcast Satellites ("DBS"),
which transmit programming directly to homes equipped with special receiving
antennas or to CATV systems for transmission to their subscribers. See
"Business--Federal Regulation of Broadcasting" for possible additional
competitive impact from proposed technological changes.
Strategy
Despite the changing dynamics of the television industry, management
believes that there will continue to be opportunities to generate
significant revenues from mass marketed programming and associated
advertising. Management believes that an increasing number of national
"niche" cable channels will continue to fractionalize video viewing,
including the cable networks themselves, and that these channels may find it
difficult to attract enough viewers to generate significant advertiser
support or obtain satisfactory programming on a cost-effective basis.
However, management believes that Outlet Broadcasting's blend of strong
local news programming, combined with national network programming and
selective use of syndicated programming at its VHF television stations, will
continue to attract large viewing audiences and advertiser support.
Additionally, management believes that the syndicated programs, movies and
children's programs offered by Outlet Broadcasting's UHF television stations
provide an attractive alternative to the more traditional news and network-
provided programming.
<PAGE>
Successful programming of broadcast television requires constant
refinement, on the basis of cost effectiveness, of the match between
available programming and the changing tastes of the local viewing audience.
In conjunction with its strategy to reduce overall costs and increase
profitability, Outlet Broadcasting has directed the programming focus at its
VHF television stations towards building on local news leadership and
selectively reducing purchases of syndicated programs. At its UHF stations,
however, Outlet Broadcasting has engaged in network affiliations, as
available, while simultaneously developing local news programming and
improving its offerings of syndicated and children's programs. Outlet
Broadcasting intends to continuously refine its programming mix in order to
attract and hold the audiences desired by advertisers and to increase
profitability. Outlet Broadcasting also believes that its improving
financial condition will enable it to consider the acquisition of desirable
broadcast or related properties, should such properties become available.
Outlet Broadcasting's strategy has the following elements:
Build on Local News Leadership. Local news programming is
commercially valuable because of its high viewership level, the
attractiveness to advertisers of the demographic characteristics
of the typical news audience (allowing stations to charge higher
rates for advertising time) and the enhanced ratings of other
programming in time periods following the news. In addition,
strong local news product helps differentiate local broadcast
stations from cable system competitors, which generally do not
provide this service. The cost of producing local news
programming is generally lower than other sources of non-network
programming, and the amount of local news programming can be
increased for very modest incremental increases in cost.
Moreover, such programming can be increased or decreased on very
short notice, providing Outlet Broadcasting with greater
programming flexibility. Outlet Broadcasting has focused on
maintaining and building each VHF station's local news franchise
as the foundation of its strategy to maintain and build audience
loyalty and increase revenues and profitability. According to the
November 1994 Nielsen report, WJAR(TV) remained as the leading
news station in its market while WCMH (TV)'s weekday news programs
generally captured the second largest share of the Columbus
audience in their time periods. WWHO(TV) has instituted a one-
hour 10:00 p.m. news program and WNCN(TV) is in process of
installing a news department to prepare to provide local news
programming during the latter half of 1995.
<PAGE>
Optimize Selection of Syndicated Programming. At its VHF
television stations, Outlet Broadcasting has operated to reduce
its dependence on, and financial commitment to, syndicated
programming. Within this framework, Outlet Broadcasting has
balanced the cost of available syndicated programs with their
potential to increase advertising revenue, while giving due
consideration to the risk of reduced popularity during the term of
the program contract. Outlet Broadcasting is now selectively
buying only those programs which are available on a cost-effective
basis and for contractual periods which permit financial and
programming flexibility. Selected programs must also complement a
station's overall and/or competitive programming strategies.
Outlet Broadcasting's UHF television stations are more dependent
on syndicated programs for their overall programming needs. At
these stations, Outlet Broadcasting has sought to upgrade the
quality of their syndicated programs, on a cost-effective basis,
in order to provide a more attractive product to their viewers.
Strengthen Advertiser Relationships. Advertising by political
candidates injects significant revenues in relatively short time
periods, but disrupts traditional commercial advertising. In
conjunction with a policy decision not to accept advertising by
political candidates during local news programs, Outlet
Broadcasting effectively limited the amount of such advertising
its stations will carry, thereby minimizing the disruption to
commercial advertisers. Outlet Broadcasting also improved its
audience research capability and enlarged the production
facilities available to its advertisers. In addition, Outlet
Broadcasting expanded its sales staff devoted to supporting its
advertising customers. Management believes that these actions
will strengthen Outlet Broadcasting's relations with these
customers.
Control Costs. Management believes that controlling costs is
essential to achieving and maintaining the profitability of its
broadcast television stations. Therefore, Outlet Broadcasting
implemented a program to control costs which, beginning in 1992,
led to substantially improved operating results. The cost control
measures included reducing financial commitments to costly, long-
term syndicated program contracts, increasing the amount of local
news programming, reducing staff and corporate overhead and
relocating WJAR(TV) and corporate headquarters to a more efficient
facility. Through its ongoing strategic planning and annual
budget processes, Outlet Broadcasting intends to continue to
identify and implement cost saving opportunities.
<PAGE>
Seasonality
Outlet Broadcasting's operating revenues are generally highest in the
second and fourth quarters of each year, due in part to increases in
beverage advertising in the spring and retail advertising in the period
leading up to and including the holiday season. Revenues may also be
affected by special events carried by NBC, such as the Olympic Games or the
Super Bowl. In addition, advertising revenues are generally higher during
political election years due to campaign spending by political candidates.
Other Activities
In addition to its broadcasting properties, the Company has interests in
certain television production activities. These activities now only include
the offering by each of Outlet Broadcasting's television stations of
production services to advertisers and others. It is not anticipated that
any of such activities will generate significant revenues.
Exploration of Strategic Alternatives
On March 21, 1995, the Company announced that the Board of Directors had
retained a financial advisor to help the Company explore strategic
alternatives to enhance shareholder value, including a possible business
combination, the sale of all or a portion of the Company, potential
acquisitions or any other similar transactions. The Company said that there
can be no assurance that any transaction will result from the exploration
process.
Federal Regulation of Broadcasting
Television broadcasting is subject to the jurisdiction of the FCC under
the Communications Act of 1934, as amended (the "Communications Act"). The
Communications Act prohibits television broadcasting except in accordance
with a license issued by the FCC. The Communications Act also empowers the
FCC, among other things, to issue, revoke or modify broadcasting licenses,
to determine the location of stations, to regulate the equipment used by
stations, to adopt such regulations as may be necessary to carry out the
provisions of the Communications Act, and to impose penalties for violation
of such regulations. The assignment of a broadcast license or the transfer
of control of a corporation holding a license cannot be effected without the
prior approval of the FCC.
Television licenses are issued for terms of five years. Licenses are
renewable for additional terms upon application to the FCC, which will
approve the renewal without a hearing if there are no conflicting
applications or petitions to deny by third parties conflicting with the
renewal applications (either of which could require a hearing), or adverse
findings as to the licensee's qualifications. In recent years, there have
been a number of challenges and competing applications to broadcast license
renewal applications although, in the vast majority of cases, television
licenses are renewed by the FCC.
<PAGE>
Outlet Broadcasting's station licenses have the following expiration dates,
until renewed:
WJAR(TV) . . . . . . . . . . . . . April 1, 1999
WCMH(TV) . . . . . . . . . . . . . October 1, 1997
WNCN(TV) . . . . . . . . . . . . . February 1, 1997
WWHO(TV) . . . . . . . . . . . . . October 1, 1997
The FCC rules permit cognizable ownership by one entity of up to twelve
television stations, up to eighteen FM radio stations and up to eighteen AM
radio stations. With respect to television stations, however, the FCC
adopted an additional ownership limit based on audience reach. Under the
audience-reach limitation, an entity may acquire cognizable ownership
interests in up to twelve television stations only if the aggregate number
of television households reached by the television stations does not exceed
25% of the national television household audience as determined by market
ratings. The percentage of the national television household audience
reached by the television stations owned by the Company is significantly
below these limitations.
The FCC rules also generally prohibit the common ownership of a television
station and either an AM or an FM radio station with overlapping areas of
local service, although an AM-FM station combination by itself is permitted.
Ownership of a newspaper, CATV system, and a television station in the same
market is also prohibited. These rules apply only to those who seek new
authorizations or FCC approval of transfers of existing combinations.
The FCC requires the attribution of the licenses held by a broadcasting
company to its officers, directors, and certain holders of its voting
securities, so that there would be a violation of FCC regulations where an
officer, director, or stockholder and a broadcasting company together hold
more than the permitted number of stations or own stations that serve the
same area.
The foregoing is only a brief summary of certain provisions of the
Communications Act and the regulations of the FCC. Reference is made to the
Communications Act, FCC regulations and the public notices promulgated by
the FCC for further information. The Company is unable to predict what
impact, if any, changes in these laws would have.
Music Licensing
In 1983, the U.S. District Court for the Southern District of New York
upheld a challenge by members of the television industry to the legality,
under the antitrust laws, of the so-called "blanket" music-licensing system
routinely used by the ASCAP and BMI music-licensing organizations in
authorizing broadcasters to use copyrighted musical works in syndicated
television programming. The District Court established an interim blanket
license rate frozen at the level in effect in 1980. This interim
<PAGE>
rate was set to permit the licensing organizations to collect some revenue
pending final court determination of the case, with the understanding that
television stations would be liable for any retroactive rate increases set
by the court. However, the judgment of the District Court was reversed by
the U.S. Court of Appeals for the Second Circuit. Subsequently, the U.S.
Supreme Court refused to hear an appeal of the case, thereby affirming the
Second Circuit's determination that blanket music licensing is permissible.
A final determination of retroactive adjustments in music-licensing rates
for the interim time period remained pending.
On February 26, 1993, the District Court ruled that broadcasters may pay
music license fees on either a per program basis or a blanket license based
on a flat fee (ASCAP had sought a blanket license based on a percentage of
each station's revenue). In addition, the District Court established a
formula for determining industry-wide license payments for the retroactive
period to 1983. The District Court also instructed the parties to develop a
formula to govern the allocation of annual blanket license fees among
television stations.
In September 1993 the members of the television industry and ASCAP reached
final agreement on television music performance rights fees payable by
television stations through 1994. The agreement provides for continuation
of the interim blanket and per program licenses and payments through the end
of 1994. The parties also agreed that ASCAP receive an additional industry-
wide payment of $4 million for 1993 and an additional $10.65 million to be
paid in 1994. (The 1993 and 1994 add-on payments allocated to WJAR(TV) and
WCMH(TV) amounted to approximately $60,000 in the aggregate).
ASCAP has appealed the rate court decision establishing blanket and per
program license fees effective January 1, 1995. Pending resolution of the
appeal, ASCAP and a committee representing the television industry have
agreed that television stations will continue to pay ASCAP for the period
January 1, 1995 through June 30, 1995 on the same basis as the stations were
currently reporting and paying. The parties have also agreed that ASCAP
receive an additional industry-wide payment for the six month period of
$3.064 million. This amount will be allocated to individual stations by
formula. It is expected that the allocation to Outlet Broadcasting's
television stations will be relatively minor.
In March 1994 a committee representing members of the television industry
announced that a final agreement had been reached with BMI, whose music
licensing fees are generally tied to ASCAP fees. The agreement provided for
continuation of the interim blanket and per program licenses and payments to
BMI through the end of 1994. The agreement also called for an additional,
industry-wide payment of $14 million to be made during the balance of 1994
($6.125 payable by May 20, 1994 and the remaining $7.875 payable at $1.125
million each month June through
<PAGE>
December, 1994). The add-on payments were allocated to each television
station in accordance with the formula developed for the previous ASCAP
settlement allocation.
BMI currently receives approximately 70% of what ASCAP receives. However,
BMI is continuing to advocate that it should be paid on parity with ASCAP.
As a result, BMI and the committee representing the television industry are
continuing to negotiate fee determinations. The final fee determinations,
as noted above, could have an effect on Outlet Broadcasting's continuing
costs of music licensing for its television properties.
Employee Relations
The Company and Outlet Broadcasting have approximately 325 full-time
employees. Approximately 172 of such employees are represented by labor
unions under collective bargaining agreements. These agreements expire on
various dates through February 1997. Outlet Broadcasting contributes to and
maintains employee benefit and retirement plans for its employees.
Item 2. Properties
----------
The Company's and Outlet Broadcasting's corporate headquarters as well as
the studio facility for WJAR(TV) are located at 23 Kenney Drive, Cranston,
Rhode Island 02920.
The following table sets forth certain information concerning Outlet
Broadcasting's principal facilities.
<TABLE>
<CAPTION>
Owned or Approximate Square
Location: Leased Footage
--------- --------- ------------------
<S> <C> <C>
Corporate Headquarters/
WJAR(TV) Studio Facilities
Cranston, Rhode Island Owned 42,000
WCMH(TV) Studio Facilities
Columbus, Ohio Owned 54,000
WNCN(TV) Studio Facilities
Clayton, North Carolina Owned 6,281
WWHO(TV) Studio Facilities
Chillicothe, Ohio (A) 1,162
</TABLE>
(A) Leased by licensee
The tower site for WJAR-TV is owned. The tower sites for WCMH-TV and
WNCN(TV) are leased. The tower site for WWHO(TV) is leased by that
station's licensee.
<PAGE>
Item 3. Legal Proceedings.
------------------
The Company is not a party, and none of its assets is subject, to any
pending legal proceedings, other than ordinary routine litigation incidental
to Outlet Broadcasting's businesses and against which it is adequately
insured, or which are not material.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters.
--------------------
The Company's Common Stock is traded in the NASDAQ National Market
System. There are 6,579,631 shares issued and outstanding. The information
set forth under the heading "Quarterly Results of Operations" on page 20 of
the Annual Report is incorporated herein by reference.
Item 6. Selected Financial Information.
-------------------------------
The information set forth under the heading "Five Year Comparison of
Selected Financial Data" on page 21 of the Annual Report is incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
------------------------------------
The information under the heading "Management's Discussion and
Analysis" contained on pages 22 through 28 of the Annual Report is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
The information with respect to "Financial Statements and Supplementary
Data" contained on pages 4 through 21 of the Annual Report is incorporated
herein by reference.
Item 9. Changes in and Disagreements on Accounting and
----------------------------------------------
Financial Disclosure.
---------------------
None.
<PAGE>
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
The current executive officers and directors of the Company are as
follows:
<TABLE>
<CAPTION>
Years with
Position with the Company
Name Age the Company or Outlet Broadcasting
---- --- ------------- ----------------------
<S> <C> <C> <C>
James G. Babb 63 Chairman of the (3)
Board, President
and Chief Executive
Officer
Felix W. Oziemblewski 60 Vice President and 26
Chief Financial
Officer
Joanne E. Schenck 37 Secretary 20
Linda Sullivan 41 Vice President-- 10
General Manager
WJAR-TV
Douglas E. Gealy 34 Vice President-- (3)
General Manager
WCMH-TV
Letitia Baldrige 69 Director (5)
Julius Koppelman 78 Director (5)
Frank E. Walsh, Jr. 54 Director (5)
Frank E. Richardson 55 Director (5)
Robert C. Butler 64 Director (4)
Leonard Lieberman 66 Director (4)
James K. Makrianes 70 Director (4)
Stephen J. Carlotti 52 Director (3)
Frederick R. Griffiths 74 Director (2)
Solomon M. Yas 53 Director (2)
Victor H. Palmieri 65 Director (1)
</TABLE>
----------------------
(1) Since 1993.
(2) Since 1992.
(3) Since 1991.
(4) Since 1988.
(5) Since 1986.
<PAGE>
Set forth below is certain information with respect to the Company's
current executive officers and directors.
James G. Babb
Mr. Babb was elected Chairman, President and Chief Executive Officer of
the Company as of May 1, 1991. Before joining the Company, from November
1988 to January 1991, Mr. Babb was President of Jefferson-Pilot
Communications Company, an owner-operator of radio and television
broadcasting stations and broadcasting-related businesses. Prior thereto,
he served as Executive Vice President and Chief Operating Officer of that
company.
Felix W. Oziemblewski
Mr. Oziemblewski has been with Outlet Broadcasting since 1968, has
served as its Vice President and Chief Financial Officer since 1984 and has
served the Company in those capacities since its formation in 1986. Prior
to joining the Company, Mr. Oziemblewski, a certified public accountant, was
employed by Ernst & Young. He has been active in several professional
organizations.
Joanne E. Schenck
Ms. Schenck has been with Outlet Broadcasting since 1974 and has served
as its Personnel Administrator since 1985. She was appointed Secretary in
January 1992.
Douglas E. Gealy
Mr. Gealy was appointed Vice President-General Manager of WCMH-TV in
July 1991 and also made General Manager of WWHO-TV in April 1994. Prior to
joining the Company, from 1989 to 1991, Mr. Gealy was President and General
Manager of WHOI-TV, Peoria, Illinois. Prior thereto, he was associated with
WKEF-TV Dayton, Ohio for five years where he became General Sales Manager.
Linda Sullivan
Ms. Sullivan has been with Outlet Broadcasting since 1985. She was
appointed Vice President-General Manager of WJAR-TV in February 1991. From
1985 to 1986 she was the National Sales Manager for WJAR-TV and from 1986
until February 1991 she served that station as its General Sales Manager.
Letitia Baldrige
Since 1964, Ms. Baldrige has been the owner of Letitia Baldrige
Enterprises, Inc., a management training and public relations consulting
firm. She is an author, lecturer, and columnist. Ms. Baldrige is also a
director of Hartmarx Corporation, Federal Home Loan Bank of Atlanta and a
member of the board of numerous non-profit organizations.
Robert C. Butler
Mr. Butler has been Senior Vice President and Chief Financial Officer
of International Paper Company, a forest products company, since 1988. Mr.
Butler was a Group Executive Vice President of the National Broadcasting
Company ("NBC") from 1984 to 1988. From 1979 to 1984 he served as Executive
Vice President-Finance of NBC.
<PAGE>
Stephen J. Carlotti
Mr. Carlotti is Managing Partner of Hinckley, Allen & Snyder, a
Providence, Rhode Island law firm, and has been a partner of that firm since
January 1992 and from May 1970 to July 1989. He was Senior Executive Vice
President, Chief Operating Officer and General Counsel of The Mutual Benefit
Life Insurance Company ("Mutual Benefit") from August 1989 to August 1991
and a consultant to Mutual Benefit from September 1991 to December 1991.
Frederick R. Griffiths
Mr. Griffiths is a retired former Vice President-Corporate Affairs of
Outlet Broadcasting for the period from 1976 to 1987. He previously served
in various administrative and creative capacities during a thirty year
affiliation with Outlet Broadcasting.
Julius Koppelman
Mr. Koppelman has been Chairman of the Board of Harding Service
Corporation ("Harding Service"), a management consulting firm, since 1985
and was previously Chairman of the Board of Harding Resources, Inc.
("Harding"), its predecessor. From 1982 to 1985, he was President of
Harding. For more than five years prior to September 1981, when he retired,
he was Executive Vice President and a director of RCA Corporation, a
communications and electronics company. Mr. Koppelman is also a director of
other companies, including Dyersburg Fabrics, Inc. and Princess House, Inc.
Leonard Lieberman
Mr. Lieberman was elected a director of the Company in 1988. Mr.
Lieberman was elected on January 4, 1991 to serve as Chairman, President and
Chief Executive Officer of the Company until he was succeeded by Mr. Babb.
Mr. Lieberman was President and Chief Executive Officer of Supermarkets
General Corporation from 1983 to 1987 and was Chairman of that company from
1986 to 1987. He is also a director of other corporations, including
Celestial Seasonings, Inc., Republic New York Corporation, Sonic Corp., The
William Carter Company and La Petite Academy, Inc.
James K. Makrianes
Mr. Makrianes is a Director of Webb, Johnson Associates, an executive
search firm, since March 1995. He was formerly a Partner of Ward Howell
International, an executive search firm, from February 1989 to February
1995. Mr. Makrianes was President of Haley Associates, an executive
recruitment firm, from 1981 to 1987, and was Chairman of the Board of that
firm from 1987 to 1988.
<PAGE>
Victor H. Palmieri
Mr. Palmieri has been Special Deputy Rehabilitator, Confederation Life
Insurance Company (U.S.) since August 1994. He was Deputy Rehabilitator and
Chief Executive Officer of Mutual Benefit from August 1991 to April 1994 and
from April 1994 to March 1995 he was President and Chief Executive Officer
of MBL Life Assurance Corp. Mr. Palmieri is also Chairman of The Palmieri
Company, a firm organized in 1969 to provide assistance in the management of
business and government institutions. He was engaged as Trustee and Chief
Executive Officer of Colorado-Ute Association, an electric utility, from
1990 to 1991 and completed a successful reorganization of that utility. He
is also a director of other corporations, including Ernst Home Center, Inc.,
The William Carter Company and Broadcasting Partners, Inc.
Frank E. Richardson
Mr. Richardson is President and a Director of Wesray Capital
Corporation ("Wesray"), a private investment banking firm of which he has
been an officer for over five years. He is a director of several other
corporations, including Alex. Brown & Sons, Dyersburg Fabrics, Inc., New
River Industries, Inc. and Sonic Corp.
Frank E. Walsh, Jr.
Mr. Walsh has been Chairman of Wesray since August 1989. Mr. Walsh was
Vice Chairman of Wesray from 1986 to 1989 and Executive Vice President of
Wesray from 1984 to 1986. He has been a director of Wesray since 1984. Mr.
Walsh is also a director of other companies, including Tyco Laboratories,
Inc.
Solomon M. Yas
Mr. Yas is a consultant in the field of Human Resources. He is a
former Vice President-Human Resources of Outlet Broadcasting, having served
from 1985 until retirement as of June 1, 1991. From 1964 to 1973, he was
Director of Personnel for ARA Services, Inc.
Item 11. Executive Compensation.
-----------------------
The information appearing under the heading "Executive Compensation"
on pages 7 through 15 of the Proxy Statement is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners
-----------------------------------------------
and Management.
---------------
The information appearing under the heading "Stock Ownership" on pages
5 through 6 of the Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
The information appearing under the heading "Certain Relationships and
Related Transactions" on page 16 of the Proxy Statement is incorporated
herein by reference.
<PAGE>
PART IV
Item 14. Exhibit, Financial Statement Schedules, and Reports on
------------------------------------------------------
Form 8-K.
---------
(a). (1) Financial Statements and Schedules
The following Consolidated Financial Statements of Outlet
Communications, Inc., which appear on pages 4 through 19 of the Annual
Report, are incorporated herein by reference.
Consolidated Balance Sheets as of December 31, 1994, and 1993.
Consolidated Statements of Operations for the years ended December
31, 1994, 1993 and 1992.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows for the years ended December
31, 1994, 1993 and 1992.
Notes to Consolidated Financial Statements -- December 31, 1994.
(2) The following Financial Statement Schedules of Outlet
Communications, Inc. are included herein.
For the years ended December 31, 1994, 1993 and 1992:
Page Herein Schedule
----------- --------
S-1 Schedule II -- Valuation and Qualifying
Accounts
All supporting schedules other than the above have been omitted because they
are not required or the information to be set forth therein is included in
the financial statements or in the notes thereto.
(b). Reports on Form 8-K. None.
(c). Exhibits (an exhibit index immediately preceding the exhibits
indicates the page number where each exhibit can be found).
<PAGE>
The Company will furnish, upon request, any exhibit listed herein upon
the payment of a fee not to exceed reasonable expenses incurred by the
Company in furnishing such exhibit.
3. (a) Certificate of Incorporation*, as amended January 8, 1988;**
and September 19, 1989;*******
(b) By-Laws;**
4. Indenture, dated as of July 8, 1993 between Outlet
Broadcasting, Inc. and Bankers Trust Company, as Trustee,
governing Outlet Broadcasting, Inc. 10 7/8% Senior
Subordinated Notes Due 2003;***
10. Material contracts:
(a) Agreement for Management Consulting Services, dated
July 31, 1986, by and between Harding Service Corporation
and Outlet Communications, Inc.;*(1)
(b)(i) Stockholders' Agreement, dated December 10, 1986, by and among
Outlet Communications, Inc.; Outlet Broadcasting, Inc. and the
persons named therein (the Stockholders' Agreement);***
(b)(ii) Amendment No. 1, dated as of December 1, 1987, to the
Stockholders' Agreement;***
(b)(iii) Agreement dated July 26, 1988, by and among Outlet
Communications, Inc.; Outlet Broadcasting, Inc. and the
persons named therein amending the Stockholders' Agreement;***
(c) Credit and Guaranty Agreement dated as of June 28, 1993 among
Outlet Broadcasting, Inc. and Outlet Communications, Inc. and
Fleet National Bank;***
(d) Supplemental Retirement Plan;***(1)
(e) 1992 Stock Incentive Plan, as amended and restated;***(1)
(f)(i) Employment Agreement, dated April 1, 1989, among Felix W.
Oziemblewski and Outlet Broadcasting, Inc. and Outlet
Communications, Inc.;****(1)
(f)(ii) Employment Agreement, dated January 1, 1995, among Linda
Sullivan and Outlet Broadcasting, Inc. and Outlet
Communications, Inc.;********(1)
(f)(iii) Employment Agreement, dated May 1, 1993 among Douglas E. Gealy
and Outlet Broadcasting, Inc. and Outlet Communications,
Inc.***(1)
(f)(iv) Employment Agreement, dated January 1, 1993, between James G.
Babb and Outlet Communications, Inc.;****** as amended
December 17, 1993;*******(1)
(f)(v) Employment Agreement, dated January 1, 1995, among Adam G.
Polacek and Outlet Broadcasting, Inc. and Outlet
Communications, Inc.;********(1)
(f)(vi) Employment Agreement, dated January 1, 1995 among Steven
Soldinger and Outlet Broadcasting, Inc. and Outlet
Communications, Inc.********(1)
(g) Lease Agreement dated as of September 27, 1982 between
WBNS-TV and Outlet Broadcasting, Inc. regarding tower facility
of WCMH;***
(h) Station Affiliation Agreement, dated as of September 1, 1994,
between WB Communications and Outlet Broadcasting;********
<PAGE>
(i) Time Brokerage Agreement dated as of March 18, 1994 among
Outlet Broadcasting, Inc. and Fant Broadcasting Company of
Ohio, Inc. and Outlet Communications, Inc.********
(j) Press Release, dated March 21, 1995, announcing the retention
of a financial advisor to explore strategic
alternatives.********
13. 1994 Annual Report.********
22. Subsidiaries of the Registrant:
Outlet Broadcasting, Inc. and Atlin Communications, Inc.
23. Consent of Independent Auditors********
__________________
* Incorporated by reference from the Registration Statement on
Form S-1, Registration No. 33-9442, declared effective by the Securities and
Exchange Commission on January 21, 1987.
** Incorporated by reference from Current Report on Form 10-K for
the year ended December 31, 1987.
*** Incorporated by reference from Outlet Broadcasting, Inc.
Registration Statement on Form S-1, Registration No. 33-62292, declared
effective by the Securities and Exchange Commission on July 8, 1993.
**** Incorporated by reference from Annual Report on Form 10-K for
the year ended December 31, 1989.
***** Incorporated by reference from Annual Report on Form 10-K for
the year ended December 31, 1990.
****** Incorporated by reference from Annual Report on Form 10-K for
the year ended December 31, 1992.
******* Incorporated by reference from Annual Report on Form 10-K for
the year ended December 31, 1993.
******** Filed herewith.
________________________________________________
(1) Management contract or compensatory plan or arrangement.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on behalf by the undersigned, thereunto duly authorized.
OUTLET COMMUNICATIONS, INC.
/s/ James G. Babb
-------------------------------
By: James G. Babb
Chairman of the Board,
President and Chief
Executive Officer
Dated: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Principal Executive
Officer:
/s/ James G. Babb Chairman of the March 27, 1995
--------------------------- Board, President,
James G. Babb Chief Executive
Officer, and
Director
Principal Financial and
Accounting Officer:
/s/ Felix W. Oziemblewski Vice President and March 27, 1995
---------------------------- Chief Financial
Felix W. Oziemblewski Officer
<PAGE>
Directors:
/s/ Letitia Baldrige Director March 27, 1995
-------------------------
Letitia Baldrige
/s/ Robert C. Butler Director March 27, 1995
-------------------------
Robert C. Butler
/s/ Stephen J. Carlotti Director March 27, 1995
-------------------------
Stephen J. Carlotti
/s/ Frederick R. Griffiths Director March 27, 1995
--------------------------
Frederick R. Griffiths
/s/ Julius Koppelman Director March 27, 1995
--------------------------
Julius Koppelman
/s/ Leonard Lieberman Director March 27, 1995
---------------------------
Leonard Lieberman
/s/ James K. Makrianes Director March 27, 1995
---------------------------
James K. Makrianes
/s/ Victor H. Palmieri Director March 27, 1995
---------------------------
Victor H. Palmieri
/s/ Frank E. Richardson Director March 27, 1995
----------------------------
Frank E. Richardson
/s/ Frank E. Walsh, Jr. Director March 27, 1995
----------------------------
Frank E. Walsh, Jr.
/s/ Solomon M. Yas Director March 27, 1995
----------------------------
Solomon M. Yas
<PAGE>
OUTLET COMMUNICATIONS, INC.
VALUATION AND QUALIFYING ACCOUNTS Schedule II
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance at Additions Balance
beginning charged at end
of period to expense Deductions of period
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended
December 31, 1992
Allowance for
doubtful accounts $285 $187 $172 $300
==== ==== ==== ====
Year ended
December 31, 1993
Allowance for
doubtful accounts $300 $275 $275 $300
==== ==== ==== ====
Year ended
December 31, 1994
Allowance for
doubtful accounts $300 $154 $133 $321
==== ==== ==== ====
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
3. (a) Certificate of Incorporation*, as amended
December 17, 1987;** and September 19, 1989***
(b) By-Laws;**
4. Indenture, dated as of July 8, 1993 between
Outlet Broadcasting, Inc. and Bankers Trust
Company, as Trustee, governing Outlet
Broadcasting, Inc. 10 7/8% Senior Subordinated
Notes Due 2003;***
10. Material contracts:
(a) Agreement for Management Consulting Services,
dated July 31, 1986, by and between Harding
Service Corporation and Outlet Communications,
Inc.;*(1)
(b)(i) Stockholders' Agreement, dated December 10, 1986,
by and among Outlet Communications, Inc.; Outlet
Broadcasting, Inc. and the persons named therein
(the Stockholders' Agreement);***
(b)(ii) Amendment No. 1, dated as of December 1, 1987, to
the Stockholders' Agreement;***
(b)(iii) Agreement dated July 26, 1988, by and among Outlet
Communications, Inc.; Outlet Broadcasting, Inc.
and the persons named therein amending the
Stockholders' Agreement;***
(c) Credit and Guaranty Agreement dated as of June 28,
1993 among Outlet Broadcasting, Inc. and Outlet
Communications, Inc. and Fleet National Bank;***
(d) Supplemental Retirement Plan;***(1)
(e) 1992 Stock Incentive Plan, as amended
and restated;***(1)
(f)(i) Employment Agreement, dated April 1, 1989, among
Felix W. Oziemblewski and Outlet Broadcasting, Inc.
and Outlet Communications, Inc.;****(1)
(f)(ii) Employment Agreement, dated January 1, 1995,
among Linda Sullivan and Outlet Broadcasting, Inc.
and Outlet Communications, Inc.;********(1) 28
(f)(iii) Employment Agreement, dated May 1, 1993 among
Douglas E. Gealy and Outlet Broadcasting, Inc. and
Outlet Communications, Inc.***(1)
(f)(iv) Employment Agreement, dated January 1, 1993,
between James G. Babb and Outlet Communications,
Inc.;****** as amended December 17, 1993;*******(1)
(f)(v) Employment Agreement, dated January 1, 1995,
among Adam G. Polacek and Outlet Broadcasting, Inc.
and Outlet Communications, Inc.;********(1) 35
(f)(vi) Employment Agreement, dated January 1, 1995 among
Steven Soldinger and Outlet Broadcasting, Inc. and
Outlet Communications, Inc.********(1) 42
(g) Lease Agreement dated as of September 27, 1982
between WBNS-TV and Outlet Broadcasting, Inc.
regarding tower facility of WCMH;***
(h) Station Affiliation Agreement, dated as of
September 1, 1994, between WB Communications and
Outlet Broadcasting;******** 49
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
(i) Time Brokerage Agreement dated as of March 18,
1994 among Outlet Broadcasting, Inc. and Fant
Broadcasting Company of Ohio, Inc. and Outlet
Communications, Inc.******** 69
(j) Press Release, dated March 21, 1995, announcing
the retention of a financial advisor to explore
strategic alternatives.******** 143
13. 1994 Annual Report.******** 144
22. Subsidiaries of the Registrant:
Outlet Broadcasting, Inc. and Atlin Communications, Inc.
23. Consent of Independent Auditors******** 176
</TABLE>
__________________
* Incorporated by reference from the Registration
Statement on Form S-1, Registration No. 33-9442, declared
effective by the Securities and Exchange Commission on
January 21, 1987.
** Incorporated by reference from Current Report on
Form 10-K for the year ended December 31, 1987.
*** Incorporated by reference from Outlet Broadcasting,
Inc. Registration Statement on Form S-1, Registration No. 33-62292, declared
effective by the Securities and Exchange Commission on
July 8, 1993.
**** Incorporated by reference from Annual Report on
Form 10-K for the year ended December 31, 1989.
***** Incorporated by reference from Annual Report on
Form 10-K for the year ended December 31, 1990.
****** Incorporated by reference from Annual Report on
Form 10-K for the year ended December 31, 1992.
******* Incorporated by reference from Annual Report on
Form 10-K for the year ended December 31, 1993.
******** Filed herewith.
_____________________________________________
(1) Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 10.(f)(ii)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 1st day of January, 1995, by and between Outlet
Communications, Inc., a Delaware corporation and Outlet Broadcasting, Inc., a
Rhode Island Corporation (collectively the "Corporation"), and Linda Sullivan
("Executive").
W I T N E S S E T H :
---------------------
WHEREAS, the Corporation desires to assure itself of the services of
Executive and Executive is willing to make her services available to the
Corporation on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained in this Agreement, IT IS AGREED:
1. Employment. The Corporation hereby employs Executive and Executive
----------
hereby accepts employment with the Corporation on the terms and conditions set
forth in this Agreement.
2. Term. The term of Executive's employment hereunder shall commence on
----
January 1, 1995 and shall continue through December 31, 1996 unless earlier
terminated pursuant to Paragraph 6 hereof. Notwithstanding the foregoing, the
Executive's employment shall be automatically extended for consecutive one-year
periods unless notification to the contrary is given by one of the parties to
this Agreement no later than six months prior to the expiration of the initial
two year term or any extension thereafter.
3. Duties. (a) Executive shall serve as Vice President and General Manager
------
Station WJAR TV, Providence, Rhode Island during the term of this Agreement and
will, under the direction of the Chief Executive Officer of the Corporation,
faithfully and to the best of her ability perform the duties of such offices.
Executive agrees to devote such time, energy, and skills to such employment as
required.
4. Compensation. Executive's compensation for the services performed under
------------
1
<PAGE>
this Agreement shall be as follows:
(a) Compensation.
------------
(i) Base Salary. Executive shall receive: a base salary of One
-----------
Hundred Thirty Thousand Dollars ($130,000 per year, payable in regular bimonthly
installments ("Base Salary").
(ii) Adjustment. Executive's basic compensation shall be
----------
reviewed periodically by the Chief Executive Officer and the Compensation
Committee of the Board and adjusted in accordance with Outlet's Salary
Administration Program, entitling Executive to be benefitted by the Program's
provision governing salary increases.
(b) Incentive Compensation. In addition to the Base Salary, Executive
----------------------
shall be eligible to earn incentive compensation as a participant in Outlet's
Executive Incentive Compensation Plan.
5. Fringe Benefits.
---------------
(a) Generally. Executive shall be entitled to any and all
---------
benefits made available to Executive management-level employees of the
Corporation and such other benefits as the Board may from time to time, in its
discretion, make to Executive.
(b) Insurance.
---------
(i) Medical and Health Coverage. Executive shall be eligible
---------------------------
to participate in all applicable health and welfare plans in effect for
Executives of the Corporation.
(c) Pension. Executive shall be entitled to participate, if eligible, in
-------
the Corporation's current retirement plan and supplemental retirement plan.
(d) Vacation. Executive shall be entitled to receive paid vacation
--------
annually, in accordance with existing Corporation policy.
(e) Reimbursement for Reasonable Business Expenses. The Corporation
----------------------------------------------
shall reimburse Executive for reasonable expense incurred by her in connection
with her performance of duties pursuant to this Agreement.
