<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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STC BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4833 75-2676358
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
ROBERT N. SMITH
CHIEF EXECUTIVE OFFICER
3839 4TH STREET NORTH, SUITE 420
ST. PETERSBURG, FLORIDA 33703
(813) 821-7900
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
JEREMY W. DICKENS
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(A) REGISTRATION FEE
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<S> <C> <C>
11% Senior Subordinated Notes due 2007............ $100,000,000 $30,304
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</TABLE>
(a) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED JUNE , 1997
PROSPECTUS
OFFER FOR ALL OUTSTANDING
11% SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
11% SENIOR SUBORDINATED NOTES DUE 2007
OF
STC BROADCASTING, INC.
STC Broadcasting, Inc. ("STC" or the "Company") hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange $1,000 principal amount of registered 11% Senior Subordinated Notes due
2007 (the "New Notes") issued by the Company for each $1,000 principal amount of
unregistered 11% Senior Subordinated Notes due 2007 (the "Old Notes") issued by
the Company, of which an aggregate principal amount of $100,000,000 is
outstanding. The form and terms of the New Notes are identical to the form and
terms of the Old Notes except that the New Notes have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will not bear any
legends restricting their transfer. The New Notes will evidence the same debt as
the Old Notes and will be issued pursuant to, and entitled to the benefits of,
the Indenture (as defined) governing the Old Notes. The Exchange Offer is being
made in order to satisfy certain contractual obligations of the Company. See
"The Exchange Offer" and "Description of New Notes." The New Notes and the Old
Notes are sometimes collectively referred to herein as the "Notes."
Interest on the New Notes will be payable semiannually on March 15 and September
15 of each year, commencing on September 15, 1997. The New Notes will mature on
March 15, 2007. Except as described below, the Company may not redeem the New
Notes prior to March 15, 2002. On and after such date, the Company may redeem
the New Notes, in whole or in part, at the redemption prices set forth herein,
together with accrued and unpaid interest, if any, to the redemption date. In
addition, at any time and from time to time on or prior to March 15, 2000, the
Company may, subject to certain requirements, redeem up to 25% of the aggregate
principal amount of the New Notes with the net cash proceeds from one or more
Public Equity Offerings (as defined) at a redemption price equal to 111% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
redemption date, provided that after any such redemption, at least 75% of the
aggregate principal amount of the New Notes originally issued remain outstanding
immediately after each such redemption. The New Notes will not be subject to any
sinking fund requirements. Upon a Change of Control (as defined), (i) the
Company will have the option, at any time on or prior to March 15, 2002, to
redeem the New Notes, in whole but not in part, at a redemption price equal to
100% of the principal amount thereof, plus accrued and unpaid interest plus the
Applicable Premium (as defined) and (ii) if the New Notes are not redeemed or if
such Change of Control occurs after March 15, 2002, the Company will be required
to offer to repurchase the New Notes at a price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, to the
repurchase date. See "Description of New Notes."
The New Notes will be unsecured and will be subordinated in right of payment to
all existing and future Senior Indebtedness (as defined) of the Company. The New
Notes will rank pari passu with any future Senior Subordinated Indebtedness (as
defined) of the Company and will rank senior to all other subordinated
indebtedness of the Company. The Indenture under which the New Notes will be
issued (the "Indenture") will permit the Company and its Subsidiaries (as
defined) to incur additional indebtedness, including Senior Indebtedness,
subject to certain limitations. See "Description of Notes." The net proceeds
from the sale of the Old Notes were used by the Company to repay outstanding
indebtedness incurred in connection with the recent acquisition of certain
commercial television broadcast station assets (the "Acquisition"). See "The
Acquisition" and "Use of Proceeds." As of March 31, 1997, on a pro forma basis
after giving effect to the Acquisition and the Original Offering (as defined),
there would not have been any Senior Indebtedness outstanding, and the Company
would have had no Senior Subordinated Indebtedness outstanding other than the
New Notes and no indebtedness subordinated to the New Notes outstanding. See
"Description of New Notes -- Ranking and Subordination."
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SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES.
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The Company will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on , 1997,
unless extended (as so extended, the "Expiration Date"). Tenders of Old Notes
may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions. See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The letter of transmittal accompanying this
Prospectus (the "Letter of Transmittal") states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed,
for a period of 90 days after the Expiration Date, to make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
No public market existed for the Old Notes before the Exchange Offer. The
Company currently does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system, and no active public market for the New Notes is currently anticipated.
The Company will pay all the expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 3
AVAILABLE INFORMATION
As a result of the filing under the Securities Act of 1933, as amended (the
"Securities Act") of the Registration Statement on Form S-1 with respect to the
New Notes (the "Registration Statement"), of which this Prospectus is a part,
the Company will become subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will file reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
may be inspected and copied at the public reference facilities of the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates by writing to
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is hereby made to such exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Copies of the Registration
Statement and the exhibits thereto are on file with the Commission and may be
examined without charge at the public reference facilities of the Commission
described above. Copies of such materials can also be obtained at prescribed
rates by writing to the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The reports, proxy
statements and other information filed by the Company with the Commission may
also be obtained from the web site that the Commission maintains at
http://www.sec.gov.
The Company is required by the Indenture to furnish the holders of the New
Notes with copies of the annual reports and of the information, documents and
other reports specified in Sections 13 and 15(d) of the Exchange Act, so long as
any New Notes are outstanding.
i
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CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA
As used in this Prospectus, unless the context otherwise requires, (i) the
"Company" or "STC" refers to STC Broadcasting, Inc. and its subsidiaries; (ii)
the "Stations" collectively refer to WEYI-TV, Saginaw, Michigan ("WEYI"),
WROC-TV, Rochester, New York ("WROC"), KSBW-TV, Salinas, California ("KSBW"),
and WTOV-TV, Steubenville, Ohio ("WTOV"); (iii) "Holdings" refers to Sunrise
Television Corp., which owns all of the capital stock of the Company; and (iv)
"SBP" refers to Smith Broadcasting Partners, L.P. and "SBG" refers to Smith
Broadcasting Group, Inc., each an affiliate of Robert N. Smith. SBP and SBG had
interests in the Stations prior to the Acquisition and continue to have
interests through their indirect ownership in Holdings. In addition, as used in
this Prospectus, references to the "Company" in the context of WTOV refers to
the Company's 100% non-voting and 99% equity interest in Smith Acquisition
Company ("SAC"), which owns and operates WTOV. See "The Acquisition."
The terms "broadcast cash flow" and "operating cash flow" are referred to
in various places in this Prospectus. "Broadcast cash flow" is defined as
station operating income (loss) plus depreciation of property and equipment,
amortization of intangible assets and amortization of program rights, minus
payments on program rights. "Operating cash flow" is defined as station
operating income (loss) plus depreciation of property and equipment,
amortization of intangible assets and amortization of program rights, minus
payments on program rights and corporate expenses. Although broadcast cash flow
and operating cash flow are not measures of performance calculated in accordance
with generally accepted accounting principles ("GAAP"), management believes that
broadcast cash flow is useful to a prospective investor because it is a measure
widely used in the broadcast industry to evaluate a television broadcast
company's operating performance and that operating cash flow is useful to a
prospective investor because it is widely used in the broadcast industry to
evaluate a television broadcast company's ability to service debt. Neither
broadcast cash flow nor operating cash flow should be considered in isolation or
as a substitute for net income (loss), cash flows from operating activities and
other income and cash flow statement data prepared in accordance with GAAP or as
a measure of liquidity or profitability. These terms may not be comparable to
other similarly titled items for other companies.
