<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: 33-9443
OUTLET BROADCASTING, INC.
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(Exact name of registrant as specified in its charter)
Rhode Island 05-0194550
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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
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
The aggregate market value of the voting stock held by non-affiliates of the
registrant was none.
Documents Incorporated by Reference: None
The number of shares of the registrant's Class A Common Stock, par value $.01
per share, outstanding as of March 24, 1995, was 1,000,000.
The Exhibit Index for this document appears on page 74 hereof.
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Page 1 of 191 Pages
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PART I
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Item 1. Business.
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Introduction
Outlet Broadcasting, Inc., a Rhode Island corporation ("Outlet
Broadcasting"), is a wholly-owned subsidiary of Outlet Communications, Inc.,
a Delaware corporation ("Outlet Communications"). The operations of Outlet
Broadcasting, a television broadcasting company, 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) began
broadcasting programming provided by 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, 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.
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").
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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 Outlet Broadcasting'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 Outlet
Broadcasting's Cranston station is provided by NBC and approximately 25% is
provided or licensed by independent third parties. Outlet Broadcasting's
Columbus station receives 52% of its programming from NBC and 34% is
provided or licensed by 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.
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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 to pay to WB 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.
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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 Outlet
Broadcasting'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 Outlet Broadcasting'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 Outlet Broadcasting's television markets.
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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 Outlet Broadcasting'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). Outlet Broadcasting'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.
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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.
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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.
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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, Outlet Broadcasting 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, Outlet Communications announced that the Board of
Directors had retained a financial advisor to help Outlet Communications
explore strategic alternatives to enhance shareholder value, including a
possible business combination, the sale of all or a portion of Outlet
Communications, potential acquisitions or any other similar transactions.
Outlet Communications 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.
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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 Outlet Broadcasting 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. Outlet Broadcasting 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
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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
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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
Outlet Communications 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
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Outlet Broadcasting's and Outlet Communications' 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
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<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.
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Item 3. Legal Proceedings.
------------------
Outlet Broadcasting 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.
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PART II
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Item 5. Market for Registrant's Common Equity and Related
-------------------------------------------------
Stockholder Matters.
--------------------
Outlet Broadcasting's authorized capital stock consists of 3,000,000
shares of Class A Common Stock, par value $.01 per share, 1,000,000 shares
of non-voting Class B Stock, par value $.01 per share, and 1,000,000 shares
of Preferred Stock, with no par value. Of such shares, 1,000,000 shares of
Class A Common Stock and no shares of Class B Common Stock or Preferred
Stock are issued and outstanding. All of Outlet Broadcasting's issued and
outstanding shares are owned by Outlet Communications. Accordingly, there
is no established public trading market for Outlet Broadcasting's common
stock.
Outlet Broadcasting has no present intention to pay dividends on its
common stock. Among other things, the future payment of dividends will
depend on Outlet Broadcasting's earnings and financial condition, capital
requirements, and general economic conditions. In addition, Outlet
Broadcasting's ability to pay dividends is restricted by the terms of its
debt agreements.
Item 6. Selected Financial Information.
-------------------------------
The comparability of the data in the following table of Selected
Financial Information is affected by dispositions of broadcast stations
including two radio stations and two UHF television stations that were sold
in 1990. Also, 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 of $1,826,000.
Outlet Broadcasting has not paid cash dividends on its capital stock
during any of the periods presented below.
<TABLE>
<CAPTION>
(dollars in thousands, except per share amounts)
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1994 1993 1992 1991 1990
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 59,442 $ 46,952 $ 45,153 $ 39,434 $ 49,187
Operating income 20,175 12,428 10,297 2,232 9,072
Income (loss) before
non-recurring items
and income taxes 11,229 2,342 (2,825) (12,343) (5,243)
Net income (loss) 10,569 4,634 (1,552) (9,265) 6,112
Income (loss) per share $ 10.57 $ 4.63 $ (1.55) $ (9.27) $ 6.11
Total assets $129,928 $117,611 $126,646 $143,029 $156,499
Long-term debt excluding
current maturities 75,000 79,500 87,447 95,961 91,885
Other long-term
liabilities 15,098 13,392 18,085 18,933 25,566
Stockholders' equity 16,404 5,785 1,113 2,665 11,930
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</TABLE>
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Item 7. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.
------------------------------------
Results of Operations
---------------------
Outlet Broadcasting'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
Outlet Broadcasting 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, 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 net operating losses.
The following table summarizes Outlet Broadcasting'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.
- 15 -
<PAGE>
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 with $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 Outlet Broadcasting'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 Outlet Broadcasting'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.
Both of Outlet Broadcasting'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 to $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.
- 16 -
<PAGE>
Revenues were favorably affected in 1993 by a rebounding economy along
with strong viewer ratings at Outlet Broadcasting'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 Outlet Broadcasting'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 Outlet Broadcasting began limiting the advertising spots
available to political candidates on its television stations. As part of
this strategy, Outlet Broadcasting opted not to offer political advertising
spots during its local news programs. This allowed Outlet Broadcasting 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.
- 17 -
<PAGE>
Programming expenses include departmental operating costs as well as
charges for amortization of film contract rights. Since 1992 Outlet
Broadcasting 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 Outlet Broadcasting's VHF television stations
decreased by approximately 2% and 15% in 1994 and 1993, respectively.
During 1994, 1993 and 1992, Outlet Broadcasting 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 Outlet Broadcasting'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.
Outlet Broadcasting 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 Outlet Broadcasting'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 Outlet Broadcasting'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
- 18 -
<PAGE>
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.
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 Outlet Broadcasting'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, Outlet Broadcasting'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. Outlet
Broadcasting 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%.
- 19 -
<PAGE>
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 Outlet Broadcasting'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 Outlet Broadcasting acquired pursuant
to a shared distribution venture. Outlet Broadcasting has attempted to
license the black and white television series to other broadcasters but has
not been successful in doing so.
In April 1993 Outlet Broadcasting 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 ($1.83) 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, Outlet Broadcasting 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
$4.43 per share, representing the recognition of previously unrecognized tax
benefits.
Outlet Broadcasting 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.
- 20 -
<PAGE>
Outlet Broadcasting 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.
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 Outlet
Broadcasting'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 Outlet Broadcasting'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, Outlet Broadcasting'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 Outlet Broadcasting 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 Outlet Broadcasting is strategically committed to a reduced
investment in film contract rights, it has been selective in this process.