(f) Automobile. During the Employment Period, the Corporation shall
----------
provide Executive with full use of an automobile similar to vehicles provided to
other
2
<PAGE>
management-level employees owned or leased by the Corporation for use in
carrying out her duties for both the Corporation and for use in such additional
personal business as Executive may deem appropriate. The Corporation agrees to
provide adequate insurance for the automobile and occupants and to pay all
maintenance and operating costs appropriate or necessary to maintain such
automobile in prime operating condition.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. During the term of this Agreement,
--------------------------
the Corporation shall be entitled to terminate Executive's employment at any
time for Just Cause upon not less than sixty (60) days written notice to
Executive specifying the cause and the date of termination. For this purpose,
"Just Cause" shall mean fraud, conviction of a felony, dishonesty, gross
negligence in the performance of her duties to the Corporation, willful
misconduct in the performance of her duties to the Corporation, willful
misrepresentation to shareholders and directors which is materially injurious to
the Corporation, willful failure to comply with a reasonable written order of
the Board of Directors and material breach of this Agreement. In the event of
such termination, payments for Base Salary and vested rights to fringe benefits
shall be prorated to the date of termination. All other obligations of the
Corporation hereunder shall cease as of the date of termination.
(b) Termination for Death or Permanent Incapacity. In the event of
---------------------------------------------
Executive's death while employed hereunder or if Executive's employment
hereunder is terminated by reason of permanent incapacity, as herein provided,
Corporation shall continue to pay the base salary specified in subparagraph
4(a)(i) above through the end of the month in which such event occurs; and
Executive shall also be entitled to a pro rata portion of the Incentive Bonus,
if any, based on actual performance of Corporation, which Executive would have
earned had she continued in its employ for the balance of the year in which such
event occurs using the ratio to twelve months of the number of months of that
year to and including the month in which such event occurs.
If during the term of this Agreement Executive should become disabled,
through illness or otherwise, from performing her duties hereunder, Executive
shall be entitled to a leave of absence from corporation for the duration of any
such disability up to but not
3
<PAGE>
exceeding six months in any one twelve-month period. Executive's base salary
retainer and Incentive Bonus and her status as an employee hereunder shall
continue during any such leave of absence. Executive shall be deemed to be
permanently incapacitated only if and when her leaves of absence for disability
shall have continued beyond those specified in this paragraph and thereafter
upon impartial medical advice it shall have been certified to corporation that
the disability is such that it will substantially impair her ability to perform
her duties hereunder.
(c) Termination Without Just Cause. During the term of this Agreement, the
------------------------------
Corporation shall be entitled to terminate Executive's employment without Just
Cause upon not less than sixty (60) days' written notice to Executive specifying
the date of termination; provided however, that if this Agreement is terminated
by the Corporation for any reason other than for Just Cause, or if the Agreement
is terminated by the Corporation for any reason which the Corporation believes
constitutes Just Cause, and it is ultimately determined that Executive was
wrongfully terminated, Executive shall continue to receive her Base Salary in
the amount and manner as if both parties had fully performed their obligations
under this Agreement for the Employment Period notwithstanding such termination.
7. Noncompetition. The Corporation and Executive agree that the
--------------
Corporation's customer contacts and relations are established and maintained at
great expense and that Executive by virtue of employment under this Agreement,
will have unique and extensive exposure to the personal contact with the
Corporation's customers and that she will be able to establish a unique
relationship with those customers and the opportunity, both during and after
employment, to unfairly compete with the Corporation (which term, for purposes
of this paragraph 7, shall include the Corporation, or any affiliate or
subsidiary of the Corporation which provides similar products and services).
Therefore, Executive and the Corporation agree as follows:
(a) During Term of Employment. Executive agrees during her employment with
-------------------------
the Corporation that she shall not, directly or indirectly, either individually
or as an employee, agent, partner, shareholder, consultant, or in any other
capacity participate in, engage in, or have a financial or other interest in any
business which is directly competitive
4
<PAGE>
with the Corporation or any successor or assign of the Corporation. The
ownership of an interest constituting not more than one percent (1%) of the
outstanding debt or equity in a corporation whose shares are traded in a
recognized stock exchange or trade in the over-the-counter market, even though
the corporation may be a competitor of the Corporation, shall not be deemed
financial participation in a competitor.
(b) Upon Termination of Employment. Executive agrees that upon termination
------------------------------
of employment with the Corporation, for a period of one (1) year after December
31, 1996, or the termination date of her employment with the Corporation,
whichever date is later, she will not, directly or indirectly, individually or
as an employee, agent, partner, shareholder, consultant, or in any other
capacity, canvass, contact, solicit or accept on behalf of himself or any other
corporation, any customers with whom Executive had personal contact or whose
account Executive personally serviced or supervised while employed hereunder,
for the purpose of providing services, products or business directly competitive
with those then being provided by the Corporation, in the city in which the
Executive was employed.
8. Confidentiality. In the course of her employment with the Corporation
---------------
prior to the date hereof Executive had, and in the course of her employment
hereunder Executive will have, access to confidential information and records,
date, formulae, specifications and other trade secrets of the Corporation and
its affiliates and subsidiaries ("Confidential Information"). During and after
her employment by the Corporation, Executive shall not directly or indirectly
disclose Confidential Information to any person or use any Confidential
Information, except as required in the course of such employment. All records,
files, drawings, documents, models, equipment and the like relating to the
Corporation's or any of its affiliates' or subsidiaries' business, which
Executive shall prepare or use or come into contact with, shall be and remain
such company's sole property and shall not be removed from such company's
premises without its written consent, except as required in the course of such
employment.
9. Specific Performance. In the event of any controversy concerning the
--------------------
rights or obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be
5
<PAGE>
cumulative and nonexclusive and shall be in addition to any other remedy to
which the parties may be entitled.
10. Sale, Consolidation or Merger. In the event of a sale of the stock of
-----------------------------
the Corporation, or consolidation or merger of the Corporation with or into
another corporation or entity, or the sale of substantially all of the operating
assets of the Corporation to another corporation, entity or individual, the
Corporation's successor-in-interest shall be deemed to have assumed all
liabilities of the Corporation under this Agreement.
11. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
12. Notices. Any notice to be given hereunder shall be deemed sufficient if
-------
addressed in writing, and delivered by registered or certified mail or delivered
personally, in the case of the Corporation, to its principal business office and
in the case of Executive, to her address appearing on the records of the
Corporation, or to such other addresses as he may designate in writing to the
Corporation.
13. Severability. In the event that any provisions shall be held to be
------------
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions, and provisions hereof shall remain in
full force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable, and enforceable.
14. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
15. Entire Agreement. This Agreement contains the entire agreement of the
----------------
parties with respect to Executive's employment by the Corporation and supersedes
any prior or simultaneous agreements between them, whether oral or written.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Rhode Island.
6
<PAGE>
17. Coverage. The provisions set forth in this Agreement with respect to
--------
the terms and conditions of Executive's employment will not prevent Executive
from participating in any other employee compensation or benefit program adopted
by the Corporation for its key employees solely because such programs are not
specifically mentioned in this Agreement.
18. Benefit. This Agreement shall be binding upon and inure to the
-------
benefit of and shall be enforceable by and against the Corporation, its
successors and assigns, and Executive, her heirs, beneficiaries, and legal
representatives. It is agreed that the rights and obligations of Executive may
not be delegated or assigned except as specifically set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ATTEST: OUTLET COMMUNICATIONS, INC.
/s/ Ann Snell By: /s/ James G. Babb
-------------------------- --------------------------------
Chairman, President & CEO
ATTEST: OUTLET BROADCASTING, INC.
/s/ Ann Snell By: /s/ James G. Babb
-------------------------- --------------------------------
Chairman, President & CEO
WITNESS:
/s/ Joanne Schenck By: /s/ Linda Sullivan
-------------------------- --------------------------------
Linda Sullivan
7
<PAGE>
Exhibit 10.(f)(v)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 1st day of January, 1995, by and between Outlet
Communications, Inc., a Delaware corporation and Outlet Broadcasting, Inc., a
Rhode Island Corporation (collectively the "Corporation"), and Adam G. Polacek
("Executive").
W I T N E S S E T H:
--------------------
WHEREAS, the Corporation desires to assure itself of the services of
Executive and Executive is willing to make his services available to the
Corporation on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained in this Agreement, IT IS AGREED:
1. Employment. The Corporation hereby employs Executive and Executive
-----------
hereby accepts employment with the Corporation on the terms and conditions set
forth in this Agreement.
2. Term. The term of Executive's employment hereunder shall commence on
----
January 1, 1995 and shall continue through December 31, 1996 unless earlier
terminated pursuant to Paragraph 6 hereof. Notwithstanding the foregoing, the
Executive's employment shall be automatically extended for consecutive one-year
periods unless notification to the contrary is given by one of the parties to
this Agreement no later than six months prior to the expiration of the initial
two year term or any extension thereafter.
3. Duties. (a) Executive shall serve as Vice President and General
------
Manager Station WNCN, Raleigh, North Carolina during the term of this Agreement
and will, under the direction of the Chief Executive Officer of the Corporation,
faithfully and to the best of his ability perform the duties of such offices.
Executive agrees to devote such time, energy, and skills to such employment as
required.
4. Compensation. Executive's compensation for the services performed
------------
under
1
<PAGE>
this Agreement shall be as follows:
(a) Compensation.
------------
(i) Base Salary. Executive shall receive: a base salary of
-----------
One Hundred Thirty Thousand Dollars ($130,000) per year, payable in regular
bimonthly installments ("Base Salary").
(ii) Adjustment. Executive's basic compensation shall be
----------
reviewed periodically by the Chief Executive Officer and the Compensation
Committee of the Board and adjusted in accordance with Outlet's Salary
Administration Program, entitling Executive to be benefitted by the Program's
provision governing salary increases.
(b) Incentive Compensation. In addition to the Base Salary,
----------------------
Executive shall be eligible to earn incentive compensation as a participant in
Outlet's Executive Incentive Compensation Plan.
5. Fringe Benefits.
---------------
(a) Generally. Executive shall be entitled to any and all
---------
benefits made available to Executive management-level employees of the
Corporation and such other benefits as the Board may from time to time, in its
discretion, make to Executive.
(b) Insurance.
---------
(i) Medical and Health Coverage. Executive shall be eligible
---------------------------
to participate in all applicable health and welfare plans in effect for
Executives of the Corporation.
(c) Pension. Executive shall be entitled to participate, if
-------
eligible, in the Corporation's current retirement plan and supplemental
retirement plan.
(d) Vacation. Executive shall be entitled to receive paid
--------
vacation annually, in accordance with existing Corporation policy.
(e) Reimbursement for Reasonable Business Expenses. The
----------------------------------------------
Corporation shall reimburse Executive for reasonable expenses incurred by him in
connection with his performance of duties pursuant to this Agreement.
(f) Automobile. During the Employment Period, the Corporation
----------
shall provide Executive with full use of an automobile similar to vehicles
provided to other
2
<PAGE>
management-level employees owned or leased by the Corporation for use in
carrying out his duties for both the Corporation and for use in such additional
personal business as Executive may deem appropriate. The Corporation agrees to
provide adequate insurance for the automobile and occupants and to pay all
maintenance and operating costs appropriate or necessary to maintain such
automobile in prime operating condition.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. During the term of this Agreement,
--------------------------
the Corporation shall be entitled to terminate Executive's employment at any
time for Just Cause upon not less than sixty (60) days written notice to
Executive specifying the cause and the date of termination. For this purpose,
"Just Cause" shall mean fraud, conviction of a felony, dishonesty, gross
negligence in the performance of his duties to the Corporation, willful
misconduct in the performance of his duties to the Corporation, willful
misrepresentation to shareholders and directors which is materially injurious to
the Corporation, willful failure to comply with a reasonable written order of
the Board of Directors and material breach of this Agreement. In the event of
such termination, payments for Base Salary and vested rights to fringe benefits
shall be prorated to the date of termination. All other obligations of the
Corporation hereunder shall cease as of the date of termination.
(b) Termination for Death or Permanent Incapacity. In the event of
---------------------------------------------
Executive's death while employed hereunder or if Executive's employment
hereunder is terminated by reason of permanent incapacity, as herein provided,
Corporation shall continue to pay the base salary specified in subparagraph
4(a)(i) above through the end of the month in which such event occurs; and
Executive shall also be entitled to a pro rata portion of the Incentive Bonus,
if any, based on actual performance of Corporation, which Executive would have
earned had he continued in its employ for the balance of the year in which such
event occurs using the ratio to twelve months of the number of months of that
year to and including the month in which such event occurs.
If during the term of this Agreement Executive should become
disabled, through illness or otherwise, from performing his duties hereunder,
Executive shall be entitled to a leave of absence from corporation for the
duration of any such disability up to but not
3
<PAGE>
exceeding six months in any one twelve-month period. Executive's base salary
retainer and Incentive Bonus and his status as an employee hereunder shall
continue during any such leave of absence. Executive shall be deemed to be
permanently incapacitated only if and when his leaves of absence for disability
shall have continued beyond those specified in this paragraph and thereafter
upon impartial medical advice it shall have been certified to corporation that
the disability is such that it will substantially impair his ability to perform
his duties hereunder.
(c) Termination Without Just Cause. During the term of this Agreement,
------------------------------
the Corporation shall be entitled to terminate Executive's employment without
Just Cause upon not less than sixty (60) days' written notice to Executive
specifying the date of termination; provided however, that if this Agreement is
terminated by the Corporation for any reason other than for Just Cause, or if
the Agreement is terminated by the Corporation for any reason which the
Corporation believes constitutes Just Cause, and it is ultimately determined
that Executive was wrongfully terminated, Executive shall continue to receive
his Base Salary in the amount and manner as if both parties had fully performed
their obligations under this Agreement for the Employment Period notwithstanding
such termination.
7. Noncompetition. The Corporation and Executive agree that the
--------------
Corporation's customer contacts and relations are established and maintained at
great expense and that Executive by virtue of employment under this Agreement,
will have unique and extensive exposure to the personal contact with the
Corporation's customers and that he will be able to establish a unique
relationship with those customers and the opportunity, both during and after
employment, to unfairly compete with the Corporation (which term, for purposes
of this paragraph 7, shall include the Corporation, or any affiliate or
subsidiary of the Corporation which provides similar products and services).
Therefore, Executive and the Corporation agree as follows:
(a) During Term of Employment. Executive agrees during his employment
-------------------------
with the Corporation that he shall not, directly or indirectly, either
individually or as employee, agent, partner, shareholder, consultant, or in
any other capacity participate in, engage in, or have a financial or other
interest in any business which is directly competitive with the
4
<PAGE>
Corporation or any successor or assign of the Corporation. The ownership of an
interest constituting not more than one percent (1%) of the outstanding debt or
equity in a corporation whose shares are traded in a recognized stock exchange
or trade in the over-the-counter market, even though the corporation may be a
competitor of the Corporation, shall not be deemed financial participation in a
competitor.
(b) Upon Termination of Employment. Executive agrees that upon
------------------------------
termination of employment with the Corporation, for a period of one (1) year
after December 31, 1996, or the termination date of his employment with the
Corporation, whichever date is later, he will not, directly or indirectly,
individually or as an employee, agent, partner, shareholder, consultant, or in
any other capacity, canvass, contact, solicit or accept on behalf of himself or
any other corporation, any customers with whom Executive had personal contact or
whose account Executive personally serviced or supervised while employed
hereunder, for the purpose of providing services, products or business directly
competitive with those then being provided by the Corporation, in the city in
which the Executive was employed.
8. Confidentiality. In the course of his employment with the Corporation
---------------
prior to the date hereof Executive had, and in the course of his employment
hereunder Executive will have, access to confidential information and records,
data, formulae, specifications and other trade secrets of the Corporation and
its affiliates and subsidiaries ("Confidential Information"). During and after
his employment by the Corporation, Executive shall not directly or indirectly
disclose Confidential Information to any person or use any Confidential
Information, except as required in the course of such employment. All
records, files, drawings, documents, models, equipment and the like relating to
the Corporation's or any of its affiliates' or subsidiaries' business, which
Executive shall prepare or use or come into contact with, shall be and remain
such company's sole property and shall not be removed from such company's
premises without its written consent, except as required in the course of such
employment.
9. Specific Performance. In the event of any controversy concerning the
--------------------
rights or obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be
5
<PAGE>
cumulative and nonexclusive and shall be in addition to any other remedy to
which the parties may be entitled.
10. Sale, Consolidation or Merger. In the event of a sale of the stock
-----------------------------
of the Corporation, or consolidation or merger of the Corporation with or into
another corporation or entity, or the sale of substantially all of the operating
assets of the Corporation to another corporation, entity or individual, the
Corporation's successor-in-interest shall be deemed to have assumed all
liabilities of the Corporation under this Agreement.
11. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
12. Notices. Any notice to be given hereunder shall be deemed
-------
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of the Corporation, to its principal
business office and in the case of Executive, to his address appearing on the
records of the Corporation, or to such other addresses as he may designate in
writing to the Corporation.
13. Severability. In the event that any provisions shall be held to be
------------
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions, and provisions hereof shall remain in
full force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable, and enforceable.
14. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
15. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties with respect to Executive's employment by the Corporation and
supersedes any prior or simultaneous agreements between them, whether oral or
written.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Rhode Island.
6
<PAGE>
17. Coverage. The provisions set forth in this Agreement with respect
--------
to the terms and conditions of Executive's employment will not prevent Executive
from participating in any other employee compensation or benefit program
adopted by the Corporation for its key employees solely because such programs
are not specifically mentioned in this Agreement.
18. Benefit. This Agreement shall be binding upon and inure to the
-------
benefit of and shall be enforceable by and against the Corporation, its
successors and assigns, and Executive, his heirs, beneficiaries, and legal
representatives. It is agreed that the rights and obligations of Executive may
not be delegated or assigned except as specifically set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ATTEST: OUTLET COMMUNICATIONS, INC.
/s/ Signature Appears Here /s/ Signature Appears Here
------------------------------- ---------------------------------
Chairman, President & CEO
ATTEST: OUTLET BROADCASTING, INC.
/s/ Signature Appears Here By: /s/ Signature Appears Here
------------------------ --------------------------------
Witness:
/s/ Signature Appears Here By: /s/ Signature Appears Here
---------------------------------- -----------------------------------
Adam G. Polacek
-7-
<PAGE>
Exhibit 10.(f)(vi)
EMPLOYMENT AGREEMENT
THIS AGREEMENT made this 1st day of January, 1995, by and between Outlet
Communications, Inc., a Delaware corporation and Outlet Broadcasting, Inc., a
Rhode Island Corporation (collectively the "Corporation"), and Steven Soldinger
("Executive").
W I T N E S S E T H:
-------------------
WHEREAS, the Corporation desires to assure itself of the services of
Executive and Executive is willing to make his services available to the
Corporation on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained in this Agreement, IT IS AGREED:
1. Employment. The Corporation hereby employs Executive and Executive
----------
hereby accepts employment with the Corporation on the terms and conditions set
forth in this Agreement.
2. Term. The term of Executive's employment hereunder shall commence on
----
January 1, 1995 and shall continue through December 31, 1995 unless earlier
terminated pursuant to Paragraph 6 hereof. Notwithstanding the foregoing, the
Executive's employment shall be automatically extended for consecutive one-year
periods unless notification to the contrary is given by one of the parties to
this Agreement no later than three months prior to the expiration of the initial
one year term or any extension thereafter.
3. Duties. (a) Executive shall serve as Vice President - Television
------
during the term of this Agreement and will, under the direction of the Chief
Executive Officer of the Corporation, faithfully and to the best of his ability
perform the duties of such offices. Executive agrees to devote such time,
energy, and skills to such employment as required.
4. Compensation. Executive's compensation for the services performed
------------
under this Agreement shall be as follows:
1
<PAGE>
(a) Compensation.
------------
(i) Base Salary. Executive shall receive: a base salary of
-----------
One Hundred Ten Thousand Dollars ($110,000) per year, payable in regular
bimonthly installments ("Base Salary").
(ii) Adjustment. Executive's basic compensation shall be
----------
reviewed periodically by the Chief Executive Officer and the Compensation
Committee of the Board and adjusted in accordance with Outlet's Salary
Administration Program, entitling Executive to be benefitted by the Program's
provision governing salary increases.
(b) Incentive Compensation. In addition to the Base Salary,
----------------------
Executive shall be eligible to earn incentive compensation as a participant in
Outlet's Executive Incentive Compensation Plan.
5. Fringe Benefits.
---------------
(a) Generally. Executive shall be entitled to any and all benefits
---------
made available to Executive management-level employees of the Corporation and
such other benefits as the Board may from time to time, in its discretion, make
to Executive.
(b) Insurance.
---------
(i) Medical and Health Coverage. Executive shall be eligible
to participate in all applicable health and welfare plans in effect for
Executives of the Corporation.
(c) Pension. Executive shall be entitled to participate, if
-------
eligible, in the Corporation's current retirement plan and supplemental
retirement plan.
(d) Vacation. Executive shall be entitled to receive paid vacation
--------
annually, in accordance with existing Corporation policy.
(e) Reimbursement for Reasonable Business Expenses. The
----------------------------------------------
Corporation shall reimburse Executive for reasonable expenses incurred by him in
connection with his performance of duties pursuant to this Agreement.
(f) Automobile. During the Employment Period, the Corporation
----------
shall provide Executive with full use of an automobile similar to vehicles
provided to other management-level employees owned or leased by the Corporation
for use in carrying out
2
<PAGE>
his duties for both the Corporation and for use in such additional personal
business as Executive may deem appropriate. The Corporation agrees to provide
adequate insurance for the automobile and occupants and to pay all maintenance
and operating costs appropriate or necessary to maintain such automobile in
prime operating condition.
6. Termination of Employment.
-------------------------
(a) Termination for Just Cause. During the term of this Agreement,
--------------------------
the Corporation shall be entitled to terminate Executive's employment at any
time for Just Cause upon not less than sixty (60) day's written notice to
Executive specifying the cause and the date of termination. For this purpose,
"Just Cause" shall mean fraud, conviction of a felony, dishonesty, gross
negligence in the performance of duties to the Corporation, willful misconduct
in the performance of his duties to the Corporation, willful misrepresentation
to shareholders and directors which is materially injurious to the Corporation,
willful failure to comply with a reasonable written order of the Board of
Directors and material breach of this Agreement. In the event of such
termination, payments for Base Salary and vested rights to fringe benefits shall
be prorated to the date of termination. All other obligations of the Corporation
hereunder shall cease as of the date of termination.
(b) Termination for Death or Permanent Incapacity. In the event of
---------------------------------------------
Executive's death while employed hereunder or if Executive's employment
hereunder is terminated by reason of permanent incapacity, as herein provided,
Corporation shall continue to pay the base salary specified in subparagraph
4(a)(i) above through the end of the month in which such event occurs; and
Executive shall also be entitled to a pro rata portion of the Incentive Bonus,
if any, based on actual performance of Corporation, which Executive would have
earned had he continued in its employ for the balance of the year in which such
event occurs using the ratio to twelve months of the number of months of that
year to and including the month in which such event occurs.
If during the term of this Agreement Executive should become
disabled, through illness or otherwise, from performing his duties hereunder,
Executive shall be entitled to a leave of absence from corporation for the
duration of any such disability up to but not exceeding six months in any one
twelve-month period. Executive's base salary retainer and
3
<PAGE>
Incentive Bonus and his status as an employee hereunder shall continue during
any such leave of absence. Executive shall be deemed to be permanently
incapacitated only if and when his leaves of absence for disability shall have
continued beyond those specified in this paragraph and thereafter upon impartial
medical advice it shall have been certified to corporation that the disability
is such that it will substantially impair his ability to perform his duties
hereunder.
(c) Termination Without Just Cause. During the term of this Agreement,
------------------------------
the Corporation shall be entitled to terminate Executive's employment without
Just Cause upon not less than sixty (60) days' written notice to Executive
specifying the date of termination; provided however, that if this Agreement is
terminated by the Corporation for any reason other than for Just Cause, or if
the Agreement is terminated by the Corporation for any reason which the
Corporation believes constitutes Just Cause, and it is ultimately determined
that Executive was wrongfully terminated, Executive shall continue to receive
his Base Salary in the amount and manner as if both parties had fully performed
their obligations under this Agreement for the Employment Period notwithstanding
such termination.
7. Noncompetition. The Corporation and Executive agree that the
--------------
Corporation's customer contacts and relations are established and maintained at
great expense and that Executive by virtue of employment under this Agreement,
will have unique and extensive exposure to the personal contact with the
Corporation's customers and that he will be able to establish a unique
relationship with those customers and the opportunity, both during and after
employment, to unfairly compete with the Corporation (which term, for purposes
of this paragraph 7, shall include the Corporation, or any affiliate or
subsidiary of the Corporation which provides similar products and services).
Therefore, Executive and the Corporation agree as follows:
(a) During Term of Employment. Executive agrees during his employment
-------------------------
with the Corporation that he shall not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, consultant, or in
any other capacity participate in, engage in, or have a financial or other
interest in any business which is directly competitive with the Corporation or
any successor or assign of the Corporation. The ownership of an interest
4
<PAGE>
constituting not more than one percent (1%) of the outstanding debt or equity in
a corporation whose shares are traded in a recognized stock exchange or trade in
the over-the-counter market, even though the corporation may be a competitor of
the Corporation, shall not be deemed financial participation in a competitor.
(b) Upon Termination of Employment. Executive agrees that upon
------------------------------
termination of employment with the Corporation, for a period of one (1) year
after December 31, 1995, or the termination date of his employment with the
Corporation, whichever date is later, he will not, directly or indirectly,
individually or as an employee, agent, partner, shareholder, consultant, or in
any other capacity, canvass, contact, solicit or accept on behalf of himself or
any other corporation, any customers with whom Executive had personal contact or
whose account Executive personally serviced or supervised while employed
hereunder, for the purpose of providing services, products or business directly
competitive with those then being provided by the Corporation, in the city in
which the Executive was employed.
8. Confidentiality. In the course of his employment with the Corporation
---------------
prior to the date hereof Executive had, and in the course of his employment
hereunder Executive will have, access to confidential information and records,
data, formulae, specifications and other trade secrets of the Corporation and
its affiliates and subsidiaries ("Confidential Information"). During and after
his employment by the Corporation, Executive shall not directly or indirectly
disclose Confidential Information to any person or use any Confidential
Information, except as required in the course of such employment. All records,
files, drawings, documents, models, equipment and the like relating to the
Corporation's or any of its affiliates' or subsidiaries' business, which
Executive shall prepare or use or come into contact with, shall be and remain
such company's sole property and shall not be removed from such company's
premises without its written consent, except as required in the course of such
employment.
9. Specific Performance. In the event of any controversy concerning the
--------------------
rights or obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance. Such
remedy, however, shall be cumulative and nonexclusive and shall be in addition
to any other remedy to which the
5
<PAGE>
parties may be entitled.
10. Sale, Consolidation or Merger. In the event of a sale of the stock
-----------------------------
of the Corporation, or consolidation or merger of the Corporation with or into
another corporation or entity, or the sale of substantially all of the operating
assets of the Corporation to another corporation, entity or individual, the
Corporation's successor-in-interest shall be deemed to have assumed all
liabilities of the Corporation under this Agreement.
11. Waiver. The failure of either party to insist, in any one or more
------
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
12. Notices. Any notice to be given hereunder shall be deemed sufficient
-------
if addressed in writing, and delivered by registered or certified mail or
delivered personally, in the case of the Corporation, to its principal business
office and in the case of Executive, to his address appearing on the records of
the Corporation, or to such other addresses as he may designate in writing to
the Corporation.
13. Severability. In the event that any provisions shall be held to be
------------
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions, and provisions hereof shall remain in
full force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable, and enforceable.
14. Amendment. This Agreement may be amended only by an agreement in
---------
writing signed by the parties hereto.
15. Entire Agreement. This Agreement contains the entire agreement of
----------------
the parties with respect to Executive's employment by the Corporation and
supersedes any prior or simultaneous agreement between them, whether oral or
written.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Rhode Island.
17. Coverage. The provisions set forth in this Agreement with respect to
--------
the
6
<PAGE>
terms and conditions of Executive's employment will not prevent Executive from
participating in any other employee compensation or benefit program adopted by
the Corporation for its key employees solely because such programs are not
specifically mentioned in this Agreement.
18. Benefit. This Agreement shall be binding upon and inure to the
-------
benefit of and shall be enforceable by and against the Corporation, its
successors and assigns, and Executive, his heirs, beneficiaries, and legal
representatives. It is agreed that the rights and obligations of Executive may
not be delegated or assigned except as specifically set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day, month and year first above written.
ATTEST: OUTLET COMMUNICATIONS, INC.
/s/ Signature Appears Here By: /s/ Signature Appears Here
-------------------------- ------------------------------
Chairman, President & CEO
ATTEST: OUTLET COMMUNICATIONS, INC.
/s/ Signature Appears Here By: /s/ Signature Appears Here
-------------------------- ------------------------------
Chairman, President & CEO
WITNESS:
/s/ Signature Appears Here By: /s/ Signature Appears Here
-------------------------- ------------------------------
Steven Soldinger
7
<PAGE>
Exhibit 10.(h)
WB COMMUNICATIONS
STATION AFFILIATION AGREEMENT
As of September 1, 1994
Outlet Broadcasting
23 Kenney Drive
Cranston, Rhode Island 02920-4489
Attention: Doug Gealy
The following shall comprise the agreement between WB Communications
("WB," "we," or "us"), and Outlet Broadcasting ("Affiliate" or "you") for the
affiliation of television station WWHO ("Station") with WB for carriage of WB
programming. The Federal Communications Commission ("FCC") has issued a
broadcast license ("License") to Fant Broadcasting as the Licensee to operate
Station in Chillicothe, Ohio, the community in which Station is licensed by the
FCC ("Community of License"). Outlet Broadcasting, has entered into a Lease
Management Agreement ("LMA") with Fant Broadcasting. Under said LMA, you are
the broker for programming on station WWHO and you have the right and authority
to manage the station and to enter into this Network Affiliation Agreement.
All references in this Agreement to "WB program(s)" and "WB programming" and any
variations thereof shall mean the programming made available by WB under this
Agreement.
1. WB Programming: WB will make available to Affiliate WB programs for free
--------------
over-the-air broadcast and broadcast by any other means by Station in the
Community of License during the term of this Agreement. During such term,
except as otherwise provided herein, WB grants Affiliate the exclusive
right to have Station broadcast the WB programming in the Community of
License only as scheduled by WB over free over-the-air television and by
such other technological means as are available to Affiliate for broadcast
in the Community of License so long as Station broadcasts the WB
programming for over-the-air television. WB shall have the sole discretion
to select, schedule, substitute and/or withdraw WB programming or any
portion(s) thereof. WB shall also have the right to authorize any
television broadcasting station, regardless of the community in which it is
licensed by the FCC, to broadcast any presentation of a subject we deem to
be of immediate national significance including, but not limited to, a
Presidential address. Except as provided herein, during the term of this
Agreement Affiliate shall be the sole affiliate of WB for transmission for
exhibition on television of WB programming in the Community of License.
-1-
<PAGE>
2. Program Carriage:
----------------
(a) We agree to make available for broadcast by Station WB programming for
the hours programmed by WB at the times and dates scheduled by WB
throughout the term of this Agreement. You acknowledge that the times
and roll-out dates set forth in this Agreement are approximate only
and you agree to have Station broadcast WB programs irrespective of
whether WB meets, fails to meet or otherwise varies from the
anticipated program schedule set forth herein; provided, however, that
WB hereby agrees not to accelerate such anticipated program schedule.
To the extent WB makes available such WB programming for broadcast,
this Agreement both obligates us to make available such WB programs to
Station and obligates Station to broadcast such WB programs over-the-
air pursuant to the terms of this Agreement.
(b) Subject to the exceptions set forth in subparagraph 2(e) and the right
of preemption set forth in subparagraph 2(f), Station shall broadcast
WB programs on the dates and at the times scheduled by WB. Station
shall broadcast WB programs in their entirety, including but not
limited to WB commercial announcements, WB identifications, program
promotional material, and credit announcements contained in such
programs, without interruption or deletion or addition of any kind,
except for the commercial announcements that Station is allowed to add
pursuant to Paragraph 5. Notwithstanding the foregoing, you may
substitute other WB promotional announcements in lieu of program
promotional material that is inaccurate as it pertains to Station's
schedule. No commercial announcement, promotional announcement or
public service announcement will be broadcast by Station during any
interval within a WB program, which interval is designated by WB as
being for the sole purpose of making a station identification
announcement.
(c) The initial Scheduled Program Times of WB programming and the
anticipated roll-out dates of that programming are set forth as
follows (the specified times apply for the Eastern and Pacific Time
Zones; the Mountain and Central Time Zones are one hour earlier for
Prime Time and Latenight programming only, except as otherwise agreed
by us):
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Prime Time: 7:00 p.m. - 10:00 p.m. Sunday
8:00 p.m. - 10:00 p.m. Monday through Saturday. Two
nights, to be designated by us, during the 1994/1995
broadcast year (one night in January 1995 with the
second night commencing during the third quarter of
1995); one additional night commencing during the
1995/1996 broadcast year; and one additional night
during each broadcast year thereafter until seven
nights of programming are made available.
Children's: 7:00 a.m. - 8:00 a.m.; 7:30 a.m. - 8:30 a.m.; or 8:00
a.m. - 9:00 a.m. (at WB's election) Monday through
Friday; 3:00 p.m. - 5:00 p.m. Monday through Friday;
8:00 a.m. - 12:00 noon Saturday; Weekday mornings (one
hour) and Saturday mornings (three hours) commencing
September 1995; One additional Saturday hour commencing
September 1996; Monday through Friday afternoons (two
hours) commencing September 1997. It is anticipated
that the additional Children's programming will
commence in approximately the second week of September.
Latenight: 11:00 p.m. - 12:00 midnight Monday through Friday,
commencing not earlier than 1997 and subject to the
approval of the WB Affiliate's Council (as defined in
Paragraph 13 below)
(d) Notwithstanding the roll-out schedule for Children's afternoon
programming in subparagraph (c) above, WB's supply of Children's
afternoon programming shall be subject to the expiration of the
current agreements between WB affiliates and suppliers of Children's
afternoon programming. Station agrees not to extend or renew any
agreement it may have with such suppliers for such programming during
the term of this Agreement if such renewal or extension would
interfere with the broadcast of the WB Children's afternoon
programming.
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(e) You confirm that as of the date of this Agreement you have no
commitments, except those listed in Schedule 1 hereto, which would
impede Station's broadcasting all WB programming made available during
the term of this Agreement. If any WB programming is not broadcast by
you because of any such commitment expressly described in Schedule 1
(but excluding extensions by exercise of options by Affiliate [but not
by the programming licensor] or otherwise), then such programming
shall be broadcast in a time period upon which you and we shall
mutually agree and which shall be of quality and rating value
comparable to that of the Scheduled Program Times. These programs will
not be considered preempted for purposes of subparagraph 2(f).
(f) Notwithstanding anything in this Agreement to the contrary, nothing in
this Agreement shall be construed to prevent or hinder Affiliate from
(i) rejecting or refusing any WB program which Affiliate reasonably
believes to be unsatisfactory or unsuitable or contrary to the public
interest or (ii) substituting a program which, in Affiliate's opinion,
is of greater local or national importance. In such an event, you
shall provide us with advance written notice of any such rejection,
refusal or substitution, no later than 14 days prior to the air date
of such programming, except where the nature or the substitute
program make such notice impracticable (e.g., coverage of breaking
news or other unscheduled events) or the programming has not been made
available to you by such date, in which cases you agree to give us as
much advance notice as the circumstances permit. Such notice shall
include a statement of the reasons you believe that the rejected WB
programming is unsatisfactory or unsuitable or contrary to the public
interest, and/or that a substituted program is of greater local or
national importance. In view of the limited amount of WB programming
to be supplied pursuant to this Agreement (at least until such time as
the full WB programming schedule has been rolled out) you acknowledge
that you do not foresee any need to substitute programming of greater
local or national importance for WB programming, except in those
circumstances requiring live coverage of fast-breaking news events or
very infrequent special events. It is acknowledged by WB that because
you are the broker under an LMA Agreement that the broadcast Licensee
shall retain the right to reject
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programming pursuant to its obligations as a Licensee of the FCC.
To the extent you substitute another program for a WB program as
permitted under subparagraph 2(f)(ii), then you will broadcast such
omitted program and the commercial announcements contained therein (or
any replacement programming provided by WB and the commercial
announcements contained therein) during a time period upon which you
and we shall promptly and mutually agree and which shall be of quality
and rating value comparable to that of the preempted program's
Scheduled Program Time. In the event that the parties do not promptly
agree upon such a time period after reasonable consultation in good
faith and after taking into account the practical alternatives under
the circumstances, then, without limiting any other rights of WB under
this Agreement or otherwise, we shall have the right to license the
broadcast rights to the applicable omitted programming (or replacement
programming) to another television station located in the Community of
License.