Designated market area ("DMA") rankings are from the Nielsen Station Index
dated November 1996 as estimated by the A.C. Nielsen Company ("Nielsen"). There
are 211 generally-recognized television "markets" or DMAs in the United States,
which are ranked in size according to various factors based upon actual or
potential audience. Unless otherwise indicated herein, (i) market revenue,
market revenue share, projected advertising revenue growth and station revenue
share data have been obtained from Investing in Television 1993, 1994, 1995 and
1996, BIA Publications, Inc. ("BIA"); (ii) television household data has been
obtained from the Nielsen Station Index for November of the appropriate year;
(iii) audience share and audience rankings, except where specifically stated to
the contrary, have been derived from Nielsen estimates (November of the
appropriate year) of the percentage of persons in the DMA tuned into the
relevant station from sign-on to sign-off (Sunday to Saturday, 6:00 a.m. to 2:00
a.m.); (iv) general market economic data has been obtained from BIA and the
chambers of commerce in each Station's market; (v) the term "station" or
"commercial station" means a television broadcast station and does not include
public television stations, cable stations or networks (e.g., CNN, TBS or ESPN),
or stations that do not meet the minimum Nielsen reporting standards (i.e.,
weekly cumulative audience share of at least 2.5% for Sunday to Saturday, 7:00
a.m. to 1:00 a.m.); and (vi) the term "independent" describes a commercial
television station that is not affiliated with the ABC, CBS, NBC or Fox
television networks.
The year ended December 31, 1996, when used with reference to financial
information of the Stations, refers to the period that the Stations were owned
by Jupiter/Smith TV Holdings, L.P. ("Jupiter") and operated by SBP during 1996,
which period began on January 3 with respect to WEYI, WROC and WTOV and January
17 with respect to KSBW. Management does not consider the results of operations
of the Stations from January 1, 1996 to the dates the Stations were acquired to
be significant to the combined results of operations of the Stations for the
year ended December 31, 1996.
ii
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SUMMARY
The following summary should be read in conjunction with the more detailed
information, financial statements and notes thereto appearing elsewhere in this
Prospectus. For additional information relating to certain defined terms and
financial reporting periods used herein, as well as the sources for the market
and other industry data contained herein, see "Certain Definitions and Market
and Industry Data." Unless the context otherwise requires, references herein to
the New Notes following the consummation of the Exchange Offer assume that all
outstanding Old Notes are tendered and exchanged for New Notes in the Exchange
Offer.
THE COMPANY
The Company currently owns and operates four network-affiliated television
broadcast stations located in four distinct and geographically diverse markets,
ranging in size from the 62nd to the 139th largest DMAs in the United States.
Three of the Stations are network affiliates of NBC (one of which is also a
secondary affiliate of ABC) and one Station is a network affiliate of CBS.
The Company was recently organized by management and Hicks, Muse, Tate &
Furst Incorporated ("Hicks Muse") with the goal of becoming a leading owner and
operator of network-affiliated television broadcast stations, serving select
"middle-to-small markets" (i.e., those DMAs ranked from approximately 50 to 150
by Nielsen). Management believes that these markets provide greater opportunity
for the Company to successfully apply its business strategy of increasing
revenues while controlling operating costs and other expenses. Commercial
stations in the Company's target markets generally face limited competition from
other over-the-air broadcasters for audience, syndicated programming and
advertising revenues.
For the year ended December 31, 1996 (throughout which the Stations were
operated by the Company's current management), the Stations' net revenues and
broadcast cash flow increased 14.1% and 78.6%, respectively, from $32.9 million
and $8.6 million, respectively, in 1995 to $37.6 million and $15.4 million,
respectively, in 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In 1996, none of the Stations accounted
for more than 30.0% of the Stations' aggregate net revenues. The Company is
actively pursuing additional acquisitions of television broadcast stations in
other middle-to-small markets that it believes will provide similar
opportunities to increase broadcast cash flow.
The four markets in which the Company currently operates offer geographic
diversity that reduces the impact on the Company of changes in respective market
economies and provide favorable competitive operating environments. Three of
these markets range from the 62nd to the 70th largest markets in the United
States based on reported market revenues. In the Wheeling, West
Virginia-Steubenville, Ohio DMA, the Company's Station is one of only two
commercial television broadcast stations and in the Flint-Saginaw-Bay City,
Michigan and Rochester, New York DMAs, the Company's Stations are one of only
four commercial television broadcast stations. In the six station
Monterey-Salinas, California DMA, the Company's Station effectively has the only
over-the-air VHF signal capable of reaching a majority of the households in this
market due to the natural barrier formed by the mountains surrounding the
Monterey Bay, which tends to interfere with the competing VHF station located in
San Jose, California. The Company's Stations are the number one ranked station
in the Monterey-Salinas and Wheeling-Steubenville DMAs and the number three
ranked station in the Flint-Saginaw-Bay City and Rochester DMAs. The Company
believes that the Stations are well positioned to achieve long-term growth in
audience share and revenue share because of (i) the limited competition for
viewers from other over-the-air television broadcasters in these markets, (ii)
the strength of the Company's management and (iii) the Stations' favorable
and/or improving rankings within their DMAs. In addition, management believes
that the limited number of other television broadcast stations in these markets
enables the Company to purchase syndicated programming at favorable rates.
1
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The following table summarizes certain information regarding each Station
and its respective DMA:
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YEAR ENDED DECEMBER 31, 1996
PRIMARY/ NUMBER OF -----------------------------
MARKET SECONDARY COMMERCIAL STATION STATION NET % OF
STATION/CHANNEL: DMA REVENUE NETWORK TV STATIONS RANK IN AUDIENCE REVENUES(1) TOTAL NET
DMA RANK RANK AFFILIATION IN DMA DMA SHARE (IN THOUSANDS) REVENUES
---------------- ---- ------- ----------- ----------- ------- -------- -------------- ------------
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WEYI/25:
Flint-Saginaw-Bay City, MI.... 62 70 NBC 4 3 13% $ 8,061 21.5%
WROC/8:
Rochester, NY................. 74 62 CBS 4 3 18% $10,994 29.3%
KSBW/8:
Monterey-Salinas, CA.......... 122 69 NBC 6(2) 1 22% $10,486 27.9%
WTOV/9:
Wheeling, WV- Steubenville,
OH.......................... 139 160 NBC/ABC 2 1 22% $ 8,018 21.3%
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(1) Includes trade and barter revenues and net of agency and sales
representative commissions.
(2) The Company's Station effectively has the only over-the-air VHF signal
capable of reaching a majority of the households in this market. In
addition, of the six stations in this DMA, two are Spanish-language
stations. See "Business -- The Stations -- KSBW: Monterey-Salinas,
California."
BUSINESS STRATEGY
The Company's business strategy is to acquire and operate television
broadcast stations and maximize operating cash flow through both revenue growth
and improved cost control. The Company believes that revenue growth and cost
control may be achieved simultaneously, principally because many of the costs
associated with operating a television station are fixed. The Company's
management team has successfully implemented this strategy with other television
broadcast stations as well as with the Stations. Key components of the Company's
business strategy include:
Controlling Costs. The Company seeks to selectively reduce costs at
acquired stations without adversely affecting growth. Since management assumed
operations of the Stations in January 1996, broadcast cash flow margins at the
Stations increased from 26.2% for 1995 to 41.0% for 1996, in part due to an
approximately $2.2 million reduction in station operating expenses. Broadcast
cash flow margins at each of the Stations increased from 1995 to 1996, including
significant improvements at WEYI (from 13.0% for 1995 to 45.5% for 1996) and
WTOV (from 33.4% for 1995 to 49.0% for 1996). This financial success resulted in
part from management's aggressive cost saving initiatives such as the
elimination of unnecessary sales expenses. After acquiring a station, management
implements a cost control strategy stressing the elimination of unnecessary
costs, budgeting, accountability and disciplined credit and collection
procedures. Management believes that it has created an operating structure that
can profitably accommodate revenue growth. See "Certain Transactions."