At December 31, 1994 Outlet Broadcasting 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 Outlet Broadcasting'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.
- 21 -
<PAGE>
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
Outlet Broadcasting'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 on the Junior Note
commenced February 1, 1992 on a semi-annual basis.
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 Outlet Broadcasting'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, Outlet
Broadcasting purchased the assets and broadcast license of WNCN-TV for an
aggregate price of $5,478,000, including acquisition costs of approximately
$105,000.
- 22 -
<PAGE>
In 1993, net cash used by investing activities of $5,907,000
represented capital expenditures for, primarily, completion of renovations
and improvements to Outlet Broadcasting'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 Outlet Broadcasting incurred costs for construction in progress
totalling $2,062,000. This principally represented the cost of land,
building and partially completed improvements. Outlet Broadcasting made
additional capital expenditures in 1992 of $881,000, primarily for studio
and technical equipment.
Outlet Broadcasting'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. Outlet Broadcasting
anticipates that these capital expenditures can be financed from funds
generated by internal operations. Outlet Broadcasting'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 Outlet Broadcasting's senior
bank lender. Also in 1994, a capital contribution of $50,000 was provided
to Outlet Broadcasting by its parent company.
In 1993, net cash used by financing activities amounted to $10,416,000.
During the year, Outlet Broadcasting 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 Outlet
Broadcasting 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.
- 23 -
<PAGE>
On July 15, 1993 Outlet Broadcasting 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 Outlet Broadcasting 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, Outlet Broadcasting 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 also provided to Outlet Broadcasting in 1993 by its parent company.
In 1992, net cash used by financing activities totalled $12,994,000.
This included a repayment of the outstanding balance of Outlet
Broadcasting's former senior loan in the amount of $3,310,000 which matured
on January 2, 1992. Outlet Broadcasting 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, Outlet Broadcasting
purchased an aggregate $6,825,000 face amount of its outstanding Senior
Notes in open-market transactions.
At December 31, 1994 Outlet Broadcasting 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 Outlet
Broadcasting's improved results of operations. In summary, Outlet
Broadcasting'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
- 24 -
<PAGE>
investing and financing activities of $13,382,000. In 1993, a net decrease
of $12,451,000 in Outlet Broadcasting'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, Outlet Broadcasting has
available to it a revolving credit facility in the amount of $5,000,000.
Outlet Broadcasting expects that internally generated funds from operations
and amounts available under the revolving credit facility will provide
sufficient liquidity for Outlet Broadcasting 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. Outlet Broadcasting 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.
- 25 -
<PAGE>
Item 8. Financial Statements and Supplementary Data,
--------------------------------------------
The Financial Statements of Outlet Broadcasting appear on Pages F-1
through F-23 hereof.
Item 9. Changes in and Disagreements on Accounting and
----------------------------------------------
Financial Disclosure.
---------------------
None
- 26 -
<PAGE>
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
The current executive officers and directors of Outlet Broadcasting are
as follows:
<TABLE>
<CAPTION>
Years with
Position with Outlet Communications
Name Age Outlet Broadcasting 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.
- 27 -
<PAGE>
Set forth below is certain information with respect to Outlet
Broadcasting's current executive officers and directors.
James G. Babb
Mr. Babb was elected Chairman, President and Chief Executive Officer of
Outlet Broadcasting as of May 1, 1991. Before joining Outlet Broadcasting,
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 Outlet Broadcasting in those capacities since its formation in 1986.
Prior to joining Outlet Broadcasting, 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 Outlet Broadcasting, 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.
- 28 -
<PAGE>
Stephen J. Carlotti
Mr. Carlotti is Managing Partner of Hinckley, Allen & Snyder, a
Providence, Rhode Island law firm, and has been a partner in 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 Outlet Broadcasting in 1988.
Mr. Lieberman was elected on January 4, 1991 to serve as Chairman, President
and Chief Executive Officer of Outlet Broadcasting 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.
- 29 -
<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 following table sets forth certain information with respect to
compensation paid to the Chief Executive Officer and the most highly
compensated executive officers as to whom the total annual salary and bonus
earned exceeded $100,000 for the fiscal year ended December 31, 1994.
- 30 -
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
-------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
Shares
Other Under- All
Annual Restricted lying Other
Principal Compen- Stock Options Compen-
Name Position Year Salary Bonus(1) sation(2) Awards(3) Granted sation(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James G. Babb Chairman, 1994 $331,154 $225,000 $22,819 $ 0 90,000 $1,848
President 1993 294,615 200,000 23,014 0 0 0
and Chief 1992 266,442 160,000 15,066 67,500 30,000 0
Executive
Officer
Felix W. Oziemblewski Vice 1994 127,819 55,000 5,542 0 8,000 1,200
President- 1993 121,554 60,000 8,781 0 0 0
Chief 1992 116,319 40,700 7,165 22,500 10,000 0
Financial
Officer and
Treasurer
Douglas E. Gealy Vice 1994 146,538 60,000 4,660 0 12,000 1,558
President- 1993 133,077 65,000 5,101 0 0 0
General 1992 113,615 41,700 4,080 22,500 10,000 0
Manager
WCMH-TV
Linda W. Sullivan Vice 1994 124,808 50,000 4,386 0 12,000 1,200
President- 1993 111,539 57,500 5,138 0 0 0
General 1992 102,539 35,100 4,136 22,500 10,000 0
Manager
WJAR-TV
</TABLE>
(1) Amounts represent incentive compensation awards. The amounts for 1993
also include one-time bonuses of $25,000 for Mr. Babb and $15,000 each
for Mr. Oziemblewski, Mr. Gealy and Ms. Sullivan, paid upon completion of
a successful debt refinancing.
(2) Amounts listed represent gross-up payments for tax liabilities. Excludes
perquisites and other benefits, unless the aggregate amount of these
items exceeds the lesser of either $50,000 or 10 percent of the total
annual salary and bonus reported for the named executive officer.
(3) As of December 31, 1994, total restricted stock awards of 71,500 shares
had been made pursuant to Outlet Communications' 1992 Stock Incentive
Plan. The value of the restricted stock awards shown in the table is
based on the market value of the shares on the date of grant of the
award, less the purchase price ($1.00 per share). The shares subject to
such awards vest in three equal annual installments commencing in August
1993. As of December 31, 1994, Mr. Oziemblewski and Mr. Gealy had each
purchased 6,666 shares and Ms. Sullivan had purchased 3,333 shares in
accordance with the terms of the original grant. As of December 31,
1994, the market value of outstanding restricted stock awards held by Mr.