In addition, if three or more episodes of a program series are
preempted by you as permitted hereunder in any thirteen-week period,
for any reasons other than force majeure as provided in Paragraph 6,
we shall have the right, upon 60 days prior written notice, to
terminate your right to broadcast that program series and to withdraw
all future episodes of that series. Such thirteen-week periods shall
be measured consecutively from the first broadcast date of the program
series in question. If we subsequently place such a series on another
station in the Community of License, we reserve the right not to offer
you the broadcast rights to that series for subsequent broadcast
seasons.
In addition to all other remedies, to the extent one or more episodes
of a program series is preempted by you in violation of (i.e., other
than as permitted under) this Paragraph 2, we shall have the right,
upon 30 days prior written notice, to terminate your right to
broadcast the remainder of the program series and withdraw all future
episodes of that series from you.
(g) Nothing in this Agreement shall be construed to prevent or hinder WB
from (i) substituting one or more WB
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programs for previously scheduled WB programs, in which event WB will
make the substituted programs available to Station pursuant to the
provisions of Paragraph 1 and Paragraph 3; (ii) cancelling one or more
WB programs; or (iii) postponing any scheduled roll-out dates of WB
programming. Further, nothing in this Agreement shall be construed to
obligate WB (x) to provide a minimum or specific number of WB
programs; (y) to commence providing WB programming on any particular
date; or (z) to expand the amount of WB programming pursuant to a
specified timetable.
3. Delivery: WB agrees to make available the WB programming for satellite
--------
transmission by a carrier selected and arranged for by Affiliate or the WB
Affiliate's Council. Upon request by Affiliate, WB shall provide to
Affiliate a list of satellite carriers which, to the best of WB's
knowledge, are transmitting WB programming for other stations. WB shall
bear no costs incurred in connection with the satellite transmission of the
WB programming, including the uplink, the downlink therefrom and broadcast
by Station. Station shall pay no uplink costs.
4. Promotion:
---------
(a) We will provide you with on-air promotional announcements ("WB
Promos") for WB programming, which WB Promos are intended for
broadcast during Station's broadcast of non-WB programming. You agree
to cooperate with us in good faith and use your best efforts to
provide an on-air promotional schedule consistent with our
recommendations and consistent with Station's good business judgment.
You shall maintain complete and accurate records of all WB Promos that
are broadcast. In the event that you find it commercially unreasonable
to maintain such records, WB will reasonably discuss the nature of the
records that need to be maintained and the least cumbersome way to
maintain the necessary records. Upon request by WB for those records,
you shall provide copies of all such records to WB within two weeks of
such request.
(b) You shall budget Station's advertising availabilities in such a manner
as to enable Station to broadcast additional WB Promos during periods
in which Station is deemed a "Subperformer." Station shall be deemed
to be a "Subperformer" from the time its "Sweeps rating" is
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below the average prime time rating for all WB affiliated broadcast
stations until such time as Station's sweeps rating is no longer below
the average prime time rating for all WB affiliated broadcast
stations. The Station's sweeps rating means the Station's average A.C.
Nielsen rating for the most recently completed sweeps period for
adults 18-49 for all prime time hours programmed by WB. For such time
as Station remains a Subperformer, Station shall: (i) broadcast,
during each one-half hour of all periods of each day that Station is
broadcasting non-WB programming, at least one (1) 30-second WB Promo
(or WB Promos aggregating 30 seconds, to the extent we so elect) for
Station's local, syndicated or WB programming; and (ii) broadcast
during all periods when Station is broadcasting non-WB programming WB
Promos for not less than:
Prime Time Hours Programmed by WB
2 hours - 20% of 100%
4 hours - 25% "
6 hours - 30% "
8 hours - 35% "
10 hours - 40% "
12 hours* - 45% "
(*12 or more hours)
(the "Applicable Percentage") of the total, aggregate gross ratings
points ("GRPs") for all the promotional announcements broadcast by
Station ("Aggregate Promotional GRPs") within the periods in which
non-WB programming is being broadcast. The specific WB Promos
broadcast by Station and the number of broadcasts of each WB Promo may
be specified by WB and the broadcast of the WB Promo shall be made so
that the Aggregate Promotional GRPs allocated to WB promos are
distributed fairly and reasonably across the periods when non-WB
programming is being broadcast. For such time as Station's sweeps
rating ranks Station within the bottom 50% (ranked highest to lowest)
of those WB affiliated broadcast stations that are Subperformers, then
the Applicable Percentage for Station shall be not less than 55% of
100% of the Aggregate Promotional GRPs. The WB Promos broadcast during
each half-hour of non-WB programming, as required by this subparagraph
4(b), may be counted toward Station's Applicable Percentage. Station
shall continue
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to air WB Promos under this schedule until Station is no longer a
Subperformer, as defined above. WB acknowledges that there will be
cross-promotion of Station on another station operated by you in the
market. In the event that you should determine that the subperforming
station formula is not workable in the particular case of Station WB
will discuss alternatives with you in good faith.
(c) In addition to providing WB Promos, we shall make available for your
use, at reasonable cost, such other promotional and sales materials as
we and you may mutually consider appropriate. You shall not delete any
copyright, trademark, logo or other notice, or any credit included in
any such materials relating to WB, and you shall not exhibit, display,
distribute or otherwise use any trademark, logo or other material or
item delivered pursuant to this Paragraph 4 or otherwise, except as
instructed by us at the time.
(d) Commencing on the first date that WB programming is aired by Station
and for the remaining term of this Agreement, Station shall identify
itself as a WB affiliate, both on and off-the-air. Prior to the
"Launch Date" (as defined in subparagraph 9(b)), Station shall
identify itself as a WB affiliate only after WB gives Affiliate
permission to do so and only in a manner reasonably directed by WB.
Prior to the Launch Date, Affiliate shall not, without the express
written permission of WB, make any disclosures to the press or
business community or issue any press announcements about Station's
affiliation with WB.
5. Commercial Announcements:
------------------------
(a) With respect to WB programming, the parties to this Agreement shall be
entitled to insert the following number of commercial announcements
(Station's allotment includes station breaks but excludes 5-second
prime time station identification breaks at the beginning of each
hour):
(1) Prime Time (as defined in subparagraph 2(c)) hour (pro-rated for
half-hour programs):
You shall have the right to insert six 30-second commercial
announcements. WB shall
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have the right to insert sixteen 30-second commercial
announcements.
(2) Children's:
Weekday half-hour:
You shall have the right to insert six 30-second commercial
announcements (or other material constituting "commercial
matter" under the FCC's regulations). WB shall have the
right to insert six 30-second commercial announcements.
Weekend half-hour:
You shall have the right to insert five 30-second commercial
announcements (or other material constituting "commercial
matter" under the FCC's regulations). WB shall have the
right to insert five 30-second commercial announcements and
one 15-second commercial.
(3) Latenight (as defined in subparagraph 2(c)):
You will receive half the total number of commercial
announcements as specified by WB or less as mutually agreed
to.
(b) If the amount of commercial advertising, commercial matter or other
non-program time included in WB programming is reduced for any reason
(including but not limited to the adoption or modification of statutes
or regulations or any other governmental action), then we shall be
entitled to reduce the number of commercial announcements available to
you to the extent necessary to provide WB and Affiliates with the same
proportionate amount of commercial time (inclusive of station breaks
with respect to Affiliate) that each party is entitled to under this
Agreement.
(c) Your broadcast over Station of the commercial announcements included
by us in WB programming is of the essence to this Agreement, and
nothing contained in this Agreement (other than in subparagraph 2(f))
shall limit our rights or remedies relating to your failure to so
broadcast said commercial announcements. You shall
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maintain complete and accurate records of all commercial announcements
broadcast as provided herein. Within two weeks following each request
by us therefor, you will submit copies of all such records to WB.
6. Force Majeure: WB shall not be liable for failure to make available any
-------------
programming or any portion(s) thereof, and Station shall not be liable for
failure to broadcast any such programming or any portion(s) thereof, by
reason of any act of God, equipment failure, action or claims by any third
person, labor dispute, law, governmental regulation or order, or other
cause beyond either party's reasonable control ("force majeure event"). If
due to any force majeure event, we substantially fail to make available all
of the programming to be delivered to Affiliate under the terms of this
Agreement, or you substantially fail to broadcast such programming as
scheduled by WB for four consecutive weeks, or for six weeks in the
aggregate during any 12-month period, then the "non-failing" party may
terminate this Agreement upon thirty 30 days prior written notice to the
"failing" party so long as such notice is given at any time prior to the
"non-failing" party's receipt of actual notice that the force majeure
event(s) has ended; provided further, however, that notwithstanding the
above provisions, you shall not have any right to so terminate this
Agreement, upon a force majeure event or otherwise, if we: (i) fail to make
available a minimum or specific number of WB programs; (ii) fail to
commence making available WB programming on any particular date; (iii) fail
to expand the amount of WB programming pursuant to a specified timetable;
(iv) substitute one or more WB programs for previously scheduled WB
programs; (v) cancel one or more WB programs; or (vi) postpone the roll-out
of any WB programming.
7. Assignment or Transfer: Affiliate shall not assign or transfer any of its
----------------------
rights, obligations or privileges under this Agreement, by operation of law
or otherwise, without WB's prior written consent, which consent shall not
be unreasonably withheld after taking into consideration the business
interests of WB. Any purported assignment or transfer by you, without such
prior consent, shall be null and void and of no effect. WB will employ all
reasonable efforts to analyze any proposed transfer of Station to a third
party, and will not unreasonably refuse to allow the assignment of the WB
affiliation. You also agree that if any application is made to the FCC
pertaining to any purported, attempted or actual assignment or transfer of
control of the License (except as to
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"short form" (as described below) assignments or transfers of control which
do not involve a material assignment or transfer of control), or any
interest in Affiliate, Station or the License, you shall immediately notify
WB in writing of the filing of such application. In the event of a
purported, attempted or actual assignment or transfer of control of the
License (except as to "short form" assignments or transfers of control made
pursuant to Section 73.3540(f) of the FCC's rules), WB shall have the right
to terminate this Agreement, effective upon 30 days advance written notice,
which notice may be given at any time until 90 days after the last
occurring of: (a) the date on which we learn that such assignment or
transfer (voluntary or involuntary) has become effective, (b) the date on
which we receive written notice of such assignment or transfer, or (c) the
effective date of this Agreement. The foregoing termination provisions
shall apply to any assignments or transfers of control that become
effective at any time on or after the beginning of the sixth month prior to
the date of this Agreement.
If we do not so terminate this Agreement, you shall, upon our request,
procure and deliver to us in a form satisfactory to us, the agreement of
the proposed assignee or transferee that, upon consummation of the
assignment or transfer of control, the assignee or transferee will assume
and perform this Agreement in its entirety without limitation of any kind.
If you fail to notify WB of the proposed assignment or transfer of control
of Station or the License, or fail to procure the agreement of the proposed
assignee or transferee in accordance with this Paragraph 7, then we shall
have the right to terminate this Agreement upon 30 days advance written
notice.
8. Unauthorized Copying: You shall not, and shall not cause or authorize
--------------------
others to record, copy or duplicate any programming or other material we
furnish pursuant to this Agreement, in whole or in part, and you shall take
all reasonable precautions to prevent any such recording, copying or
duplication. Notwithstanding the foregoing, if Station is located in the
Mountain Time Zone you may pre-record WB programming for later broadcast at
the times scheduled by us. You shall erase all such pre-recorded
programming promptly after its scheduled broadcast. Notwithstanding the
above provisions, Station may make a non-broadcast quality recording of its
entire broadcast day for archival, file and reference purposes and uses
only, which copy shall be kept in Station's possession at all times.
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9. Term:
----
(a) The term of this Agreement shall commence on September 1, 1994 and
shall continue for 36 months following the Launch Date (the "initial
period"). After the initial period, the term of this Agreement may be
extended for additional successive periods of two years each, by us,
in our sole discretion, giving written notice of such extension to you
at least 120 days prior to the expiration of the then-current period;
provided, however, that if, within 30 days of your receipt of the
notice of extension, you, in your sole discretion, give us written
notice that you reject such extension, then the extension notice shall
not be effective and this Agreement shall terminate upon expiration of
the then-current period.
(b) The "Launch Date" shall be the date on which WB first makes WB
programming available to Affiliate for broadcast by Station on a
regularly scheduled basis.
(c) Each "Contract Year" hereunder shall be an annual period during the
term of this Agreement. The First Contract Year is the annual period
beginning on the Launch Date; the Second Contract Year is the annual
period commencing one year after the Launch Date, etc.
(d) During the initial period, WB shall, within its sole discretion and
without liability, have the right to terminate this Agreement so long
as we (i) provide sixty days prior written notice to you and (ii) are
either:
(A) ceasing operation as a television network; or (B) substantially
restructuring the ownership of the television network. In the event of
a termination pursuant to this subparagraph, Station shall maintain
its cable position at least until the date that the initial term
hereof would have ended, but for the earlier termination.
(e) Notwithstanding anything to the contrary contained in this Agreement,
upon the termination or expiration of the term of this Agreement, all
of your rights to broadcast or otherwise use any WB program or any
trademark, logo or other material or item hereunder shall immediately
cease and neither you nor Station shall have any further rights
whatsoever with respect to any such program, trademark, logo, material
or item.
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10. Applicable Law: The obligations of you and WB under this Agreement are
--------------
subject to all applicable federal, state, and local laws, rules and
regulations (including, but not limited to, the Communications Act of 1934,
as amended, and the rules, regulations and policies of the FCC) and this
Agreement and all matters or issues collateral thereto shall be governed by
the laws of the State of California without regard to California's conflict
of law rules.
11. Station Acquisition by WB: During the term of this Agreement, WB agrees
-------------------------
that neither we nor Time Warner Inc. nor any of its subsidiary companies
will acquire, as defined by the attribution rules of the FCC, a television
broadcast station licensed in the Community of License.
12. Change in Operations: In the event that Station's transmitter location,
--------------------
power, frequency, programming format or hours of operation are materially
changed at any time during the term of this Agreement so that Station is of
materially less value to us as a broadcaster of WB programming than at the
date of this Agreement, then we shall have the right to terminate this
Agreement upon 30 days prior written notice. You shall notify WB
immediately in writing if application is made to the FCC to modify in a
material manner the transmitter location, power or frequency of Station or
if Affiliate plans to modify in a material manner the hours of operation of
Station. If you fail to notify us as required herein, then we shall have
the right to terminate this Agreement by giving you 30 days prior written
notice.
13. WB Affiliates Council: You, with the other affiliates of WB, shall form a
---------------------
WB Affiliates Council (the "Council"), which shall be comprised of
representatives from five different affiliates of WB.
14. Non-Liability of Council Members: To the extent the Council and its members
--------------------------------
are acting in their capacity as such, then the Council and each member so
acting shall not have any obligation or legal or other liability whatsoever
to you in connection with this Agreement, including without limitation,
with respect to the Council's or such member's approval or non-approval of
any matter, exercise or non-exercise of any right or taking of or failing
to take any other action in connection therewith.
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15. Warranties and Indemnities:
--------------------------
(a) WB agrees to indemnify, defend and hold Affiliate harmless against and
from all claims, damages, liabilities, costs and expenses arising out
of the use by Station under this Agreement of any WB program or other
material furnished by WB under this Agreement, provided that Affiliate
promptly notifies WB of any claim or litigation to which this
indemnity shall apply, and provided further that Affiliate cooperates
fully with WB in the defense or settlement of such claim or
litigation. Affiliate agrees to indemnify, defend and hold WB harmless
against and from all claims, damages, liabilities, costs and expenses
with respect to Affiliate's operation of the Station or any material
furnished, added or deleted to or from WB programming by Affiliate.
This indemnity shall not apply to litigation expenses, including
attorney's fees, that the indemnified party elects to incur on its own
behalf. Except as otherwise provided in this Agreement, neither
Affiliate nor WB shall have any rights against the other for claims by
third persons, or for the failure to operate facilities or to furnish
WB programs if such failure is the result of a force majeure event as
defined in Paragraph 6. Furthermore, notwithstanding any other
provisions of this Agreement, Affiliate shall not have any rights
against WB for claims by third parties or Affiliate arising out of any
actions or omissions of WB permitted under subparagraph 2(g).
(b) You agree to maintain for Station such licenses, including performing
rights licenses as now are or hereafter may be in general use by
television broadcasting stations and are necessary for you to
broadcast the television programs which we furnish to you hereunder.
We will clear all music in the repertory of SESAC, ASCAP and BMI used
in our programs, thereby licensing the broadcasting of such music in
such programs over Station. You will be responsible for all music
license requirements (and all other permissions) for any commercial or
other material inserted by you within or adjacent to WB programs in
accordance with this Agreement.
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(c) You warrant that the License is in good standing and you agree to
comply with all relevant statutes and FCC rules and requirements so as
to maintain the License in good standing. In the event you are found
to have materially violated any laws or FCC rules or requirements
(after the exhaustion of all appeals so long as Station retains the
License during the pendency of such appeal), the effect of which is
that Station is of materially less value to us as a broadcaster of WB
programming than as of the date of this Agreement, then we shall have
the right to terminate this Agreement upon 30 days prior written
notice. You shall notify us immediately of any action by the FCC
imposing any forfeitures or other sanction(s) on Station or you
including but not limited to short-term renewals, revocation or denial
of renewal.
(d) You warrant that all information delivered by you to us in connection
with this Agreement shall be true and correct in all material
respects, including, without limitation, the information required in
connection with Plan A attached hereto if you elect that Plan.
(e) You warrant that execution of this Agreement and performance of its
obligations will not violate or result in a default under (i) any
material agreement or instrument to which you are party or (ii) any
statute, ordinance, governmental rule or regulation in any material
respect, or order, judgment, injunction, decree or ruling of any court
or administrative agency applicable to you, which default would
materially interfere with the performance of your obligations
hereunder.
(f) You warrant that you are not a party to any legal action or other
proceeding before any court or administrative agency which could
prohibit the performance of your obligations under this Agreement.
16. Retransmission Consent: If any law, governmental regulation or other action
----------------------
permits you to elect to require any cable television system or other
multichannel video program distributor to obtain your consent to such
system's or distributor's retransmission of Station's broadcast of either
Station's signal as a whole or any WB programming included therein, then
Affiliate and WB agree to negotiate in good faith regarding whether such
consent is to be given (including without limitation, whether you shall or
shall not, in lieu of requiring consent, elect to require any cable system
to comply
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with any "must carry" rules, regulations or laws) and, if so, the terms
under which such consent is to be given (including without limitation, the
amount and type of compensation, if any, to be paid by the system or
distributor for such consent and whether any of that compensation shall be
shared between you and us). It is acknowledged that the retransmission
rights of Station are owned and controlled by the owner of the Station.
However, in the event that you should obtain such rights as a part of your
LMA then you shall negotiate with WB as provided in this paragraph. Further
you will employ reasonable efforts to have the owner of the Station
negotiate with WB in good faith.
17. Network Non-Duplication Protection: During the term of this Agreement,
----------------------------------
Affiliate shall be entitled to network non-duplication protection, as
provided by Sections 76.92 through 76.97 of the FCC's rules, against the
presentation of any WB program by a cable system during the period
commencing one day before and ending fourteen (14) days after receipt of
such WB program by Station. The geographic zone of network non-duplication
protection shall be the Designated Market Area ("DMA") (as defined by
Nielsen) in which your Station is located or any lesser zone mandated by
Sections 76.92 and 73.658(m) of the FCC's rules as those rules exist as of
the date of this Agreement. Network non-duplication protection shall extend
only to WB programs that Station is carrying in accordance with the terms
of this Agreement and such protection shall be subject to the terms and
provisions of subparagraph 2(f). You are under no obligation to exercise in
whole or in part the network non-duplication rights granted herein.
18. Affiliation Payments: Affiliate agrees to pay to WB, at Affiliate's
--------------------
election, made at the time of execution hereof by designating the
appropriate selection on the signature page of this Agreement, either the
sums set forth in subparagraphs 18 A(1) and A(2) or the sums set forth in
subparagraph 18 B; these payments are intended to compensate WB for the WB
programming and are in no way intended to, nor do they, confer on WB any
ownership or other equity interest in Station. If you fail to so designate
Plan A or Plan B where indicated, you shall be deemed to have selected Plan
B.
PLAN A
------
A(1) Station Disposition Payment. Upon the occurrence of a sale or
---------------------------
refinancing of the Station or disaffiliation under certain
circumstances, Affiliate shall pay to WB an
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amount equal to 25% of the difference between the value of the Station
at the time of such event and the value of the Station immediately
prior to the execution of this Agreement, all as defined and set forth
in Paragraph A of the Plan A Exhibit attached hereto.
A(2) Net Ordinary Operating Cash Flow Payments. As a non-refundable
-----------------------------------------
advance to be credited against the Station Disposition Payment,
Affiliate shall pay to WB, on an annual basis, 25% of the amount by
which Station's "ordinary operating cash flow" annually exceeds that
average annual amount of such cash flow that the Station generated
during its last two full fiscal years prior to the date of this
Agreement, all as defined and set forth in Paragraph B of the Plan A
Exhibit attached hereto.
PLAN B
------
B. Affiliation Ratings Payments. Affiliate shall pay to WB an annual
----------------------------
payment, based on the Station's television market ratings, for WB
prime time programming, commencing with the initial broadcast by
Station of such programming, all as defined and set forth in the Plan
B Exhibit attached hereto.
19. Notices and Reports:
-------------------
(a) In addition to any other reports or forms requested herein, you will
provide to us in writing, in the manner reasonably requested by WB,
such reports covering WB programs broadcast by Station as we may
request from time to time. To the extent we provide you forms for such
purpose, you shall provide such reports on these forms.
(b) All notices, reports or forms required or permitted hereunder to be in
writing shall be deemed given when personally delivered (including,
without limitation, by overnight courier or other messenger or upon
confirmed receipt of facsimile copy) or on the date of mailing postage
prepaid, addressed as specified below, or addressed to such other
address as such party may hereafter specify in a written notice.
Notice to Affiliate shall be to the address set forth for Affiliate on
page 1 of this Agreement. Notice to WB shall be to: WB Communications,
4000 Warner Boulevard, Burbank, California, 91522, Attention: General
Counsel.
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20. Miscellaneous:
-------------
(a) Nothing contained in this Agreement shall create any partnership,
association, joint venture, fiduciary or agency relationship between
the parties hereto.
(b) Nothing contained in this Agreement nor the conduct of any officer,
director, agent or employee of either WB or Affiliate shall be deemed
to create or to constitute ownership by WB, in whole or in part, of
Affiliate, Station or the License or in any way constitute a
derogation of the rights, duties and responsibilities imposed upon
Affiliate. Nothing in this Agreement shall be deemed to delegate to
WB, directly or indirectly, any right to control the operations of
Station.
(c) You shall at all times permit us, in connection with WB programming,
without charge, to place on, maintain and use at Station's premises,
at our expense, such equipment as WB shall reasonably require. Station
shall operate such equipment for us, to the extent we reasonably
request, and no fee shall be charged by Station therefor. It is agreed
that no equipment that is not customarily used at broadcast stations
will be placed at Station. In the event that Station believes that the
placement of the equipment is unreasonable, then Station and WB will
enter into good faith negotiations about the placement of such
equipment.
(d) No waiver of any failure of any condition or of the breach of any
obligation hereunder shall be deemed to be a waiver of any preceding
or succeeding failure of the same or any other condition, or a waiver
of any preceding or succeeding breach of the same or any other
obligation.
(e) Each and all of the rights and remedies of WB and Affiliate under this
Agreement shall be cumulative, and the exercise of one or more of said
rights or remedies shall not preclude the exercise of any other right
or remedy under this Agreement, at law or in equity. Notwithstanding
anything to the contrary contained in this Agreement, in no event
shall either party hereto be entitled to recover any lost profits or
consequential damages because of a breach or failure by the other
party, and except as expressly provided in this Agreement to the
contrary, neither WB nor Affiliate shall have any right against the
other with respect to claims by any third person or other third
entity.
-18-
<PAGE>
(f) Paragraph headings are included in this Agreement for convenience only
and shall not be used to interpret this Agreement or any of the
provisions hereof, no shall they be given any legal or other effect.
(g) This Agreement, including all Exhibits attached hereto, constitutes
the entire understanding between WB and Affiliate concerning the
subject matter hereof and shall not be amended, modified, changed,
renewed, extended or discharged except by an instrument in writing
signed by the parties or as otherwise expressly provided herein. No
inducement, representations or warranties except as specifically set
forth herein have been made by either party to this Agreement to the
other. This Agreement replaces any and all prior and contemporaneous
agreements, whether oral or written, pertaining to the subject matter
hereof.
(h) This Agreement may be executed in counterparts, with the Agreement
being effective when each party hereto has executed a copy and
delivered that copy to the other party hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
WB COMMUNICATIONS OUTLET BROADCASTING, as broker for
("WB") Programming pursuant to an LMA
Agreement
("Affiliate")
By: /s/ Signature Appears Here By: /s/ Signature Appears Here
--------------------------- ----------------------------
Title: Title: V.P. & G.M.
------------------------ ------------------------
Date: 1/25/95 Date: 11/14/94
------------------------- -------------------------
Signify which Plan Affiliate elects
by writing in Station's call letters
next to the Plan selected.
Plan A
-----------------------
Plan B WWHO
------------------------
-19-
<PAGE>
[LETTERHEAD OF WWHO53 APPEARS HERE]
SCHEDULE "A"
1. Cleveland Cavaliers Basketball
2. Cleveland Indians Baseball
3. Columbus Chill Hockey
<PAGE>
Exhibit 10.(i)
TIME BROKERAGE AGREEMENT
------------------------
Dated as of March 18, 1994
Among
Outlet Broadcasting, Inc.
and
Fant Broadcasting Company of Ohio, Inc.
and
Outlet Communications, Inc.
(for limited purposes)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
Recitals........................................................ 1
ARTICLE I
PROGRAMMING AGREEMENT
---------------------
1.1 Brokered Programming................................ 1
1.2 Licensee Programming................................ 2
1.3 Preemption.......................................... 2
ARTICLE II
OPERATIONS
----------
2.1 Compliance with FCC Regulations..................... 2
2.2 Provision of Programming............................ 3
2.3 Station Staffing.................................... 3
2.4 Station Maintenance................................. 3
2.5 New Technology...................................... 3
ARTICLE III
CONSIDERATION
-------------
3.1 Fee................................................. 4
3.2 Adjustments......................................... 4
ARTICLE IV
TERM AND SECURITY FOR PERFORMANCE
---------------------------------
4.1 Initial Term........................................ 5
4.2 Renewal Term........................................ 5
4.3 Cancellation........................................ 5
4.4 Termination for Refusal To Transmit Programs........ 5
4.5 Termination for Default and Nonperformance.......... 5
4.6 Liquidated Damages.................................. 6
4.7 Security for Performance............................ 8
4.8 Specific Performance................................ 9
4.9 Survival of Option and Right of First Refusal....... 9
ARTICLE V
ASSIGNABILITY, OPTION TO PURCHASE,
----------------------------------
RIGHT OF FIRST REFUSAL, LPTV OPTION
-----------------------------------
5.1 Assignability....................................... 9
5.2 Option To Purchase.................................. 9
5.3 Right of First Refusal.............................. 12
5.4 Licensee's Option to Purchase Translator............. 12
ARTICLE VI
REGULATORY MATTERS
------------------
6.1 Renegotiation Upon FCC Action or Other
Regulatory Changes.................................. 13
6.2 FCC Matters......................................... 13
6.3 Mandatory Signal Carriage........................... 14
</TABLE>
i
<PAGE>
ARTICLE VII
BROADCAST EQUIPMENT AND RELATED ASSETS
-------------------------------------
7.1 Equipment and Assets ................................. 14
7.2 Insurance ............................................ 14
7.3 Lease of Tower Space and Equipment Building .......... 15
ARTICLE VIII
REPRESENTATIONS, WARRANTIES, AND COVENANTS
------------------------------------------
8.1 Licensee's Representations and Warranties ............ 16
8.2 Broker's Representations and Warranties .............. 17
8.3 Licensee's Affirmative Covenant ...................... 18
8.4 Broker's Affirmative Covenant ........................ 18
8.5 Licensee's Negative Covenants ........................ 18
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Force Majeure ........................................ 20
9.2 Trademarks ........................................... 20
9.3 Notice ............................................... 20
9.4 Duty to Consult ...................................... 21
9.5 Press Releases ....................................... 21
9.6 Severability ......................................... 21
9.7 Entire Agreement ..................................... 21
9.8 Survival ............................................. 21
9.9 Payment of Expenses .................................. 22
9.10 Further Assurances ................................... 22
9.11 Counterparts ......................................... 22
9.12 Headings ............................................. 22
9.13 Dealings with Third Parties .......................... 22
9.14 Indemnification ...................................... 22
9.15 Governing Law ........................................ 23
ii
<PAGE>
TIME BROKERAGE AGREEMENT
------------------------
This TIME BROKERAGE AGREEMENT (the "Agreement") is made as of March 18,
1994, among Outlet Broadcasting, Inc., a Rhode Island ("Broker"), and Fant
Broadcasting Company of Ohio, Inc., an Alabama corporation ("Licensee"), and
with respect to paragraph 5.2, Outlet Communications, Inc. ("OCI"), a
Delaware corporation.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Broker is in the business of producing and transmitting news,
sports, informational, public service and entertainment programming and
associated advertising on Television Station WCMH (TV), Columbus, Ohio; and
WHEREAS, Licensee, as of the date of this Agreement noted above, is the
licensee of the Television Station presently operating with the call letters
WWAT (TV) in Chillicothe, Ohio (the "Station") and as of that date owns certain
of the Station's assets; and
WHEREAS, Broker desires to utilize its currently held assets as well as
assets it will acquire to provide programming to be transmitted on the Station
at such time as Licensee becomes the Station's licensee, pursuant to the
provisions hereof and pursuant to applicable regulations and policies of the
Federal Communications Commission ("FCC"); and
WHEREAS; Licensee desires to accept and transmit programming supplied by
Broker on the Station while maintaining control over the Station and continuing
to broadcast Licensee's own public interest programming;
NOW, THEREFORE, in consideration of these premises and the mutual promises,
undertakings, covenants and agreements of the parties contained in this
Agreement, the parties hereto do hereby agree as follows:
ARTICLE I
PROGRAMMING AGREEMENT
---------------------
1.1 Brokered Programming. Broker hereby agrees to provide for transmission
--------------------
by the Station of news, sports, informational and entertainment programming and
associated advertising, promotional, and public service programming and
announcement matter sufficient to program the Station on a daily basis
throughout the year ("Brokered Programming"), subject to paragraphs 1.2 and 1.3
herein. All Brokered Programming and its
<PAGE>
transmission by the Station shall be subject to the supervision and control of
Licensee.
1.2 Licensee Programming. Licensee will retain sole responsibility for
--------------------
ascertainment of the needs of its community of license and service area,
including specifically the children therein. The parties agree that the Brokered
Programming will include programming which responds to these ascertained needs
and concerns, including children's programming; provided, however, Licensee
shall have the right and obligation to broadcast such additional noncommercial
programming, either produced or purchased by Licensee, as it determines
appropriate to respond to the ascertained issues of community concern ("Licensee
Programming"); provided, further, however, beginning on the Commencement Date,
as defined below in paragraph 4.1 and continuing through 11:59 p.m. on April 17,
1994, (the "Transition Period"), Licensee shall have the right to transmit
commercial programming ("Transition Programming"). Such Licensee Programming and
Transition Programming shall be broadcast at times agreed to by Broker and
Licensee, provided, however, that in the absence of such agreement, Licensee may
delete or preempt in its sole discretion any Brokered Programming for the
purpose of transmitting such Licensee Programming and Transition Programming.
For purposes of this Agreement, "noncommercial" shall mean any programming
for which no consideration of any kind is received by Licensee.
1.3 Preemption. Licensee may preempt or delete any Brokered Programming
----------
which Licensee believes to be unsatisfactory, unsuitable or contrary to the
public interest, and to substitute programming which, in Licensee's opinion, is
of greater local or national importance.
ARTICLE II
OPERATIONS
----------
2.1 Compliance with FCC Regulations. Licensee will retain responsibility
-------------------------------
for the employ of such personnel as is necessary to assure compliance with all
FCC regulations, including all technical regulations governing the operation of
the Station and all programming content requirements, including maintenance of a
main studio and providing a meaningful managerial and staff presence at the main
studio, ascertainment of and programming in response to community needs and
concerns and the needs and concerns of children, satisfaction of the limits on
commercial matter in children's programming, political programming laws and
regulations, sponsorship identification rules, lottery and contest regulations,
maintenance of the Station's public and political files, compiling appropriate
quarterly issues programs lists, children's programming lists, employment
records and all other FCC requirements and duties.
2
<PAGE>
2.2 Provision of Programming. Subject to Licensee's control and supervision,
-------------------------
Broker shall provide the programming specified in paragraph 1.1 hereof and shall
be responsible for implementing its transmission by the Station, utilizing
assets owned by Broker to the extent necessary. To the extent Broker reasonably
requests the use of tangible station assets owned by Licensee to enable Broker
to fulfill its obligations under this Agreement, Licensee shall make the use of
such assets reasonably available to Broker at no cost. To the extent Licensee
requests the use of assets owned by Broker to produce or broadcast the
programming specified in paragraphs 1.2 and 1.3 hereof, or to fulfill Licensee's
obligations pursuant to paragraph 2.1 hereof, Broker shall make the use of such
assets available to Licensee pursuant to an Equipment Lease to be executed in
the form set out in Exhibit A.
2.3 Station Staffing. Licensee shall have sole discretion to make and
----------------
effectuate all staffing and personnel decisions for the Station, including the
sole responsibility to determine appropriate levels of staffing to fulfill
Licensee's duties under paragraph 2.1 herein. Broker shall have no control or
right of review whatsoever over any decision by Licensee to hire or dismiss any
Licensee employee. Whenever any individuals, whether employed by Licensee or
Broker, are on the Station's premises, they shall be subject to the supervision
and direction of Licensee's General Manager or other supervisory personnel.
2.4 Station Maintenance. Licensee shall retain ultimate operational control
-------------------
over the Station and shall retain full responsibility for ensuring compliance
with all FCC technical rules. Licensee hereby delegates to Broker, under the
supervision and ultimate control of Licensee's Chief Operator, the duty to
maintain in good working order the Station's equipment used in connection with
the broadcast of the Station's program material. Broker shall bear full and
exclusive responsibility for all capital expenditures that may be necessary to
maintain the Station's equipment in good working order; provided, however, that
-------- -------
Broker's obligation to bear exclusive responsibility for all necessary capital
expenditures for the maintenance and improvement of the transmission facilities
licensed to the Station shall be limited to the Initial Term and first Renewal
Term and shall also be limited in amount to Three Million Dollars
($3,000,000.00), exclusive of any recovery of proceeds from policies insuring
the Station's equipment, received by Broker for the account of Licensee or
directly by Licensee.
2.5 New Technology. The parties agree that any future FCC frequency
--------------
allocations associated with the operation of the Station are included under the
provisions of this Agreement. Specifically, if an HDTV simulcast channel is
allocated to the Station, Broker will have the exclusive right to build the
transmission facility and the parties agree to bargain in good
3
<PAGE>
faith to enter into an appropriate agreement with Licensee for the provision of
programming by Broker for that facility on terms consistent with this Agreement.
ARTICLE III
CONSIDERATION
-------------
3.1 Fee. Starting on the Commencement Date, as defined below, Broker
---
shall pay to Licensee a monthly fee calculated according to the provisions set
forth in Section 3 of Exhibit B. In further consideration of the programming
transaction contemplated under this Agreement as well as the right to renew the
Agreement as provided in paragraph 4.2, Broker shall pay to Licensee the sum of
Five Hundred Twenty Five Thousand Dollars ($525,000.00) ("Initial Payment") in
cash. Of this amount, Fifty Thousand Dollars ($50,000.00) has already been
delivered to Licensee by letter of Broker dated February 28, 1994. The remaining
Four Hundred Seventy Five Thousand Dollars ($475,000.00) shall be delivered on
the Commencement Date. The Net Operating Income, as defined in Exhibit B, shall
be shared in accordance with the provisions of Exhibit B.