Intensifying Sales Efforts. The Company implements an aggressive approach
to sales and marketing designed to increase market revenue share. Management
believes that increases in revenue share are not necessarily dependent on
increases in audience share. Since management assumed operations of the Stations
in January 1996, net revenues of the Stations increased by 14.1% over 1995, due,
in part, to newly implemented initiatives such as: (i) the restructuring and
expansion of the local sales departments at three of the Stations (including the
hiring of new sales management and experienced sales personnel with local market
knowledge); (ii) the engagement of a new national sales representative firm for
three of the Stations; (iii) the sponsorship and broadcasting of local events
and activities, such as highly-rated high school football, offering local
advertisers value-added community identity; and (iv) the institution of more
efficient sales incentives.
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Building on Local News Franchises. The Company seeks to increase revenues
by developing a highly-rated, well-differentiated local news product designed to
build viewer loyalty and target specific demographic audiences that appeal to
advertisers. Through the implementation of its strategy, management has
succeeded in strengthening the top-rated local news positions of KSBW (four
times the audience ratings of its nearest news competitor) and WTOV (winner of
10 Associated Press awards in Ohio and West Virginia) in their respective DMAs.
At WROC and WEYI, the local news programming has been redirected through several
initiatives including: (i) the hiring of a new news director at WROC with prior
successful experience redirecting news operations (whose responsibilities also
include overseeing the news programming at the other Stations); (ii) the hiring
of new, experienced on-air talent (including new anchor teams); (iii) the
creation of a new on-air appearance at WROC through improved set lighting,
music, graphics and news room production equipment; (iv) the reprogramming of
local newscasts to include more exclusive/investigative stories with greater
audience appeal; and (v) the careful selection of top-rated syndicated
programming that is broadcast just prior to and after the local news.
Managing Program Selection. Each Station seeks to cost effectively purchase
first-run and off-network syndicated programming to target specific demographic
audiences. The Stations have been able to purchase syndicated programming at
rates that management believes are attractive, in part because of the limited
competition for such programming in the Stations' DMAs. WROC, WTOV and KSBW have
contracts (expiring in 1999 and 2000) to air highly-rated programming, such as
The Oprah Winfrey Show, Jeopardy and Wheel of Fortune. In September 1996, WEYI
began airing programming such as Hard Copy and Entertainment Tonight, which had
previously been broadcast by a local competitor. Additional highly-rated
syndicated programming aired by the Stations includes Rosie O'Donnell on WROC
(through September 1997), WTOV and KSBW (beginning in September 1997) and
Seinfeld and Mad About You on WTOV.
Positioning and Branding Stations. The Company seeks to increase revenues
by developing and maintaining a unique, local "brand image" for each Station
within its respective market with which viewers and advertisers can identify.
This strategy integrates local news, programming, promotion and sales efforts
for each Station based on its market's demographics, competition, dynamics and
opportunities. By covering local events in more of the 12 Ohio Valley counties
(including the Wheeling, West Virginia market) than its competitors, WTOV has
been able to increase its profile with viewers and advertisers and differentiate
itself from its local competitors. KSBW continues to reinforce its identity with
viewers as the "Monterey-Salinas" television station with highly-recognized,
established on-air talent, as well as comprehensive local news coverage and
community involvement. WEYI has benefited from its network affiliation and
positioned itself as mid-Michigan's NBC station.
Pursuing Selective Acquisitions. The Company actively seeks to acquire
underperforming television stations that management believes can benefit from
its business strategy. Targeted stations generally have one or more of the
following characteristics: (i) attractive acquisition terms, which may include
station-for-station exchanges; (ii) opportunities to implement effective cost
controls; (iii) opportunities for increased advertising revenue; (iv)
opportunities for increased audience share through improved newscasts and
programming; (v) limited competition from other television broadcasters; and
(vi) market locations that possess attractive projected growth in advertising
revenues. The Company generally targets network-affiliated stations, which
typically have established audiences for their news, sports and entertainment
programming, located in DMAs generally ranked from 50 to 150. Management
believes that these stations can achieve operating margins comparable to larger
market stations, yet may be purchased for lower multiples of cash flow. The
Company believes that because of the limited competition from other television
broadcasters in these middle-to-small markets, there is an opportunity for local
stations to attract large local audience share and thus compete successfully for
advertising revenues with alternative media, such as cable television, radio and
newspapers.
3
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MANAGEMENT AND OWNERSHIP
Management, together with Hicks Muse, organized the Company in order to
pursue the business strategy described previously. Management and Hicks Muse
have combined their efforts in the belief that the ability of the Company's
management team to implement successfully its business strategy would be further
enhanced by Hicks Muse's extensive experience in the capital markets as well as
with other broadcasting ventures.
The Company's management team, led by Robert N. Smith, President and Chief
Executive Officer, has over 17 years of extensive and diverse experience in the
television broadcast industry as well as experience in managing within the
constraints of leveraged capital structures. Members of the Company's management
team have worked together since 1986 and have successfully implemented an
operating strategy similar to the Company's at other television stations. The
Company's management team assumed the operations of and obtained an ownership
interest in the Stations in January 1996. During the year ended December 31,
1996, net revenues and broadcast cash flow of the Stations increased $4.7
million, or 14.1%, and $6.8 million, or 78.6%, respectively. The Company's
senior executive officers and other Station general managers have invested
approximately $1.9 million in the Company as part of the Acquisition. See "The
Acquisition."
Hicks Muse is a private investment firm with offices in Dallas, New York,
St. Louis and Mexico City that specializes in leveraged acquisitions,
recapitalizations and other principal investing activities. Hicks Muse
(including its predecessor firm) has completed or has pending approximately 90
leveraged acquisitions having a combined transaction value of approximately $19
billion. An affiliate of Hicks Muse is the managing general partner of Sunrise
Television Partners, L.P., (the "Partnership"), which controls Holdings.
Investment partnerships controlled by Hicks Muse invested approximately $75.0
million (including approximately $68.0 million by affiliates of Hicks Muse) in
the Partnership in connection with the Acquisition. See "The Acquisition" and
"Certain Transactions."
Hicks Muse has extensive experience using leveraged acquisition platforms
in the radio broadcast and other industries. It is the founder of Chancellor
Broadcasting Company ("Chancellor") and Capstar Broadcasting Partners, Inc.
("Capstar"), which have been active acquirors and successful operators of radio
broadcast stations. Both Chancellor and Capstar employ acquisition and operating
strategies similar to the strategy of the Company. When Hicks Muse formed
Chancellor in 1994 and Capstar in 1996, neither company owned or operated any
radio stations. On a pro forma basis assuming the consummation of certain
pending transactions, Chancellor and Capstar would own and operate, or provide
services to, approximately 103 and 120 radio stations, respectively. See "Risk
Factors -- Potential Conflicts of Interest" and "Business -- Federal Regulation
of Television Broadcasting -- Other Ownership Matters."