Babb, Mr. Oziemblewski, Mr. Gealy and Ms. Sullivan, less the purchase
price ($1.00 per share), was $472,500, $52,510, $52,510 and $105,005 for
unpurchased shares, respectively. No restricted stock awards were made
in 1994.
(4) Amounts represent Outlet Broadcasting's contribution to the Outlet
Broadcasting, Inc. 401(k) and Profit Sharing Plan.
- 31 -
<PAGE>
Stock Options
-------------
Outlet Communications currently maintains the 1992 Stock Incentive Plan
(the "Plan") as approved by stockholders on June 25, 1992, amended April 27,
1993. The Plan authorizes grants of either non-qualified or incentive stock
options, or awards of restricted shares, to key employees. The aggregate
number of shares of Common Stock available for awards under the Plan is
300,000 shares. The purpose of the Plan is to encourage stock ownership by
executives and thereby increase the executives' personal interest in Outlet
Broadcasting's continued success and progress. The Plan is administered by
the Compensation Committee of the Board of Directors, which determines the
terms of options granted, the exercise price and exercisability thereof.
The following table sets forth certain information regarding option grants
in the last fiscal year to the executive officers named in the Summary
Compensation Table.
- 32 -
<PAGE>
Option Grants in Last Fiscal Year
---------------------------------
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term(2)
------------------------------------------------------------------------------------------------------------------------
% of Total
Options
Shares Under- Granted to
lying Stock Employees Exercise
Options in Fiscal Price Expiration
Name Granted(1) Year Per Share Date 0% 5% 10%
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
James G. Babb 45,000 29.1% $13.00 July 11, 2004 $ 0 $ 953,100 $1,517,400
" " 45,000 29.1% 1.00(3) July 11, 2004 540,000 1,493,100 2,057,400
Felix W. Oziemblewski 8,000 5.2% 15.75 Oct. 27, 2004 0 205,280 326,800
Douglas E. Gealy 12,000 7.8% 15.75 Oct. 27, 2004 0 307,920 490,200
Linda W. Sullivan 12,000 7.8% 15.75 Oct. 27, 2004 0 307,920 490,200
</TABLE>
(1) Options become exercisable in three equal annual installments commencing one
year from grant date.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 0%, 5% and 10%
compounded annually from the date the respective options were granted.
(3) The market price per share at date of grant was $13.00.
- 33 -
<PAGE>
The following table shows fiscal year-end option values for the
executive officers named in the Summary Compensation Table. No options were
exercised by such individuals during 1994.
Fiscal Year-end Option Values
<TABLE>
<CAPTION>
Number
of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Year-End Year-End(1)
---------------------------------------------------------------------------
Exer- Unexer- Exer- Unexer-
Name cisable cisable cisable cisable
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James G. Babb 30,000 90,000 $405,000 $877,500
Felix W. Oziemblewski 10,000 8,000 135,000 67,000
Douglas E. Gealy 10,000 12,000 135,000 100,500
Linda W. Sullivan 6,667 12,000 90,005 100,500
</TABLE>
(1) Value is based on the last sales price per share ($16.75) on
December 31, 1994, as reported on the NASDAQ National Market
System, less the applicable option price.
Retirement Plans
Outlet Broadcasting maintains a non-contributory qualified retirement plan
(the "Retirement Plan") for the benefit of its employees, including the
individuals named in the Summary Compensation Table. As of August 31, 1994,
Outlet Broadcasting curtailed the Retirement Plan and suspended the accrual
of further benefits for all employees. The following table shows the
estimated annual benefits payable upon retirement to persons in specified
salary and bonus levels and years of credited service.
<TABLE>
<CAPTION>
Compen-
sation Years of Service
-------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
15 20 25 30 35
-----------------------------------------------------------------
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
150,000 33,750 45,000 56,250 67,500 78,750
175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000
225,000 50,625 67,500 84,375 101,250 118,125
250,000 56,250 75,000 93,750 112,500 118,800*
300,000 67,500 90,000 112,500 118,800* 118,800*
400,000 90,000 118,800* 118,800* 118,800* 118,800*
450,000 101,250 118,800* 118,800* 118,800* 118,800*
500,000 112,500 118,800* 118,800* 118,800* 118,800*
600,000 118,800* 118,800* 118,800* 118,800* 118,800*
-----------------------------------------------------------------
</TABLE>
* Maximum annual benefit permitted under Section 415 of the
Internal Revenue Code.
Note - The estimated annual benefits shown in the above table may
be further limited due to the provisions of section 401(a)(17) of
the Internal Revenue Code.
- 34 -
<PAGE>
The amounts payable shown in the preceding table are based on the
following assumptions: (i) the individual shall have retired at the normal
retirement age of 65, (ii) "compensation" is the average of the covered
compensation paid to such individual during the three calendar years in
which salary is the highest, (iii) covered compensation is salary and
bonuses paid to Plan participants, and for 1994 is shown in the Salary and
Bonus columns of the Summary Compensation Table, and (iv) benefits are paid
in the form of a straight-life annuity.
In addition to the Retirement Plan, the individuals named in the
Summary Compensation Table also participate in a non-qualified supplemental
retirement plan (the "Supplemental Plan") which provides a supplemental
benefit based on a percentage of final average compensation and years of
service, less benefits paid under the Retirement Plan and Social Security
benefits. The following table shows the estimated annual benefits payable
under the Supplemental Plan to persons in the specified salary and bonus
levels and years of credited service.