3.2 Adjustments.
-----------
(a) Effective at the end of the Transition Period, Licensee may broadcast
up to two hours of Licensee Programming per week pursuant to paragraph 1.2
without any adjustment to the fee set out in paragraph 3.1. If at any time
following the Transition Period and continuing during the term of the Agreement,
the Station shall fail to carry Brokered Programming for all but the two hours
per week specified in this paragraph 3.2, the fee payable to Licensee by Broker
shall be reduced by the then-current market rate of the advertising time
scheduled during any deleted or preempted Brokered Programming. During the
Transition Period, there shall be no reduction in the fee payable to Licensee by
Broker for the then-current market rate of the advertising time scheduled during
any deleted or preempted Brokered programming.
(b) Notwithstanding the provisions of subparagraph 3.2(a), the fee payable
to Licensee by Broker shall not be reduced if Licensee determines, in its good
faith judgment, that noncommercial Licensee Programming, as defined in paragraph
1.2, of more than two hours per week is necessary to meet FCC requirements or to
meet Licensee's obligations as an FCC licensee.
ARTICLE IV
TERM AND SECURITY FOR PERFORMANCE
---------------------------------
4
<PAGE>
4.1 Initial Term. The Initial Term of this Agreement shall commence on the
------------
date noted above by the parties (the "Commencement Date") and shall expire on
the final day of the ten-year period following the Commencement Date, unless
otherwise renewed.
4.2 Renewal Term. This Agreement shall automatically renew for two
------------
additional periods of five years each ("Renewal Terms"), unless Broker provides
written notice of nonrenewal within 180 days prior to the expiration of the
Initial Term.
4.3 Cancellation. Licensee shall have the unlimited right to cancel this
------------
Agreement at any time upon provision of twelve months' written notice to Broker,
such advance notice being necessary in view of the substantial financial
commitments Broker will be required to incur in order to provide high quality
programming for transmission on the Station; provided, however, that upon
-------- -------
cancellation of this Agreement by Licensee under this paragraph, there shall be
a final accounting of monies due but unpaid under this Agreement; and provided
--------
further that Broker shall be entitled to Liquidate Damages under paragraph 4.6
-------
herein.
4.4 Termination for Refusal To Transmit Programs. Effective at the end of
--------------------------------------------
the Transition Period, in the event that Licensee refuses to transmit
programming under this agreement (except as a result of Broker's default under
any of its obligations herein or except as provided in paragraph 9.1) for either
twenty-four (24) consecutive hours or one-half hour in each day in any period of
thirty (30) consecutive days, Broker shall have the right, exercisable at any
time within sixty (60) days after the end of such period, to terminate this
Agreement as of any date within 120 days of the date Broker notifies Licensee of
its election to terminate this Agreement. If such termination shall occur
pursuant to this paragraph, such termination shall extinguish and cancel this
Agreement without further liability of Broker to Licensee; provided, however,
-------- -------
that, upon termination of this Agreement by Broker under this paragraph, there
shall be a final accounting of monies due but unpaid under this Agreement; and
provided further that Broker shall be entitled to Liquidated Damages, as defined
-------- -------
in paragraph 4.6 herein.
4.5 Termination for Default and Nonperformance. Except as is provided in
------------------------------------------
paragraph 4.4, should either party be in breach of this Agreement for the
nonperformance of a material obligation, this Agreement may be terminated by the
non-defaulting party if such breach shall continue with respect to monetary
defaults for a period of five (5) days and, with respect to non-monetary
defaults, for a period of fifteen (15) days following the receipt of written
notice from the non-defaulting party ("Cure Period"), which notice shall
indicate the nature of such default; provided, however, that there shall be a
-------- -------
final accounting of monies due but
5
<PAGE>
unpaid under this Agreement and provided further that if such termination is due
-------- -------
to the default of Licensee, Broker shall be entitled to Liquidated Damages, as
defined in paragraph 4.6 herein. The Cure Period shall be extended as necessary
for those non-monetary defaults which cannot be cured within fifteen (15) days,
provided that the defaulting party is diligently working with all reasonable
haste to remedy such default.
4.6 Liquidated Damages.
------------------
(a) Licensee acknowledges that Broker has made a substantial advance
payment in order to enter into this Agreement; that Broker will acquire certain
assets associated uniquely with the Station's operation and will enter into
various long-term agreements with program suppliers and other third parties to
produce programming for the Station at substantial expense and risk; that Broker
will recruit, hire and maintain a staff of employees dedicated to acquiring and
producing quality programming to be broadcast on the Station; and that Broker
will make substantial investments in additional hard assets to produce quality
programming for the Station. Licensee also acknowledges that Broker will make
substantial investments, both in tangible and intangible terms, to promote the
Station under this Agreement, to create a unique image for the Station, and to
develop a competitive position in the market for the Station and that such
efforts on the part of Broker will add substantial value to the Station.
Licensee and Broker hereby acknowledge and agree that any measure of actual
damages cannot compensate Broker for the loss of Licensee's performance under
this Agreement and that the true measure of damages to Broker for a
cancellation, termination, or material breach of this Agreement by Licensee or
by Broker pursuant to paragraphs 4.3, 4.4, or 4.5 is incapable of accurate
estimation with reasonable certainty. Licensee and Broker therefore agree that
it is a fair and reasonable forecast of just compensation for the harm caused to
be measured by liquidated damages, as defined in subparagraph (b) of this
paragraph, to be paid to Broker upon the cancellation, termination or breach of
this Agreement by Licensee.
(b) "Liquidated Damages" shall mean an amount equal to funds expended
and/or committed to be expended by Broker (except (i) with respect to items (2)
through (8) below, such expenditures and/or commitments as are consistent with
industry practices and (ii) to the extent not theretofore recovered by Broker
from Gross Revenues as defined by Exhibit B prior to the cancellation,
termination, or breach) in each of the following categories:
(1) the Initial Payment;
(2) the full value of all service contracts and programming agreements
assumed and entered into by Broker
6
<PAGE>
for purposes of providing programming and advertising to be broadcast on
the Station, which Broker owns at the time of cancellation, termination or
breach, less any consideration received by Broker as a consequence of its
good faith efforts to sell or assign such agreements;
(3) the full value of all severance and employee benefit packages
that Broker, in its discretion, shall provide to employees whose services
would not be required in the absence of this Agreement;
(4) the full value of any contracts with third parties, which could
not be performed owing to cancellation or termination, for services to be
rendered in connection with programming provided to the Station including,
without limitation, producers, advertising salespeople, technicians,
engineers, and any other independent contractors whose services would not
be required in the absence of this Agreement;
(5) the full value of all expenses incurred to promote the Station
and position the Station in the marketplace;
(6) the full value of all assets acquired by Broker for the purpose
of initially implementing this Agreement and of all Capital Expenditures
incurred subsequently in connection with this Agreement, less any
consideration received by Broker as a consequence of its good faith efforts
to sell any such assets;
(7) all corporate, legal, administrative, professional and brokerage
expenses relating in any way to this Agreement; and
(8) the good will and intangible value associated with Broker's
efforts under this Agreement to create a unique image and competitive
market position for the Station, giving due consideration to the fact that
the option and right of first refusal contained in paragraphs 5.2 and 5.3
shall survive cancellation or termination of this Agreement.
(c) Should Licensee cancel, terminate or materially breach this Agreement,
Broker shall submit its computation of Liquidated Damages under the categories
set forth above to a "Big Six" accounting firm mutually acceptable to the
parties for independent auditing and verification. Within thirty (30) days of
verification, Licensee agrees to tender payment of all verified amounts to
Broker; provided, however, that if Licensee objects to any particular enumerated
component of the Liquidated Damages, as verified, it shall notify Broker of such
objection within fifteen (15) days of verification. If thereafter Broker
7
<PAGE>
and Licensee cannot agree as to the amount of the objectionable component,
either party shall have the right to elect to arbitrate such dispute provided it
gives written notice of its election to arbitrate by the thirtieth (30th) day
following the date of Licensee's objection to Broker's verification. All
arbitration proceedings shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and shall be in
Columbus, Ohio. In any proceeding, the arbitrators shall be bound by the
provisions of this Agreement. The prevailing party in any arbitration proceeding
shall be entitled to enforce such award in any court of competent jurisdiction.
Notwithstanding that Licensee may question a particular component of the
Liquidated Damages and either party may elect arbitration of the dispute, the
remainder of the items comprising the Liquidated Damages shall be paid by
Licensee to Broker within thirty (30) days of accounting verification, as
specified above. No payment shall be required as to any contested component
until the earlier of (i) Broker and Licensee reaching an agreement on the amount
or (ii) entering of the arbitration award.
(d) If any category of Liquidated Damages is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
categories of Liquidated Damages shall not be affected thereby, and the parties
agree to use their best efforts to negotiate a replacement category that is
neither invalid, illegal nor unenforceable.
4.7 Security for Performance. Licensee's performance under this Agreement
------------------------
shall be secured by a security interest in all of Licensee's and Station's
assets, junior only to that certain mortgage and security agreement of even date
herewith between Licensee and Triplett & Associates, Inc., an Ohio corporation,
to secure the obligation of Licensee under that certain promissory note in
original face amount of One Million Four Hundred Seventy Five Thousand Dollars
($1,475,000.000) also of even date herewith ("Triplett Obligation"). The form of
the Security Agreement is attached as Exhibit C. In addition, Licensee's
performance under this Agreement shall be secured by the personal guarantee of
Anthony J. Fant as a pledgor of the Licensee stock that he holds. If additional
individuals or entities shall acquire stock of Licensee, Licensee's performance
under this Agreement shall be further secured by personal guarantees of such
shareholders as pledgors of the Licensee stock that they hold. The pledge
agreement(s) shall provide that the Broker shall not take any action which would
constitute or result in an assignment of license or change of control of
Licensee without first obtaining FCC approval if such assignment or change of
control would require that approval. In addition, the pledge agreement(s) shall
provide that (i) voting rights will remain with the Licensee, even in the event
of its default; (ii) in the event of default, there will be either a private or
public sale of the
8
<PAGE>
stock; and (iii) prior to the exercise of stockholder rights by the purchaser
at such sale, the prior consent of the FCC will be obtained. The forms of the
Personal Guaranty and Pledge Agreement are attached, respectively, as Exhibits D
and E.
4.8 Specific Performance. The rights to be transferred pursuant to the
--------------------
terms of this Agreement are unique and not readily available on the open market.
For that reason and others, Broker will be damaged seriously and irreparably
injured should this transaction not be performed through no fault of its own,
but for reasons attributable to Licensee. Accordingly, the Broker, in addition
to all other legal remedies, shall have the right to enforce this Agreement by a
decree of specific performance.
4.9 Survival of Option and Right of First Refusal. In the event that this
---------------------------------------------
Agreement shall be terminated pursuant to paragraph 4.5 because of Broker's
default, the option to purchase and right of first refusal conveyed to Broker
pursuant to Article V shall not survive such termination. Such option and right
of first refusal shall survive cancellation pursuant to paragraph 4.3, any other
termination other than pursuant to paragraph 4.5 because of Broker's default, or
a transfer of control of Licensee or the assignment of the Station's FCC
authorizations to any party other than Broker for a period of ten (10) years
following such termination or the consummation of such transfer or such
assignment, and such option and right of first refusal shall remain in full
force and effect.
ARTICLE V
ASSIGNABILITY, OPTION TO PURCHASE,
----------------------------------
RIGHT OF FIRST REFUSAL, LPTV OPTION
-----------------------------------
5.1 Assignability. This Agreement shall inure to the benefit of and be
-------------
binding upon Licensee, Broker and their respective successors and assigns;
provided, however, that Licensee shall not assign or transfer its rights,
-------- -------
benefits, duties or obligations under this Agreement without the prior written
consent of Broker, unless such assignment or transfer is to a single-purpose
corporation of which Licensee or Anthony J. Fant owns at least fifty percent
(50%), in value and voting power, of all issued and outstanding stock and in
accordance with the provisions of paragraph 4.7, all such stock is pledged to
secure the obligations of Licensee's successor under this Agreement. This
Agreement shall not terminate upon the sale of the Station to a successor
licensee or upon a transfer of control of Licensee, but shall be assigned to or
assumed by any subsequent owner of the Station.
5.2 Option To Purchase.
------------------
9
<PAGE>
(a) If and at such time as (i) Broker's acquisition of the Station would
not be prohibited by then existent FCC rules or policies and FCC action, if any,
allowing such acquisition shall no longer be subject to administrative or
judicial reconsideration or review, or (ii) Broker shall furnish evidence
reasonably satisfactory to Licensee that a waiver of the FCC's rules or policies
is likely to permit Broker to own the Station, Broker may, subject to prior FCC
approval, purchase the Station and all associated assets, including real estate,
from Licensee for a purchase price of Six Million Five Hundred Thousand Dollars
($6,500,000.00) ("Exercise Price"), of which Three Million Dollars
($3,000,000.00) will be paid in cash at the closing on the acquisition of the
Station ("Station Closing"), plus discharge of the balance, if any, of the
obligations to Triplett & Associates, Inc. under the Triplett Obligation defined
in paragraph 4.7. The balance shall be paid at the Station Closing in 175,000
shares of common stock of OCI, Broker's corporate parent, at a guaranteed price
of at least Twenty Dollars ($20.00) per share based on the closing price on
NASDAQ (or such other organized exchange on which such shares shall be traded if
such shares are not then listed on NASDAQ) on the date preceding the closing on
the exercised option ("Closing Price"). In the event that there are no trades of
OCI stock on that day, the Closing Price shall be the average of the low bid
price and the high ask price. If the Closing Price is less than Twenty Dollars
($20.00), the difference shall be paid in cash in an amount equal to the product
of (a) 175,000 and (b) the difference between (x) Twenty Dollars ($20.00) and
(y) the Closing Price. If OCI's common stock is worth more than Twenty Dollars
($20.00) per share on such closing date, no adjustment shall be made in the
number of shares to be paid to Licensee. As consideration for this option to
purchase the Station, Broker shall pay to Licensee on the Commencement Date the
sum of Four Hundred Seventy Five Thousand Dollars ($475,000.00) ("Option
Payment") in cash, which Option Payment shall be credited against the Exercise
Price.
(b) During the first five (5) years following the Commencement Date,
Broker may exercise the option specified in this paragraph 5.2 by delivering to
Licensee a written notice of exercise no earlier than fifteen (15) days
following either of the events specified in (a) (i) or (a) (ii) of this
paragraph 5.2 and no later than two (2) years following either of the events
specified in (a) (i) or (a) (ii) of this paragraph 5.2. During the remainder of
the term of this Agreement, as renewed, Broker may exercise the option specified
in this paragraph 5.2 by delivering to Licensee a written notice of exercise no
earlier than fifteen (15) days following either of the events specified in (a)
(i) or (a) (ii) of this paragraph 5.2 and no later than one (1) year following
either of the events specified in (a) (i) or (a) (ii) of this paragraph 5.2.
Within thirty (30) days following delivery of such notice, Broker and Licensee
shall enter into a detailed asset purchase agreement with respect to the
Station, containing
10
<PAGE>
customary and reasonable terms and conditions, and shall jointly file such
application or applications as may be required to obtain the consent of the FCC
for the assignment of the Station's license or licenses from Licensee to Broker.
(c) Broker's rights under this option to purchase shall be fully
assignable to any third party (i) that is qualified under the Communications Act
of 1934, as amended, and the FCC's rules and policies to hold the Station's
license, and (ii) that presents audited financial statements demonstrating a net
worth of at least Five Million Dollars ($5,000,000.00) for its preceding fiscal
year.
(d) As used in paragraph 5.2(a), the term common stock shall mean and
include the common stock of OCI, authorized on the date hereof, and shall also
include any capital stock of any class of capital stock of OCI hereafter
authorized which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary liquidation, dissolution or winding up
of OCI, provided, however, that the shares issuable under this Agreement shall
include only shares of such class designated in OCI's Certificate of
Incorporation as common stock as of the date hereof, or (i) in the case of any
reclassification, change, consolidation, merger or conveyance of all or
substantially all of the assets of OCI, the securities or property received in
connection with such event, or (ii) in the case of any reclassification or
change in the outstanding shares of common stock of OCI as a result of
subdivision, or combination, or change in par value or from par value to no par
value or from no par value to par value such shares of common stock as so
reclassified or changed. In the event of the occurrence of any event described
in the preceding clauses (i) and (ii) prior to the exercise by Broker of the
option included in paragraph 5.2(a) hereof, Licensee shall have the right upon
giving of notice to Broker within ten (10) days of the exercise of said option
by Broker of requiring Broker to pay the consideration due at the Station
Closing entirely in cash. Licensee acknowledges that it is the intention of
Licensee to acquire such shares of common stock to be issued in connection with
the exercise of the option by Broker for its own account for the purpose of
investment and not with a view to distribution or resale thereof. The
acquisition by Licensee of such shares shall constitute a confirmation by it of
this representation. Licensee acknowledges and agrees that the shares of common
stock to be purchased by it will not have been registered under the Securities
Act of 1933, as amended and accordingly may not be sold unless they are sold in
a transaction which is exempt from the registration requirements of said Act or
a registration statement pursuant to that Act is in effect at the time of such
sale, and that each certificate representing such shares shall bear a legend to
that effect. Notwithstanding anything contained
11
<PAGE>
herein, if, as a result of any merger, consolidation or sale of all or
substantially all of the assets of OCI, the then holders of the common stock of
OCI shall receive less than seventy-five percent (75%) in total consideration in
connection with such transaction in common stock, as defined herein, of the
purchaser or surviving entity, then Broker shall have the right to pay Licensee
upon the exercise of the option all in cash.
5.3 Right of First Refusal.
----------------------
(a) In the event Licensee receives and wishes to accept a bona fide offer
---- ----
to sell or transfer control of the Station, however styled, with a party other
than Broker, Licensee shall provide Broker with written notice of that offer and
all material terms and conditions of that offer, including, without limitation,
the identity of the offering party. If that offer is evidenced by any
writing(s), Licensee shall provide Broker with true copies of such writings
together with the written notice required by this subparagraph. Upon receipt of
such notice, Broker shall have the right, exercisable by giving notice in
writing thereof to Licensee within thirty (30) business days after receipt of
notice by Broker, to match such offer and, within thirty (30) days of such
notice to Licensee, to enter into an asset or stock purchase agreement with
Licensee at the same price and with equivalent material terms and conditions;
provided, however, that Broker's right to first refusal shall be exercisable by
-------- -------
Broker only if (i) Broker's acquisition of the Station would not be prohibited
by then existent FCC rules or policies and FCC action, if any, allowing such
acquisition shall no longer be subject to administrative or judicial
reconsideration or review, or (ii) Broker shall, with its notice matching the
offer, furnish evidence reasonably satisfactory to Licensee that a waiver of the
FCC's rules is likely to permit Broker to own the Station.
(b) Broker's rights under this right of first refusal shall be fully
assignable to any third party (i) that is qualified under the Communications Act
of 1934, as amended, and the FCC's rules and policies to hold the Station's
license, and (ii) that presents audited financial statements demonstrating a net
worth of at least Five Million Dollars ($5,000,000.00) for its preceding fiscal
year.
5.4 Licensee's Option to Purchase Translator. If and at such time as the
----------------------------------------
FCC amends Section 76.51 of its rules, 47 C.F.R. (S) 76.51, to delete
Chillicothe from the name of the Columbus television market, Licensee will
consider exercising its option under the Option Agreement dated October 7, 1993,
among Broker; RBC, Inc; and Triplett and Associates, Inc., to acquire the assets
associated with television translator W17AI licensed to Columbus, Ohio. In the
event of such acquisition, the operation
12
<PAGE>
of television translator W17AI shall be subject to this Agreement. At the time
that Licensee exercises its option to acquire W17AI, Broker agrees to enter into
good faith negotiations with Licensee to make the funds necessary for
acquisition of W17AI available by loan on an arms' length basis. Such loan shall
be secured by the assets associated with W17AI and the personal guarantee of
Anthony J. Fant.
ARTICLE VI
REGULATORY MATTERS
------------------
6.1 Renegotiation Upon FCC Action or Other Regulatory Changes. If the FCC
---------------------------------------------------------
determines that this Agreement is inconsistent with Licensee's licensee
obligations or is otherwise contrary to FCC policies, rules and regulations, or
if regulatory, legislative, or judicial action subsequent to the Commencement
Date alters the permissibility of this Agreement under the FCC's Rules or the
Communications Act of 1934, as amended, the parties shall renegotiate this
Agreement in good faith and recast this Agreement in terms that are likely to
cure the defects perceived by the FCC or the changes caused by regulatory,
legislative, or judicial action and return a balance of benefits to both parties
comparable to the balance of benefits provided by the Agreement in its current
terms. If, after such good faith negotiations, either party determines that
recasting the Agreement to meet the defects perceived by the FCC is impossible
without materially changing the relationships contemplated by the parties,
either party may terminate this Agreement without further liability upon thirty
(30) days' prior written notice. If termination shall occur pursuant to this
paragraph, such termination shall extinguish and cancel this Agreement without
further liability on the part of either party to the other; provided, however,
-------- -------
that there shall be a final accounting of monies due but unpaid under this
Agreement, and provided, further, that Broker shall be entitled to Liquidated
-------- -------
Damages, as defined in paragraph 4.6 herein.
6.2 FCC Matters.
-----------
(a) The parties agree that this Agreement shall be filed with the FCC and
placed in the public inspection file of the Station; provided, however, that all
-------- -------
monetary amounts shall be redacted from such publicly available copies.
(b) Should a change in FCC policy or rules make it necessary to obtain FCC
consent for the implementation, continuation or further effectuation of any
element of this Agreement, both parties hereto shall use their best efforts
diligently to prepare, file and prosecute before the FCC all petitions, waiver
requests, construction permit applications, amendments, rulemaking comments and
other related documents
13
<PAGE>
necessary to secure and/or retain FCC approval of all aspects of this Agreement.
Broker and Licensee shall bear in equal measure the reasonable cost of
preparation of any such documents, provided that each party has approved such
expenditures. Notwithstanding anything in this Agreement to the contrary, it is
understood that no filing shall be made with the FCC with respect to this
Agreement unless both parties hereto have reviewed said filing and consented to
its submission.
6.3 Mandatory Signal Carriage. If the mandatory signal carriage rights of
-------------------------
broadcasters set forth in Section 614 of the Cable Television Consumer
Protection and Competition Act of 1992, 47 U.S.C. (S) 534, or in the FCC's rules
implementing such section are legislatively, judicially, or administratively
altered and such alteration results in a reduction of the cable subscribers
receiving the Station's signal via their cable systems as of the Station Closing
compared to the number of such households on the Commencement Date, the Exercise
Price shall be reduced by an amount which is the product of the following three
numbers: (x) the Exercise Price times (y) the percentage reduction in Cable
subscribers times (z) fifty-eight percent (58%), which represents the parties'
approximation of cable penetration in the Columbus ADI as of the date of this
Agreement. The parties agree that the number of cable subscribers receiving the
Station via their cable systems on the Commencement Date is 291,166 as set forth
in Exhibit F.
ARTICLE VII
BROADCAST EQUIPMENT AND RELATED ASSETS
--------------------------------------
7.1 Equipment and Assets. Licensee represents and warrants to Broker that
---------------------
Licensee owns the transmitting equipment (including the Station's transmitter,
antenna, transmission line, and associated equipment), studio equipment,
furniture, and fixtures specified on the inventory attached hereto as Exhibit
B-1 (the "Tangible Assets"). Such Tangible Assets being crucial to the
successful operation of this Agreement, Licensee represents and warrants to
Broker that the Tangible Assets are free and clear of all debts, liabilities,
obligations, liens, and encumbrances of any kind, character, and description,
whether accrued, absolute, contingent or otherwise, except for the liens
described in Exhibit G hereto. Licensee affirmatively covenants to Broker that
the Tangible Assets shall not be disposed of without the prior written consent
of Broker, other than in the ordinary course of business and unless such
Tangible Assets shall be replaced with assets of comparable quality, capacity,
and utility.
7.2 Insurance. The parties shall during the initial term of this Agreement
---------
and during any and all Renewal Terms, keep in force and effect by advance
payment of premium comprehensive
14
<PAGE>
casualty, property damage, business interruption, and liability insurance with
an insurance company and in an amount reasonably acceptable to Broker, insuring
against any liability that may accrue on account of any loss or damage to the
Tangible Assets or occurrences on or about the Tangible Assets. Broker and
Licensee shall be specified as insureds under the policy required under this
Section 7.2. Licensee will supply a Certificate of Insurance to Broker
demonstrating Licensee's compliance with its obligations under this Section 7.2
on the Commencement Date and upon each and every renewal date for the insurance
policy maintained by Licensee, and will provide Broker thirty (30) days' prior
notice of the expiration of said policy and immediate notice of any cancellation
of said policy.
7.3 Lease of Tower Space and Equipment Building
------------------------------------------------
(a) Licensee is the lessee under that certain lease of land on which
is located a tower of License and an equipment building with Donald L. Davis and
Wilma J. Davis ("Davises") which expires July 31, 1998, as amended (the "Tower
Lease"). Such Tower Lease being crucial to the successful operation of this
Agreement, Licensee represents and warrants to Broker that (a) Licensee has
delivered to Broker a complete and current copy of the Tower Lease; (b) the
Tower Lease is and will remain in full force and effect; and (c) Licensee is and
will remain in material compliance with the terms of the Tower Lease, including
its insurance requirements, and Licensee is not in breach of any term of the
Tower Lease.
(b) Licensee affirmatively covenants to Broker that Licensee will
timely pay all rental payments under the Tower Lease promptly when due and
otherwise fully comply with all terms of the Tower Lease, and that Licensee will
provide copies of any and all notices received from the Davises relating to the
Tower Lease within seventy-two (72) hours of their receipt by Licensee.
(c) Except as provided above in paragraph 5.1 with respect to
Licensee's assignment or transfer of its rights under this Agreement to a
controlled corporation, Licensee agrees not to assign the Tower Lease without
the consent of Broker, which consent shall not be unreasonably withheld. A
request by Licensee for the consent of Broker to assign the Tower Lease shall be
deemed reasonable if such assignment is associated with the assignment of the
license of the Station or the transfer of control of Licensee for which the
FCC's consent is necessary.
(d) Licensee agrees to exercise its right to extend the Tower Lease
for the duration of each Renewal Term commencing during the term of this
Agreement as of and to the extent provided in the Tower Lease.
15
<PAGE>
ARTICLE VIII
REPRESENTATIONS, WARRANTIES, AND COVENANTS
------------------------------------------
8.1 Licensee's Representations and Warranties. Licensee represents and
-----------------------------------------
warrants to Broker as follows:
(a) Organization. Licensee is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Alabama and has
full power and authority to acquire and own the property, licenses and permits
associated with the Station, and to carry out all of the transactions
contemplated by this Agreement.
(b) Compliance with Law. Licensee has complied with and will continue to
-------------------
comply with all laws, rules and regulations governing the business, ownership
and operations of the Station that are material in any way to this Agreement.
All attendant contracts and undertakings, as well as the carrying out of this
Agreement, do not result in any violation of or be in conflict with Licensee's
Articles of Incorporation and By-laws, or any existing judgment, decree, other,
statute, law, rule or regulation of any governmental authority applicable to
Licensee.
(c) Corporate Authority. All requisite corporate resolutions and other
-------------------
authorizations necessary for the execution, delivery, performance and
satisfaction of this Agreement by Licensee have been duly adopted and
complied with.
(d) Misrepresentation of Material Fact. No document or contract disclosed
----------------------------------
to Broker pursuant to this Agreement and which in any way affects any of the
properties, assets or proposed business of Licensee as related to this
Agreement, and no certificate or statement furnished by Licensee or on behalf of
it in connection with the transactions contemplated herein contains or will
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein not misleading.
(e) Authorizations in Good Standing. Licensee is fully qualified under the
-------------------------------
Communications Act of 1934, as amended, and the FCC's rules and policies to be
the licensee of the Station. Licensee's permit or license and all related
authorizations for the Station are in full force and effect and unimpaired by
any acts or omissions of Licensee, its employees or agents; and there is no
complaint, condition, event, defect or occurrence existing or, to the knowledge
of Licensee, threatened against said authorization(s) that would materially
threaten their retention or renewability by Licensee.
(f) Capitalization and Share Ownership. Licensee's authorized capital
----------------------------------
consists of 1,000 shares of common stock [with $1.00 par value] of which 1,000
shares are issued
16
<PAGE>
and outstanding. All of said shares of issued and outstanding common stock are
owned of record by Anthony J. Fant, a resident of Alabama. No other class of
capital stock is authorized by Licensee's articles of incorporation.
(g) Litigation. There is no litigation at law or in equity, no
----------
arbitration proceeding, and no proceeding before or by any court, commission,
agency, or other administrative or regulatory body or authority, or, to the best
of Licensee's knowledge, threatened or anticipated, which would have a material
adverse affect upon the Station. To the extent that any such event shall exist
on the Commencement Date, Licensee agrees that any and all costs, judgments,
and liabilities which have or shall become due and payable shall be the sole and
exclusive financial responsibility of Licensee and shall be deducted from
Licensee's share of Net Operating Cash Income, as defined in Exhibit B.
(h) All federal, state, county and local tax returns, reports and
declarations of estimated tax or estimated tax deposit forms required to be
filed in connection with the Station's operations, real estate, or payroll have
been duly and timely filed. All taxes which have become due pursuant to such
returns or pursuant to any assessment received by them have been paid as have
all installments of estimated taxes. All taxes, levies, and other assessments
which the Station is required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
authorities.
8.2 Broker's Representations and Warranties. Broker represents and
---------------------------------------
warrants to Licensee as follows:
(a) Organization. Broker is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Rhode Island and
has full power and authority to own its property and to carry out all of the
transactions contemplated by this Agreement.
(b) Corporate Authority. All requisite corporate resolutions and other
-------------------
authorizations necessary for the execution, delivery, performance and
satisfaction of this Agreement by Broker have been duly adopted and complied
with.
(c) Misrepresentation of Material Fact. No document or contract disclosed
----------------------------------
to Licensee pursuant to this Agreement and which in any way affects any of the
properties, assets or proposed business of Licensee as relates to this
Agreement, and no certificate or statement furnished by Broker or on behalf of
it in connection with the transactions contemplated herein contains any untrue
statement of a material fact or omits to
17
<PAGE>
state a material fact necessary in order to make the statements contained herein
not misleading.
8.3 Licensee's Affirmative Covenant. Licensee covenants and agrees that
-------------------------------
it will comply fully with all applicable federal, state and local laws, rules
and regulations (including, without limitation, all FCC rules, policies and
regulations) and pertinent provisions of all contracts, permits and pertinent
agreements to which it is a party or is otherwise bound.
8.4 Broker's Affirmative Covenant. Broker covenants and agrees that it
-----------------------------
will fully comply with all applicable federal, state and local laws, rules and
regulations (including, without limitation, all FCC rules, policies and
regulations) in the provision of the Brokered Programming to Licensee.
8.5 Licensee's Negative Covenants. In further consideration of the
-----------------------------
Initial Payment and Option Payment, Licensee covenants and agrees as follows:
(a) Indebtedness. Licensee shall not incur, create, assume or become or
------------
be liable in any manner with respect to, or permit to exist any further
indebtedness or liability, whether direct or indirect or contingent, except
indebtedness with respect to trade obligations and other ordinary accruals in
the normal course of business not yet due and payable or not more than ninety
(90) days in arrears measured from the date of such payment is due or with
respect to which Licensee is contesting in good faith the amount or validity
thereof by appropriate proceedings, and indebtedness in the respect of
endorsements of negotiable instruments for collection in the ordinary course of
business.
(b) Liens. Licensee shall not create, incur, assume, or suffer or permit
-----
to exist any additional mortgage, pledge, lien, charge, or other encumbrance of
any nature whatsoever on any of the assets or ownership interests now or
hereafter owned, issued, or outstanding other than (i) liens securing payment of
taxes either not yet due or the validity of which are being contested in good
faith by appropriate proceedings as to which it will set aside on its books
adequate reserves, (ii) deposits under the worker's compensation, employment
insurance or social security laws, or to secure statutory obligations or surety
or appeal bonds or secure indemnity, performance, or other similar bonds arising
in the ordinary course of business, (iii) liens imposed by laws such as
carriers, warehousemen or mechanics liens incurred by it in good faith in the
ordinary course of business, (iv) liens arising out of a pre-judgment
attachment, judgment or award against it with respect to which it shall be
currently prosecuting an appeal, a stay of execution pending such appeal having
been secured, (v) liens in favor of Broker, (vi) liens in favor of Triplett and
Associates in original face amount not to exceed One Million Four Hundred
Seventy Five Thousand Dollars
18
<PAGE>
($1,475,000.00), and (vii) restrictions, easements, reservations, exceptions,
encroachments, and minor irregularities in title which do not interfere with the
occupation and use and enjoyment by Licensee of such properties and assets in
the normal course of its business or materially impair the value of such
properties and assets for the purpose of such business.
(c) Sales and Leaseback. Licensee shall not enter into any arrangements,
-------------------
directly or indirectly, with any person whereby it shall sell or transfer any
property, real, personal, or mixed, to be used in its business or hereafter
acquired and thereafter rent or leasing such property.
(d) Fundamental Changes. Licensee shall not permit or suffer any amendment
-------------------
of its charter or documents which could materially effect its financial
condition or the rights of Broker under this Agreement; or issue any additional
shares of capital stock unless such shares shall have been pledged to Broker as
required under that certain guarantee of even date herewith, or in any way alter
its capital structure.
(e) Mergers, Acquisitions, Sales of Assets. Licensee shall not merge
--------------------------------------
into, or consolidate with any person or permit any other person to merge into or
consolidate with it; effect any asset sale or acquire (directly or indirectly)
any additional station, any business unit or all or substantially all of the
assets or properties of or ownership interest in any person without the prior
express approval of Broker; or change its corporate structure or organization
from that set forth herein.
(f) Change in Business. Licensee shall not engage directly or indirectly
------------------
in any business other than that of operating the Station.
(g) Accounts Receivable. Licensee shall not sell, assign, discount, or
-------------------
dispose in any way of any accounts receivable, promissory notes, or trade
acceptances held by it with or without recourse except for collection (including
endorsement) in the ordinary course of business.
(h) Amendment of Certain Agreements. Licensee shall not amend or modify
-------------------------------
any provisions evidencing the obligations to Triplett and Associates, Inc. as
listed in Exhibit G hereto.
(i) Compliance. Licensee shall not (i) fail to make any contributions to
----------
pension plans required by Section 412 in the Internal Revenue Code of 1986, (ii)
fail to make payments required by Title Four of the Employees Retirement Income
and Security Act of 1974, as amended or (iii) fail to correct a prohibited
transaction with an employee benefit plan with respect to which it is liable for
tax imposed by Section 4975 of the Code.
19
<PAGE>
ARTICLE IX
MISCELLANEOUS
-------------
9.1 Force Majeure. Notwithstanding anything contained in this Agreement to
-------------
the contrary, neither party shall be liable to the other for failure to perform
any obligation under this Agreement (nor shall any charges or payments be made
in respect thereof) if prevented from doing so by reason of fires, strikes,
labor unrest, embargoes, civil commotion, rationing or other orders or
requirements, acts of civil or military authorities, acts of God or other
contingencies, including equipment failures, beyond the reasonable control of
the parties, and all requirements as to notice and other performance required
hereunder within a specified period shall be automatically extended to
accommodate the period of pendency of such contingency which shall interfere
with such performance.
9.2 Trademarks. For the term of this Agreement, Licensee hereby grants
----------
Broker an unlimited license to use any and all trademarks, service marks,
patents, trade names, jingles, slogans, logotypes and other intangible rights
owned and used or held for use by Licensee in conjunction with the Station.
Licensee agrees to execute such additional documentation as may be necessary or
desirable to effectuate the license granted under this paragraph.
9.3 Notice. All notices, requests, demands and other communications that
------
are required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed given when delivered by hand, overnight courier, or
sent by facsimile transmission or on the third day after mailing if mailed by
registered mail, postage prepaid, return-receipt requested, as follows:
(a) If to Licensee, to:
Fant Broadcasting Company of Ohio, Inc.
2729 11th Avenue South
Birmingham, Alabama 35205-1751
Attention: Anthony J. Fant
with a copy to
Fletcher Heald & Hildreth
1300 North 17th Street
Arlington, Virginia 22209
Attention: Howard M. Weiss
(b) If to Broker, to:
20
<PAGE>
Outlet Broadcasting, Inc.
23 Kenney Drive
Cranston, Rhode Island 02920
Attention: James G. Babb
with a copy to:
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Attention: Stephen J. Carlotti
or to such other address as any party shall have designated by notice in writing
to the other parties.
9.4 Duty to Consult. Each party agrees that it will use its best efforts
---------------
not to take any action that will unreasonably interfere, threaten or frustrate
the other party's purposes or business activities, and that it will keep the
other party informed of, and coordinate with the other party regarding, any of
its activities that may have a material effect on such party.