RECENT DEVELOPMENT
On May 8, 1997, the Company entered into an agreement and plan of merger
(the "WJAC Merger Agreement") with WJAC, Incorporated ("WJAC"), pursuant to
which WJAC will become a wholly owned subsidiary of the Company. WJAC, channel
6, is a VHF NBC-affiliated station serving the Johnstown/Altoona, Pennsylvania
market, which is the 92nd largest DMA in the United States. The approximate
purchase price will be $36.0 million including certain working capital, and the
expected closing date will be early in the fourth quarter of 1997. The Company
intends to finance this transaction with the proceeds of future debt and/or
equity financings. The WJAC Merger Agreement is subject to customary conditions
and no assurances can be given as to whether, or on what terms, such transaction
or such financings will be consummated by the Company.
On April 18, 1997, the Company entered into a letter of intent to acquire
all of the stock of a company that owns two television broadcast stations for
approximately $8.5 million, excluding working capital. The letter of intent is
subject to customary conditions and no assurances can be
4
<PAGE> 9
given as to whether, or on what terms, such potential acquisition will be
consummated by the Company.
The Company is in discussions with respect to other possible acquisitions
of television broadcast stations, although no agreements have been reached.
Consideration for such acquisitions would consist of available cash, plus the
proceeds of future debt and/or equity financings. See "Use of Proceeds" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
5
<PAGE> 10
THE EXCHANGE OFFER
The Exchange Offer......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, Old Notes representing $100
million aggregate principal amount are
outstanding. The terms of the New Notes and the
Old Notes are substantially identical in all
material respects, except that the New Notes will
be freely transferable by the holders thereof
except as otherwise provided herein. See
"Description of New Notes."
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Company, the
Company believes that New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes
may be offered for resale, sold and otherwise
transferred by any person receiving the New
Notes, whether or not that person is the
registered holder (other than any such holder or
such other person that is an "affiliate" of the
Company within the meaning of Rule 405 under the
Securities Act), without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that (i) the New
Notes are acquired in the ordinary course of
business of that holder or such other person,
(ii) neither the holder nor such other person is
engaging in or intends to engage in a
distribution of the New Notes, and (iii) neither
the holder nor such other person has an
arrangement or understanding with any person to
participate in the distribution of the New Notes.
See "The Exchange Offer -- Purpose and Effect."
Each broker-dealer that receives New Notes for
its own account in exchange for Old Notes, where
those Old Notes were acquired by the
broker-dealer as a result of its market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of these New Notes.
See "Plan of Distribution."
Registration Rights
Agreement................ The Old Notes were sold by the Company on March 25,
1997, in a private placement in reliance on
Section 4(2) of the Securities Act and
immediately resold by the initial purchasers
thereof in reliance on Rule 144A under the
Securities Act (the "Original Offering"). In
connection with the Original Offering, the
Company entered into an Exchange and Registration
Rights Agreement with the initial purchasers of
the Old Notes (the "Registration Rights
Agreement") requiring the Company to make the
Exchange Offer. See "The Exchange
Offer -- Purpose and Effect."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1997, or such later
date and time to which it is extended by the
Company.
Withdrawal................. The tender of the Old Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the
Expiration Date. Any Old Notes not accepted for
exchange for any reason will be returned without
expense to the
6
<PAGE> 11
tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Interest on the New
Notes and Old Notes...... Interest on each New Note will accrue from the date
of issuance of the Old Note for which the New
Note is exchanged or from the date of the last
periodic payment of interest on such Old Note,
whichever is later. No additional interest will
be paid on Old Notes tendered and accept for
exchange.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Company. See "The Exchange Offer -- Certain
Conditions to Exchange Offer."
Procedures for Tendering
Old Notes................ Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Notes and any other required
documentation, to the Exchange Agent (as defined)
at the address set forth herein. Persons holding
the Old Notes through the Depository Trust
Company ("DTC") and wishing to accept the
Exchange Offer must do so pursuant to the DTC's
Automated Tender Offer Program, by which each
tendering participant will agree to be bound by
the Letter of Transmittal. By executing or
agreeing to be bound by the Letter of
Transmittal, each holder will represent to the
Company that, among other things, (i) the New
Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business
of the person receiving such New Notes, whether
or not such person is the registered holder of
the Old Notes, (ii) neither the holder nor any
such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii)
neither the holder nor any such other person has
an arrangement or understanding with any person
to participate in the distribution of such New
Notes, and (iv) neither the holder nor any such
other person is an "affiliate," as defined under
Rule 405 promulgated under the Securities Act, of
the Company. Pursuant to the Registration Rights
Agreement, the Company is required to file a
"shelf" registration statement for a continuous
offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes if (i)
because of any change in law or applicable
interpretations of the staff of the Commission,
the Company is not permitted to effect the
Exchange Offer, (ii) the Exchange Offer is not
consummated within 225 days of the Original
Offering, (iii) any holder of Private Exchange
Securities (as defined) requests within 60 days
after the Exchange Offer, (iv) any applicable law
or interpretations do not permit any holder of
Old Notes to participate in the Exchange Offer,
(v) any holder of Old Notes participates in the
Exchange Offer and does not receive freely
transferrable New Notes in exchange for Old Notes
or (iv) the Company so elects.
7
<PAGE> 12
Acceptance of Old Notes and
Delivery of New Notes.... The Company will accept for exchange any and all
Old Notes which are properly tendered (and not
withdrawn) in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange
Offer will be delivered promptly following the
Expiration Date. See "The Exchange Offer -- Terms
of the Exchange Offer."
Exchange Agent............. U.S. Trust Company of Texas, N.A., is serving as
Exchange Agent (the "Exchange Agent") in
connection with the Exchange Offer.
Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."
Effect of Not Tendering.... Old Notes that are not tendered or that are
improperly tendered and not accepted will,
following the completion of the Exchange Offer,
continue to be subject to the existing
restrictions upon transfer thereof. The Company
will have no further obligation to provide for
the registration under the Securities Act of such
Old Notes.
8
<PAGE> 13
THE NEW NOTES
Issuer..................... STC Broadcasting, Inc.
Securities Offered......... $100,000,000 aggregate principal amount of 11%
Senior Subordinated Notes due 2007 (the "New
Notes").
Maturity................... March 15, 2007.
Interest Payment Dates..... March 15 and September 15 of each year, commencing
on September 15, 1997.
Sinking Fund............... None.
Optional Redemption........ Except as described below, the Company may not
redeem the New Notes prior to March 15, 2002. On
and after such date, the Company may redeem the New
Notes, in whole or in part, at the redemption
prices set forth herein, together with accrued and
unpaid interest, if any, to the redemption date. In
addition, at any time and from time to time on or
prior to March 15, 2000, the Company may redeem up
to 25% of the aggregate principal amount of the New
Notes with the net cash proceeds of one or more
Public Equity Offerings, at a redemption price
equal to 111% of the principal amount thereof plus
accrued and unpaid interest, if any, to the
redemption date; provided, however, that after any
such redemption at least 75% of the aggregate
principal amount of New Notes would remain
outstanding immediately after each such redemption.
See "Description of New Notes -- Optional
Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time on or
prior to March 15, 2002, to redeem the New Notes,
in whole but not in part, at a redemption price
equal to 100% of the principal amount thereof, plus
accrued and unpaid interest plus the Applicable
Premium and (ii) if the Company does not so redeem
the New Notes or if a Change of Control occurs
after March 15, 2002, the Company will be required
to make an offer to repurchase the New Notes at a
price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest,
if any, to the repurchase date. See "Description of
New Notes -- Change of Control."