<TABLE>
<CAPTION>
Compen-
sation Years of Service
-----------------------------------------------------------------
15 20 25 30 35
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $ 21,875 $ 25,000 $ 15,625 $ 6,250 $ 0
150,000 26,250 30,000 18,750 7,500 0
175,000 30,625 35,000 21,875 8,750 0
200,000 35,000 40,000 25,000 10,000 0
225,000 39,375 45,000 28,125 11,250 0
250,000 43,750 50,000 31,250 12,500 6,200
300,000 52,500 60,000 37,500 31,200 31,200
400,000 70,000 81,200 81,200 81,200 81,200
450,000 78,750 106,200 106,200 106,200 106,200
500,000 87,500 131,200 131,200 131,200 131,200
600,000 121,200 181,200 181,200 181,200 181,200
-----------------------------------------------------------------
</TABLE>
The amounts payable shown in the above table are based on the following
assumptions: (i) the individual shall have retired at the normal age of 65,
(ii) "compensation" is the average salary paid to such individual during the
three calendar years in which salary is the highest in the five years prior
to retirement, plus the average Executive Incentive Compensation award for
the highest three years during the ten years prior to retirement, (iii)
benefits are paid in the form of a straight-line annuity, (iv) estimated
annual payments are after deduction for Retirement Plan benefits, but before
any deduction for Social Security benefits. Covered compensation under the
Supplemental Plan is included in the Salary and Bonus columns of the Summary
Compensation Table.
As of December 31, 1994, for purposes of computing benefits under the
Retirement Plan and the Supplemental Plan, Mr. Babb has 3.4 years of
service, Mr. Oziemblewski has 25.9 years, Ms. Sullivan has 9.4 years, and
Mr. Gealy has 3.2 years.
- 35 -
<PAGE>
On September 1, 1994 Outlet Broadcasting adopted the Outlet Broadcasting,
Inc. 401(k) and Profit Sharing Plan (the "401(k) Plan"). This plan is a
qualified 401(k) deferred compensation plan whose purpose is to enable
eligible employees to save for retirement. Eligible employees are those
employees who are not covered by a collective bargaining agreement, unless
the agreement allows for participation in the 401(k) Plan, and who have
completed one year of service and have attained age 21.
Eligible employees may contribute up to the lesser of 15% of taxable
compensation in each calendar year, excluding the taxable value of stock
options, fringe benefits or moving and other expense reimbursements, or
$9,240. All employee contributions are allocated to the employee's
individual account and, at the employee's election, are invested in money
market, fixed income or equity funds. Outlet Broadcasting will make
matching contributions in an amount equal to 25% of the employee
contributions but subject to a maximum employee contribution of 6% of
eligible compensation. Outlet Broadcasting's matching contributions vest
with the employee at the rate of 20% for each year of service. Outlet
Broadcasting may also make annual discretionary profit sharing contributions
in an amount to be determined by the Board of Directors at the end of each
calendar year. The maximum contributions allowed are limited by regulations
promulgated under the Internal Revenue Code.
Employment Contracts
Mr. James G. Babb entered into an employment agreement as Chairman,
President and Chief Executive Officer, effective January 1, 1993, for a term
of five years, as amended. The agreement provides for a base salary of
$345,000, as adjusted. The agreement also provides that Mr. Babb will be a
participant in the Executive Incentive Compensation Plan and that he will be
eligible to receive awards of stock options under Outlet Communications'
stock option plans. Mr. Babb is further eligible to receive additional
compensation in the event of a merger or sale of assets pursuant to which
Outlet Communications' stockholders receive value in excess of $9 per share.
In the event of termination without cause, Outlet Broadcasting will pay Mr.
Babb his compensation for twelve months or the remaining portion of his
employment period, whichever is greater.
- 36 -
<PAGE>
Mr. Douglas E. Gealy entered into an employment agreement as Vice
President-General Manager of WCMH-TV in May 1993 which remains in effect
until April 30, 1996. The contract provides for a base salary of $150,000
per annum, as adjusted, and also provides that the employee will be a
participant in the Executive Incentive Compensation Plan. Ms. Sullivan
entered into an employment agreement as Vice President-General Manager of
WJAR-TV, effective January 1, 1995, which remains in effect until December
31, 1996. The agreement provides for a base salary of $130,000 and also
provides that the employee will be a participant in the Executive Incentive
Compensation Plan. The employment contract of Mr. Oziemblewski with Outlet
Broadcasting expired as of March 31, 1992. The contract provides, however,
that if employment is terminated other than for cause, death or disability
within a five-year period following the term of the contract, Outlet
Broadcasting will pay a minimum of one year base salary as severance
payment. At December 31, 1994 this amounted to $130,000. In the event of a
merger of Outlet Communications or Outlet Broadcasting, or acquisition of
50% of their voting securities, or any other change in control, the
contracts are deemed to have been assigned to the successor entity.
Compensation Committee Interlocks and Insider Participation
Mr. Koppelman serves as Chairman and Messrs. Butler, Richardson and Walsh
and Ms. Baldrige serve as members of the Compensation Committee of the
Board. No member of the Compensation Committee is a current or former
officer or employee of Outlet Broadcasting or any of its subsidiaries. All
members of the Compensation Committee except Ms. Baldrige were designated by
Wesray pursuant to the Stockholders' Agreement described below under
"Certain Relationships and Related Transactions-Stockholders' Agreement."
Messrs. Richardson and Walsh are stockholders and Messrs. Koppelman,
Richardson and Walsh are directors of Harding Service, which provides
management consulting services to Outlet Broadcasting pursuant to an
agreement entered into in July 1986. Under the agreement, Harding Service
has agreed to provide Outlet Broadcasting with general management, corporate
finance, marketing and business investment advice until July 1996. Such
advice includes reviewing capital and operating budgets, capital
appropriations, executive compensation and employee incentive programs,
business strategies, budgeting and forecasting, and general corporate
planning and financial oversight. Harding Service provides management
consulting services to several other entities affiliated with Wesray. In
consideration of the consulting services, Outlet Broadcasting has agreed to
pay consulting services fees equal to 0.333% of annual gross revenues to
Harding Service, which fees totalled $236,630 in 1994. This agreement was
entered into when Outlet Communications was privately held and may not be on
terms as favorable to Outlet Broadcasting as could have been obtained from
an unaffiliated party.
- 37 -
<PAGE>
Compensation Committee Report
The Compensation Committee of the Board of Directors of Outlet
Broadcasting, Inc. (the "Committee") herein presents the following report on
executive compensation:
Outlet Broadcasting maintains a Salary Administration Program of which
the primary purpose is to ensure that Outlet Broadcasting has a credible,
logical and consistent process for making salary decisions. The existence
of such a program enables Outlet Broadcasting to determine that each
executive receives a fair and reasonable salary for the level of work
performed and for the quality of that work. The program also directly
associates executive compensation with company performance.