9.5 Press Releases. Except as may be required by law or any governmental
--------------
agency, no announcement to the press or to any third party of the transactions
contemplated herein shall be made by either party unless the same shall be
approved in advance in writing by both Broker and Licensee.
9.6 Severability. Subject to paragraph 6.1, if any provision of this
------------
Agreement is held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remainder of this Agreement shall not be
affected thereby, and the parties agree to use their best efforts to negotiate a
replacement article that is neither invalid, illegal nor unenforceable.
9.7 Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties with respect to its subject matter and supersedes all prior
agreements and understandings of the parties, oral and written, with respect to
its subject matter. This Agreement may be modified only by an agreement in
writing executed by all of the parties hereto.
9.8 Survival. All representations, warranties, covenants and agreements
--------
made herein by the parties hereto or in any certificate to be delivered
hereunder or made in writing in connection with the transactions contemplated
herein shall survive the execution and delivery of this Agreement. All such
representations, warranties, covenants and agreements shall survive for three
years past the date on which this Agreement terminates.
21
<PAGE>
9.9 Payment of Expenses. Except as otherwise provided, Licensee and Broker
-------------------
shall pay their own expenses incident to the preparation and carrying out of
this Agreement, including all fees and expenses of their respective counsel.
9.10 Further Assurances. From time to time after the date of execution
------------------
hereof, the parties shall take such further action and execute such further
documents, assurances and certificates as either party reasonably may request of
the other to effectuate the purposes of this Agreement.
9.11 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this
Agreement duly executed by the other party hereto.
9.12 Headings. The headings in this Agreement are for the sole purpose of
--------
convenience of reference and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
9.13 Dealings with Third Parties. Neither party is nor shall hold itself
---------------------------
out to be vested with any power or right to bind contractually or act on behalf
of the other as its contracting broker, agent or otherwise for committing,
selling, conveying or transferring any of the other party's assets or property,
contracting for or in the name of the other party, making any contractually
binding representations contractually binding such party.
9.14 Indemnification.
---------------
(a) Each party shall forever, to the fullest extent permitted by law,
protect, save, defend and keep the other party harmless and indemnify said other
party against, all claims, demands, causes of action, loss, investigations,
proceedings, demands, penalties, fines, expenses and judgments, including
reasonable attorneys' fees and costs, arising directly or indirectly out of the
negligence or willful misconduct of the other party, its agents or employees in
connection with the performance of this Agreement.
(b) Broker shall forever, to the fullest extent permitted by law, protect,
save, defend and keep Licensee and its officers, directors, employees, and
agents and each of them harmless and indemnify them from and against any and all
loss, damage, liability, or expense, including reasonable attorney's fees,
resulting from any claim of libel, slander, defamation, copyright infringement,
idea misappropriation, invasion of right of privacy or publicity, or any other
claim against Licensee arising out of
22
<PAGE>
Broker's programming on the Station, provided that Licensee shall give Broker
prompt notice of any claim and shall cooperate in good faith with Broker in
attempts to resolve and settle any such claims. The foregoing shall not apply to
the use of any new matters that Licensee may insert in or adjacent to Broker's
programming.
(c) Licensee shall forever, to the fullest extent permitted by law,
protect, save, defend, and keep Broker and its officers, directors, employees,
and agents and each of them harmless and indemnify them from and against any and
all loss, damage, liability, or expense, including reasonable attorney's fees,
resulting from any claim of libel, slander, defamation, copyright infringement,
idea misappropriation, invasion of right of privacy or publicity, or any other
claim against Broker arising out of Licensee's programming on the Station,
provided that Broker shall give Licensee prompt notice of any claim and shall
cooperate in good faith with Broker in attempts to resolve and settle any such
claims.
9.15 Governing Law. This Agreement shall be construed under and in
-------------
accordance with the laws of the State of Ohio, without giving effect to the
principles of conflict of laws.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
FANT BROADCASTING COMPANY OF OHIO, INC.
By /s/ Signature Appears Here
---------------------------------
President
OUTLET BROADCASTING, INC.
By /s/ Signature Appears Here
-----------------------------
Chief Financial Officer
OUTLET COMMUNICATIONS, INC.
(with respect to paragraph 5.2)
By /s/ Signature Appears Here
-----------------------------
Chief Financial Officer
<PAGE>
LEASE AGREEMENT
Lease Agreement made this ______ day of _____________, 19__ between the
Lessor and Lessee set forth at Schedule A, attached hereto.
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1. Lease Agreement. Lessor hereby leases to Lessee, and Lessee hereby
rents from Lessor, all the machinery, equipment and other personal property
("Equipment") described in the Equipment Lease Schedule(s) which is attached
hereto ("Schedules"), upon the terms and conditions set forth in this Lease, as
supplemented by the terms and conditions set forth in the appropriate Schedule
identifying such items of Equipment. All of the terms and conditions of this
Lease shall govern the rights and obligations of Lessor and Lessee, except as
specifically modified in writing. Whenever reference is made herein to "this
Lease", it shall be deemed to include each of the various Schedules identifying
all items of Equipment, all of which constitute one undivided lease of the
Equipment and the terms and conditions of which are incorporated herein by
reference.
2. Term. The obligations under this Lease shall commence upon the written
acceptance thereof by Lessor and shall end upon full performance and observance
of each and every term, condition and covenant set forth in this Lease, each
Schedule thereto and any extensions thereof. The rental term of the Equipment
listed in each Schedule shall commence on the date that the first rental payment
is due and shall terminate on the date set forth at Schedule A.
----------
3. Rental Payments. The rent for the Equipment described in each Schedule
shall be the amount stated in such Schedule and shall be due and payable on the
dates set forth therein. Such rent shall be payable at the office of Lessor or
its assigns (or at such other place as Lessor may from time to time designate in
writing). The receipt of any check or other item on account of any rental
payment shall not be considered as payment thereof until such check or other
item is honored when presented for payment.
4. Delivery and Installation. Lessee has selected each item of Equipment
designated in the appropriate Schedule. If Equipment is to be ordered by Lessor,
in reliance upon Lessee's selection, such Equipment will then be ordered by
Lessor from such supplier or Lessor will accept an assignment of any existing
purchase order therefor. Lessor shall have no liability for any delivery or
failure by the supplier to fill the purchase order or
EXHIBIT A
<PAGE>
meet the conditions thereof. Lessee, at its expense, shall pay all
transportation, packing, taxes, duties, installation, testing and other charges
in connection with the delivery, installation and use of the Equipment. In the
event that the cost of any item of Equipment described in a particular Schedule
is higher or lower than the price set forth in Lessor's purchase order therefor,
then the monthly rental shall be changed accordingly to fully reflect any such
adjustment.
5. Warranties. LESSOR, NOT BEING THE MANUFACTURER OF THE EQUIPMENT NOR THE
MANUFACTURER'S AGENT, MAKES NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND
WHATSOEVER WITH RESPECT TO THE EQUIPMENT, INCLUDING BUT NOT LIMITED TO: THE
MERCHANTABILITY OF THE EQUIPMENT OR ITS FITNESS FOR ANY PARTICULAR PURPOSE; THE
DESIGN OR CONDITION OF THE EQUIPMENT; THE QUALITY OR CAPACITY OF THE EQUIPMENT;
THE WORKMANSHIP IN THE EQUIPMENT; COMPLIANCE OF THE EQUIPMENT WITH THE
REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO:
PATENT INFRINGEMENT; OR LATENT DEFECTS. Lessee will be subrogated to Lessor's
claims, if any, against the manufacturer or supplier of the Equipment for breach
of any warranty or representation and, upon written request from Lessee, Lessor
shall take all reasonable action requested by Lessee to enforce any such
warranty, express or implied, issued on or applicable to any of the Equipment
which is enforceable by Lessor in its own name; provided, however, that (a)
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Lessee is not in default under this Lease and (b) Lessor shall not be obligated
to resort to litigation to enforce any such warranty unless Lessee shall pay all
expenses in connection therewith. Notwithstanding the foregoing, Lessee's
obligations to pay the rentals or otherwise under this Lease shall be and are
absolute and unconditional. All proceeds of any such warranty recovery from the
manufacturer or supplier of the Equipment shall first be used to repair the
affected Equipment.
6. Title To and Location of Equipment. Title to each item of Equipment
leased hereunder shall remain with the Lessor at all times and the Lessee shall
have no right, title or interest therein, except as expressly set forth in this
Lease. Lessee, at his expense, shall protect and defend Lessor's title to the
Equipment and shall keep the Equipment free and clear from any and all claims,
liens, encumbrances and legal processes of Lessee's creditors and other persons.
Lessor assumes no liability and makes no representation as to the treatment by
Lessee of this Lease, the Equipment or the rental payments for financial
statement or tax purposes.
All items of Equipment shall at all times be and remain personal property
notwithstanding that any such Equipment may now
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<PAGE>
or hereafter be affixed to realty. The Equipment shall be delivered to the
location specified in the Schedule with respect thereto and shall not thereafter
be removed from such location without the written consent of Lessor. The Lessor
shall be permitted to display notice of its ownership of the Equipment by
affixing to each item of Equipment and identifying stencil or plate or any other
indicia of ownership and Lessee shall not alter, deface, cover or remove such
ownership identification.
7. Use of Equipment, Inspection and Reports. Lessee may possess and use
the Equipment in accordance with this Lease, provided that any such use is in
conformity with all applicable laws, any insurance policies and any warranties
of the manufacturer with respect to the Equipment. Lessor shall have the right
to inspect the Equipment at the premises of the Lessee or wherever the Equipment
may be located. Lessee shall promptly notify Lessor of all details arising out
of any change in location of the Equipment, any alleged encumbrances thereon or
any accident allegedly resulting from the use or operation thereof.
8. Further Assurances. Lessee shall execute and deliver to Lessor, upon
Lessor's request, such instruments and assurances as Lessor deems necessary for
the confirmation or perfection of this Lease and Lessor's rights hereunder. In
furtherance thereof, Lessor may file or record this Lease or a financing
statement with respect thereto so as to give notice to any interested parties.
Any such filing or recording shall not be deemed evidence of any intent to
create a security interest under the Uniform Commercial Code.
9. Risk of Loss. All risk of loss, damage, theft or destruction to each
item of Equipment shall be borne by the Lessee. No such loss, damage, theft or
destruction of the Equipment, in whole or in part, shall impair the obligations
of Lessee under this Lease, all of which shall continue in full force and
effect; and Lessee, at Lessor's option, shall either (a) place the affected
Equipment in good repair, condition and working order, or (b) replace the same
with like Equipment in good repair, condition and working order, or (c) pay the
Lessor an amount equal to all unpaid rent due and to become due under this
Lease with respect to the affected Equipment, less the net amount of the
recovery, if any, actually received by the Lessor from insurance or otherwise
for such loss, damage, theft or destruction. After compliance with the
foregoing to Lessor's satisfaction, and provided Lessee is not in default under
this Lease, Lessee shall be subrogated to Lessor's rights with respect to any
insurance policies or claims for reimbursement by others with respect to such
loss, damage, theft or destruction.
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<PAGE>
10. Maintenance and Repairs. Lessee shall, at its expense, maintain each
item of Equipment, and all additions, attachments and accessories with respect
thereto, in good mechanical condition and running order, but shall not be
responsible for normal wear and tear or depreciation resulting from the
authorized use thereof. Without the prior written consent of Lessor, Lessee
shall make no repair, alteration or attachment with respect to any item of
Equipment which interferes with the normal and satisfactory operation or
maintenance thereof, or creates a safety hazard, or which might result in the
creation of a mechanic's or materialman's lien with respect thereto. All
additions, attachments, accessories and repairs at any time made or placed upon
the Equipment shall become part of the Equipment and shall be the property of
Lessor.
11. Insurance. Lessee will, at its own expense, insure the Equipment at all
times against all hazards requested by Lessor, including but not limited to
fire, theft and extended coverage insurance, and such policies shall be payable
to Lessor as its interest may appear. Such policies of insurance shall be
reasonably satisfactory to Lessor as to form, amount and insurer, and shall
provide for at least ten (10) days written notice of cancellation to Lessor.
Lessee shall furnish certificates, policies or endorsements to Lessor as proof
of such insurance. Lessor may act as attorney for Lessee in making, adjusting or
settling any claims under any insurance policies insuring the Equipment. Lessee
assigns to Lessor all of its right, title and interest to any insurance policies
insuring the Equipment, including but not limited to all rights to receive the
proceeds of insurance not in excess of the unpaid obligations under this Lease,
and directs any insurer to pay all such proceeds directly to Lessor and
authorizes Lessor to endorse Lessee's name on any draft for such proceeds.
Lessee shall, at its expense, carry public liability insurance with respect
to the Equipment and the use thereof, in such amounts and with such insurers as
are reasonably satisfactory to Lessor, and such insurance policies shall also
name Lessor as an insured thereunder. The proceeds of any public liability or
property damage insurance shall be payable first to Lessor to the extent of its
liability, if any, and the balance to Lessee. The proceeds of any fire, theft
and extended coverage insurance with respect to the Equipment shall be payable
solely to Lessor and shall be applied by Lessor toward the payment of Lessee's
obligations hereunder and any balance of the proceeds shall be the property of
Lessor, provided that at Lessor's option such proceeds may be used for the
repair or replacement of the affected Equipment.
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<PAGE>
12. Taxes. Lessee shall keep the Equipment free and clear of all levies,
liens and encumbrances and, as additional rent during the term of this Lease,
shall pay all assessments, license fees, taxes (including sales, use, excise,
personal property, ad valorem, stamp, documentary and other taxes) and all other
governmental charges, fees, fines or penalties whatsoever, whether payable by
Lessor or Lessee, on or relating to the Equipment or the use, registration,
rental, shipment, transportation, delivery, ownership or operation thereof, and
on or relating to this Lease and any Schedules and Lessee shall file all returns
required therefor and furnish copies thereof to Lessor at its request;
provided, however, that the foregoing shall not include any federal or state
-------- -------
income or franchise taxes of Lessor.
13. Lessor's Performance of Lessee's Obligations. If Lessee shall fail to
duly and promptly perform any of its obligations under this Lease with respect
to the Equipment, Lessor may (at its option) perform any act or make any payment
which Lessor deems necessary for the maintenance and preservation of the
Equipment and Lessor's title thereto, including payments for satisfaction of
liens, repairs, taxes, levies and insurance. All sums so paid or incurred by
Lessor, together with interest as provided below, and any reasonable legal fees
incurred by Lessor in connection therewith shall be additional rent under this
Lease and payable by Lessee to Lessor on demand. The performance of any act or
payment by Lessor as aforesaid shall not be deemed a waiver or release of any
obligation or default on the part of Lessee.
14. Late Charges. Should Lessee fail to duly pay any part of any rental
payment or other sum to be paid to Lessor under this Lease, then Lessee shall
pay interest on such delinquent payment from the due date until paid at the
lower of 1% per month or the highest legal contract rate of interest.
15. Indemnification. Lessee assumes liability for, and hereby agrees to
indemnify, protect and keep harmless Lessor, its agents, employees, officers,
directors, successors and assigns from and against any and all liabilities,
obligations, losses, damages, injuries, claims, demands, penalties, actions,
costs and expenses, including but not limited to reasonable attorney's fees, of
whatsoever kind and nature, arising out of the use, condition (including but not
limited to latent and other defects and whether or not discoverable by Lessee or
Lessor), operation, ownership, selection, delivery, leasing or return of any
item of Equipment, regardless of where, how and by whom operated, or any failure
on the part of Lessee to perform or comply with any conditions of this Lease.
The indemnities and assumptions of
-5-
<PAGE>
liabilities and obligations herein provided for shall continue in full force and
effect notwithstanding and expiration or other termination of this Lease.
Lessee is an independent contractor and nothing contained in this Lease shall
authorize Lessee or any other person to operate any item of Equipment so as to
incur or impose any liability or obligation for or on behalf of Lessor.
16. No Offset. This Lease is a net lease and all rental payments shall be
paid by Lessee irrespective of any set-off, counterclaim, recoupment, defense or
other right which Lessee may have against Lessor, the supplier of the Equipment
or any other party.
17. Purchase Option. Lessee shall have no option to purchase or otherwise
acquire title or ownership of any item of Equipment.
18. Renewal. There shall be no renewal of this Lease without the written
agreement of Lessor. If Lessor fails to return any item of Equipment at the end
of the original lease term or any renewal thereof, then (without any waiver of
Lessor's rights) the Lease thereof shall automatically be renewed from month to
month with rent payable monthly at the monthly rate applicable during the
original term.
19. Advance Rentals and Security. Any advance rentals paid by Lessee to
Lessor shall be applied to rental payments coming due under this Lease in the
inverse order of maturity. Lessee's obligations under this Lease are secured by
any of its property with respect to which lessor may be granted a security
interest in any other agreement or document.
20. Assignment by Lessee. Without Lessor's prior written consent, Lessee
may not, by operation of law or otherwise, (a) assign, transfer, pledge,
hypothecate or otherwise dispose of this Lease or any interest therein or (b)
sublet or lend the Equipment or permit same to be used by anyone other than
Lessee or Lessee's employees.
21. Assignment by Lessee. For the purpose of providing funds for
financing the purchase of the Equipment, or for any other purpose, Lessee agrees
(a) that Lessor may assign, sell or encumber all or any other part of this
Lease, the Equipment and the rental payments hereunder and (b) in the event of
any such assignment of rental payments hereunder and written notice thereof to
Lessee, to unconditionally pay directly to any such assignee all rentals and
other sums due or to become due under this Lease. THE RIGHTS OF ANY SUCH
ASSIGNEE SHALL NOT BE SUBJECT TO ANY DEFENSE, COUNTERCLAIM OR SETOFF WHICH
LESSEE MAY HAVE
-6-
<PAGE>
AGAINST THE LESSOR. Notwithstanding the foregoing, any such assignment (a) shall
be subject to Lessee's right to possess and use the Equipment so long as Lessee
is not in default under this Lease and (b) shall not release any of Lessor's
obligations hereunder or any claim which Lessee has against Lessor.
22. Return of Equipment. Upon payment in full of all rental payments for
any item of Equipment described in any Schedule, Lessee shall at its expense
deliver such items of Equipment to Lessor's premises set forth at Schedule A or
----------
any place or places within a radius of 100 miles of Lessor's premises,
designated by Lessor in writing, for such disposition as Lessor may determine.
In the event of default by Lessee under this Lease, Lessee shall return all
Equipment to Lessor in the same manner. All Equipment so delivered by Lessee to
Lessor shall be in the same condition as when delivered to Lessor, reasonable
wear and tear resulting from authorized use thereof alone excepted.
23. Events of Default. Lessee shall be in default under this Lease upon
the happening of any of the following events or conditions ("Events of
Default"):
(a) Default by Lessee in payment of any installment or any rent other
indebtedness or obligation now or hereafter owed by Lessee to Lessor under this
Lease or otherwise and the continuance of such default for ten (10) consecutive
days; or (b) default in the performance of any obligation, covenant or liability
contained in this Lease or any other agreement or document with Lessor, and the
continuance of such default for ten (10) consecutive days after written notice
thereof by Lessor to Lessee; or (c) any warranty, representation or statement
made or furnished to Lessor by or on behalf of Lessee proves to have been false
in any material respect when made or furnished; or (d) loss, theft, damage,
destruction or the attempted sale or encumbrance by Lessee of any of the
Equipment, or the making of any levy, seizure or attachment thereof or thereon;
or (e) dissolution, termination of existence, discontinuance of its business,
insolvency, business failure, or appointment of a receiver of any part of the
property of, or assignment for the benefit or creditors by Lessee or the
commencement of any proceedings under any bankruptcy, reorganization or
arrangement laws by or against Lessee.
24. Remedies of Lessee. Upon the occurrence of any Event of Default and
at any time thereafter (subject to any applicable grace provisions), Lessor may
without any further notice exercise one or more of the following remedies, as
Lessor in its sole discretion shall elect: (a) declare all unpaid rentals under
this Lease to be immediately due and payable; (b) terminate this Lease
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<PAGE>
as to any or all items of Equipment; (c) take possession of the Equipment
wherever found, and for this purpose enter upon any premises of Lessee and
remove the Equipment, without any liability for suit, action or other proceeding
by the Lessee and remove the same; (d) cause Lessee at its expense to promptly
return the Equipment to Lessor and in the condition set forth above; (e) use,
hold, sell, lease or otherwise dispose of the Equipment or any item thereof on
the premises of Lessee or any other location without affecting the obligations
of Lessee as provided in this Lease; (f) sell or lease the Equipment or any part
thereof, at public auction or by private sale or lease at such time or times and
upon such terms as Lessor may determine, free and clear of any rights of Lessee
and, if notice thereof is required by law, any notice in writing of any such
sale or lease by Lessor to Lessee not less than ten (10) days prior to the date
thereof shall constitute reasonable notice thereof to Lessee; (g) proceed by
appropriate action either by law or in equity to enforce performance by Lessee
of the applicable covenants of this Lease or to recover damages for the breach
thereof; or (h) exercise any and all rights accruing to Lessor under any
applicable law upon a default by a Lessee. In addition, Lessor shall be entitled
to recover immediately as liquidated damages, and not as a penalty, a sum equal
to the aggregate of the following: (a) all unpaid rentals or other sums which
are due and payable for any items of Equipment up to the date of redelivery to
or repossession by Lessor; (b) any expenses paid or incurred by Lessor in
connection with the repossession, holding, repair and subsequent sale, lease or
other disposition of the Equipment, including but not limited to attorney's fees
and legal expenses; (c) all unpaid rentals due and to become due under this
Lease for any item of Equipment which Lessee fails to return to Lessor as
provided above or converts or destroys, or which Lessor is unable to repossess;
and (d) an amount equal to the difference between (i) all unpaid rentals for any
item of Equipment returned to or repossessed by Lessor from the date thereof to
the end of the respective rental period therefor and (ii) the present fair
market rental value of each such item or item of Equipment for such unexpired
rental period (the "Unexpired Rental Value"); provided, however, that the
-------- -------
Unexpired Rental Value of each item of Equipment shall be deemed to be an amount
equal to the proceeds of any sale thereof by Lessor or lease thereof by Lessor
for a period substantially similar to the unexpired rental period therefor.
Should Lessor, however, estimate its actual damages to exceed the foregoing,
Lessor may, at its option, recover its actual damages in lieu of or in addition
thereto. Lessor shall not be obligated to sell, lease or otherwise dispose of
any item of repossessed Equipment hereunder if it would impair the sale, lease
or other disposition of similar equipment in the ordinary course of Lessor's
business or which was previously repossessed
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<PAGE>
by Lessor from any party. None of the remedies under this Lease are intended to
be exclusive, but each shall be cumulative and in addition to any other remedy
referred to herein or otherwise available to Lessor in law or in equity. Any
repossession or subsequent sale or lease by Lessor of any item of Equipment
shall not bar an action for a deficiency as herein provided and the bringing of
an action or the entry of judgment against the Lessee shall not bar the Lessor's
right to repossess any or all items of Equipment. LESSEE WAIVES ANY AND ALL
RIGHTS TO NOTICE AND TO A JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF
THE EQUIPMENT BY LESSOR IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE.
25. Severability. Any provision of this Lease which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition and unenforceable, without invalidating the
remaining provisions hereof. To the extent permitted by applicable law, Lessee
hereby waives any provision of law which prohibits or renders unenforceable any
provisions hereof in any respect.
26. Notices. All notices, reports, and other documents provided for herein
shall be deemed to have been given or made when mailed, postage prepaid, or sent
by telefacsimile, addressed to Lessor or Lessee at their respective addresses
set forth above at Schedule A or such other addresses as either of the parties
----------
hereto may designate in writing to the other from time to time for such purpose.
27. Amendments and Waivers. This instrument and Schedule A and the
----------
Schedules attached hereto constitute the entire agreement between Lessor and
---------
Lessee with respect to the Equipment and the subject matter of this Lease. No
term or provision of this Lease may be changed, waived, amended or terminated,
except by a written agreement signed by both Lessor and Lessee, except that
Lessor may insert the serial number of any item of Equipment on the appropriate
Schedule after delivery thereof. No express or implied waiver by Lessor of any
Event of Default hereunder shall in any way be, or be construed to be, a waiver
of any future or subsequent Event of Default whether similar in kind or
otherwise.
28. Construction. This Lease shall in all respects be governed by and
construed in accordance with the laws of the State of Ohio. The titles of the
sections of this Lease are for convenience only and shall not define or limit
any of the terms or provisions hereof. Time is of the essence of this Lease in
each and all of its provisions.
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<PAGE>
29. Parties. The provisions of this Lease shall be binding upon, and
inure to the benefit of, the assigns, representatives and successors of the
Lessor and Lessee.
LESSEE HEREBY ACKNOWLEDGES RECEIPT OF AN EXECUTED AND TRUE COPY OF THIS
LEASE AND THAT IT IS NON-CANCELLABLE FOR THE ORIGINAL RENTAL TERM.
IN WITNESS WHEREOF, the Lessor and Lessee have each caused this Lease to be
duly executed.
SEAL LESSEE
ATTEST OR WITNESS: FANT BROADCASTING COMPANY OF OHIO, INC.
(Name of Lessee)
______________________________ By:____________________________
(Secretary, if Corporate Title:
Lessee, Otherwise Witness)
(Must be Signed by Authorized
Corporate Officer, Partner or
Proprietor)
LESSOR
Accepted this day of March, 1994.
--
OUTLET BROADCASTING, INC.
By_____________________________
Title:
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<PAGE>
Schedule A
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1. Lessor: Outlet Broadcasting, Inc.
------
23 Kenney Drive
Cranston, RI 02920-4489
Attn: Mr. James G. Babb
Facsimile (401) 455-9216
2. Lessee: Fant Broadcasting Company of Ohio, Inc.
------
-------------------------
-------------------------
Attn: Mr.
--------------
Facsimile:
--------------
3. Termination of Rental: , 19 .
--------------------- --
4. Location for Return of Equipment:
---------------------------------------
------------------------------------------------------------------------.
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<PAGE>
Equipment Lease Schedule
------------------------
Monthly Payment
No. Units Description Location Rental Date
--------- ----------- -------- ------- -------
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<PAGE>
EXHIBIT B TO TIME BROKERAGE AGREEMENT
BETWEEN OUTLET BROADCASTING, INC. AND FANT BROADCASTING
COMPANY OF OHIO, INC.
1. Defined Terms. For the purposes of this Exhibit B the following terms,
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unless the context otherwise requires, shall have the following meanings:
1.1 "Accounting Period" shall mean the period from the Initial Calculation
Date to the First Interim Calculation Date and thereafter each twelve month
period ending on the next Interim Calculation Date, or Final Calculation Date,
whichever shall occur first.
1.2 "Capital Expenditures" shall mean the sum of the (a) $525,000, and (b)
all amounts paid by Broker in connection with the purchase of equipment used to
provide for all of the operational needs of Station WWAT-TV, including the
broadcast of programming in accordance with Section 2.2 of this Agreement.
1.3 "Capital Expenditure Charge" shall mean for any Accounting Period an
amount equal to the product of (x) .08 and (y) the amount of the Unrecovered
Capital Expenditures as of any Interim Calculation Date or Final Calculation
Date, as the case may be.
<PAGE>
1.4 "Debt Service Payment" shall mean for any Accounting Period an amount
equal to the product of (x) $17,895.82 and (y) the number of full calendar
months in such Accounting Period. In case any Accounting Period shall include a
portion of a calendar month there shall be included a pro rata portion of such
$17,895.82 based on the number of days of such partial month included within
such Accounting Period.
1.5 "Direct Expenses" shall mean for any Accounting Period the difference
between (a) the actual expenses incurred by Broker in operating WCMH of
Columbus, Ohio and carrying out its obligations under this Agreement with
respect to WWAT-TV and (b) the expenses which would have been paid by Broker had
Broker solely operated WCMH for such Accounting Period. Such expenses shall
include, without limitation, cost of the provision at WCMH of programming,
whether purchased from third parties or produced by Broker, promotional costs,
the cost of all sales of time, representative fees and commissions, salaries and
fringe benefits for personnel employed by Broker at WCMH, data services,
insurance, bad debts, supplies, utilities and other like items, but shall
exclude amounts related to the provision at WCMH of general station management,
real property rents, general building maintenance, depreciation of any type and
accounting. Notwithstanding the foregoing, for that Accounting Period beginning
on the Initial Calculation Date and ending on December
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<PAGE>
31, 1994, the total Direct Expenses shall not exceed $2 million and for the next
Accounting Period (calendar year 1995) $3 million. For each subsequent
Accounting Period, the Direct Expenses shall not exceed the sum of (w) $3
million and (x) 30 percent of the difference between (y) the Gross Revenue for
the Accounting Period ending on December 31, 1995 and (z) the Gross Revenue
for the 12 month period for which the calculation is then being made.
1.6 "Final Calculation Date" shall mean the date on which this Agreement
shall terminate.
1.7 "First Interim Calculation Date" shall mean December 31, 1994.
1.8 "Gross Revenue" shall mean the sum of (x) amounts billed where
payment is expected in cash and (y) the fair market value of all other property
received by Broker during an Accounting Period arising from the sale of
advertising time by Broker pursuant to Section 2.2 of this Agreement.
1.9 "Gross Operating Income" shall mean for any Accounting Period the
positive difference, if any, between Net Revenue and the sum of (a) Direct
Expenses, (b) Debt Service Payment, (c) Operating Lease Payments, (d) Station
Operating Expense, and (e) Station Maintenance Expenses.
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<PAGE>
1.10 "Initial Calculation Date" shall mean the date of this Agreement.
1.11 "Interim Calculation Date" shall mean December 31, 1995 and each
December 31 thereafter during the term of this Agreement, or the Final
Calculation Date, whichever date shall occur first.
1.12 "Net Revenue" shall mean for any Accounting Period the Gross Revenue
less agency fees and representative fees incurred during such Accounting Period
by Broker.
1.13 "Net Operating Income" or "Net Operating Loss" shall mean for any
Accounting Period the positive or negative difference, if any, between Net
Revenue and the sum of (a) Direct Expenses, (b) Debt Service Payment, (c)
Operating Lease Payments, (d) Station Operating Expense, (e) Station Maintenance
Expenses, (f) Unrecovered Capital Expenditures, (g) Management Fee, (h) Capital
Expenditure Charge and (i) the Unrecovered Net Operating Loss.
1.14 "Management Fee" shall mean for any Accounting Period an amount equal
to 10 percent of Gross Operating Income.
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<PAGE>
1.15 "Operating Lease Payments" shall mean all payments made by Licensee
to Broker pursuant to that certain lease of personal property between Broker
and Licensee of even date herewith attached as Exhibit A.
1.16 "Station Budgeted Discretionary Operating Expenses" shall mean the
amounts contained in the Station Operating Budget for salaries and related
expenses (including fringe benefits), travel and entertainment and general and
administrative expenses payable to related third parties.
1.17 "Station Maintenance Expenses" shall mean all expenses incurred by
the Broker to maintain in good operating repair and condition the property of
Licensee listed on Schedule B-1 hereto.
1.18 "Station Operating Budget" shall mean the estimate of the Station
Operating Expense which is prepared by Licensee pursuant to Section 2 of this
Schedule B for each twelve month period during the term of this Agreement,
except that the first such period shall commence on the Initial Calculation Date
and shall end on December 31, 1994.
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<PAGE>
1.19 "Station Operating Expense" shall mean for any Accounting Period the
expenses actually incurred by Licensee for the operation of WWAT-TV pursuant to
Section 1.2 and 1.3 of this Agreement, which shall include the amount actually
incurred with respect to Station Budgeted Discretionary Operating Expenses, but
not in excess of the amount contained in the Station Operating Budget with
respect thereto, rents for studios and transmission facilities, all payments to
utilities and unrelated suppliers for utilities, supplies and services
reasonably necessary in the operation of WWAT-TV by Licensee, all real and
personal property taxes and sales taxes paid by Licensee, administrative
expenses, but excluding therefrom any income taxes, accounting expenses,
corporate franchise taxes, salaries and other items not explicitly set forth
herein.
1.20 "Station Operating Expense Estimated Payment" shall mean an amount
paid once each month by Broker to Licensee which shall equal one-twelfth of the
Station Operating Budget for each Accounting Period during the term of this
Agreement provided, however, that for the Accounting Period between the Initial
Calculation Date and December 31, 1994, such payment shall be agreed upon
between Licensee and Broker.
-6-
<PAGE>
1.21 "Unrecovered Capital Expenditure" shall mean for the Accounting
Period for which the calculation is being made together with all prior
Accounting Periods the positive difference, if any, for all such Accounting
Periods between the (x) Capital Expenditures and (y) the Net Operating Income in
excess of the sum of (a) Direct Expense, (b) Debt Service Payment, (c) Station
Operating Expense, (d) Management Fee, (e) Station Maintenance Expenses, (f)
Capital Expenditure Charge and (g) Operating Lease Payments.
1.22 "Unrecovered Net Operating Loss" shall mean for any Accounting
Period, the positive difference, if any, between (a) the Net Operating Loss for
all prior Accounting Periods and (b) the aggregate Net Operating Income for all
prior Accounting Periods.
2. Station Operating Expenses. Licensee has prepared a Station Operating
--------------------------
Budget for the period between the Initial Calculation Date and December 31, 1994
as set forth in Schedule B-3 hereto. Within 30 days after the expiration of
such period and each Accounting Period thereafter during the term of this
Agreement, Licensee shall deliver to Broker a detailed statement of the Station
Operating Expenses incurred and paid by Licensee for such period. If such
amount shall be less than the Station Operating Expense Estimated Payment made
by Broker for such
-7-
<PAGE>
period, the difference shall be deducted from the next Station Operating Expense
Estimated Payment thereafter made by Broker pursuant to this Agreement. If the
amount shown on such statement shall be greater than the Station Operating
Expense Payment made by Broker for such period, then Broker shall pay the
Licensee the difference within 30 days. At least 60 days prior to each December
31st occurring during the term of this Agreement, Licensee shall deliver to
Broker a Station Operating Budget which Broker shall have the right to review
and request documentation with respect thereto. Licensee agrees that Station
Budgeted Discretionary Operating Expense Budget for the Interim Accounting
Period commencing on January 1, 1995 shall not exceed $1,000. Thereafter, no
Station Operating Budget shall contain an amount for Station Budgeted
Discretionary Operating Expenses greater than the product of (a) the amount
actually contained in the Station Operating Budget for the then Accounting
Period and (b) one plus the percentage increase in the Price Index for the
period between October 1 of the calendar year next preceding the calendar year
in which such budget is submitted and October 1 of the calendar year in which
said budget is submitted. For purposes of this section the term "Price Index"
means the Consumer Price Index for all Urban Consumers (CPI-U): Cleveland-
Akron-Lorain Average, All Items adjusted (1982-84=100) published monthly by the
Bureau of Labor Statistics, U.S. Department of Labor. If the Bureau of Labor
Statistics should cease to publish
-8-
<PAGE>
the Price Index in its present form as currently calculated, a comparable index
reflecting changes in the cost of living determined in a similar manner or by
substitution, combination or weighting of available indices, expenditure groups,
items, components or population, published by the Bureau of Labor Statistics or
by a responsible financial periodical or recognized authority shall be
designated by Broker to be the Price Index thereafter. The Price Index for any
date relevant to the application of any provision hereof shall be that published
by the Bureau of Labor Statistics for the month containing such date, if
computed for such month, or otherwise for the most recent month immediately
preceding the month for which the application is to be made. Since a Price
Index relevant to the application of the provisions hereof may not be
available as of the date on which a determination using the Consumer Price
Index is to be made, necessary adjustments between Licensee and Broker shall be
made retroactively, within a reasonable time after required computations can
be readily completed.
3. Monthly Payments By Broker. Commencing on the Initial Calculation Date
--------------------------
for the portion of the calendar month then remaining and thereafter monthly
within five days of the first business day of each month thereafter during the
term of this Agreement, Broker shall pay to Licensee the sum of (a) the Debt
Service Payment, (b) the Operating Lease Payment and (c) the
-9-
<PAGE>
Station Operating Expense Estimated Payment for such month, subject, however, to
reduction in the case of the Station Operating Expense Estimated Payment in
accordance with the provisions of Section 2 of this Schedule B. Notwithstanding
the provisions of this Section, in the event (i) Broker shall receive notice of
default from the holder of debt of Licensee secured by a first mortgage on the
property of Licensee, (ii) Broker shall thereafter send a copy of such notice to
Licensee, and (iii) Licensee shall not contest such notice by commencement of
legal proceedings within ten (10) days of the sending of such notice by Broker,
Broker may thereafter make all or part of the Debt Service Payment to the holder
to the extent of Licensee's obligation at such time to such holder.