Ranking.................... The New Notes will be unsecured and will be
subordinated in right of payment to all existing
and future Senior Indebtedness of the Company,
including indebtedness outstanding under the Credit
Agreement. The New Notes will rank pari passu with
any future Senior Subordinated Indebtedness of the
Company and will rank senior to all other
subordinated indebtedness of the Company. In
addition, the New Notes will be effectively
subordinated to all indebtedness of subsidiaries of
the Company. As of December 31, 1996, on a pro
forma basis after giving effect to the Acquisition
and the Original Offering, there would not have
been any Senior Indebtedness outstanding and the
Company would have had no Senior Subordinated
Indebtedness outstanding other than the New Notes
and no indebtedness subordinated to the New Notes
outstanding. See "Description of New
Notes -- Ranking and Subordination."
9
<PAGE> 14
Restrictive Covenants...... The Indenture will limit, among other things, (i)
the incurrence of additional indebtedness by the
Company and its Subsidiaries, (ii) the payment of
dividends on, and redemption of, capital stock of
the Company and its Subsidiaries, (iii)
investments, (iv) the sale or swap of assets, (v)
transactions with affiliates and (vi)
consolidations, mergers and transfers of all or
substantially all of the Company's assets. The
Indenture also will prohibit certain restrictions
on distributions from Subsidiaries. However, all of
those limitations and prohibitions will be subject
to a number of important qualifications and
exceptions. See "Description of New
Notes -- Certain Covenants."
USE OF PROCEEDS
There will be no cash proceeds to the Company from the exchange pursuant to
the Exchange Offer.
The net proceeds from the Original Offering were used (i) to repay
borrowings under the Credit Agreement incurred to finance the Acquisition and
(ii) to pay certain expenses incurred in connection with the Original Offering.
The Company will use the remaining net proceeds received from the Original
Offering to fund future acquisitions and for working capital and other general
corporate purposes.
RISK FACTORS
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" for risks involved with an investment in
the New Notes.
10
<PAGE> 15
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth as of the dates and for the periods
indicated (i) summary historical financial information of the Stations and (ii)
summary pro forma financial information of the Stations and the Company. The
historical financial information for the three years ended December 31, 1996 has
been derived from the audited financial statements of the Stations and have been
audited by Arthur Andersen LLP, independent auditors, and are included elsewhere
herein. Statement of Operations Data below station operating income and related
Other Financial Data, as well as Balance Sheet Data, for the Stations for the
years ended, or at, December 31, 1994 through December 31, 1995 have not been
presented because such information is not meaningful for the following reasons:
(i) during such periods the Stations were owned and/or operated by persons other
than the Company and management; (ii) they were not owned or operated as a
single unit for any of such periods; and (iii) they were operated as part of
larger units, and therefore, allocations of corporate expenses, interest and
long term debt cannot appropriately be made to the Stations. The summary pro
forma information gives effect to the Acquisition, the Original Offering and the
proposed acquisition of WJAC, but does not purport to represent what the
Company's results actually would have been if such transactions had occurred at
the dates indicated, nor does such information purport to project the results of
the Company for any future period. See "Unaudited Pro Forma Financial
Information," "Selected Historical Financial Information," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and the related notes thereto included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------- ----------------------------
THREE MONTHS
YEARS ENDED DECEMBER 31, YEAR ENDED ENDED
---------------------------- DECEMBER 31, MARCH 31,
1994 1995 1996(1) 1996(1)(2) 1997(1)(2)
------- ------- -------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues............................ $31,043 $32,905 $ 37,559 $ 47,104 $ 10,667
Station operating expenses.............. 19,822 20,729 18,564 24,219 6,193
Amortization of program rights.......... 3,123 3,181 3,581 4,446 1,197
Depreciation and amortization........... 3,695 4,119 10,146 18,162 4,539
------- ------- -------- -------- --------
Station operating income.............. $ 4,403 $ 4,876 5,268 277 (1,262)
======= =======
Corporate expenses(3)................... 840 1,250 312
-------- -------- --------
Operating income (loss)............... 4,428 (973) (1,574)
Interest expense........................ 6,072 12,917 3,230
Other income(4)......................... 1,552 1,552 60
-------- -------- --------
Loss before income taxes................ (92) (12,338) (4,744)
Provision for income taxes(5)........... -- 200 50
-------- -------- --------
Net loss.............................. $ (92) (12,538) (4,794)
========
Dividends and accretion on Redeemable
Preferred Stock(6).................... 4,332 1,083
-------- --------
Loss applicable to common shares........ $(16,870) $ (5,877)
======== ========
OTHER FINANCIAL DATA:
Broadcast cash flow(7).................. $ 7,822 $ 8,624 $ 15,405 $ 18,420 $ 3,303
Broadcast cash flow margin(8)........... 25.2% 26.2% 41.0% 39.1% 31.0%
Operating cash flow(9).................. $ 14,565 $ 17,170 $ 2,991
Capital expenditures(10)................ $ 1,287 $ 750 2,966 3,365 657
Payments for program rights............. 3,399 3,552 3,590 4,128 1,062
Ratio (deficiency) of earnings to fixed
charges(11)........................... 1.0x $(16,670) $ (5,827)
BALANCE SHEET DATA (AT YEAR END):
Cash and cash equivalents............... $ 2,753 $ -- $ 2,653
Total assets............................ 106,608 225,843 244,100
Total long-term debt, including current
portion............................... 65,000 121,300 121,300
Redeemable Preferred Stock(12).......... -- 28,500 28,861
Partners'/Common stockholder's equity... 36,313 58,937 57,992
See notes on following page.
</TABLE>
11
<PAGE> 16
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
- ---------------
(1) Financial information for 1996 reflects the period that the Stations were
owned by Jupiter and operated by management during 1996, which began on
January 3 with respect to WEYI, WROC and WTOV and January 17 with respect
to KSBW. Management does not consider the results of operations of the
Stations from January 1, 1996 to the dates the Stations were acquired to be
significant to the results of operations of the Stations for the year ended
December 31, 1996.
(2) Pro forma Statement of Operations Data gives effect to the Acquisition, the
Original Offering and the proposed acquisition of WJAC as if such
transactions occurred on January 1, 1996. Pro forma Balance Sheet Data
gives effect to the Acquisition, the Original Offering and proposed
acquisition of WJAC as if such transactions occurred on March 31, 1997.
(3) Corporate expenses consist primarily of management fees and other corporate
expenses, including corporate salaries.
(4) Other income consists primarily of approximately $1.5 million of
nonrecurring revenues for consulting services provided during 1996.
(5) No provision for income taxes has been reflected for historical 1996 since
the Stations operated as partnerships and the net loss of such partnerships
was reported by the partners. No pro forma provision for federal income
taxes has been reflected due to the pro forma net loss. Pro forma state tax
provisions of $200,000 and $50,000 have been reflected for the year ended
December 31, 1996 and the three months ended March 31, 1997, respectively.
(6) Reflects accrued dividends and accretion on the Redeemable Preferred Stock.
(7) "Broadcast cash flow" consists of station operating income plus
depreciation on property and equipment, amortization of intangible assets
and amortization of program rights minus payments on program rights.
Broadcast cash flow is not a measure of performance calculated in
accordance with GAAP and should not be considered in isolation or as a
substitute for net income (loss), cash flows from operating activities and
other income or cash flow statement data prepared in accordance with GAAP
or as a measure of liquidity or profitability.
(8) "Broadcast cash flow margin" is broadcast cash flow divided by net revenues
expressed as a percentage.
(9) "Operating cash flow" consists of station operating income plus
depreciation of property and equipment, amortization of intangible assets
and amortization of program rights minus payments on program rights and
corporate expenses. Operating cash flow is not a measure of performance
calculated in accordance with GAAP and should not be considered in
isolation or as a substitute for net income (loss), cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP or as a measure of liquidity or profitability.