Executive Compensation Policy. It is the policy of Outlet Broadcasting to
provide executive compensation that is equitable and competitively
attractive. In addition, executive compensation should be related to
improvements in corporate operating performance. Thus, compensation will be
established at levels that are fair and objectively determined and, through
incentives tied in to performance objectives, will be directly connected
with increases in the company's value for the ultimate benefit of the
shareholders.
Base Compensation. The Salary Administration Program, as it pertains to
base compensation, includes the following elements:
. Job Evaluation Establishes the economic value of each job and relates
the valuation to both the marketplace and other jobs. This results in
the development of a salary range for each level of work.
. Performance Appraisal Provides for a fair and equitable review of job
performance, conducted on a regular basis.
. Performance Planning Combines pay programs with fulfillment of operating
goals and/or financial objectives.
- 38 -
<PAGE>
The Committee considers that the salary range levels developed for the
executive officers are reasonable and competitive. Actual salaries are
based on the established salary range as further adjusted within that range
by individual performance contributions. During fiscal 1994, Outlet
Broadcasting exhibited substantial growth and continued its favorable
performance trends. Operating results in 1994 were marked by significant
increases in revenue, operating income and net income. Outlet
Broadcasting's financial performance also improved with reductions in long-
term debt and interest expense. There was a substantial increase in
stockholders' equity. Also in 1994, Outlet Broadcasting added two
independent UHF television stations to its operations. In recognition of
Outlet Broadcasting's overall positive performance, the Committee granted
the executive officers named in the Summary Compensation Table (the "Named
Executives") an increase in base salary.
Executive Incentive Compensation Plan Key management employees are eligible
to participate in Outlet Broadcasting's Executive Incentive Compensation
Plan. Participants are selected based on ability to affect profitability,
with awards based primarily on the attainment of certain annual operating
objectives. The plan is intended to reward specific operating
accomplishments and provide competitive levels of compensation for the
attainment of those financial objectives. In particular, the plan aims to
focus activities toward optimum and steady earnings growth which, the
Committee believes, are primary determinants of stockholder value over
time. Under the plan, target awards are established for executive officers
as a percentage of their base salary range. The targeted awards are subject
to decrease or increase based on actual performance and at the discretion of
the Committee. The Committee may also grant discretionary awards to certain
key employees. During 1994, Outlet Broadcasting exceeded its financial
performance objectives and incentive compensation awards were made to the
Named Executives as shown in the Summary Compensation Table, to be paid in
1995.
Stock Incentive Program The Committee believes that by encouraging stock
ownership in Outlet Communications by executives, it serves to increase the
executives' personal interest in Outlet Broadcasting's continued success and
progress. Therefore, executives are eligible to receive stock options
and/or restricted shares, giving them the right to purchase shares of Common
Stock of Outlet Communications at a specified price in the future. The size
of individual stock grants is based upon job responsibility and individual
contribution to Outlet Broadcasting's success. Previous stock option grants
are considered when awards are determined.
In view of the substantial improvement in operating and financial
results over the past three year period, and to provide additional
incentives to further improve Outlet Broadcasting's performance in 1995 and
beyond, individual stock options were granted in 1994 to the Named
Executives and other key employees. In granting these options, the
individuals were provided with an immediate financial interest in increasing
stockholder value.
- 39 -
<PAGE>
In addition, the Committee, subject to shareholder approval, has
approved an amendment to the 1992 Stock Incentive Plan to increase the
number of shares of Common Stock available thereunder by 300,000 shares,
which shares would then be used for future stock option grants or restricted
share awards.
Compensation for the Chairman and Chief Executive Officer Mr. James G.
Babb, Chairman, President and Chief Executive Officer joined Outlet
Broadcasting in May 1991. His employment agreement was structured to
provide Mr. Babb with a competitive base salary, subject to annual review,
along with an annual incentive opportunity. In considering Mr. Babb's
compensation for 1994, the Committee reviewed such compensation arrangements
and further reviewed the trend of the company's operating performance during
the year. It was noted that the company significantly exceeded its
financial operating objectives for 1994. In particular, the Committee noted
that the 1994 financial performance as measured by various factors,
including revenue growth, expense control, operating income and net income
per share, was a continuation of Outlet Broadcasting's significantly
improved financial performance since 1992. The Committee also noted that
Outlet Broadcasting successfully added two independent UHF television
stations to its operations in 1994.
Because of the growth and considerable success enjoyed by Outlet
Broadcasting in its 1994 operating results, and because its accomplishments
will further serve to benefit long-term business prospects, the Committee
has made the following determinations regarding the compensation of Mr.
Babb:
. Upon annual review, Mr. Babb's base salary was increased from $305,000
per year to $345,000 per year.
. Under the annual incentive compensation plan, an incentive award of
$225,000 was accrued for fiscal 1994.
. Under the 1992 Stock Incentive Plan, non-qualified and incentive stock
options were awarded for an aggregate 90,000 shares of Outlet
Communications' Common Stock, of which 45,000 are exercisable at $13.00
per share (fair market value on date of grant) and 45,000 are exercisable
at $1.00 per share. The Committee approved the discounted options for
Mr. Babb to reflect his importance to the company's future success.
- 40 -
<PAGE>
Limitations on the Deductibility of Compensation Pursuant to the 1993
Omnibus Budget Reconciliation Act, a portion of annual compensation payable
after 1993 to any of the five highest paid executive officers is not
deductible for federal income tax purposes to the extent such officer's
overall compensation exceeds $1 million. Qualifying performance-based
incentive compensation, however, is both deductible and excluded for
purposes of calculating the $1 million base. Outlet Broadcasting has
determined that no portion of anticipated compensation payable to any
executive officer in 1995 will be non-deductible. Compensation includes the
"spread" or excess of the fair market value of the shares received upon
exercise of a stock option over the exercise price. The spread on the
discounted stock options granted to Mr. Babb in 1994 will not constitute
qualified performance-based compensation. Accordingly, the amount of
compensation attributable to such spread will not be deductible for federal
income tax purposes to the extent that Mr. Babb's total compensation (other
than qualifying performance-based compensation) exceeds $1 million in any
year. This is likely to occur if the stock price continues to increase or
if Mr. Babb exercises a substantial portion of the discounted options in a
single year. The Committee has determined that the negative impact of the
loss of deductibility for a portion of this non-cash compensation expense is
outweighed by the need to compensate Mr. Babb appropriately and adequately
for his contributions to Outlet Broadcasting's success and to recognize his
importance to long-term business prospects. The Committee will continue to
address the issue of deductibility in formulating compensation arrangements
for executive officers.