4. Payments to Licensee. Within sixty days after the First Interim
--------------------
Calculation Date, and each Interim Calculation Date thereafter, or the Final
Calculation Date, whichever shall occur first, Broker shall make a determination
of the Net Operating Income in accordance with the terms of this Agreement for
the Accounting Period ending on such Interim or Final Calculation Date and shall
submit the determination to Licensee. With such schedule, Broker shall pay to
Licensee with respect to such Accounting Period the sum, if any, of (a) 25
percent of the Net Operating Income of $1 million or less, (b) 30 percent of
the Net Operating Income in excess of $1 million but not more than $2
-10-
<PAGE>
million, (c) 35 percent of the Net Operating Income in excess of $2 million but
not more than $3 million, (d) 40 percent of the Net Operating Income in excess
of $3 million but not more than $4 million, (e) 45 percent of the Net Operating
Income in excess of $4 million but not more than $5 million and (f) 50 percent
of the Net Operating Income in excess of $5 million.
5. Accounting. Within 30 days of the time of the rendering of any statement
----------
of Station Operating Expenses or Net Operating Income (a "Statement") required
under this Agreement, if either party shall question the amount or propriety of
any item appearing in such Statement or excluded therefrom and if thereafter
Broker and Licensee cannot agree as to the amount or propriety of such item, the
dispute may be determined by arbitration as hereinafter provided. Notice of
arbitration shall be given within seventy-five days of the delivery of the
Statement, unless a party has elected to audit as hereinafter provided.
Notwithstanding that a party may question any item, the amount due as shown on
such Statement shall nevertheless be paid (except for the portion if any which
is then subject to ongoing arbitration or litigation). Unless a party shall
take written exception to any item contained in any such Statement within 30
days after delivery of the same, such Statement shall be considered as final
and accepted by the party to whom delivered. Either party will upon request by
the other within 45
-11-
<PAGE>
days make available for inspection books of original entry and documentation
relating to any of the items of income or expense reflected in any such
Statement. Each party shall have the right at its sole cost and expense to audit
any such Statement. Written notice of intention to audit shall be received by
the other party within 45 days of the furnishing of any Statement. Said audit
shall be commenced within 30 days of the delivery of notice of intention and
once commenced must be pursued until completed at the office of the party which
is subject to the audit during the hours of 9:00 A.M. to 4:30 P.M. during the
normal business work week. Results of each audit shall be made available to all
parties. In the event of a discrepancy resulting in underpayment or overpayment
of more than 5 percent of that which was actually paid, the party subject to the
audit shall pay the cost thereof. In any other event, the party requesting the
audit shall pay the cost. Should the parties be unable to reconcile the amount
contained in any such audit, either party shall have the right to elect to
arbitrate such dispute provided it gives written notice of its election to
arbitrate within 30 days of the date after delivery of the audit results. The
failure to give written notice within such 30 day period shall be deemed a
waiver of any right to arbitrate the amounts disclosed on the audit. If as a
result of the audit there shall be any adjustments with respect to any amounts
due or heretofore paid pursuant to this agreement, such amount shall be
-12-
<PAGE>
paid within 10 days. If such amount is not paid within 10 days, it shall bear
interest at the maximum rate permitted by law. All arbitration proceedings shall
be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and shall be held in Columbus, Ohio. In any proceeding,
the arbitrators shall be bound by the provisions of this Agreement. The
prevailing party in any arbitration proceeding shall be entitled to enforce such
award in any court of competent jurisdiction.
-13-
<PAGE>
WWAT Equipment Inventory (1993)
Transmitter Building (Williamsport)
Transmitter
Comark "S" Series (Comark/Marconi Modulator)
-B7500 High Tech Broadcast Modulator
-Comark CTE-20 20 Watt Vis/Aur Exciter System
15 Watt Multiplex Mode
-GLY-28 Outdoor Heat Exchanger System
4 Fans, 39 Circuits, Sump, Pump
-NWL Unitized, High Voltage Power Supply
-Comark High Voltage Controller/Vacuum contractors
and primary step starts
-2 External Cavity, High Efficiency, Wide Band,
Water Cooled Klystron Power Amplifier;
Control Cabinetry, Dolly and Magnet Circuit Assemblies
-2 EEV K3672BDC 60Kw Klystron Amplifier Tubes/Water Cooled
-Comark RF Package: Waveguide, Diplexer with Color/Aural Notches,
Remote Controlable/Motorized RF Switching System, Dummy Load,
Reject Load, Harmonic Filter, Monitoring Couples, Hardware
Antenna
Dielectric TFU-36JDAS UHF Pylon Antenna
Transmission Line
Dielectric 6 1/8 600 ft. Transmission Line Run
Dielectric 6 1/8 Elbows, Hardware, Transformer
Tower
(4) Tape Machines
(4) Video Monitors
(1) Audio Monitor
(1) Waveform Monitor
(1) Vectorscope
(1) Demodulation ch. 53
Microwave Transmitter System including
Receivers,
Antennas,
Transmission Line
(2) Satellite Receiver Systems including
Antennas,
EBS Receiver
EXHIBIT B-1
<PAGE>
SECURITY AGREEMENT
BETWEEN
OUTLET BROADCASTING, INC., AS SECURED PARTY,
AND
FANT BROADCASTING COMPANY OF OHIO, INC., AS DEBTOR
THIS SECURITY AGREEMENT (this "Agreement"), made and entered into this 18th
day of March, 1994 by and between OUTLET BROADCASTING, INC., a Rhode Island
corporation (the "Secured Party"), and FANT BROADCASTING COMPANY OF OHIO, INC.,
an Alabama corporation (the "Debtor");
W I T N E S S E T H:
WHEREAS, on the date hereof the Secured Party and the Debtor entered into
a certain Time Brokerage Agreement (the "Time Brokerage Agreement") respecting
the Television Station WWAT(TV), in Chillicothe, Ohio (the "Television
Station"); and
WHEREAS, in order to induce the Secured Party to enter into the Time
Brokerage Agreement, and as a material condition thereof, the Debtor desires to
enter into this Agreement;
NOW THEREFORE AND IN CONSIDERATION THEREOF the parties hereto agree as
follows:
1. GRANT OF SECURITY INTEREST. Debtor hereby grants to the Secured Party a
--------------------------
continuing security interest in the "collateral" described in Paragraph 2 below,
a portion of which is identified more specifically on Exhibit A attached hereto,
to secure the full and timely payment and performance of all amounts,
liabilities, obligations, covenants and duties to be paid or performed by
Debtor to Secured Party under the Time Brokerage Agreement and under this
Agreement, as the same may be amended from time to time, plus all interest,
costs, expenses and reasonable attorney's fees which may be made or incurred
by Secured Party in the administration, and collection in the event of default
and in the protection, maintenance, and liquidation of the collateral
(collectively, the "Obligations"). This Agreement shall be and become
effective when, and continue in effect as long as any of the Obligations are
outstanding and unpaid or unperformed, and Debtor will not sell, assign,
transfer, pledge or otherwise dispose of or encumber any collateral to any
third party while this agreement is in effect without the written consent of
the Secured Party; the Secured Party consents to the Security Agreement
entered into by the Debtor and others with Triplett & Associates, Inc., dated
as of even date herewith.
2. COLLATERAL. The "collateral" covered by this Agreement is all of the
----------
Debtor's property described hereinafter which it now owns or shall hereafter
acquire or create immediately upon the acquisition or creation thereof and
includes, but is not limited to, any items listed on any schedule or list
attached hereto:
EXHIBIT C
<PAGE>
A. Accounts. All accounts, documents, chattel paper, instruments,
--------
contract rights, general intangibles, choses in action, including, without
limitation, any right to any refund of any taxes heretofore or hereafter paid
to any governmental authority and including without limitation any and all
purchase order and other documents evidencing obligations for services
rendered by the Debtor which are hereinafter individually and collectively
referred to as "accounts" regardless of whether any such accounts are
acceptable or unacceptable to Secured Party or whether any such accounts have
been scheduled to the Secured Party on any schedule or list attached hereto or
otherwise given to the Secured Party.
B. Inventory. All inventory and goods now owned or hereafter acquired
---------
by the Debtor, including, without limitation, raw materials, work in process,
tangible property, stock in trade, and including, without limitation, all
programming or other materials used or useful in the operation of the
Television Station.
C. Equipment. All equipment and fixtures, including, without
---------
limitation, all machinery, furniture, furnishings, and vehicles, together
with all accessions, parts, attachments, accessories, tools, or appurtenances
thereto, or appertaining, attached, kept, used, or intended for use in
connection therewith and all substitutions, improvements and replacements
thereof and additions thereto.
D. All Assets; Intangibles; Permits; Etc. All accounts, equipment,
-------------------------------------
inventory, fixtures, documents, chattel paper, instruments, contract rights,
general intangibles, including, without limitation, any right to any refund of
any taxes, now owned or hereafter existing or acquired by Debtor, and
including, without limitation, the value of the Debtor as a going concern,
goodwill, trademarks, tradenames, service marks, blueprints, designs, product
lines and research and development, and further including, without limitation,
all of the Debtor's rights under all present and future authorizations,
permits, licenses and franchises heretofore or hereafter granted to Debtor
for the operation and ownership of television stations (except for licenses,
authorizations and permits issued by the Federal Communications Commission
(the "FCC") to the extent it is unlawful to grant a security interest in such
licenses, authorizations and permits, but including, to the maximum extent
permitted by law, all rights incident and appurtenant to such licenses,
authorizations and permits, including, without limitation, the right to
receive all proceeds derived or arising from or in connection with the
assignment or transfer of such licenses, authorizations and permits).
-2-
<PAGE>
E. Proceeds, Etc. Proceeds of hazard insurance and eminent domain or
--------------
condemnation awards of all of the foregoing described properties or interests
in properties including, without limitation, all products of and accessions to
such properties or interests in property. Plus, any and all deposits or other
sums at any time credited by or due to Debtors and any and all instruments,
documents, policies and certificates of insurance, securities, goods, accounts
receivable, choses in action, chattel paper, cash, property and proceeds
thereof (whether or not the same are collateral or proceeds thereof hereunder)
owed by Debtor or in which Debtor has an interest now or at any time
hereafter.
The property or interest in properties described in this paragraph 2 are
sometimes hereinafter individually and collectively referred to as the
"collateral".
3. FURTHER ACTIONS. Debtor shall execute and deliver to the Secured Party,
---------------
concurrently with Debtor's execution of this Agreement and at any time or times
hereafter at the request of the Secured Party (and pay the cost of filing or
recording same in all public offices deemed necessary by the Secured Party) all
financing statements, assignments, certificates of title, applications for
vehicle titles, affidavits, reports, notices, schedules of accounts,
designations of inventory, letters of authority and all other documents that
Secured Party may reasonably request, in a form satisfactory to the Secured
Party to perfect and maintain perfected Secured Party's security interest in the
collateral in order to fully consummate all of the transactions contemplated
hereunder.
4. WARRANTIES. Debtors warrant and agree that:
----------
A. Debtors have or will acquire full title to the collateral and is
and will be the lawful owner of all of the collateral with right to subject
same to the security interest hereunder;
B. All of the collateral is located in the State of Ohio and Debtor
shall not remove any part of same therefrom without the Secured Party's prior
written consent and will not use or permit the collateral to be used for any
unlawful purpose whatsoever;
C. Debtor shall not conduct business under any other name than that
given above, nor change or reorganize the type of business entity which it
does business, except upon prior written approval of Secured Party and if such
approval is granted, Debtor agrees that all documents, instruments and
agreements demanded by the Secured Party shall be prepared, filed and recorded
at Debtor's expense before such change occurs;
-3-
<PAGE>
D. Debtor shall not remove any records concerning the collateral from
the address hereinafter specified, nor keep any of its records concerning the
same at any other address unless written notice thereof is given to the
Secured Party at least ten (10) days prior to the creation of any new address
for the keeping of such records;
E. Debtor shall at all times maintain the collateral in first class
condition and repair;
F. Debtor has the right and power and is duly authorized to enter into
this Agreement and the execution of this Agreement shall not constitute a
breach of any provision contained in any agreement or instrument to which
Debtor is or may become a party or to which Debtor is or may be bound or
affected;
G. All financial statements and information relating to Debtor
delivered or to be delivered by Debtor to the Secured Party are true and
correct and prepared in accordance with generally accepted accounting
principles, and there has been no material adverse change in the financial
condition of Debtor since the submission of such financial information to the
Secured Party.
H. There are no actions or proceedings which are threatened or pending
against Debtor which might result in any material adverse change in Debtor's
financial condition or which might materially affect any of Debtor's assets;
and
I. Debtor has duly filed all federal, state and other governmental tax
returns which Debtor is required by law to file and all such taxes requires to
be paid have been paid in full.
5. INSURANCE, TAXES, ETC. Debtor shall:
----------------------
A. Pay all taxes, levies, assessments, judgments, and charges of any
kind upon or relating to the collateral to Debtor's business and to Debtor's
ownership or use of any of its assets, income or gross receipts;
B. At its own expense keep and maintain all collateral fully insured
against loss or damage by fire, theft, explosion, and other risks in such
amounts, with such companies, under such policies and under such form as shall
be satisfactory to the Secured Party, which policies shall expressly provide
that loss thereunder shall be payable to the Secured Party as its interest may
appear, and Secured Party shall have a security interest in the proceeds of
such insurance and may apply any such proceeds which may be received by it
towards payment of Debtor's liabilities,
-4-
<PAGE>
whether or not due, in such order of application as Secured Party may
determine:
C. Maintain at its own expense public liability and property damage
insurance in such amounts with such companies, under such policies and in such
form as may be satisfactory to Secured Party and upon Secured Party's request
shall furnish Secured Party with such policies and of payment of premiums
thereon. If Debtor at any time hereafter shall fail to obtain or maintain any
of the policies required above or pay any premium in whole or in part relating
thereto or shall fail to pay any such tax, assessment, levy or charge or to
discharge any such lien or encumbrance, then Secured Party, without waiving
or releasing any obligation or default of Debtor hereunder may at any time
hereafter, but shall be under no obligation to do so, make such payment or
obtain such discharge or obtain and maintain such policies of insurance and
pay such premiums and take such action with respect thereto as Secured Party
deems advisable. All sums so disbursed by Secured Party including the
reasonable attorney fees, court costs, expenses and other charges relating
thereto, shall be part of Debtor's liability secured hereby and payable on
demand.
6. LOCATION OF COLLATERAL. The Debtor's place of business in Ohio is and
----------------------
shall be located at 1281 River Road, Chillicothe, Ohio 45601. All of the
collateral will at all times be kept and maintained at the studio and
transmitter locations of the Television Station at 1281 River Road, Chillicothe,
Ohio 45601. Debtor will notify Secured Party in writing in advance of any
proposed change in location of any of the collateral and will not remove any
collateral from the county in which it is presently or may hereafter be located
without Secured Party's written consent. In addition, Debtor will notify Secured
Party in writing in advance of any proposed change in location of the Debtor's
principal place of business from Chillicothe, Ohio.
7. GENERAL INFORMATION. Debtor shall permit Secured Party or its authorized
-------------------
agents upon reasonable request to have access to and to inspect all the
collateral and Debtor's other assets, if any, and may from time to time verify
accounts, inspect, check, make copies of or extract from the books, records and
files of Debtor and Debtor will make same available at any time for such
purposes. In addition, Debtor shall promptly supply Secured Party with financial
and other information concerning its affairs and assets as Secured Party may
request from time to time.
8. DEFAULT. The occurrence of any of the following events shall
-------
constitute a default as such term is used herein:
-5-
<PAGE>
A. The non-payment, when due, of any amount payable under, or the
failure to perform, any of the obligations or any extension or renewal
thereof;
B. Any statement, representation or warranty of the Debtor herein, in
the Time Brokerage Agreement or in any other writing at any time furnished by
the Debtor to the Secured Party is untrue in any respect as of the date made;
C. Any obligor, which term as used herein shall mean the Debtor and
such other party primarily or secondarily liable on any of the liabilities,
becomes insolvent or unable to pay debts as they mature or makes an assignment
for the benefit of creditors, conveys any assets to a trustee for the benefit
of the obligor's creditors, conveys substantially all of its assets, or any
proceeding is instituted by or against the obligor alleging that such obligor
is insolvent or unable to pay debts as they mature or a petition of any kind
is filed under the Federal Bankruptcy Act by or against such obligor.
D. Entry of any judgment against the Debtor or order of attachment,
execution, sequestration or other order in the nature of a writ is levied on
any of the collateral;
E. Dissolution, merger or consolidation or transfer of a substantial
part of the property of the Debtor; or
F. The Secured Party feels insecure for any other reason whatsoever.
9. DEFAULT REMEDIES. Whenever a default shall exist, the Secured Party may
exercise from time to time any rights and remedies, including the right to
immediate possession of the collateral, available to it under applicable law.
Debtor agrees in case of default to assemble, at its expense, all the collateral
at a convenient place acceptable to the Secured Party and to pay all costs to
the Secured Party of collection and enforcement of the Obligations, including,
without limitation, reasonable attorney's fees and legal expenses, including,
without limitation, participation in bankruptcy proceedings and expenses of
locating the collateral and expenses of any repairs to any property to which any
collateral may be affixed or be a part. If any notification of any intended
disposition of any of the collateral is required by law, such notification, if
mailed, shall be deemed reasonable and properly given if sent at least five (5)
days before such disposition, postage prepaid, addressed to the Debtor at the
address herein shown or at such other address as the Debtor may have given to
the Secured Party. Debtor agrees that Secured Party shall, in the event of any
default, have the right to peaceably retake any of the
-6-
<PAGE>
collateral, and Debtor waives any right they may have, in such instance to a
judicial hearing prior to such retaking.
10. FCC APPROVAL. Notwithstanding anything to the contrary contained in
------------
this Agreement, the Secured Party will not take any action pursuant to this
Agreement which would constitute or result in any assignment of license or
change of control of the Debtor, if such assignment of license or change of
control would require (under then-existing law) prior approval of the FCC
without first obtaining such prior approval. After a default has occurred and is
continuing, the Debtor agrees to take any and all actions that the Secured Party
may reasonably request in order to obtain any FCC approvals which are necessary
or appropriate to enable the Secured Party to exercise and fully enjoy all
rights and benefits granted to the Secured Party by this Agreement, including
specifically, without limitation, the use of the Debtor's reasonable efforts, at
the Debtor's cost and expense, to assist the Secured Party in obtaining any
prior approvals from the FCC as are necessary for performance of any action or
transaction contemplated by this Agreement. Specifically, and without
limitation, the Debtor will, after a default has occurred and is continuing, and
upon the Secured Party's request, prepare, sign and file with the FCC all
relevant portions of any application for assignment of license or transfer of
control as may be necessary or appropriate under FCC rules and regulations.
11. GENERAL. Time shall be deemed of the very essence of this agreement.
-------
Except as otherwise defined in this agreement all terms in this agreement shall
have the meanings provided by the Ohio Uniform Commercial Code. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of any collateral in its possession if it takes such action for
that purpose as Debtor requests in writing, but failure of Secured Party to
comply with such request shall not of itself be deemed a failure to exercise
reasonable care, and failure of the Secured Party to preserve or protect any
rights with respect to such collateral against any prior parties or to do any
act with respect to the preservation of such collateral not so requested by
Debtor shall not be deemed a failure to exercise reasonable care in the custody
and preservation of such collateral. Any delay on the part of Secured Party in
exercising any power, privilege or right hereunder, or under any other
instrument executed by Debtor to Secured Party in connection herewith shall not
operate as a waiver thereof and no single or partial exercise thereof, or the
exercise of any other power, privilege or right shall preclude other or further
exercises thereof, or the exercise of any other power, privilege or right. The
waiver by Secured Party of any default by Debtor shall not constitute a waiver
of any subsequent defaults, but shall be restricted to the defaults so waived.
If any part of this agreement shall be contrary to law which Secured Party might
seek to apply or enforce, or should otherwise be defective, the other provisions
of this agreement shall not be affected thereby, but shall
-7-
<PAGE>
continue in full force and effect. All rights, remedies and powers of Secured
Party hereunder are irrevocable and cumulative, and not alternative or
exclusive, and shall be in addition to all rights, remedies and powers given
hereunder or in or by any other instruments or by the Ohio Uniform Commercial
Code or any laws now existing or hereafter enacted.
This Agreement has been executed and delivered in Ohio and shall be
construed in accordance with the laws of the State of Ohio. Whenever possible
each provision of this agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or other remaining provisions of
this Agreement. The rights and privileges of Secured Party hereunder shall inure
to the benefit of its successors and assigns and this agreement shall be binding
on all successors and assigns of Debtor.
Debtor hereby authorizes the Secured Party to date and correct obvious
errors in this Agreement without affecting Debtor's liability hereunder.
The Debtor acknowledges that this is the entire agreement between the
parties except to the extent that writings signed by the party to be charged are
specifically incorporated herein by reference either in this Agreement or in
such writings and acknowledges receipt of a true and complete copy of this
Agreement.
SECURED PARTY DEBTOR
OUTLET BROADCASTING, INC. FANT BROADCASTING COMPANY OF OHIO,
INC.
By: By:
---------------------- ----------------------
Title: Title:
------------------- ------------------
ADDRESS OF SECURED PARTY: ADDRESS OF DEBTOR:
23 Kenney Drive 1281 River Road
Cranston, Rhode Island 02920 Chillicothe, Ohio 43501
Attention: James G. Babb
-8-
<PAGE>
GUARANTY
THIS GUARANTY, dated as of the ___ day of March, 1994, is by Anthony J.
Fant, of Birmingham, Alabama, (the "Guarantor") in favor of Outlet Broadcasting,
Inc. ("Outlet").
WHEREAS, Fant Broadcasting Company of Ohio, Inc. ("FB Inc.") owns
television station WWAT-TV and has entered in a Time Brokerage Agreement, dated
this date, with Outlet (the "Agreement");
WHEREAS, the Guarantor owns all of the shares of the outstanding capital
stock of FB Inc. and the execution and delivery by the Guarantor of this
Guaranty is a condition precedent to, and an inducement for, Outlet's
execution and delivery of the Agreement; and
WHEREAS, the Guarantor expects to derive substantial benefits from FB Inc.
as a result of the Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Guarantor hereby represents and agrees as follows:
1. GUARANTY OF PERFORMANCE. The Guarantor hereby guarantees to Outlet
the full and punctual performance when due (including but not limited to
payment) of all liabilities, agreements and other obligations of FB Inc. to
Outlet, whether direct or indirect, absolute or contingent, due or to become
due, secured or unsecured, now existing or hereafter arising or acquired,
relating to or arising out of or under the Agreement (collectively, the
"Obligations"). This Guaranty is an irrevocable, absolute, unconditional and
continuing guaranty of the full and punctual performance of the Obligations and
is in no way conditioned upon any requirement that Outlet first attempt to
resort to any other means of obtaining payment or performance. In the event
that an Event of Default (as such term is defined in Section 8, below) shall
---------
have occurred, the obligations of the Guarantor hereunder shall become
immediately due, without demand or notice of any nature, all of which are
expressly waived by the Guarantor. Performance by the Guarantor hereunder may
be required by Outlet on any number of occasions.
2. GUARANTOR AGREEMENT TO PAY. The Guarantor further agrees to pay to
Outlet, on demand, all costs and expenses (including court costs and legal fees
and expenses) incurred or expended by Outlet in connection with this Guaranty
and the enforcement
EXHIBIT D
<PAGE>
thereof, together with interest on amounts recoverable under this from the time
of notice by Outlet to Guarantor that such amounts are due until payment, at the
rate per annum equal to 12%, provided that if such interest exceeds the maximum
amount permitted to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount.
3. LIMITED GUARANTY. The liability of the Guarantor hereunder shall be
limited in recourse to Guarantor's rights, title and interests in the capital
stock of FB Inc.
4. WAIVERS BY GUARANTOR; HOLDER'S FREEDOM TO ACT. The Guarantor agrees
that the Obligations will be paid and performed strictly in accordance with
their respective terms regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of Outlet with respect thereto. The Guarantor waives presentment, demand,
protest, notice of acceptance, notice of Obligations incurred and all other
notices of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshalling of assets of FB Inc., and all suretyship
defenses generally.
5. UNENFORCEABILITY OF OBLIGATIONS. If for any reason FB Inc. ceases to
have any legal existence or has no legal obligation to discharge any of the
Obligations, or if any of the Obligations have become irrecoverable from FB Inc.
by operation of law or for any other reason, this Guaranty shall nevertheless be
binding on the Guarantor to the same extent as if the Guarantor at all times had
been the principal obligor on all such Obligations.
6. SUBROGATION AND SUBORDINATION. Until the performance in full of all
Obligations and any and all obligations of FB Inc. to Outlet (and the expiration
of any applicable preference periods under the Federal Bankruptcy Code without
there having occurred any reorganization), the Guarantor shall not exercise any
rights against FB Inc. arising as a result of any payment by the Guarantor
hereunder, by way of subrogation or otherwise, and will not prove any claim in
competition with Outlet or its affiliates in respect of any payment hereunder in
bankruptcy or insolvency proceedings of any nature; the Guarantor will not claim
any set-off or counterclaim against FB Inc. in respect of any liability of the
Guarantor to FB Inc.; and the Guarantor waives any benefit of and any right to
participate in any collateral which may be held by Outlet or any such affiliate.
The payment of any amounts due with respect to any indebtedness of FB Inc. now
or hereafter held by the Guarantor is hereby subordinated to the prior payment
in full of the Obligations. The Guarantor agrees that after the occurrence of
-2-
<PAGE>
any default by FB Inc., including without limitation an Event of Default (as
such term is defined in Section 8, below), in the payment or performance of the
---------
Obligations, the Guarantor will not demand, sue for or otherwise attempt to
collect any such indebtedness of FB Inc. to the Guarantor until the Obligations
shall have been paid in full. If, notwithstanding the foregoing sentence, the
Guarantor shall collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by the
Guarantor as trustee for Outlet, and be paid over to Outlet, on account of the
Obligations without affecting in any manner the liability of the Guarantor under
the provisions of this Guaranty. In the event the Guarantor is or becomes an
"insider" (as defined from time to time in Section 101 of the Federal Bankruptcy
Code) with respect to FB Inc., any and all rights of the Guarantor (a) of
reimbursement, indemnification and exoneration against FB Inc., (b) of
contribution against FB Inc. (if the Guaranty is secured) and/or any other
guarantor and (c) of subrogation to the rights of Outlet or any similar rights
under the Obligations, whether such rights arise under an express or implied
contract or operation of law, are hereby expressly waived, it being the
intention of the parties hereto that the Guarantor shall not be deemed a
"creditor" (as defined in Section 101 of the Federal Bankruptcy Code) of FB Inc.
by reason of the existence of this Guaranty, this waiver being given to induce
Outlet to enter into the Amendment.
7. FURTHER ASSURANCES. The Guarantor also agrees to do all such things
and execute all such documents, including financing statements, as Outlet may
consider necessary or desirable to give full effect to this Guaranty and to
perfect and preserve the rights and powers of Outlet hereunder.
8. DEFAULTS. The occurrence of any one or more of the following events
shall constitute an "Event of Default" under the provisions of this Guaranty
(individually, an "Event of Default" and collectively, the "Events of Default"):
(a) The failure of the Guarantor to pay or perform any of the
Obligations as and when due in accordance with the provisions of this Guaranty;
or
(b) Any representation or warranty made in this Guaranty or in any
other document furnished in connection with this Guaranty, shall prove to have
been false or misleading in any material respect; or
(c) The failure of the Guarantor to perform, observe or comply with any
covenant, condition or agreement contained in this Guaranty, which default shall
remain unremedied for thirty (30) days after written notice thereof to the
Guarantor by Outlet; or
-3-
<PAGE>
(d) A default shall occur under any of the Obligations, and such
default is not cured within any applicable grace period provided therein; or
(e) The Guarantor or FB Inc. shall (i) be the subject of, or apply for
or consent to, the appointment of a receiver, trustee or liquidator of itself or
any property, (ii) admit in writing the inability to pay debts as they mature,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent, (v) file, consent, acquiesce, take action
in or be the subject of any bankruptcy, reorganization, insolvency, readjustment
of debt, dissolution or liquidation proceeding involving it or any property, or
(vii) be the subject of, or by any act indicate its consent to, approval of or
acquiescence in, any order, judgment or decree by any court of competent
jurisdiction or any governmental authority enjoining or otherwise prohibiting
the operation of a material portion of the FB Inc.'s business or the use or
disposition of a material portion of the Guarantor's or FB Inc.'s assets; or
(f) The entry of a final judgment for the payment of money or
otherwise that would have a material adverse affect on the financial condition
of the Guarantor or FB Inc.; or
(g) If FB Inc. should merge, consolidate, combine, liquidate, dissolve
or otherwise terminate its existence; or
(h) If there shall be a transfer of all or substantially all of the
Guarantor's or FB Inc.'s assets, without Outlet's prior written consent; or
(i) The attachment or garnishment of all or substantially all of the
property, goods or credits of the Guarantor or FB Inc. which remains unpaid,
unstayed, undismissed or unbonded for a period of thirty (30) days; or if any
foreclosure is instituted (by judicial proceedings, by publication of notice
pursuant to a power of sale or otherwise) against a material portion of the
Guarantor's or FB Inc.'s property under any mortgage, deed of trust or security
agreement granted and is not dismissed or terminated for a period of fifteen
(15) days; or
(j) If the Guarantor fails to promptly notify Outlet, in writing,
within ten (10) days of the occurrence of any event or condition of which the
Guarantor is aware which constitutes an Event of Default, or which, with the
giving of notice or passage of time or both, would constitute an Event of
Default, and together with such notice, furnish a written statement to Outlet
which shall set forth the details of any action the Guarantor proposes to take
with respect thereto; or
-4-
<PAGE>
(k) Death of the Guarantor.
11. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of and be
enforceable by Outlet, its successors, transferees and assigns. Without limiting
the generality of the foregoing sentence, Outlet may assign or otherwise
transfer any agreement held by them evidencing, securing or otherwise executed
in connection with the Obligations, to any other person or entity permitted
under the Agreement.
12. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective, unless the same shall be in writing and signed by Outlet. No failure
on the part of Outlet to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.
13. NOTICES. All notices and other communications called for hereunder
shall be made in writing and, shall be deemed to have been duly made or given
when delivered by hand or mailed first class mail postage prepaid or, in the
case of telefacsimile notice, when transmitted, answer back received, addressed
as follows: (a) if to the Guarantor, at the address set forth below, (b) if to
Outlet, at the address set forth below or (c) at such address as either party
may designate in writing.
Outlet Broadcasting, Inc.
23 Kenney Drive
Cranston, RI 02920-4489
Attn: Mr. James G. Babb, President
Telefacsimile: (401) 455-9216
Anthony J. Fant
2729 11th Avenue South
Birmingham, Alabama 35205-1751
Telefacsimile:
----------------
14. GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty is intended to
take effect as a sealed instrument and shall be enforced, governed by and
construed in accordance with, the laws of the State of Ohio, without application
of its conflicts of law rules. The Guarantor agrees that any suit for the
enforcement of this Guaranty may be brought in the courts of the State of Ohio
or any federal court sitting therein, and consents to the non-exclusive
jurisdiction of such court and to service of process in any such suit being made
upon the Guarantor by mail at the
-5-
<PAGE>
address specified in Section 13 hereof. The Guarantor hereby waives any
----------
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit was brought in an inconvenient court. THE GUARANTOR
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE
PARTIES WITH RESPECT TO THIS GUARANTY.
15. SECURITY. This Guaranty is secured by a Stock Pledge Agreement, dated
this date, by Guarantor to Outlet.
16. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of the Obligations. The invalidity or unenforceability of any one or
more sections of this Guaranty shall not affect the validity or enforceability
of its remaining provisions. Captions are for the ease of reference only and
shall not affect the meaning of the relevant provisions. The meanings of all
defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
and delivered as of the date appearing on page one.
----------------------------
Anthony J. Fant
-6-
<PAGE>
STOCK PLEDGE AGREEMENT
----------------------
1. To induce Outlet Broadcasting, Inc. (the "Secured Party"), which term
shall include its successors and assigns and the holder from time to time of
this Stock Pledge Agreement (the "Agreement"), to enter into a Time Brokerage
Agreement, dated this date, with Fant Broadcasting Company of Ohio, Inc. ("FB
Inc."), Anthony J. Fant (the "Guarantor") has delivered a Guaranty, dated this
date, to the Secured Party (the "Guaranty"). In consideration thereof, the
Guarantor does hereby grant a security interest in, and pledge, assign, transfer
and deliver to the Secured Party, and to its successors and assigns, as general
collateral security for the payment and performance of Guarantor's obligations
and liabilities under the Guaranty, and for any and all indebtedness,
obligations or liabilities of every kind and nature of the Guarantor to the
Secured Party with respect to the Guaranty, or otherwise, or in any other manner
whatsoever or any extension or renewal thereof, (all of the foregoing
hereinafter being collectively referred to as the "Obligations"), the stock
certificates attached hereto as Exhibit A and incorporated herein by reference,
---------
which Exhibit A has attached to it a stock power for each stock certificate,
---------
duly signed by the Guarantor as transferor (all of the aforesaid stock
certificates and powers being hereinafter collectively referred to as the
"Collateral").
2. The Guarantor warrants and represents to the Secured Party that (i) he
is the lawful owner of the Collateral free and clear of all liens and
encumbrances or other interests of third parties, (ii) he has the full power and
lawful right to pledge the Collateral to the Secured Party, (iii) the Collateral
is registered in his name on the stock transfer books and records of FB Inc.
(the "Corporation"), (iv) he will warrant and defend the title to the Collateral
against the claims and demands of any person, firm, corporation, trust,
partnership or other entity, (v) the Collateral constitutes 100% of the
presently issued and outstanding shares of the Corporation, and (vi) there are
no restrictions on the transferability of the Collateral to the Secured Party or
with respect to the foreclosure and transfer thereof by the Secured Party or, if
three are any such restrictions, any and all restrictions on the transferability
have been duly waived with respect to this assignment, transfer, pledge, and the
grant of a security interest to the Secured Party and with respect to the
foreclosure and transfer thereof by the Secured Party.
<PAGE>
3. Prior to any default in the payment or performance of the Obligations,
the Guarantor shall have all rights, powers, privileges and preferences
pertaining to the Collateral subject to the terms of this Agreement. Upon any
default in the payment or performance of the Obligations or in any of the terms
of this Agreement, the Secured Party shall have the right, at its option, to
exercise all such rights, powers, privileges and preferences pertaining to the
Collateral and to cause the Collateral to be registered in the Secured Party's
name or in the name of its nominee. To effectuate the provisions hereof, the
Guarantor hereby irrevocably appoints and constitutes the Secured Party as his
true and lawful attorney with full power of substitution to complete and fill in
any blank endorsements, to file the same and to take such further action as the
Secured Party may deem necessary to exercise, as a stockholder, all of his
right, title and position in the Corporation. The aforesaid power of attorney
shall be deemed irrevocable and coupled with an interest. The Guarantor further
agrees that any transfer of the Collateral under the provisions of this
paragraph shall not be deemed a sale or disposition under the provisions of
Article 9 of the Uniform Commercial Code, nor an acceptance of such Collateral
in satisfaction of the Obligations or any portion thereof.
4. Upon any such default, the Secured Party shall further have all the
rights and remedies of a secured party afforded by the Uniform Commercial Code
or afforded by other applicable law. Requirement of reasonable notice with
respect to any sale or disposition shall be met if such notice is mailed,
postage prepaid, to the Guarantor at the address set forth in the Guaranty at
least five (5) days before the time of the sale or other disposition. Expenses
of retaking, holding, preparing for sale, selling, or the like shall include the
Secured Party's reasonable attorneys' fees and other costs and legal expenses.
5. Until such time as the Obligations have been paid or performed in full,
the Guarantor shall not suffer or cause or permit any other or further shares of
the Corporation to be issued unless such shares are pledged with the Secured
Party as additional Collateral for the Obligations, nor shall the Guarantor
encumber the Collateral, or any part thereof, with any lien, security interest,
or encumbrance junior to the interest granted to the Secured Party hereby, nor
shall the Guarantor permit the Corporation to be dissolved.
6. The Guarantor agrees that upon any assignment or transfer of the
Agreement, the Secured Party may deliver to the assignee or transferee the
Collateral, which assignee or transferee shall thereupon become vested with all
powers and rights given to the Secured Party in respect thereto and the
2
<PAGE>
Secured Party shall be thereafter forever relieved and fully discharged from any
liability or responsibility in connection therewith. In no event shall the
Secured Party be liable with respect to the Collateral, except for the
safekeeping thereof.