(10) The Company anticipates capital expenditures to be approximately $2.8
million for 1997, and approximately $1.6 million per year thereafter.
(11) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges. "Fixed charges" consist of interest
expense, amortization of deferred financing charges, the component of
rental expense believed by management to be representative of the interest
factor thereon and preferred stock dividend requirements and related
accretion. If the ratio is less than 1.0x, the deficiency is shown.
(12) Consists of 14% Exchangeable Redeemable Preferred Stock (the "Redeemable
Preferred Stock"), mandatorily redeemable in 2008 with an aggregate
liquidation preference of $30.0 million. Dividends are cumulative and
payable quarterly, which prior to 2002 may, at the option of the Company,
be paid in additional shares of Redeemable Preferred Stock. In addition,
the Redeemable Preferred Stock is exchangeable at any time, at the option
of the Company, for debt of the Company. The Credit Agreement and the
Indenture will limit the Company's ability to pay cash dividends prior to
2002 and the Company's ability to exchange the Redeemable Preferred Stock
for debt of the Company. See "Description of Redeemable Preferred Stock."
12
<PAGE> 17
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following risk factors
before purchasing the Notes offered hereby.
ABSENCE OF OPERATING HISTORY; RECENT ACQUISITION OF STATIONS
The Company has been newly formed and has not yet conducted substantial
operations; therefore, there are limited historical financial results of the
Company for investors to evaluate. While this Prospectus contains historical
results of operations of the Stations, the Stations were only under the
operating management of certain members of management of the Company since
January 1996. Consequently, there is limited information about the performance
of the Stations under the Company's management for prospective purchasers of the
New Notes to evaluate. In addition, historical and predecessor results of
operations are not necessarily indicative of future results. See "Business."
The Acquisition has been accounted for using the purchase method of
accounting and the total purchase price has been allocated to the assets and
liabilities acquired, based upon their respective fair values. As a result, the
Company will have significant non-cash charges for depreciation and amortization
expense related to the fixed assets and goodwill that were acquired in the
Acquisition. In addition, the Company has incurred substantial indebtedness in
connection with the Acquisition for which it will have significant debt service
requirements. For the foregoing reasons, the Company expects that it will report
net losses for the foreseeable future.
RISKS RELATED TO THE ABILITY TO IMPLEMENT THE COMPANY'S OPERATING AND
ACQUISITION STRATEGY
No assurances can be given that the Company or its management team will be
able to implement successfully the operating strategy described herein,
including the ability to identify, negotiate and consummate future acquisitions
on favorable terms. While management may have successfully implemented similar
operating strategies in the past for particular stations, no assurances can be
given as to what degree the Company or its management will be able to implement
successfully such strategies for the Company in the future.
The ability of the Company to implement its operating strategy and to
consummate future acquisitions will require significant additional debt and/or
equity capital and no assurances can be given as to whether, and on what terms,
such additional debt and/or equity capital will be available.
SUBSTANTIAL LEVERAGE AND INSUFFICIENCY OF EARNINGS TO COVER FIXED CHARGES
The Company has indebtedness that is substantial in relation to its
stockholder's equity. As of March 31, 1997, on a pro forma basis after giving
effect to the Acquisition and the Original Offering (but excluding the proposed
acquisition of WJAC), the Company would have had approximately $100.0 million of
indebtedness outstanding, and there would have been approximately $35.0 million
available for future borrowings under the Revolving Credit Facility. See
"Capitalization," "Description of the Credit Agreement" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." On the same pro forma basis, the
Company's earnings would have been insufficient to cover fixed charges by $9.3
million for the year ended December 31, 1996. The Company may incur additional
indebtedness in the future, subject to certain limitations to be contained in
the Indenture and the Credit Agreement and intends to do so in order to fund
future acquisitions as part of its operating strategy. See "Business -- Business
Strategy," "Description of New Notes" and "Description of the Credit Agreement."
The Company's high degree of leverage could have several important
consequences to the holders of the New Notes, including, but not limited to, the
following: (i) the Company will have significant cash requirements to service
debt, reducing funds available for operations and future business opportunities
and increasing the Company's vulnerability to adverse general economic and
industry conditions and competition; (ii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate or other purposes, may be limited; and (iii) the
Company's leveraged position and the covenants that will be contained
13
<PAGE> 18
in the Indenture and the Credit Agreement could limit the Company's ability to
compete, as well as its ability to expand, including through acquisitions, and
to make capital improvements.
The Company's ability to pay interest and principal under the Credit
Agreement and the New Notes and to satisfy its other debt obligations will
depend upon its future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond its control. Based on the current level of
operations and anticipated future growth (both internally generated as well as
through acquisitions), the Company anticipates that its cash flow from
operations, together with borrowings under the Credit Agreement, should be
sufficient to meet its anticipated requirements for working capital, capital
expenditures, interest payments and scheduled principal payments. There can be
no assurance, however, that the Company's business will generate cash flow at or
above projected levels or that anticipated future growth can be achieved. If the
Company is unable to service its indebtedness, whether in the ordinary course of
business or upon acceleration of such indebtedness, the Company will be forced
to pursue one or more alternative strategies, such as restructuring or
refinancing its indebtedness, selling assets or seeking additional equity
capital. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all, or that the approval of the Federal
Communications Commission (the "FCC") could be obtained on a timely basis, or at
all, for the transfer of any of the Stations' licenses in connection with a
proposed sale of assets. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Business -- Federal Regulation of Television Broadcasting."
SUBORDINATION
The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the New Notes will be subordinated to the prior
payment in full of all existing and future Senior Indebtedness of the Company
(including, without limitation, the Credit Agreement). In addition, the Credit
Agreement, but not the New Notes, is secured by all tangible and intangible
assets of the Company and its subsidiaries and is unconditionally guaranteed, on
a senior basis, by each of the present and future subsidiaries of the Company.
In the event of the bankruptcy, liquidation, dissolution, reorganization or
other winding-up of the Company, the assets of the Company will be available to
pay obligations on the New Notes only after all Senior Indebtedness (including
amounts outstanding under the Credit Agreement) has been so paid in full;
accordingly, there may not be sufficient assets remaining to pay amounts due on
any or all of the New Notes then outstanding. In addition, under certain
circumstances, the Company may not pay principal of, premium, if any, or
interest on, or any other amounts owing in respect of the New Notes, or
purchase, redeem or otherwise retire the New Notes, in the event of certain
defaults with respect to Senior Indebtedness, including Senior Indebtedness
under the Credit Agreement. As of March 31, 1997, on a pro forma basis after
giving effect to the Acquisition and the Original Offering, there would not have
been any Senior Indebtedness outstanding. Senior Indebtedness may be incurred by
the Company from time to time, subject to certain restrictions. See "Description
of New Notes -- Ranking and Subordination," "-- Limitation on Incurrence of
Additional Indebtedness and Issuance of Disqualified Capital Stock" and
"Description of the Credit Agreement."
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indenture and the Credit Agreement contain certain covenants that
restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, impose restrictions on the ability of a subsidiary to pay dividends
or make certain payments to the Company, merge or consolidate with any other
person or sell, assign, transfer, lease, convey, or otherwise dispose of all or
substantially all of the assets of the Company. In addition, the Credit
Agreement contains certain other and more restrictive covenants and requires the
Company to maintain specified financial ratios and to satisfy certain financial
condition tests. The Company's ability to meet these financial ratio and
financial condition tests can be effected by
14
<PAGE> 19
events beyond its control and there can be no assurance that the Company will
meet those tests. A breach of any of these covenants could result in a default
under the Credit Agreement or the Indenture. In the event of an event of default
under the Credit Agreement or the Indenture the lenders thereunder could elect
to declare all amounts outstanding thereunder, together with accrued interest,
to be immediately due and payable. In the case of the Credit Agreement, if the
Company were unable to pay those amounts, the lenders thereunder could proceed
against the collateral granted to them to secure that indebtedness.