Summary All members of the Committee are nonemployee directors who are
independent of any relationships with any executive. As described above,
the Committee believes that the Salary Administration Program for executives
is competitive and that the executive compensation programs include variable
compensation opportunities that are based on achievements of financial
objectives and enhancements in shareholder value.
Compensation Committee: Julius Koppelman, Chairman, and Members Letitia
Baldrige, Robert C. Butler, Frank E. Richardson and Frank E. Walsh, Jr.
- 41 -
<PAGE>
Performance Graph
The following performance graph compares the performance of Outlet
Communications' Common Stock to the Total Return Index for the Nasdaq Stock
Market (U.S. Companies) and to the Nasdaq Telecommunications Stocks Index
for the last five fiscal years. The graph assumes that the value of the
investment in Outlet Communications' Common Stock and each index was $100 at
December 31, 1989 and all dividends were reinvested.
A paper copy of the performance graph has been filed under cover of Form SE.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31,
----------------------------------
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Outlet Communications 100 34 17 16 42 67
Nasdaq Total
Return
Index (US) 100 85 136 159 181 177
Nasdaq Tele-
communications
Stocks Index 100 67 93 114 176 146
</TABLE>
Item 12. Security Ownership of Certain Beneficial Owners
-----------------------------------------------
and Management.
---------------
All of the issued and outstanding shares of capital stock of Outlet
Broadcasting are owned by Outlet Communications.
- 42 -
<PAGE>
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Stockholders' Agreement Outlet Communications, Outlet Broadcasting, and each
of Outlet Communications' original stockholders (including MBL Life
Assurance Corp., successor to Mutual Benefit) and certain of their
successors and assigns are parties to a stockholders' agreement (the
"Stockholders' Agreement"). As of March 17, 1995, an aggregate of 4,156,579
shares of Outlet Communications Common Stock were beneficially owned by the
parties to the Stockholders' Agreement. The Stockholders' Agreement requires
that the stockholders party to the Stockholders' Agreement vote their shares
to fix the number of directors of Outlet Communications at 14 and elect as
directors five persons designated by certain management stockholders (the
"Management Stockholders") and nine persons designated by the stockholders
affiliated with Wesray (the "Wesray Stockholders"). The following persons
are parties to the Stockholders' Agreement: Hugh J. Byrnes, Richard D.
Ferrier, Maria E. Ferrier, The Hartington Trust, Keith Hightower, John D.
Howard, Julius Koppelman, Frank H. Pearl and selected trust, Frank E.
Richardson, E. Burke Ross, Jr., William E. Simon, Manfred L. Steyn, Henrik
N. Vanderlip, The OCI Trust, (Wesray Stockholders), Reginald Butts, Steve J.
Caminis, Charles G. Conklin, Estate of David E. Henderson and related
trusts, Frederick R. Griffiths, Thomas J. Mosher, Felix W. Oziemblewski,
Gerald T. Plemmons, Josephine Renola, Garland R. Robinson, John D. Sawhill,
Gerald Scher, Mara L. Snodgrass, Solomon M. Yas, Joseph A. Young (Management
Stockholders) and MBL Life Assurance Corp.
The Stockholders' Agreement also provides that each stockholder and MBL Life
Assurance Corp. may not agree to sell any securities to a buyer who would as
a result of such purchase own more than 50% of the outstanding Common Stock
of Outlet Communications unless prior to such sale the buyer agrees to be
bound by the Stockholders' Agreement and affords each stockholder the
opportunity to sell a pro rata portion of his shares on the same terms and
conditions.
The Stockholders' Agreement terminates on the earlier of (i) December 9,
1996; (ii) the date that the Wesray Stockholders, Management Stockholders
and MBL Life Assurance Corp. own an aggregate of less than 50% of Outlet
Communications issued and outstanding Common Stock; and (iii) the date of an
event of bankruptcy or insolvency of Outlet Communications or Outlet
Broadcasting or foreclosure or similar actions or proceedings by the senior
bank lender. Mutual Benefit was placed in rehabilitation by the New Jersey
Commissioner of Insurance on July 16, 1991 and is currently in liquidation.
MBL Life Assurance Corp. is the transferee of certain assets formerly held
by Mutual Benefit, including the holdings of Mutual Benefit in Outlet
Communications' Common Stock.
Management Consulting Agreement In July 1986, Outlet Broadcasting entered
into an agreement for management consulting services with Harding Service,
of which Mr. Richardson and Mr. Walsh are stockholders and Messrs.
Koppelman, Richardson and Walsh are directors. For a description of the
agreement with Harding Service, see "Compensation Committee Interlocks and
Insider Participation."
- 43 -
<PAGE>
Transactions with the Law Firm of Hinckley, Allen & Snyder The law firm of
Hinckley, Allen & Snyder of which Mr. Carlotti, a director of Outlet
Broadcasting, is Managing Partner, provided legal services to Outlet
Broadcasting during fiscal year 1994.
Future Transactions with Affiliates
It is the policy of Outlet Broadcasting with respect to future
transactions with persons or entities affiliated with officers, directors,
employees, or stockholders of Outlet Broadcasting which relate to the
operation of the business of Outlet Broadcasting, that any such transactions
shall be on terms no less favorable to Outlet Broadcasting than could have
reasonably been obtained in arms-length transactions with independent third
parties and shall also be approved by a majority of the independent and
disinterested directors of Outlet Broadcasting. It is also the policy of
Outlet Broadcasting that any loans made in the future to officers,
employees, directors, stockholders, or affiliates of Outlet Broadcasting
must be approved by a majority of the independent and disinterested
directors of Outlet Broadcasting.
- 44 -
<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
Broadcasting, Inc., appear on pages F-1 through F-23 hereof.
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
Broadcasting, 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).
- 45 -
<PAGE>
Outlet Broadcasting will furnish, upon request, any exhibit listed
herein upon the payment of a fee not to exceed reasonable expenses incurred
by Outlet Broadcasting in furnishing such exhibit.
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)
(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;********
- 46 -
<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.********
22. Subsidiaries of the Registrant:
Outlet Productions, Inc.; Biltout, Inc.; and WATL-TV
Pro Wrestling, Inc.
__________________
* 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.