7. All of the agreements, obligations, undertakings, representations and
warranties herein made by the Guarantor shall inure to the benefit of the
Secured Party, its successors and assigns. The Guarantor further agrees to
execute such other instruments as the Secured Party may deem necessary or
desirable to effectuate the purposes of this Agreement, including but not
limited to UCC financing statements.
8. This Agreement has been executed and delivered as an Ohio agreement and
shall be governed by and construed in accordance with the laws of the State of
Ohio.
9. The Guarantor irrevocably
(i) agrees that any suit, action, or other legal proceeding arising
out of this Agreement may be brought in the courts of record
of the State of Ohio or the courts of the United States
located in the State of Ohio;
(ii) consents to the jurisdiction of such court in any such suit,
action or proceeding; and
(iii) waives any objection which it may have to the laying of venue of
such suit, action or proceeding in any of such courts and
waives any right to a trial by jury in any of such courts.
10. In case any one or more of the provisions contained herein should be
invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.
11. Notwithstanding anything to the contrary contained in this Agreement
(including but not limited to paragraph 3, above):
(i) the Secured Party will not take action pursuant to this
Agreement which would constitute or result in any assignment
of license or change of control of FB Inc., if such assignment
of license or change of control would require (under then-
existent law) prior approval of the Federal Communications
Commission ("FCC") without first
3
<PAGE>
obtaining such prior approval. After a default has occurred
and is continuing, the Debtor agrees to take any and all actions
that the Secured Party may reasonably request in order to obtain
any FCC approvals which are necessary or appropriate to enable
the Secured Party to exercise and fully enjoy all rights and
benefits granted to the Secured Party by this Agreement,
including specifically, without limitation, the use of FB Inc.'s
and Guarantor's reasonable efforts, at FB Inc.'s and Guarantor's
cost and expense, to assist the Secured Party in obtaining any
prior approvals from FCC as are necessary for performance of any
action or transaction contemplated by this Agreement.
Specifically, and without limitation, FB Inc. and Guarantor
will, after a default has occurred and is continuing, and upon
the Secured Party's request, prepare, sign and file with the FCC
all relevant portions of any application for assignment of
license or transfer of control as may be necessary or
appropriate under FCC rules and regulations.
(ii) Voting rights shall remain with the Guarantor, even in the event
of default by Guarantor. In the event of default, there shall be
either a private or public sale of the Collateral. No sale of
Collateral will become effective unless and until the prior
consent thereto of the FCC has been obtained if such consent
will then be required by the Communications Act of 1934, as
amended, (or any successor statute) and/or the Rules,
Regulations and/or policies of the FCC.
4
<PAGE>
Executed as a sealed instrument as of the ____ day of March, 1994.
WITNESS:
______________________________ ______________________________
Anthony J. Fant
Paragraph 11, acknowledged and agreed:
Fant Broadcasting Company of Ohio, Inc.
By____________________________________
Title:
5
<PAGE>
CONSENT AND AGREEMENT
OF
FANT BROADCASTING COMPANY OF OHIO, INC.
(the "Corporation")
-------------------
To induce the Secured Party to enter into the Limited Management Agreement,
dated this date, with the Corporation, the Corporation hereby:
1. Represents and warrants to the Secured Party that (i) the Collateral is
registered in the name of the Guarantor on the stock transfer books and records
of the Corporation, (ii) the Collateral constitutes all of the presently
issued and outstanding shares of the Corporation, and (iii) there are no
restrictions on the transferability of the Collateral to the Secured Party or
with respect to the foreclosure and transfer thereof by the Secured Party or, if
there are any such restrictions, any and all restrictions on the transferability
have been duly waived with respect to the above assignment, transfer, pledge,
and grant of a security interest to the Secured Party and with respect to the
foreclosure and transfer thereof by the Secured Party; and
2. Covenants and agrees to notify the Secured Party immediately of (i) the
issuance of any additional shares of the Corporation, and (ii) the purchase of
any such shares; and
3. Consents to the execution and delivery of the above Stock Pledge
Agreement by Guarantor.
Attest: Fant Broadcasting
Company of Ohio, Inc.
------------------------------- By--------------------------------
Title:
Dated: March , 1994
6
<PAGE>
EXHIBIT F
TVSS - CABLE COVERAGE 1993
TOTAL CABLE HOUSEHOLDS - 291,166
================================================================================
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
WARNER (standard) 60 160,000
WARNER (East Columbus) 11"
WARNER (All-American) 11"
--------------------------------------------------------------------------------
Communities Served
--------------------------------------------------------------------------------
. Dublin . Minerva Park . Obetz
. Westerville . Marble Cliff . Downtown
. Worthington . Riverlea . Short North
. Upper Arlington . Grove City . Valley View
. Grandview . Powell . German Village
. Boxley . Gahanna . Columbus (Eastside)*
. Hilliard . Groveport
================================================================================
================================================================================
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
Coaxial 6 80,000
--------------------------------------------------------------------------------
Communities Served
--------------------------------------------------------------------------------
. Columbus . Center Village . Pickerington
. Canal Winchester . Lithopolis . Reynoldsburg
. Brice . Lockbourne . Westerville
. Gahanna . New Albany . Whitehall
================================================================================
================================================================================
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
Continental Cablevision 13 21,700
--------------------------------------------------------------------------------
Communities Served
--------------------------------------------------------------------------------
. Baltimore . Pleasantville . Thurston
. Millersport . Ashville . Circleville
. South Bloomfield . Bremen . Carroll
. Lancaster . Sugar Grove . Pataskala
. Stoutsville
================================================================================
================================================================================
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
Dimension Cable 13 14,900
--------------------------------------------------------------------------------
Communities Served
--------------------------------------------------------------------------------
. Anderson Station . Greenland . Kinnikinnik
. Andersonville . Londonderry . Massieville
. Chillicothe . Oakland . North Fork Village
. Pleasant Valley . Slate Mills . Yellowbud
. Amanda . Tarlton
================================================================================
<PAGE>
EXHIBIT G SCHEDULE OF LIENS
---------------------------
1. Promissory Note in original face amount of $1,475,000, dated March 18, 1994
from Licensee to Triplett & Associates, Inc. (Triplett)
2. Mortgage from Licensee to Triplett dated March 18, 1994 covering certain
real property located in Green, Ross County, Ohio
3. Security Agreement between Seller and Triplett, dated March 18, 1994
<PAGE>
Exhibit 10.(j)
[LETTERHEAD APPEARS HERE]
FOR IMMEDIATE RELEASE
---------------------
Contact: James G. Babb, Outlet Chairman, President and CEO
401/455-9250
OUTLET COMMUNICATIONS TO EXPLORE STRATEGIC ALTERNATIVES
CRANSTON, RI, MARCH 21, 1995-Outlet Communications, Inc. (NASDAQ:OCOMA)
announced today that its Board of Directors has retained Goldman, Sachs & Co. as
financial advisor to help the Company explore strategic alternatives to enhance
shareholder value, including a possible business combination, the sale of all
or a portion of the Company, potential acquisitions or any other similar
transactions. The Company said there can be no assurance that any transaction
will result from the exploration process.
Headquartered in Cranston, RI, the Company owns and operates two VHF
television stations that are both NBC network affiliates: WCMH, serving the
Columbus, OH market, and WJAR-TV, serving the Providence, RI-New Bedford, MA
market. Outlet also owns a UHF station, WNCN-TV, acquired in August 1994, which
will become the NBC affiliate for the Raleigh-Durham-Goldsboro-Fayetteville, NC
market in the fall of 1995. Outlet also operates WWHO-TV, Chillicothe, OH, under
a local marketing agreement. WWHO-TV became an affiliate of The WB Television
Network in January 1995.
##
<PAGE>
Exhibit 13
For the year ended
December 31, 1994
----------------------------------
Annual Report
----------------------------------
--------------------------------------------------------------------------------
Outlet
Communications, Inc.
<PAGE>
About Outlet Communications, Inc.
Outlet Communications, Inc. ("Outlet") is a television broadcasting company
headquartered in Cranston, Rhode Island. Outlet owns and operates three
television stations including two NBC network affiliated, VHF television
stations and one independent UHF television station. In addition, Outlet
operates an independent UHF television station under a local marketing agreement
("LMA").
Of the two owned VHF television stations, one is located in Columbus, Ohio and
serves that market. The other VHF television station, based in Cranston, serves
the Providence, Rhode Island - New Bedford, Massachusetts market. The owned UHF
television station is located in Clayton, North Carolina and broadcasts in the
Raleigh - Durham, North Carolina market. The LMA is based in Chillicothe, Ohio
and broadcasts in the Columbus - Chillicothe market area. Outlet's television
stations are all ranked in the nation's major (top-50) markets. Outlet employs
approximately 325 persons.
Table of Contents
----------------------------------------------------
2 To Our Shareholders
----------------------------------------------------
4 Consolidated Financial Statements
----------------------------------------------------
21 Auditors' Report; Five Year Financial Data
----------------------------------------------------
22 Management's Discussion and Analysis
----------------------------------------------------
29 Directors and Officers
----------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Year-end Results
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 in Brief 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Net revenue $59,442,000 $46,952,000
================================================================================
Net income $10,569,000 $ 4,634,000
================================================================================
Income per share of Common Stock $1.61 $.71
--------------------------------------------------------------------------------
<CAPTION>
Fourth Quarter Results (Unaudited)
--------------------------------------------------------------------------------
<S> <C> <C>
Net revenue $19,461,000 $13,421,000
================================================================================
Net income $ 5,172,000 $ 2,679,000
================================================================================
Income per share of Common Stock $.79 $.41
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
To Our Shareholders
--------------------------------------------------------------------------------
In 1994, television broadcasting had a banner year! Your company participated in
the industry's success with record-setting performances at both the station and
Company levels. Exclusive of nonrecurring items, Outlet Communications, Inc. had
its most profitable year since becoming a publicly-held company in 1987.
According to most industry observers, 1994 was the best advertising year since
1976. Television advertising was up 15%. The growth was fueled by a healthy
economy, the rediscovery of the power of television by major advertisers, and a
record $355 million infusion of political advertising.
Outlet benefited not only from the positive economic forces but also from the
following:
. Improved ratings performance by NBC;
. Strong local ratings in Providence and Columbus;
. Good inventory control coupled with rate increases;
. Modest operating expense increases at our two major stations;
. Declining interest expense.
These external and internal factors allowed the Company to more than double net
income of the prior year. In 1994, Outlet had net income of $10,569,000 or $1.61
per share. This was a significant increase from net income in 1993 of $4,634,000
or $.71 per share.
Revenues were up at both of the Company's VHF television stations. WCMH-TV in
Columbus, Ohio, for the third consecutive year, set a new revenue record and
WJAR-TV in Providence, RI set a new local (excluding political) revenue record.
According to a survey by the Television Bureau of Advertising, the Company again
outperformed its peer group in 1994.
Although the Company benefited from heavy political spending, both VHF stations
had double-digit revenue increases without political advertising. We experienced
revenue growth in every quarter of the year and it was relatively balanced
between Columbus and Providence. In eleven of the past twelve quarters, we have
shown revenue and profit growth over the comparable quarter in the previous
year. The lone exception was the third quarter of 1993.
Total revenue in 1994 of $59,442,000 increased by 26.6% compared with
$46,952,000 in 1993. The addition of two UHF stations in April and August of
1994 only added marginally to the increase. Operating income for 1994 totalled
$20,175,000, representing an increase of $7,747,000 or 62.3% when compared with
$12,428,000 in the prior year. Operating expenses at the two VHF stations were
only up by approximately 4%, due partially to increased sales commissions.
Interest expense of $8,467,000 in 1994 decreased by $2,941,000 or 25.8% compared
to $11,408,000 in 1993.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
In August 1994, the Company acquired WNCN-TV, a UHF television station serving
the nation's 32nd market, Raleigh - Durham (Chapel Hill, Fayetteville,
Goldsboro, Rocky Mount), North Carolina. This was the Company's first
acquisition since 1985. Although the station is currently broadcasting programs
of The WB Television Network, it will become an NBC affiliate in the fall of
1995.
In June 1995, WNCN-TV will move to newly renovated offices and studios in
Raleigh. The station is also nearing completion of a new transmission facility
which will deliver to the market a full powered 5,000,000 watt signal. In March
1995 the station was favorably repositioned on Cablevision Channel 6 in Raleigh
and was added to Cable Channel 7 in Fayetteville. We now enjoy virtually 100%
cable penetration in the ADI.
Under a local marketing agreement inaugurated in April 1994, the Company also
operates WWHO-TV, a UHF television station in Chillicothe (Columbus), OH. In
January 1995, the station became an affiliate of The WB Television Network.
During 1995, the Company's two added UHF television stations will be incurring
transition expenses. However, we believe that both of the stations represent
excellent growth opportunities and fully expect them to produce positive cash
flow in 1996.
Our revenue pacing for the first quarter of 1995 continues to be positive,
reflecting the industry-wide trend. We look forward to a good 1995.
On December 30, 1994, our stock closed at $16 3/4 per share and has closed as
high as $28 3/4 since the beginning of 1995, a five-year high. We look forward
to greeting you at our WJAR-TV studios in Cranston, RI, for our Annual Meeting
of Stockholders scheduled for Tuesday, May 2, 1995 at 1:00 p.m.
Sincerely,
/s/ James G. Babb
James G. Babb
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Consolidated Balance Sheets
<TABLE>
<CAPTION>
At December 31, 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 7,840,000 $ 1,756,000
Trade accounts receivable, less allowance for
doubtful accounts of $321,000 in 1994 and
$300,000 in 1993 13,640,000 10,840,000
Film contract rights 3,350,000 3,769,000
Other current assets 1,171,000 793,000
--------------------------------------------------------------------------------
Total Current Assets 26,001,000 17,158,000
Other Assets
Film contract rights 1,012,000 2,093,000
Deferred financing costs and other 3,399,000 3,385,000
--------------------------------------------------------------------------------
4,411,000 5,478,000
Property and Equipment
Land 1,899,000 1,832,000
Buildings 10,967,000 10,474,000
Fixtures and equipment 36,766,000 31,491,000
--------------------------------------------------------------------------------
49,632,000 43,797,000
Less accumulated depreciation 27,115,000 25,674,000
--------------------------------------------------------------------------------
22,517,000 18,123,000
Intangible Assets 76,999,000 76,852,000
--------------------------------------------------------------------------------
$129,928,000 $117,611,000
================================================================================
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable $ 801,000 $ 153,000
Accrued expenses 10,394,000 8,894,000
Film contracts payable 4,174,000 4,187,000
Deferred revenue 833,000
Federal and state income taxes 2,724,000 2,200,000
Current portion of long-term debt 4,500,000 3,500,000
-------------------------------------------------------------------------------
Total Current Liabilities 23,426,000 18,934,000
Long-Term Debt
Loan Payable 15,000,000 19,500,000
Notes payable 60,000,000 60,000,000
-------------------------------------------------------------------------------
75,000,000 79,500,000
Other Liabilities
Film contracts payable 1,019,000 2,754,000
Unfunded pensions 2,355,000 2,652,000
Deferred revenue 3,889,000
Deferred income taxes 4,403,000 4,554,000
Other 3,432,000 3,432,000
-------------------------------------------------------------------------------
15,098,000 13,392,000
Stockholders' Equity
Capital stock 66,000 66,000
Capital surplus 32,476,000 32,426,000
Accumulated deficit (16,138,000) (26,707,000)
-------------------------------------------------------------------------------
16,404,000 5,785,000
-------------------------------------------------------------------------------
$129,928,000 $117,611,000
===============================================================================
</TABLE>
See accompanying notes.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31, 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Net revenue $59,442,000 $46,952,000 $45,153,000
Operating expenses:
Technical, programming and news 20,113,000 18,035,000 18,709,000
Selling, general and administrative 13,774,000 11,641,000 11,159,000
Depreciation 2,775,000 2,488,000 2,628,000
Amortization of intangibles 2,605,000 2,360,000 2,360,000
-------------------------------------------------------------------------------
39,267,000 34,524,000 34,856,000
-------------------------------------------------------------------------------
Operating income 20,175,000 12,428,000 10,297,000
-------------------------------------------------------------------------------
Interest expense:
Loan and notes payable (8,467,000) (7,392,000) (6,680,000)
Note payable to shareholder (4,016,000) (7,309,000)
Other income (expense):
Interest income 141,000 239,000 910,000
Other income 276,000 1,694,000 574,000
Other expense (896,000) (611,000) (617,000)
-------------------------------------------------------------------------------
Total interest and other income
(expense) (8,946,000) (10,086,000) (13,122,000)
-------------------------------------------------------------------------------
Income (loss) before items noted below 11,229,000 2,342,000 (2,825,000)
Nonrecurring items -- net 1,401,000
-------------------------------------------------------------------------------
Income (loss) before income taxes,
extraordinary loss and cumulative
effect of change in accounting
principle 11,229,000 2,342,000 (1,424,000)
Income taxes 660,000 316,000 128,000
-------------------------------------------------------------------------------
Income (loss) before extraordinary loss
and cumulative effect of change in
accounting principle 10,569,000 2,026,000 (1,552,000)
Extraordinary loss, net (1,826,000)
Cumulative effect of change in method
of accounting for income taxes 4,434,000
-------------------------------------------------------------------------------
Net income (loss) $10,569,000 $ 4,634,000 $(1,552,000)
===============================================================================
Income (loss) per share:
Before extraordinary loss and
cumulative effect of change in
accounting principle $1.61 $ .31 $(.24)
Extraordinary loss, net (.28)
Cumulative effect of change in method
of accounting for income taxes .68
-------------------------------------------------------------------------------
Net income (loss) per share $1.61 $.71 $(.24)
===============================================================================
</TABLE>
See accompanying notes.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Outlet Communications, Inc.
-----------------------------------------------------------------------
Consolidated Statements of Stockholders' Equity
Class A Common Stock
---------------------
Number of Par Capital Accumulated
Shares Value Surplus Deficit Total
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1991 6,552,500 $66,000 $32,388,000 $(29,789,000) $ 2,665,000
Net loss (1,552,000) (1,552,000)
------------------------------------------------------------------------------------------------------------
Balances at December 31, 1992 6,552,500 66,000 32,388,000 (31,341,000) 1,113,000
------------------------------------------------------------------------------------------------------------
Exercise of stock options 12,165 39,000 39,000
Retirement of stock (150) (1,000) (1,000)
Net income 4,634,000 4,634,000
------------------------------------------------------------------------------------------------------------
Balances at December 31, 1993 6,564,515 66,000 32,426,000 (26,707,000) 5,785,000
------------------------------------------------------------------------------------------------------------
Exercise of stock options 14,116 50,000 50,000
Net income 10,569,000 10,569,000
------------------------------------------------------------------------------------------------------------
Balances at December 31, 1994 6,578,631 $66,000 $32,476,000 $(16,138,000) $16,404,000
============================================================================================================
</TABLE>
See accompanying notes.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net income (loss) $10,569,000 $4,634,000 $(1,552,000)
Adjustments to reconcile net income
(loss) to net cash provided by
operations:
Depreciation and amortization 5,380,000 4,848,000 4,988,000
Amortization of other assets 365,000 272,000 402,000
Accretion of debt discount 649,000 1,059,000
Change in accounting principle (4,434,000)
Extraordinary loss -- net 1,826,000
(Decrease) increase in deferred taxes (151,000) 1,186,000 423,000
Increase in accounts receivable (2,800,000) (1,010,000) (302,000)
Amortization of film contract rights 5,662,000 5,633,000 6,995,000
Increase in prepaid film contract rights (4,149,000) (4,672,000) (3,460,000)
(Increase) decrease in other current assets (369,000) 395,000 (105,000)
Increase (decrease) in accounts
payable and accrued expenses 2,148,000 (3,575,000) (1,543,000)
Decrease in film contracts payable (1,773,000) (409,000) (2,497,000)
Increase in deferred revenue 4,722,000
Increase (decrease) in income taxes payable 524,000 (984,000) 943,000
Gain on sale of real estate (1,401,000)
Other (662,000) (487,000) (306,000)
--------------------------------------------------------------------------------------------------
Net Cash Provided by Operations 19,466,000 3,872,000 3,644,000
--------------------------------------------------------------------------------------------------
Investing:
Capital expenditures -- net of
disposals (3,385,000) (5,907,000) (2,943,000)
Investment in local marketing agreement (1,055,000)
Acquisition of broadcast station (5,478,000)
Proceeds from sale of real estate 7,100,000
Other (14,000)
--------------------------------------------------------------------------------------------------
Net Cash (Used) Provided by Investing (9,932,000) (5,907,000) 4,157,000
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Consolidated Statements of Cash Flows -- Continued
<TABLE>
<CAPTION>
Year ended December 31, 1994 1993 1992
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financing:
Issuance of notes payable 60,000,000
Proceeds from issuance of term loan 25,000,000
Payment of loan payable (3,500,000) (2,000,000)
Payment of mortgage (2,859,000)
Payment of long-term debt (44,150,000) (3,310,000)
Repurchase of debt (6,825,000)
Redemption of note payable to shareholder (43,946,000)
Proceeds from exercise of stock options 50,000 38,000
Debt refinancing costs (3,151,000)
Premium on debt refinancing (2,207,000)
--------------------------------------------------------------------------------------------
Net Cash Used by Financing (3,450,000) (10,416,000) (12,994,000)
--------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash
and Cash Equivalents 6,084,000 (12,451,000) (5,193,000)
Cash and cash equivalents
at beginning of year 1,756,000 14,207,000 19,400,000
--------------------------------------------------------------------------------------------
Cash and Cash Equivalents
at End of Year $7,840,000 $ 1,756,000 $14,207,000
============================================================================================
</TABLE>
See accompanying notes.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Notes to Consolidated Financial Statements
December 31, 1994
--------------------------------------------------------------------------------
1. Basis of Presentation
The consolidated financial statements include the accounts of Outlet
Communications, Inc. (the Company) and its wholly-owned subsidiaries. At
December 31, 1994, the Company's operations consist of two owned VHF television
stations and one owned UHF television station along with one UHF television
station operated under a local marketing agreement. All material intercompany
accounts are eliminated.
--------------------------------------------------------------------------------
2. Significant Accounting Policies
Revenues Broadcasting stations derive revenue from the sale of program time and
spot announcements to local, regional and national advertisers, and from
compensation received from carrying network programs and commercials.
Advertising revenue and network compensation are recognized in the period during
which the program time and spot announcements are broadcast. Revenue is also
derived from the production of film and taping of advertising materials.
Production revenue is recognized in the period when the service is provided.
Deferred revenue represents a one-time payment received upon renewal of the
Company's affiliation with a broadcasting network which will be amortized into
revenue over the term of the affiliation. The amount of deferred revenue to be
amortized over the ensuing period of twelve months is included in current
liabilities.
Film Contract Rights Film contract rights are recorded when the license period
begins and the program is available for showing. The costs of film contract
rights are amortized on accelerated methods over the contract period or as the
program is used, whichever provides the greater amortization on an accumulated
basis. The costs of programs expected to be used within one year are classified
as a current asset. Payments for film contracts are made pursuant to contractual
terms over periods that are generally shorter than the lives of the rights.
Property and Equipment Property and equipment is stated at cost. Depreciation is
calculated on the straight-line basis over the estimated useful lives of the
property and equipment varying from 3 to 40 years.
Intangible Assets Intangible assets primarily include network affiliation
agreements, station licenses and goodwill and are being amortized using the
straight-line method up to 40 years.
Income (Loss) Per Share Income (loss) per share is computed by dividing net
income (loss) by the weighted average number of shares of common stock and
common stock equivalents outstanding (when dilutive) -- 6,569,833, 6,555,394 and
6,552,500 shares at December 31, 1994, 1993 and 1992, respectively.
Cash Equivalents Cash equivalents include highly liquid investments with a
maturity of three months or less when purchased.
Concentration of Credit Risk The Company operates television stations which
serve the Columbus and Chillicothe, Ohio; Providence, Rhode Island - New
Bedford, Massachusetts and Raleigh - Durham (Fayetteville, Goldsboro and Rocky
Mount), North Carolina markets. The Company grants credit to customers,
substantially all of whom are either local advertisers within these markets or
national advertising agencies.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. Acquisition and Local Marketing Agreement
In March 1994, the Company entered into a local marketing agreement ("LMA") with
the licensee of UHF television station WWHO, Chillicothe, Ohio. Under the
agreement, the Company will serve as a broker for the sale of WWHO's advertising
time and provide it with certain programming and operating capabilities. The
Company's obligations commenced April 18, 1994 and, since that date, results of
operations for WWHO are included with those of the Company. The Company made an
initial investment in the LMA of $1,055,000 which included an option, valued at
$475,000, to purchase the station. The total investment is being amortized over
the initial ten-year term of the LMA. In addition, the Company agreed to
reimburse the licensee for certain annual operating expenses and debt service
which, during 1994, totalled $392,000. The Company has also agreed to share with
the licensee specified percentages of net operating income, as defined in the
LMA. In this regard, the Company is allowed to recover its aggregate investment
(excluding the option) and operating expense and debt service payments from the
net revenue of WWHO prior to making percentage payments from net operating
income. There were no such payments required in 1994. The LMA will automatically
renew for two additional periods of five years unless canceled by the Company.
On August 10, 1994, the Company purchased the assets and broadcast license
of television station WNCN (formerly WYED), for an aggregate price of
$5,478,000. WNCN is an independent television station licensed to Goldsboro,
North Carolina and broadcasts in the Raleigh - Durham (Fayetteville, Goldsboro
and Rocky Mount), North Carolina market area. Funds for the acquisition were
provided by the Company's internal operations. The transaction was accounted for
using the purchase method of accounting. Results of operations for WNCN are
included with those of the Company subsequent to the date of acquisition. Pro
forma net revenue, net income and net income per share for 1994 and 1993 would
not have been significantly different from the actual historical amounts.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. Income Taxes
The components of income tax expense (benefit) for the years ended December 31
are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 531 $ (870) $(281)
State 280 (14)
-------------------------------------------------------------------------------
811 (870) (295)
Deferred:
Federal (70) 1,265 379
State (81) (79) 44
-------------------------------------------------------------------------------
(151) 1,186 423
-------------------------------------------------------------------------------
660 316 128
Extraordinary loss:
Federal (940)
-------------------------------------------------------------------------------
-0- (940) -0-
-------------------------------------------------------------------------------
$ 660 $ (624) $ 128
===============================================================================
Income taxes paid $ 287 $ 114 $ 17
===============================================================================
</TABLE>
Income tax expense (benefit) computed using the federal statutory rate is
reconciled to the reported income tax provisions before extraordinary credits as
follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Year ended December 31, 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax expense (benefit) $ 3,930 $ 796 $(484)
State income taxes (net of
federal income tax benefit) 129 (52) 20
Amortization of intangible assets 529 500 409
Original issue discount 360
Adjust prior year tax estimate 311 (1,040) (281)
Change in valuation reserve (4,256) 93
Alternative minimum tax 115
Other 17 (96) 104
-------------------------------------------------------------------------------
$ 660 $ 316 $ 128
===============================================================================
</TABLE>
Pursuant to tax regulations released in 1994, the Company allocated to equity
certain proceeds received from a prior year's issuance of debt and related
common stock purchase warrants, thereby increasing the Company's net operating
loss carryover by $13,301,000 and increasing the deferred tax asset and the
related valuation reserve by $4,745,000.
Effective January 1, 1993, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 109, "Accounting for Income Taxes" and adjusted
previously recorded deferred taxes. The Company has reflected the effect of
adopting Statement 109 as a change in accounting principle at the beginning of
1993. The cumulative effect of the change increased net income for the year
ended December 31, 1993 by $4,434,000 or $.68 per share.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Deferred income taxes represent the tax effect of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes, at currently enacted rates.
Significant components of the Company's deferred tax liabilities and assets as
of December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Amortization of network affiliation agreements and FCC licenses $12,058 $12,475
Amortization of film contracts 1,173 620
Depreciation 1,400 313
Other 7 101
----------------------------------------------------------------------------------------------
Total deferred tax liabilities 14,638 13,509
Deferred tax assets:
Net operating loss carryover 9,244 9,631
Accrued expenses not currently deductible for tax purposes 768 1,398
Unfunded pensions 2,282 1,687
Deferred revenue 2,030
Other 1,788 1,584
----------------------------------------------------------------------------------------------
Total deferred tax assets 16,112 14,300
Valuation reserve for deferred tax assets (5,877) (5,345)
----------------------------------------------------------------------------------------------
Net deferred tax assets 10,235 8,955
----------------------------------------------------------------------------------------------
Net deferred tax liability $ 4,403 $ 4,554
==============================================================================================
</TABLE>
The components of the deferred income tax provision for the year ended December
31, 1992, were as follows:
<TABLE>
<CAPTION>
1992
-------------------------------------------------------------------------------
<S> <C>
Film amortization $(333)
Depreciation 435
Amortization of intangibles 919
State income taxes 34
Net operating loss (412)
Gain on sale of assets (396)
Other -- net 176
-------------------------------------------------------------------------------
$ 423
===============================================================================
</TABLE>
The Company's subsidiaries, Outlet Broadcasting, Inc. ("Broadcasting") and Atlin
Communications, Inc. ("Atlin"), have tax loss carryforwards in the amount of
$34,248,000 which expire as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
Year Broadcasting Atlin
--------------------------------------------------------------------------------
<S> <C> <C>
2002 $ 5,732
2003 4,491
2005 $ 5,375
2006 13,970
2007 2,259
2008 2,421
--------------------------------------------------------------------------------
$24,025 $10,223
================================================================================
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5. Long-term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
(Dollars in thousands)
At December 31, 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Senior loan payable to bank, principal and interest
payable in quarterly installments to September 30,
1998, interest is based on LIBOR plus 2.5% (7.8125% at
December 31, 1994) secured by substantially all of the
assets of the Company $19,500 $23,000
10 7/8% Senior Subordinated Notes, due July 15, 2003,
interest payable semiannually on January 15 and
July 15 60,000 60,000
--------------------------------------------------------------------------------
79,500 83,000
Less current portion 4,500 3,500
--------------------------------------------------------------------------------
$75,000 $79,500
================================================================================
</TABLE>
On June 28, 1993, the Company entered into a Credit and Guaranty Agreement (the
Agreement) with a bank under which the bank agreed to provide a secured senior
credit facility consisting of a term loan in the principal amount of $25,000,000
and revolving loans in the maximum principal amount outstanding of $5,000,000.
The term loan is payable in quarterly installments through September 30, 1998.
Amounts outstanding on the revolving loan would be payable in three fluctuating
quarterly installments no later than June 30, 1999. The Agreement provides for
payment of a commitment fee equal to 1/2% of the unused portion of the revolving
loan. The Agreement also provides for principal payments based on the
immediately preceding fiscal year's excess cash flow, as defined in the
Agreement, commencing July 1, 1995; however, the principal payment due July 1,
1995 has been waived by the bank. On July 15, 1993, in a public offering, the
Company issued 10 7/8% Senior Subordinated Notes due 2003 in the principal
amount of $60,000,000.
The loan and notes payable contain certain covenants that, among other things,
limit the ability of the Company to incur debt, pay cash dividends on or
repurchase capital stock (as defined in the Agreement), enter into certain
transactions with affiliates, acquire and/or dispose of certain assets and
engage in mergers and consolidations. The obligations were entered into in order
for the Company to undertake a refinancing of its outstanding long-term debt,
which was completed during 1993. As a result of the refinancing, the Company
incurred one-time debt extinguishment costs in the amount of $1,826,000, net of
income taxes, reported as an extraordinary loss during the year ended December
31, 1993.
During 1993 the Company repaid in full its Junior Subordinated Note payable to
The Mutual Benefit Life Insurance Company. Interest on the note was payable (i)
at the rate of 9% per annum (which interest was accrued and added semiannually
to the principal amount of the note through August 1, 1991), and (ii)
semiannually thereafter, based on the note's principal amount of $50,000,000,
with payments commencing on February 1, 1992, and continuing until maturity on
February 1, 1997, at 12.5% per annum. The note was recorded at a discounted
value at an effective interest rate of 17.2%, which was being amortized over the
term of the note. The Mutual Benefit Life Insurance Company is a shareholder of
the Company.
Cash payments for interest during the years ended December 31, 1994, 1993 and
1992 were $8,096,000, $13,071,000 and $13,150,000, respectively.
Annual maturities of long-term debt during each of the next five years are as
follows (dollars in thousands): 1995 -- $4,500; 1996 -- $5,000; 1997 --$5,500;
1998 -- $4,500; 1999 -- none.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
6. Lease Obligations and Commitments
The Company has several operating leases involving equipment. As of December 31,
1994, the future minimum payments under noncancelable operating leases with
initial or remaining terms of one year or more were as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
--------------------------------------------------------------------------------
<S> <C>
1995 $ 309
1996 274
1997 155
1998 157
1999 147
Thereafter 613
--------------------------------------------------------------------------------
$1,655
================================================================================
</TABLE>
Rent expense for all operating leases was approximately $604,000, $692,000 and
$796,000, for the years ended December 31, 1994, 1993 and 1992, respectively.
The Company has commitments to acquire approximately $10,992,000 of film
contract rights at December 31, 1994. The Company has also agreed to reimburse
the licensee of television station WWHO for certain annual operating and debt
service expenses over the duration of the LMA. The reimbursement for 1995 is
estimated at $612,000 and, in subsequent years, may approximate that amount.
At December 31, 1994, the Company remains contingently liable on approximately
$12,884,000 of store leases expiring on various dates through 2007, applicable
to a retail division, which was sold as of the fiscal year ended January 31,
1983. Substantially all of the leases have been assumed by others, and
management believes that future payments, if any, would not be material to the
Company's financial statements. In connection with the sale of television
stations to third parties, the Company also remains contingently liable on
approximately $4,600,000 of building and tower leases related to radio and
television stations sold in March 1990.
--------------------------------------------------------------------------------
7. Nonrecurring Items and Extraordinary Loss
The extraordinary loss in 1993 represents debt extinguishment costs as described
in Note 5. Nonrecurring items in 1992 represent a gain on the sale of real
estate, net of write-offs of marketable securities in the amount of $148,000.
--------------------------------------------------------------------------------
8. Commissions
Net revenue for the years ended December 31, 1994, 1993 and 1992 are net of
agency and national representative commissions of approximately $11,547,000,
$9,140,000 and $8,877,000, respectively.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9. Employee Benefit Plans
The Company has both qualified and nonqualified noncontributory pension plans
covering all employees age 21 or over with one year of service, excluding
certain collective bargaining groups. Pension costs are actuarially computed.
The Company's policy is to fund amounts as are necessary on an actuarial basis
to provide for benefits in accordance with the requirements of ERISA. Benefits
are based on (i) the three consecutive years in which compensation affords the
highest average, and (ii) total years of service. Net pension costs for the
indicated years ended December 31 consist of:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Service costs -- benefits earned
during the period $ 215 $ 305 $ 256
Interest cost on projected
benefit obligations 1,583 1,613 1,590
Actual return on assets (1,341) (1,311) (1,278)
Net amortization and other 108 73 19
-------------------------------------------------------------------------------
$ 565 $ 680 $ 587
===============================================================================
</TABLE>
The Company suspended the qualified pension plan as of September 1, 1994. The
Company's actuary determined the curtailment loss associated with the suspended
benefits to be $220,000.
Assumptions used in accounting for the pension plans are as follows at December
31:
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 8.5%
Average rate of increase in compensation levels 6% 6% 6%
Expected long-term rate of return on assets 5.5% - 8.5% 5.5% - 8.5% 5.5% - 8.5%
-------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the plans measured as of
December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Vested benefit obligations $(20,051) $(21,092)
===============================================================================
Accumulated benefit obligations $(20,281) $(21,404)
===============================================================================
Projected benefit obligations $(20,281) $(22,773)
Plan assets at fair value, primarily cash
equivalents and listed stocks and bonds 15,326 16,657
-------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (4,955) (6,116)
Unrecognized net actuarial gain (876) (1,745)
Unrecognized prior service cost 159 372
Unrecognized net transition obligation 1,313 3,393
Adjustment for minimum liability (774) (651)
-------------------------------------------------------------------------------
Accrued pension liability $ (5,133) $ (4,747)
===============================================================================
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
On September 1, 1994, the Company established the Outlet Broadcasting Inc.
401(k) and Profit Sharing Plan (the Plan), which qualifies under Section 401(k)
of the Internal Revenue Code, for the benefit of substantially all employees not
covered by a collective bargaining agreement, unless the agreement allows for
participation in the Plan. The Plan allows the employees to contribute up to 15%
of their regular earnings. The Company contributes, for the personal account of
each employee, 25% of the first 6%. Plan expense in 1994 was approximately
$67,000. In addition, the Company may make discretionary profit sharing
contributions annually.