Substantially all the assets of the Company, including the stock of its
subsidiaries that will hold the Company's FCC licenses, will be pledged as
collateral to secure the Company's obligations under the Credit Agreement. If
the indebtedness under the Credit Agreement were to be accelerated, there can be
no assurance that the assets of the Company would be sufficient to repay in full
that indebtedness and the other indebtedness of the Company, including the New
Notes. See "Description of New Notes -- Certain Covenants" and "Description of
the Credit Agreement."
DEPENDENCE ON ADVERTISING REVENUES; EFFECT OF ECONOMIC CONDITIONS
The television industry is affected by prevailing economic conditions.
Because the Company relies on sales of advertising time for substantially all
its revenues, the Company's operating results are sensitive to general and
regional economic conditions. Consequently, declines in advertising budgets,
particularly in recessionary periods, adversely affect the broadcast industry,
and as a result may contribute to a decrease in the revenues of broadcast
television stations. The Station's revenues in 1996 were positively affected by
significantly increased advertising revenues as a result of the occurrence in
that year of both the presidential election and the NBC broadcast of both the
United States-based Summer Olympic Games and the Super Bowl. The Company does
not expect a similar event or events to positively impact advertising revenues
in 1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business."
CONTROL OF COMPANY
All of the common stock of Holdings is owned by the Partnership, whose sole
general partner is an affiliate of Hicks Muse. As a result, Hicks Muse is
effectively able to elect all of the members of the Board of Directors of
Holdings and therefore direct the management and policies of the Company. The
interests of Hicks Muse and its affiliates may differ from the interests of
holders of the New Notes. See " -- Potential Conflicts of Interest," "The
Acquisition," "Securities Ownership of Certain Beneficial Ownership" and
"Certain Transactions."
POTENTIAL CONFLICTS OF INTEREST
Hicks Muse is in the business of making significant investments in existing
or newly formed companies and may from time to time acquire and hold controlling
or noncontrolling interests in television broadcast assets (other than through
the Company), or other businesses that may directly or indirectly compete with
the Company, including competition for advertising revenues. Although it
currently has no intention to do so, Hicks Muse and its affiliates may from time
to time identify, pursue and consummate acquisitions of television stations or
other broadcast related businesses that may be complementary to the business of
the Company and therefore such acquisition opportunities may not be available to
the Company. In addition, Hicks Muse may from time to time identify and
structure acquisitions for the Company and will receive fees in connection with
such transactions. Certain affiliates of Hicks Muse have entered, and in the
future may enter, into business relationships with the Company or its
subsidiaries. See "Certain Transactions."
Robert N. Smith (through SBG) currently holds a controlling interest in
seven television broadcast stations and has interests in two television cable
stations (other than through the Company), none of which are located in markets
in which the Company currently competes. The employment agreement among the
Company, Holdings and Mr. Smith requires him to devote his best efforts and such
time, attention, knowledge and skill to the operation of the Stations as is
15
<PAGE> 20
necessary to manage and supervise the Stations and the Company. In addition, Mr.
Smith's employment agreement permits him to invest in, become employed by or
otherwise render services to or for (i) another business enterprise (other than
the Company) having an interest in or operating a television station within
certain excluded markets in which Mr. Smith currently holds an interest in a
television station (the "Excluded Markets") and (ii) after an opportunity to
acquire or invest shall have been presented to the Company and the Company shall
have declined in writing to make such acquisition or investment, up to three
additional excluded stations (the "Excluded Stations"). As a result, potential
conflicts of interest with the Company could arise in the allocation of his time
and resources. See "Management and Directors -- Executive Compensation."
Pursuant to an employment agreement among the Company, Holdings and David
A. Fitz, Mr. Fitz is required to devote his best efforts and his working time,
attention, knowledge and skill solely to the operation of the Stations;
provided, however, that Mr. Fitz is permitted to devote reasonable time to
advisory services and oversight duties in connection with Mr. Smith's
investments in Excluded Markets and any acquisitions or investments in Excluded
Stations. In addition, Mr. Fitz's employment agreement permits him to invest in,
become employed by or otherwise render services to or for another business
enterprise (other than the Company) having an interest in or operating a
television station within the Excluded Markets. As a result, potential conflicts
of interest with the Company could arise in the allocation of his time and
resources. See "Management and Directors -- Executive Compensation."
The number of television stations the Company may acquire in any market is
limited by FCC rules and may vary depending upon whether the interests in other
television stations or certain other media properties of certain individuals
affiliated with the Company are attributable to those individuals under FCC
rules. In addition, the FCC's radio/television cross-ownership rule generally
prohibits a single individual or entity from having an attributable interest in
both a television station and a radio station serving the same market. The FCC
generally applies its ownership limits to "attributable" interests held by an
individual, corporation, partnership or other association. The broadcast
interests of the Company's officers, directors and majority stockholder are
generally attributable to the Company, which may limit the Company from
acquiring or owning television stations in certain markets. See
"Summary -- Management and Ownership," "Business -- Federal Regulation of
Television Broadcasting -- Television" and "-- Other Ownership Matters."
As a result of the current or future ownership of television and radio
broadcast stations by entities in which Hicks Muse, Mr. Smith and other members
of management of the Company have significant equity interests (other than
through the Company), regulatory and other restrictions may restrict or prohibit
the Company from entering the markets in which those other stations operate or
intend to operate. See "Summary -- Management and Ownership."
DEPENDENCE UPON KEY PERSONNEL
The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers and other personnel,
including its present officers, regional directors and general managers. The
loss of the services of its Chief Executive Officer, Robert N. Smith, its
President, Sandy DiPasquale, or its Senior Vice President and Chief Financial
Officer, David A. Fitz, may have a material adverse effect on the operations of
the Company. In connection with the Acquisition, each executive officer entered
into five-year employment agreements with Holdings and the Company. See
"-- Potential Conflicts of Interests" and "Management and Directors -- Executive
Compensation."
CHANGE OF CONTROL
Upon a Change of Control, the Company may be required to offer to purchase
all of the New Notes then outstanding at 101% of their principal amount, plus
accrued interest to the date of repurchase. If a Change of Control were to
occur, there can be no assurance that the Company would have sufficient funds to
pay the purchase price for all of the New Notes that the Company might be
required to purchase. In the event that the Company were required to purchase
New Notes
16
<PAGE> 21
pursuant to a Change of Control Offer (as defined), the Company expects that it
would require third party financing. However, there can be no assurance that the
Company would be able to obtain such financing on favorable terms, if at all. In
addition, the Credit Agreement will restrict the Company's ability to repurchase
the New Notes, including pursuant to a Change of Control Offer. A Change of
Control will result in an event of default under the Credit Agreement and may
cause the acceleration of other Senior Indebtedness, if any, in which case the
subordination provisions of the New Notes would require payment in full of the
Credit Agreement and any other such Senior Indebtedness before repurchase of the
New Notes. See "Description of New Notes -- Ranking and Subordination" and
" -- Change of Control" and "Description of the Credit Agreement." The inability
to repay Senior Indebtedness, if accelerated, and to purchase all of the
tendered New Notes, would constitute an event of default under the Indenture.
DEPENDENCE ON NETWORK AFFILIATIONS
Three of the Stations are affiliated with NBC (one of which is also a
secondary affiliate of ABC) and one Station is affiliated with CBS. The
television viewership levels for each of the Stations are materially dependent
upon programming provided by the network with which each Station is affiliated.