- 47 -
<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 BROADCASTING, 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
- 48 -
<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
- 49 -
<PAGE>
Report of Independent Auditors
Board of Directors
Outlet Broadcasting, Inc.
We have audited the accompanying consolidated balance sheets of Outlet
Broadcasting, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and the schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Outlet Broadcasting, 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. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
As discussed in 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.
ERNST & YOUNG LLP
Providence, Rhode Island
February 10, 1995
F-1
<PAGE>
Outlet Broadcasting, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
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>
F-2
<PAGE>
<TABLE>
<CAPTION>
December 31
1994 1993
--------------------------------------
<S> <C> <C>
Liabilities and Stockholder's 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
Stockholder's Equity
Capital stock 10,000 10,000
Capital surplus 32,532,000 32,482,000
Accumulated deficit (16,138,000) (26,707,000)
--------------------------------------
16,404,000 5,785,000
--------------------------------------
$129,928,000 $117,611,000
======================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
Outlet Broadcasting, 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)
================================================================
</TABLE>
F-4
<PAGE>
Outlet Broadcasting, Inc.
Consolidated Statements of Operations (continued)
<TABLE>
<CAPTION>
Year ended December 31
1994 1993 1992
----------------------------------------------
<S> <C> <C> <C>
Income (loss) per share:
Before extraordinary loss and
cumulative effect of change in
accounting principle $10.57 $2.03 $(1.55)
Extraordinary loss, net (1.83)
Cumulative effect of change in
method of accounting for income
taxes 4.43
----------------------------------------------
Net income (loss) per share $10.57 $4.63 $(1.55)
==============================================
</TABLE>
See accompanying notes.
F-5
<PAGE>
Outlet Broadcasting, Inc.
Consolidated Statements of Stockholder's Equity
<TABLE>
<CAPTION>
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 1,000,000 $10,000 $32,444,000 $(29,789,000) $ 2,665,000
Net loss (1,552,000) (1,552,000)
-----------------------------------------------------------------------------------
Balances at December 31, 1992 1,000,000 10,000 32,444,000 (31,341,000) 1,113,000
Contribution of capital 38,000 38,000
Net income 4,634,000 4,634,000
-----------------------------------------------------------------------------------
Balances at December 31, 1993 1,000,000 10,000 32,482,000 (26,707,000) 5,785,000
Contribution of capital 50,000 50,000
Net income 10,569,000 10,569,000
-----------------------------------------------------------------------------------
Balances at December 31, 1994 1,000,000 $10,000 $32,532,000 $(16,138,000) $16,404,000
===================================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
Outlet Broadcasting, 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
</TABLE>
F-7
<PAGE>
Outlet Broadcasting, Inc.
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
Year ended December 31
1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C>
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
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)
Contribution of capital 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.
F-8
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements
December 31, 1994
1. Basis of Presentation
Outlet Broadcasting, Inc. (the Company) is a wholly-owned subsidiary of
Outlet Communications, Inc. (the Parent Company). The consolidated financial
statements include the accounts of Outlet Broadcasting, 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.
F-9
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
2. Significant Accounting Policies (continued)
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 - 1,000,000 shares.
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.
F-10
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
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, totaled
$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,
NC, 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.
F-11
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes
The components of income tax expense (benefit) for the years ended December
31 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------
(Dollars in thousands)
<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>
Year ended December 31
1994 1993 1992
------------------------------------------
<S> <C> <C> <C>
(Dollars in thousands)
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>
F-12
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
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 $4.43 per share.
Deferred income taxes represent the net 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>
F-13
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
4. Income Taxes (continued)
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 has tax loss carryforwards totaling $24,025,000. The tax loss
carryforwards expire as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
2005 $ 5,375
2006 13,970
2007 2,259
2008 2,421
-------
$24,025
=======
</TABLE>
F-14
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31
1994 1993
---------------------
(Dollars in thousands)
<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.
F-15
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
5. Long-term Debt (continued)
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 Parent 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.
F-16
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
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.
F-17
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
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.
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>
1994 1993 1992
--------------------------------------------
(Dollars in thousands)
<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>
F-18
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Benefit Plans (continued)
The Company suspended the qualifed 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>
1994 1993
--------------------------------
(Dollars in Thousands)
<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>
F-19
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Benefit Plans (continued)
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 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 of 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>
1994 1993
-----------------------
(Dollars in thousands)
<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>
F-20
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
9. Employee Benefit Plans (continued)
Net periodic postretirement benefit costs for the indicated years ended
December 31, consisted of the following:
<TABLE>
<CAPTION>
1994 1993
----------------------
(Dollars in thousands)
<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.
10. Intangible Assets
Intangible assets consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
---------------------------
(Dollars in thousands)
<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>
F-21
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
11. Accrued Expenses
Accrued expenses consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1993
-----------------------
(Dollars in thousands)
<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
Description Outstanding
--------------------------------------------------------------------------------
<S> <C>
Preferred stock, no par value--authorized 1,000,000 shares --
Class A common stock, $.01 par value--authorized 3,000,000 shares 1,000,000
Class B common stock, $.01 par value--authorized 1,000,000 shares --
</TABLE>
13. 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.
F-22
<PAGE>
Outlet Broadcasting, Inc.
Notes to Consolidated Financial Statements (continued)
13. Litigation (continued)
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.
F-23
<PAGE>
OUTLET BROADCASTING, 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
Page
----
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) 76
(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) 83
(f)(vi) Employment Agreement, dated January 1, 1995 among
Steven Soldinger and Outlet Broadcasting, Inc. and
Outlet Communications, Inc.********(1) 90
(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;******** 97
<PAGE>
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.******** 117
(j) Press Release, dated March 21, 1995, announcing
the retention of a financial advisor to explore
strategic alternatives.******** 191
22. Subsidiaries of the Registrant:
Outlet Productions, Inc.; Biltout, Inc.; and WATL-TV
Pro Wrestling, Inc.
__________________
* 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 expenses 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,
data, 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
bi-monthly 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 the 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 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
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/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/Douglas R. Hamilton By:/s/Adam G. Polacek
------------------------------- ----------------------------------------
Adam G. Polacek
ROM:bvl:9326a
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 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 tine 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 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) 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 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 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.
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/ 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/ Judith H. Soldinger By:/s/ Steven Soldinger
---------------------------- ------------------------------------
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.