The Company provides postretirement medical reimbursement benefits to elected
corporate officers who have met certain service requirements. Most of the
eligible participants are currently retired. As of January 1, 1993, the Company
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" which requires the
cost of providing postretirement medical reimbursement benefits to be accrued
over the eligible employees' service period. Prior to 1993, the Company expensed
these benefits as they were paid. As permitted by the new standard, the Company
elected to recognize its accumulated postretirement benefit obligation at
January 1, 1993, on a delayed basis.
The following table provides information on the status of the medical
reimbursement benefit plan as of December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
-------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(682) $(686)
Fully eligible plan participants (71) (83)
Other active plan participants (28) (17)
-------------------------------------------------------------------------------
Total (781) (786)
Unrecognized transition obligation 522 551
-------------------------------------------------------------------------------
Accrued postretirement benefit cost $(259) $(235)
===============================================================================
</TABLE>
Net periodic postretirement benefit costs for the indicated years ended December
31 consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
---------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits attributed to service during the period $ 10 $ 10
Interest cost on accumulated postretirement benefit obligation 60 61
Amortization of unrecognized transition obligation 29 29
---------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 99 $ 100
=============================================================================================
</TABLE>
The Company's policy is to fund postretirement benefits as claims are paid. The
accumulated postretirement benefit obligation was determined using a discount
rate of 8% and a health care cost trend rate of 6%, declining to 5% in the year
2000 and thereafter. The effect of a 1% annual increase in these assumed cost
trend rates would increase the accumulated postretirement benefit obligation by
approximately $83,000; the annual costs would not be materially affected.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
10. Intangible Assets
Intangible assets consist of the following at December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Network affiliation agreements $34,917 $34,917
Station licenses and goodwill 62,231 59,479
--------------------------------------------------------------------------------
97,148 94,396
Less accumulated amortization 20,149 17,544
--------------------------------------------------------------------------------
$76,999 $76,852
================================================================================
</TABLE>
--------------------------------------------------------------------------------
11. Accrued Expenses
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
(Dollars in thousands)
1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Accrued interest $ 3,043 $ 3,043
Accrued pensions 2,778 2,095
Accrued property taxes 471 462
Accrued salaries, wages and benefits 2,120 1,404
Accrued license fees and commissions 608 462
Accrued liabilities for claims and contingencies 596 592
Other 778 836
--------------------------------------------------------------------------------
$10,394 $ 8,894
================================================================================
</TABLE>
--------------------------------------------------------------------------------
12. Capitalization
The capitalization of the Company at December 31, 1994 and 1993 was as follows:
<TABLE>
<CAPTION>
Issued and Outstanding
Description 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Preferred stock, no par value -- 1,000,000 shares authorized None None
Class A common stock, $.01 par value -- authorized 10,000,000 shares 6,578,631 6,564,515
Class B common stock, $.01 par value -- authorized 1,879,375 shares None None
</TABLE>
--------------------------------------------------------------------------------
13. Stock Purchase Plan
In June 1992, the Company's shareholders approved the adoption of the 1992 Stock
Incentive Plan (the "Plan"). The Plan authorizes (i) grants of either non-
qualified or incentive stock options, or (ii) awards of restricted shares, to
key employees of the Company. The maximum number of shares of common stock which
may be issued under the Plan is 300,000. No awards may be granted after May 25,
2002. The Plan is administered by the Compensation Committee of the Board of
Directors.
Incentive stock options may be granted to purchase common stock of the Company
at not less than 100% of the fair market value on the date the option is
granted. Non-qualified options may be granted at a price less than the fair
market value of the Common Stock at the date of grant. The Committee determines
when options become exercisable but no option may be exercised after 10 years
from date of grant. In general, the granted options become exercisable in each
of the first three years after their grant. All outstanding options become
immediately exercisable upon a change in control of the Company, as defined in
the Plan.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Restricted shares, i.e., the Class A Common Stock of the Company, are awarded to
participants at a price per share ("release price") as determined by the
Committee. Upon payment of the release price and expiration of a restricted
period, participants are issued common stock certificates free of all
restrictions. In general, the restricted period expires in three annual
installments from the approximate date of the award. In the event of a change in
control, the participant may receive any remaining restricted shares, free of
all restrictions, upon payment of the release price within 30 days following the
change-in-control event. In connection with awards of restricted shares and non-
qualified stock options, the Company has recorded compensation expense of
$261,000, $78,000 and $40,000 for 1994, 1993 and 1992, respectively.
The following is a summary of activity under the Plan:
<TABLE>
<CAPTION>
Awards Outstanding
------------------------------------------------------------------------------------------------
Stock Options Restricted Shares
------------------------------------------------------------------------------------------------
Number of Price per Number of Price per
Shares Share Shares Share
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at December 31, 1991 -- -- -- --
Granted 71,500 $3.25 - $5.00 71,500 $1.00
------------------------------------------------------------------------------------------------
Balances at December 31, 1992 71,500 $3.25 - $5.00 71,500 $1.00
Exercised (3,333) $3.25 (8,832) $1.00
------------------------------------------------------------------------------------------------
Balances at December 31, 1993 68,167 $3.25 - $5.00 62,668 $1.00
Granted 156,750 $1.00 - $15.75
Exercised (1,950) $3.25 - $7.00 (12,166) $1.00
------------------------------------------------------------------------------------------------
Balances at December 31, 1994 222,967 $1.00 - $15.75 50,502 $1.00
================================================================================================
Exercisable:
At December 31, 1993 43,331 $3.25 14,499 $1.00
At December 31, 1994 67,467 $1.00 - $9.50 26,166 $1.00
================================================================================================
Shares available for future awards:
At December 31, 1994 250
================================================================================================
</TABLE>
--------------------------------------------------------------------------------
14. Litigation
During 1993, a representative body of the television broadcast industry reached
an agreement with the American Society of Composers, Authors and Publishers
(ASCAP) as to the total industry's obligation for the payment of music
performance rights fees to that organization. The agreement provided that each
television station's performance rights fees payable to ASCAP would generally
approximate what the stations had paid to date. Accordingly, the Company
reversed an accrued liability of $2,100,000 which provided for the Company's
potential additional exposure in this matter.
The Company is also subject to litigation arising from its normal business
operations. Any liability which may result therefrom, to the extent not provided
by insurance or accruals, would not have a material effect on the Company's
financial position.
<PAGE>
--------------------------------------------------------------------------------
Consolidated Financial Statements
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Quarterly Results of Operations (Unaudited)
The following is a tabulation of the unaudited quarterly results of operations
for the years ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts and stock prices)
Quarter Ended March 31 June 30 September 30 December 31
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Net revenue $11,458 $14,828 $13,695 $19,461
Operating expenses 8,394 9,423 9,959 11,491
Operating income 3,064 5,405 3,736 7,970
Interest expense (2,098) (2,101) (2,116) (2,152)
Interest and other income (expense) (18) (24) (151) (286)
Income before income taxes 948 3,280 1,469 5,532
Income taxes (benefit) 391 1,438 (1,529) 360
Net income 557 1,842 2,998 5,172
Net income per share $.08 $.29 $.45 $.79
Dividends (2) None None None None
Stock prices
High $10 1/2 $14 $15 1/2 $18 1/4
Low 9 9 1/4 13 14
-----------------------------------------------------------------------------------------------------
1993
Net revenue $10,027 $12,830 $10,674 $13,421
Operating expenses 8,348 8,587 8,452 9,137
Operating income 1,679 4,243 2,222 4,284
Interest expense (3,256) (3,249) (2,731) (2,172)
Interest and other income (expense) 100 (34) 1,309 (53)
Income (loss) before income taxes,
extraordinary loss and cumulative
effect of change in accounting principle (1,477) 960 800 2,059
Income taxes (benefit) 88 405 (177)
Income (loss) before extraordinary
loss and cumulative effect of
change in accounting principle (1,477) 872 395 2,236
Extraordinary loss, net (1) (2,269) 443
Cumulative effect of change
in method of accounting for
income taxes 4,434
Net income (loss) 2,957 872 (1,874) 2,679
Income (loss) per share:
Before extraordinary loss and
cumulative effect of change in
accounting principle $(.23) $.14 $.06 $.34
Extraordinary loss, net (.35) .07
Cumulative effect of change
in method of accounting for
income taxes .68
Net income (loss) per share $.45 $.14 $(.29) $.41
Dividends (2) None None None None
Stock prices
High $6 $6 3/4 $9 1/2 $10 1/2
Low 4 1/8 4 1/4 6 1/2 8
-----------------------------------------------------------------------------------------------------
</TABLE>
(1) Refer to Note 7 to the Consolidated Financial Statements for further
information concerning this item.
(2) The Company has no present intention to pay dividends on its Common Stock.
The future payment of dividends will depend on the Company's earnings,
financial condition, capital requirements and other relevant factors. The
Company has approximately 1,000 shareholders.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Report of Independent Auditors
--------------------------------------------------------------------------------
Board of Directors Outlet Communications, Inc.
We have audited the accompanying consolidated balance sheets of Outlet
Communications, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Outlet
Communications, Inc. and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Notes 4 and 9 to the financial statements, in 1993 the Company
changed its method of accounting for income taxes and postretirement benefits
other than pensions.
/s/ Ernst & Young LLP
Providence, Rhode Island
February 10, 1995
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Five Year Comparison of Selected Financial Data
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1994 1993(1) 1992 1991 1990(2)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 59,442 $ 46,952 $ 45,153 $ 39,434 $ 55,662
Operating income 20,175 12,428 10,297 2,232 6,388
Income (loss) before nonrecurring
items and income taxes 11,229 2,342 (2,825) (12,643) (9,532)
Net income (loss) 10,569 4,634 (1,552) (9,265) 6,112
Net income (loss) per share $1.61 $.71 $(.24) ($1.41) $.93
Total assets $129,928 $117,611 $126,646 $143,029 $156,370
Long-term debt excluding
current maturities 75,000 79,500 87,447 95,961 91,855
Other long-term liabilities 15,098 13,392 18,085 18,933 24,154
Stockholders' equity 16,404 5,785 1,113 2,665 11,930
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net income in 1993 includes the cumulative effect of a change in method of
accounting for income taxes in the amount of $4,434,000 and an extraordinary
loss for debt extinguishment costs of $1,826,000.
(2) The comparability of the data is affected by dispositions of two radio
stations and two UHF television stations that were sold in 1990.
<PAGE>
--------------------------------------------------------------------------------
Management's Discussion and Analysis
--------------------------------------------------------------------------------
Outlet Communications, Inc. and Subsidiaries
--------------------------------------------------------------------------------
Management's Discussion and Analysis
--------------------------------------------------------------------------------
Results of Operations
The Company's operations consist of three owned television stations and one
television station operated under a local marketing agreement. The owned
stations include two NBC network-affiliated VHF television stations and one
independent UHF television station.
The two VHF television stations are WJAR-TV, which serves the Providence, Rhode
Island - New Bedford, Massachusetts area and WCMH-TV, which serves the Columbus,
Ohio area. The UHF television station, acquired by the Company on August 10,
1994, is WNCN-TV (formerly WYED-TV) which serves the Raleigh-Durham
(Fayetteville, Goldsboro and Rocky Mount), North Carolina market area.
Since April 18, 1994, the Company has also operated independent UHF television
station WWHO-TV, Chillicothe, Ohio, under a local marketing agreement with that
station's licensee. The Company serves as a broker for the sale of that
station's advertising time and provides it with certain programming and
operating capabilities. In return, the Company retains a substantial percentage
of WWHO-TV's net operating income to the extent that it exceeds net operating
losses.
The following table summarizes the Company's operating results for the last
three years and shows rates of change applicable thereto. The table also shows
the amounts of revenue obtained from both non-political and political revenue
sources.
<TABLE>
<CAPTION>
Dollars in thousands 1994 % Change 1993 % Change 1992
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue:
Non-political $55,696 19.2% $46,735 7.1% $43,639
Political 3,746 (b) 217 (b) 1,514
--------------------------------------------------------------------------------------------
Total revenue 59,442 26.6% 46,952 4.0% 45,153
Operating expenses 39,267 13.7% 34,524 (1.0%) 34,856
--------------------------------------------------------------------------------------------
Operating income $20,175 62.3% $12,428 20.7% $10,297
============================================================================================
Net cash provided
by operations(a) $19,466 402.7% $ 3,872 6.3% $ 3,644
============================================================================================
Operating cash flow(a) $25,555 47.9% $17,276 13.0% $15,285
============================================================================================
</TABLE>
(a) "Net cash provided by operations" means all cash flows (including working
capital changes) other than cash flow associated with investing or financing
activities and "Operating cash flow" means operating income plus
depreciation and amortization of intangibles.
(b) Not shown, since most political advertising occurs in alternate years.
Revenues In 1994, total net revenue of $59,442,000 increased by $12,490,000 or
26.6% compared with $46,952,000 in 1993. Of the 1994 revenue total, non-
political revenue amounted to $55,696,000. This was an increase of $8,961,000 or
19.2% compared to $46,735,000 in the prior year. Recent station additions, WWHO-
TV and WNCN-TV, added marginally to the revenue gain. Their aggregate revenue
amounted to less than 4% of the prior year's revenue total.
The increase in non-political revenue was primarily attributable to overall
improvement in economic conditions, a strong demand for advertising time and
favorable viewership of the Company's VHF television stations. This allowed
advertising rates to continue to trend higher. Increases occurred in both
national spot and local time sales. There was also an increase of more than 16%
in network compensation. This was a favorable result of the terms of the
Company's renewed affiliation with the NBC network which became effective
September 1, 1994.
Advertiser spending for political campaigns was significant in the 1994 election
year and political revenue totalled $3,746,000. This amount comprised 6.3% of
total revenue in 1994, whereas in 1992, political advertising of $1,514,000
comprised 3.4% of the revenue total.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Both of the Company's VHF television stations had increases in total revenue.
For the third consecutive year, WCMH-TV established a record high in station
revenue. WCMH-TV increased its non-political local and national spot revenue for
the year by approximately 11.4%. Political advertising provided a further 4.6%
increase to the station's revenues. The increased revenue reflected an estimated
15% growth in the Columbus advertising market.
WJAR-TV increased its non-political local and national spot revenue for the year
by approximately 20.6% with political advertising providing a further increase
to the station's revenue of 12.4%. The increased revenue reflected an estimated
17% growth in the Providence advertising market. Thus, WJAR-TV was able to
increase its market share from that of 1993.
In 1993, total net revenue of $46,952,000 increased by $1,799,000 or 4% compared
with $45,153,000 in 1992. Of the 1993 revenue total, non-political revenue
amounted to $46,735,000. This was an increase of $3,096,000 or 7.1% compared to
$43,639,000 in the prior year. Since 1993 was not a traditional election year,
advertiser spending for political campaigns was minimal and net political
revenue declined to $217,000.
Revenues were favorably affected in 1993 by a rebounding economy along with
strong viewer ratings at the Company's television stations. This allowed
advertising rates to trend generally higher. The increase in non-political
revenue occurred notwithstanding that 1992 had approximately $2,000,000 in added
revenues associated with that year's Summer Olympics. Total network compensation
in 1993 remained approximately even with that of the prior year.
In 1993, total revenue increased at both of the Company's television stations.
Increased revenue at WCMH-TV reflected continued growth in the Columbus
advertising market. Exclusive of political advertising, local revenue at WCMH-TV
was up by more than 13%.
Non-political local and national revenue in the Providence market, during 1993,
remained approximately even with the prior year. Nevertheless, WJAR-TV increased
its local and national spot revenues for the year by approximately 8%. Thus, the
station was able to increase its market share from that of 1992.
In order to reduce dependency on an inconsistent revenue source, as of the 1992
election year the Company began limiting the advertising spots available to
political candidates on its television stations. As part of this strategy, the
Company opted not to offer political advertising spots during its local news
programs. This allowed the Company to better serve its regular local and
national advertisers by providing them advertising time that is not always
available, during election years, at competing television stations. Compared to
prior election years, political revenue in 1992 declined at both television
stations. However, the amount of political revenue in the 1994 election year
rebounded substantially.
Operating Expenses Operating expenses in 1994 totalled $39,267,000. This was an
increase of $4,743,000 or 13.7% compared with $34,524,000 in 1993. More than
two-thirds of the total increase resulted from inclusion of operating expenses
for WNCN-TV and WWHO-TV in 1994. Excluding the effect of these added stations,
there was a moderate 4% increase in total operating expenses. In 1993, total
operating expenses of $34,524,000 decreased by $332,000 or 1% compared to
$34,856,000 in 1992. As a percent to revenue, total expenses decreased from
77.2% in 1992 to 73.5% in 1993 and to 66.1% in 1994.
Technical, programming and news expenses in 1994 of $20,113,000 increased by
$2,078,000 or 11.5% compared with $18,035,000 in 1993. Virtually all of the
increase was accounted for by the added stations. In 1993, technical,
programming and news expenses decreased by $674,000 or 3.6% from $18,709,000 in
the prior year.
Programming expenses include departmental operating costs as well as charges for
amortization of film contract rights. Since 1992 the Company has strategically
reduced its annual costs for amortization of film contracts. This was done by
selectively replacing more costly programs with increased local programming,
particularly news, or by replacing such costly programs with more popular and/or
cost-effective programs. As a result, programming expense at the Company's VHF
television stations decreased by approximately 2% and 15% in 1994 and 1993,
respectively.
<PAGE>
--------------------------------------------------------------------------------
Managements's Discussion and Analysis
--------------------------------------------------------------------------------
During 1994, 1993 and 1992, the Company recorded lump sum charges of $598,000,
$358,000 and $457,000, respectively, representing valuation write-downs of
certain film contracts. The 1994 and 1993 charges primarily apply to "Who's the
Boss" and the 1992 charge applies to "The Cosby Show," licensed to WCMH-TV. The
show is no longer an important producer of revenue.
As a result of the Company's increased production of local news programs, total
news department expenses at the VHF stations increased by approximately 6% in
1994 after having increased by more than 4% in 1993. The Company believes that
increasing its commitment to local programs, while at the same time reducing its
reliance on, and the term of, purchased programming, will help increase its
market share and improve programming as well as provide cost flexibility.
Selling, general and administrative expenses of $13,774,000 in 1994 increased by
$2,133,000 or 18.3% compared with $11,641,000 in 1993. The addition of
television stations WNCN-TV and WWHO-TV accounted for approximately two-thirds
of the total increase. The balance of the increase primarily reflected higher
sales commissions and incentive awards payable because of the Company's improved
operating performance. In 1993, selling, general and administrative expenses of
$11,641,000 increased by $482,000 or 4.3% compared with $11,159,000 in the prior
year. The amount for 1993 included added costs for employee benefits and
uncollectible customer accounts. As a percentage of revenue, selling, general
and administrative expenses declined to 23.2% in 1994 from approximately 24.7%
in each of the prior two years.
Depreciation expense and amortization of intangibles both increased in 1994 due
to the Company's recent investments in WNCN-TV and WWHO-TV. Depreciation expense
decreased in 1993 as certain asset values became fully depreciated.
The favorable effect of increased revenue and controlled operating expenses, in
each of the last two years, provided a significant improvement to operating
income. In 1994, operating income of $20,175,000 increased by $7,747,000 or
62.3% when compared with operating income of $12,428,000 in 1993. This
improvement reflected a 26.6% increase in revenue reduced by a 13.7% increase in
total expenses. In 1993, operating income of $12,428,000 increased by $2,131,000
or 20.7% compared with $10,297,000 in 1992. As a percent of revenue, the
operating income for 1994 was 33.9% and exceeded the operating margins of 26.5%
and 22.8% for 1993 and 1992, respectively.
Interest Expense The following table summarizes interest expense for the last
three years.
<TABLE>
<CAPTION>
Dollars in thousands 1994 % Change 1993 % Change 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest expense:
Loan and notes payable $8,467 14.5% $ 7,392 10.7% $ 6,680
Note to shareholder -0- -- 4,016 (45.1%) 7,309
---------------------------------------------------------------------------------------------------
Total $8,467 (25.8%) $11,408(a) (18.5%) $13,989
===================================================================================================
</TABLE>
(a) Net of capitalized interest of $225,000.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Total interest expense decreased in each of the last two years due to (a)
reductions made to outstanding debt over the same time period, and (b) a 1993
refinancing of the Company's total debt with borrowings at a lower rate of
interest. Details of the 1993 refinancing are provided in the discussion on net
cash used by financing activities within this report.
Debt reductions included, in 1992, the Company's repayment of the outstanding
balance of a former senior bank loan in the principal amount of $3.3 million and
open market purchases of its 13 1/4% Senior Subordinated Notes (the "Senior
Notes") in the amount of $6.8 million. The Company also paid off its outstanding
mortgage debt of $2.8 million, in 1992, from the proceeds of a sale of real
estate.
Interest expense on the note to shareholder represents the annual accretion on
the Junior Subordinated Note (the "Junior Note") payable to The Mutual Benefit
Life Insurance Company at its effective interest rate of 17.2%. Commencing in
1992, the terms of the debt instrument required an annual cash interest payment
of $6,250,000 based on a principal amount of $50,000,000 and an annual interest
rate of 12 1/2%.
Other Income (Expense) Items Interest income principally represents earnings on
invested cash. Interest income declined in 1994 and 1993 due to lower average
cash balances and/or lower market interest rates. In 1992, interest income also
included interest received on tax refunds. In 1994 and 1992, other income
principally represents tower rental income and other miscellaneous items. In
1993, other income principally represents a reversed accrual which provided for
the Company's potential exposure in a music licensing dispute that was settled
that year.
Other expense in 1994 included approximately $260,000 as the cost of employee
stock options. Other expense in 1993 and 1992 included write-downs of $117,000
and $165,000, respectively, attributable to an investment in a television
series, "Hennesey," which the Company acquired pursuant to a shared distribution
venture. The Company has attempted to license the black and white television
series to other broadcasters but has not been successful in doing so.
In April 1993 the Company moved corporate headquarters and WJAR-TV to a newly
acquired and renovated facility, located in Cranston, Rhode Island, after having
sold its former Providence facility in 1992. The 1992 sale of real estate
resulted in a nonrecurring gain of $1,401,000.
The 1994, 1993 and 1992 income tax expenses of $660,000, $316,000 and $128,000,
respectively, represent the applicable current year's provision for taxes. The
1994 provision for income taxes was reduced as the result of an adjustment of
prior year net operating losses. See Note 4 to the Consolidated Financial
Statements.
In 1993, an extraordinary loss of $1,826,000 or ($.28) per share, net of taxes,
represented one-time debt extinguishment costs resulting from a debt
refinancing. See Notes 5 and 7 to the Consolidated Financial Statements.
Effective January 1, 1993, the Company adopted Financial Accounting Standards
Board (FASB) Statement No. 109, "Accounting for Income Taxes", which requires a
change to the liability method of accounting for deferred income taxes. Adoption
of Statement 109 resulted in a cumulative effect of change in accounting
principle, in the amount of $4,434,000 or $.68 per share, representing the
recognition of previously unrecognized tax benefits.
The Company also adopted, as of January 1, 1993, FASB Statement No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." See
Note 9 to the Consolidated Financial Statements. The effect of adoption of
Statement 106 was not material.
The Company had net income for 1994 of $10,569,000 or $1.61 per share. This
compares with income before extraordinary loss and cumulative effect of change
in accounting principle, in 1993, of $2,026,000 or $.31 per share. After giving
effect to the extraordinary loss and change in accounting principle, net income
for 1993 amounted to $4,634,000 or $.71 per share. In 1992 there was a net loss
of $1,552,000 or ($.24) per share.
<PAGE>
--------------------------------------------------------------------------------
Management's Discussion and Analysis
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Liquidity and Capital Resources
In 1994, net cash provided by operations totalled $19,466,000. This was an
increase of $15,594,000 or 402.7% compared to $3,872,000 in 1993. In 1993, there
was an improvement of $228,000 in net cash provided by operations compared to
1992. The positive trend in net cash from operations reflects the improved
operating results described in "Results of Operations." In addition, net cash
from operations in 1994 reflects a one-time payment of $5,000,000 received from
NBC upon renewal of the Company's affiliation with that network. This amount has
been reported as deferred revenue and will be amortized into revenue over the
six year duration of the affiliation. The amount of deferred revenue to be
amortized over the ensuing period of twelve months is included in current
liabilities.
The improved operating results also caused the Company's operating cash flow to
increase. Operating cash flow of $25,555,000 increased by $8,279,000 or 47.9%
compared to $17,276,000 in 1993. In 1992, operating cash flow amounted to
$15,285,000.
Over the last three years, the Company's investment in film contract rights has
been at a relatively stable but reduced level. The annual increases in film
contracts during 1994, 1993 and 1992 amounted to $4,149,000, $4,672,000 and
$3,460,000, respectively. The increase for 1994 was partially attributable to
WNCN-TV and WWHO-TV, the television stations added during the year. Overall, the
amounts invested in film contract rights have enabled the Company to maintain
attractive programs on a cost-effective basis. The result has been successful in
that audience levels have been retained, while investments in film contract
rights have been reasonable and manageable. In addition, since the number of
viewing hours committed to news shows has been expanded, the demand for film
acquisitions has been reduced.
Although the Company is strategically committed to a reduced investment in film
contract rights, it has been selective in this process. At December 31, 1994 the
Company had commitments to acquire approximately $10,992,000 of film contract
rights compared to commitments of $3,492,000 at December 31, 1993. The increased
commitment primarily reflects the Company's extended association with the Oprah
Winfrey Show, to the year 2000, in behalf of WJAR-TV. It was considered that the
total benefits to be derived from this program would provide a sound economic
return to the broadcast station.
The net decreases in film contracts payable of $1,773,000, $409,000 and
$2,497,000 in 1994, 1993 and 1992, respectively, reflect payments of film
contract obligations in accordance with the contracted terms and in the normal
course of business. Along with the reduced investment in film contract rights,
the payments contributed to the overall reduction in film contracts payable at
December 31, 1994.
Amortization of film contract rights reflect the normal write-off of film
contract values over the period of their use. The reported amounts for the years
1992 through 1994 have trended lower and also include the previously described
lump-sum charges for valuation write-downs of certain film contracts.
Cash interest payments for 1994, 1993 and 1992 were $8,096,000, $13,071,000 (net
of capitalized interest of $225,000) and $13,150,000, respectively. The amount
paid in 1994 includes interest of $1,571,000 on the Company's senior bank loan
and interest of $6,525,000 on the outstanding 10 7/8% Senior Subordinated Notes.
The amount paid in 1993 includes interest of $6,769,000 on loan and notes
payable (primarily the Senior Notes), along with interest of $6,527,000 (two
semi-annual installments of $3,125,000 each plus accrued interest through date
of redemption) on the Junior Note. Cash interest payments of the Junior Note
commenced February 1, 1992 on a semi-annual basis.
<PAGE>
--------------------------------------------------------------------------------
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Interest payments in 1992 included interest on the Senior Notes along with
interest on a senior loan and a mortgage loan. In 1992 there were also cash
interest payments required with respect to the Junior Note. Interest payments
also trended lower because of the Company's 1992 purchase of Senior Notes in
open market transactions and because of repayments of its senior loan and
mortgage loan, both of which were fully repaid in 1992. Accretion of debt
discount of $649,000 and $1,059,000 in 1993 and 1992, respectively, represent
interest accrued on the Junior Note in excess of the $6,250,000 payment,
pursuant to the Junior Note's effective interest rate of 17.2%.
The increase in accounts receivable of $2,800,000 in 1994 primarily results from
the year's increased volume of business and the effect of two added television
stations. The 1994 increase in accrued expenses primarily reflects employee
related obligations, including those of the added television stations, and an
increase in commissions payable to third parties.
In 1994, net cash used by investing activities totalled $9,932,000. This
included capital expenditures, for all four television stations, of $3,385,000,
and an investment of $1,055,000 pursuant to a local marketing agreement entered
into with the licensee of WWHO-TV. In addition, the Company purchased the assets
and broadcast license of WNCN-TV for an aggregate price of $5,478,000, including
acquisition costs of approximately $105,000.
In 1993, net cash used by investing activities of $5,907,000 represented capital
expenditures for, primarily, completion of renovations and improvements to the
Company's new corporate headquarters and WJAR-TV broadcast facility in Cranston,
Rhode Island. This amount also included costs for equipping such facility with
studio and technical equipment.
In 1992, net cash provided by investing activities amounted to $4,157,000. This
included proceeds of $7.1 million received from the sale of land and a building
in Providence, Rhode Island. In connection with the purchase and renovation of
its new Cranston facility, as of December 31, 1992 the Company incurred costs
for construction in progress totalling $2,062,000. This principally represented
the cost of land, building and partially completed improvements. The Company
made additional capital expenditures in 1992 of $881,000, primarily for studio
and technical equipment.
The Company's VHF television stations operate from modern studio facilities and
do not require significant amounts of capital to be invested each year. However,
in order for the UHF television stations to maximize their operating potential,
a considerable upgrading of the facilities and equipment utilized by these
stations is required. In order to accomplish this, from the total planned
capital expenditures for 1995 of approximately $10,000,000 for all four
television stations, approximately $7,200,000 will be allocated to the UHF
stations. The Company anticipates that these capital expenditures can be
financed from funds generated by internal operations. The Company's senior bank
lender has agreed to waive any loan covenant restrictions that would otherwise
have limited the amount of capital expenditures for the year.
Net cash used by financing activities during 1994 amounted to $3,450,000. This
included payment of required quarterly installments totalling $3,500,000 due on
a term loan with the Company's senior bank lender. Also in 1994, a capital
contribution of $50,000 was provided to the Company through the exercise of
stock options.
In 1993, net cash used by financing activities amounted to $10,416,000. During
the year, the Company undertook a refinancing of its total debt and thereby
obtained benefits from lower interest rates and extended maturities on its
subordinated borrowings along with improved financial flexibility. Pursuant to
the refinancing, on June 28, 1993 the Company entered into a Credit and Guaranty
Agreement with a bank (the "Senior Loan") under which the bank agreed to provide
a secured senior credit facility consisting of a term loan in the principal
amount of $25,000,000 and revolving loans in the maximum principal amount
outstanding of $5,000,000.
<PAGE>
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
On July 15, 1993 the Company completed a public offering of 10 7/8% Senior
Subordinated Notes due 2003, in the principal amount of $60,000,000. Proceeds of
the public offering were used to prepay the principal balance of the Junior Note
due 1997 at its carrying value of $43,946,000 plus accrued interest.
Also, on August 17, 1993 the Company redeemed in full its Senior Notes due 1997
in the principal amount of $44,150,000, at 105% of par plus accrued interest.
The premium payment on the redemption totalled $2,207,000. Funds for the
redemption included a balance remaining from the above public offering along
with available cash and funds provided by the Senior Loan in the amount of
$28,000,000. The interest rates applicable to the public offering and the Senior
Loan were less than the interest rates on the Senior Notes and the Junior Note,
resulting in a decrease in 1993 interest expense.
During 1993, the Company repaid $5,000,000, net, against its Senior Loan
including term loan installments of $2,000,000. Overall, there was a net
decrease in long-term debt in 1993 of $4,447,000.
Costs incurred in connection with the debt refinancing, $3,151,000, were
capitalized to other assets. On a pretax basis, debt extinguishment costs,
comprised of the premium on debt refinancing -- $2,207,000, unamortized note
costs of the redeemed debt -- $555,000, and other -- $4,000, were reported as an
extraordinary loss. A capital contribution of $38,000 was provided to the
Company in 1993 through the exercise of stock options.
In 1992, net cash used by financing activities totalled $12,994,000. This
included a repayment of the outstanding balance of the Company's former senior
loan in the amount of $3,310,000 which matured on January 2, 1992. The Company
also paid its outstanding mortgage loan in the amount of $2,859,000 upon sale of
land and a building in Providence, Rhode Island in 1992. In addition, the
Company purchased an aggregate $6,825,000 face amount of its outstanding Senior
Notes in open-market transactions.
At December 31, 1994 the Company had net working capital, or an excess of
current assets over current liabilities, in the amount of $2,575,000. At
December 31, 1993, there was an excess of current liabilities over current
assets in the amount of $1,776,000. The increase in working capital during 1994
was directly attributable to the Company's improved results of operations. In
summary, the Company's cash position increased by $6,084,000 during 1994. This
reflected funds provided by operations of $19,466,000 less aggregate funds used
in investing and financing activities of $13,382,000. In 1993, a net decrease of
$12,451,000 in the Company's cash position contributed to the year's overall
decrease in net working capital. The decrease primarily resulted from funds used
for completion of the Cranston headquarters and broadcast studio along with
funds used for debt reduction and debt refinancing.
Under the provisions of its Senior Loan, the Company has available to it a
revolving credit facility in the amount of $5,000,000. The Company expects that
internally generated funds from operations and amounts available under the
revolving credit facility will provide sufficient liquidity for the Company to
meet its ongoing operating and capital expenditure needs.
In 1994, operating cash flow totalled $25,555,000 and the ratio of such amount
to interest expense of $8,467,000 was 3.0 to 1. In 1993, the ratio of operating
cash flow of $17,276,000 to interest expense of $11,408,000 was 1.5 to 1.
It is expected that 1995 operations, along with current cash on hand, will
provide sufficient funds to meet all cash requirements for that year, including
debt service. The Company will continue to require substantial cash flow from
operations in order to service its debt. To the extent that funds are committed
to debt service, they will not be available for other purposes, including
capital expenditures, acquisitions or distributions to stockholders.
<PAGE>
Outlet Communications, Inc.
--------------------------------------------------------------------------------
Directors and Officers
Year Ended December 31, 1994
Board of Directors
James G. Babb 1,3
Chairman, President and
Chief Executive Officer
Outlet Communications, Inc.
Letitia Baldrige 2,3,4
President
Letitia Baldrige Enterprises, Inc.
(Public Relations)
Robert C. Butler 2,4
Senior Vice President
International Paper Company
(Forestry Products)
Stephen J. Carlotti 1,3,4
Managing Partner
Hinckley, Allen & Snyder
(Law Firm)
Frederick R. Griffiths 3
(Formerly Vice President-
Corporate Affairs
Outlet Communications, Inc.)
Julius Koppelman 1,2
Chairman of the Board
Harding Service Corporation
(Management Consulting)
Leonard Lieberman 1,4
(Formerly Chairman, President
and Chief Executive Officer
Supermarkets General Corporation)
(Supermarket Chain)
James K. Makrianes 3
Director
Webb, Johnson Associates
(Executive Search)
Victor H. Palmieri
President and
Chief Executive Officer
MBL Life Assurance Corp.
(Insurance)
Frank E. Richardson 1,2
President and Director
Wesray Capital Corporation
(Private Investment Firm)
Frank E. Walsh, Jr. 2
Chairman
Wesray Capital Corporation
(Private Investment Firm)
Solomon M. Yas 4
(Formerly Vice President-
Human Resources
Outlet Communications, Inc.)
Corporate Officers
James G. Babb
Chairman, President and
Chief Executive Officer
Felix W. Oziemblewski
Vice President and
Chief Financial Officer
Joanne Schenck
Secretary
Broadcasting Officers
Linda W. Sullivan, Vice President
WJAR-TV
Douglas E. Gealy, Vice President
WCMH-TV, WWHO-TV
Adam G. Polacek, Vice President
WNCN-TV
Transfer Agent
Chemical Bank
New York, NY
Stock Symbol
NASDAQ National Market System
Listing --
OCOMA
Auditors
Ernst & Young LLP
Form 10-K Report
A copy of our annual report on
Form 10-K as filed with the
Securities and Exchange
Commission for 1994 may be
obtained without charge by
writing to:
Secretary
Outlet Communications, Inc.
23 Kenney Drive
Cranston, Rhode Island 02920-4489
Corporate Headquarters:
Outlet Communications, Inc.
23 Kenney Drive
Cranston, Rhode Island 02920-4489
401 455-9200
Committee Members:
1 Executive Committee
2 Compensation Committee
3 Nominating Committee
4 Audit Committee
<PAGE>
Outlet
Communications, Inc.
23 Kenney Drive
Cranston
Rhode Island 02920-4489
401 455-9200
<PAGE>
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Outlet Communications, Inc. of our report dated February 10, 1995, included
in the 1994 Annual Report to Stockholders of Outlet Communications, Inc.
Our audit also included the financial statement schedule of Outlet
Communications, Inc. listed in Item 14(a). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-51746) pertaining to the 1992 Stock Incentive Plan of Outlet
Communications, Inc. of our report dated February 10, 1995, with respect to the
consolidated financial statements incorporated herein by reference, and our
report included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of Outlet
Communications, Inc.
ERNST & YOUNG LLP
Providence, Rhode Island
March 27, 1995
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