<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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<PAGE>
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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<PAGE>
(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 of the substitute program
makes 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
- 4 -
<PAGE>
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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<PAGE>
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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<PAGE>
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") or 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 Promos 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. Stations shall continue
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<PAGE>
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 the 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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<PAGE>
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 Affiliate 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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<PAGE>
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
- 10 -
<PAGE>
"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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<PAGE>
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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<PAGE>
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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<PAGE>
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 attorneys' 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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<PAGE>
(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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<PAGE>
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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<PAGE>
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.
- 17 -
<PAGE>
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 nor 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, nor 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/ John Maatta By: /s/ Douglas E. Gealy
----------------------------- --------------------------------
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
-----------------------------
<PAGE>
[logo of WWHO 53]
(OUTLET AS BROKER)
SCHEDULE "A"
1. Cleveland Cavaliers Basketball
2. Cleveland Indians Baseball
3. Columbus Chill Hockey
WCMH 4 . 3165 OLENTANGY RIVER ROAD . COLUMBUS, OHIO 43202 . PHONE(614)263-4444
. FAX(614)447-9107
------------------------------------------------------------------------------
(OUTLET BROADCASTING, INC. AS TIME BROKERS FOR WWHO 53, CHILLICOTHE OHIO)
<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
-----------------
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
i
- 118 -
<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
- 119 -
<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 New 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 Liquidated
-------- -------
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 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 ($1,475,000.00) 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.
(sections) 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 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. (section) 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 damages 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 Licensee 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 complies 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 compiled with.
(d) Misrepresentations 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 or 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 files. 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 Convent. 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 character 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 Employee 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 and 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 counter parts, each of which shall be deemed an original, but
all of which together shall constitute on 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/ Anthony J. Fant
-------------------------------
President
OUTLET BROADCASTING, INC.
By /s/ Felix W. Oziemblewski
--------------------------------
Chief Financial Officer
OUTLET COMMUNICATIONS, INC.
(with respect to paragraph 5.2)
By /s/ Felix W. Oziemblewski
--------------------------------
Chief Financial Officer
23
<PAGE>
EXHIBIT A
LEASE AGREEMENT
Lease Agreement made this day of , 19 between the
----- ------------- --
Lessor and Lessee set forth at Schedule A, attached hereto.
----------
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) 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 is 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
-2-
<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 an 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 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.
-3-
<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.
-4-
<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 or 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 of
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 the 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 the 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
an waiver or 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 expected.
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 or 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
-7-
<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 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 a 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 or 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
-8-
<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 judgement 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
in effective to the extent of such prohibition and unenforceable, without
invalidating the remaining provisions hereof. To the extent permitted by
applicable law, Lessee hereby waivers 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. Amendment 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.
-9-
<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: FAN 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:
-10-
<PAGE>
Schedule A
----------
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:
------------------------
.
----------------------------------------------------------
-11-
<PAGE>
<TABLE>
<CAPTION>
Equipment Lease Schedule
------------------------
Monthly Payment
No. Units Description Location Rentals Date
--------- ----------- -------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
-12-
<PAGE>
EXHIBIT B TO TIME BROKERAGE AGREEMENT
BETWEEN OUTLET BROADCASTING, INC. AND FANT BROADCASTING
COMPANY OF OHIO, INC.
1. Defined Terms. For purposes of this Exhibit B the following terms,
--------------
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 wit 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
-2-
<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.
-3-
<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.
-4-
<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.
-5-
<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
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<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
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<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
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<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
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<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.
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<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 contactors
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
<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 in to 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:
<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).
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<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 fixed 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 is 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
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<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>
EXHIBIT D
GUARANTY
THIS GUARANTY, dated as of 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
<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 other 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 the 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>
EXHIBIT E
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 there 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 proceedings; 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 retirement 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>
???? - 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*
--------------------------------------------------------------------------------
C o m m u n i t i e s S e r v e d
--------------------------------------------------------------------------------
. Dublin . Minerva Park . Obetz
. Westerville . Marble Cliff . Downtown
. Worthington . Riverle(s)a . Short North
. Upper Arlington . Grove City . Valley View
. Grandview . Powell . German Village
. Bexley . Gahanna . Columbus (Eastside)*
. Hilliard . Groveport
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
Coaxial 6 80,000
--------------------------------------------------------------------------------
C o m m u n i t i e s S e r v e d
--------------------------------------------------------------------------------
. 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
--------------------------------------------------------------------------------
C o m m u n i t i e s S e r v e d
--------------------------------------------------------------------------------
. Baltimore . Pleasantville . Thurston
. Millersport . Ashville . Circleville
. South Bloomfield . Bremen . Carroll
. Lancaster . Sugar Grove . Pataskals
. Stoutsville
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cable System Cable Channel Subscribers
--------------------------------------------------------------------------------
Dimension Cable 13 14,900
--------------------------------------------------------------------------------
C o m m u n i t i e s S e r v e d
--------------------------------------------------------------------------------
. Anderson Station . Greenland . Kinnikinnik
. Andersonville . Londonderry . Massieville
. Chillicothe . Oakland . North Fork Village
. Pleasant Valley . Slate Mills . Yellowbud
. Amanda . Tarlton
--------------------------------------------------------------------------------
Exhibit F
<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)
Outlet
Communications,Inc. James G. Babb
Chairman,President
Chief Executive Officer
-------------------------------------------------------------------------------
23 Kenney Drive
Cranston
Rhode Island 02920-4489
(401) 455-9250
Fax:(401) 455-9216
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.
##
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 7,840
<SECURITIES> 0
<RECEIVABLES> 13,640
<ALLOWANCES> 321
<INVENTORY> 0
<CURRENT-ASSETS> 26,001
<PP&E> 22,517
<DEPRECIATION> 27,115
<TOTAL-ASSETS> 129,928
<CURRENT-LIABILITIES> 23,426
<BONDS> 75,000
<COMMON> 10
0
0
<OTHER-SE> 16,394
<TOTAL-LIABILITY-AND-EQUITY> 129,928
<SALES> 0
<TOTAL-REVENUES> 59,442
<CGS> 0
<TOTAL-COSTS> 39,267
<OTHER-EXPENSES> 896
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,467
<INCOME-PRETAX> 11,229
<INCOME-TAX> 660
<INCOME-CONTINUING> 10,569
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,569
<EPS-PRIMARY> 10.57
<EPS-DILUTED> 10.57
</TABLE>