There can be no assurance that such programming will achieve or maintain
satisfactory viewership levels in the future. In addition, the Company received
approximately $2.8 million in the year ended December 31, 1996 from revenues
from affiliation agreements, which expire between January 2002 and December
2005. Although the Company expects to be able to renew its affiliation
agreements, there can be no assurance to that effect. The non-renewal or
termination of one or more of these network affiliation agreements may have a
material adverse effect on the Company's results of operations. See
"Business -- Network Affiliations."
LABOR RELATIONS
As of March 31, 1997, approximately 45% of the Company's employees worked
under various collective bargaining agreements. While the Company believes that
its relations with its employees at all the Stations are good, there can be no
assurance that the Stations' collective bargaining agreements will be renewed in
the future. A prolonged labor dispute (which could include a work stoppage)
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Employees."
COMPETITIVE NATURE AND RISK OF CHANGES IN THE TELEVISION INDUSTRY
The television industry is highly competitive. The Stations compete for
audience and advertising revenues with other television stations (including
other network and non-network(independent) television broadcast stations
available over-the-air and through local cable systems) as well as with other
media such as newspapers, radio stations, magazines, outdoor advertising,
transit advertising, yellow page directories and direct mail. During the past
decade, the entry of strong independent broadcast stations, new networks such as
Fox, the Warner Brothers Network ("WB") and the United Paramount Network ("UPN")
and other programming alternatives such as cable television, home satellite
delivery, home video and, more recently, direct broadcast satellite ("DBS")
television and video signals delivered over telephone lines have subjected, and
will continue to subject, traditional network-affiliated television stations to
new types of competition. Competition for programming involves negotiating with
national program distributors or syndicators for exclusive rights to broadcast
first run or rerun packages of programming in each respective market.
The ability of each of the Stations to generate advertising revenues is
dependent, to a significant degree, upon its audience ratings, which, in turn,
are dependent on successful programming. There can be no assurance that any of
the Stations will be able to maintain or increase the popularity of its
programming, audience share or advertising revenues. To the extent certain of
the Company's competitors have, or in the future obtain, greater financial
resources than the Company, the Company's ability to compete successfully in its
broadcasting markets may be impeded. See "Business -- Competition."
17
<PAGE> 22
The television industry is subject to technological and regulatory changes
that could adversely affect the Company. Video compression technology currently
under development, as well as other technological developments, have the
potential to provide vastly expanded programming to targeted audiences.
Competition in the television industry in the future may come from interactive
video and data services that may provide two-way interaction. The Company is
unable to predict the effect that these or other technological changes will have
on the television industry or the future results of the Company's operations. On
April 3, 1997, the FCC adopted a table of digital channel allotments and rules
for the implementation of digital television service ("DTV") in the United
States, including high-definition television ("HDTV"). The digital table of
allotments provides each existing television station licensee or permittee with
a second broadcast channel to be used during the transition to DTV, conditioned
upon the surrender of one of the channels at the end of the DTV transition
period. Implementation of DTV will improve the technical quality of television.
Furthermore, the implementing rules permit broadcasters to use their assigned
digital spectrum flexibly to provide either standard- or high-definition video
signals and additional services, including, for example, data transfer,
subscription video, interactive material, and audio signals. However, the
digital table of allotments was devised on the basis of certain technical
assumptions which have not been subjected to extensive field testing and which,
along with specific digital channel assignments, are the subject of petitions
for reconsideration of the FCC's April 3, 1997 decision. Conversion to DTV may
reduce the geographic reach of the Company's stations or result in increased
interference, with, in either case, a corresponding loss of population coverage.
DTV implementation will impose additional costs on the Company, primarily due to
the capital costs associated with construction of DTV facilities and increased
operating costs both during and after the transition period. The FCC has set a
target date of 2006 for expiration of the transition period, subject to biennial
reviews to evaluate the progress of DTV, including the rate of consumer
acceptance.
Advances in technology and changes in the regulatory climate may increase
competition for household audiences, programs and advertisers. The Company
cannot predict how the combination of business, regulatory and technological
changes will affect the broadcast industry or the Company, including its capital
needs, results of operations or business prospects. See "Business -- Federal
Regulation of Television Broadcasting."
REGULATORY MATTERS
The broadcasting industry is subject to regulation by the FCC under the
Communications Act of 1934, as amended (the "Communications Act"). Approval by
the FCC is required for the issuance, renewal, transfer of control or assignment
of television station operating licenses. In particular, the Company's
television business is dependent upon its continuing ability to hold television
broadcast licenses from the FCC, which, generally, prior to the enactment of the
Telecommunications Act, had been issued for five-year terms. However, the
Telecommunications Act directs the FCC to extend the term of television
broadcast licenses to eight years for license applications filed after May 1,
1995. The FCC has issued an order implementing this statutory mandate. The
Company's existing television station licenses expire between October 1, 1997
and June 1, 1999. There can be no assurance that any of the Company's television
broadcast licenses will be renewed at their expiration dates for their full
terms, or at all. The non-renewal or limitation of one or more of the Company's
television broadcast licenses would have a material adverse effect on the
Company. The Telecommunications Act also addresses a wide variety of matters
(including technological changes) that affect the operation and ownership of the
Company's television stations. The Telecommunications Act eliminates the
restrictions on the number of television stations an entity may own, operate or
control nationally and increases the national audience reach limitation to 35%.
The FCC has been directed to adopt rules relating to the retention, modification
or elimination of local ownership limitations and spectrum flexibility in
connection with the issuance of additional licenses for advanced television
services, including how to establish and collect fees from broadcasters for the
implementation of ancillary and supplementary services. See "Business -- Federal
Regulation of Television Broadcasting."
18
<PAGE> 23
The FCC has been directed to revise its rules to permit cross-ownership
interests between a broadcast network and a cable system, and, if necessary, to
revise its rules to ensure carriage, channel positioning and non-discriminatory
treatment of non-affiliated broadcast stations by cable systems affiliated with
a broadcast network. The FCC has been directed to review its television
ownership rules every two years and currently has several broadcast related
rulemaking proceedings underway. There can be no assurance that any such
rulemaking or resulting changes would not materially adversely affect the
Company and/or increase competition. See "Business -- Federal Regulation of
Television Broadcasting" and "Business -- Competition."
LACK OF PUBLIC MARKET FOR THE NEW NOTES
The Old Notes were issued on March 25, 1997 and the Company is not aware
that any active trading market for the Old Notes has developed. The Company does
not intend to apply for a listing of the New Notes on a securities exchange or
on any automated dealer quotation system. There can be no assurances that a
market will develop for the New Notes or as to the liquidity of any market that
may develop for the New Notes, the ability of the holders of the New Notes to
sell their New Notes or the prices at which such holders would be able to sell
their New Notes. If such markets were to exist, the New Notes could trade at
prices that may fluctuate significantly depending upon many factors, including
prevailing interest rates and the markets for similar securities.
The liquidity of, and trading market, if any, for, the New Notes also may
be adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.
19
<PAGE> 24
THE ACQUISITION
Holdings and the Company are newly formed corporations organized by Hicks
Muse and the Company's management. Holdings owns 100% of the capital stock of
the Company. See "Management and Directors," "Certain Transactions" and
"Securities Ownership of Certain Beneficial Owners."
In January 1996, Jupiter acquired the Stations for approximately $105.4
million (including working capital and fees). SBP had an ownership interest in
and managed the Stations pursuant to a contract with Jupiter. Robert N. Smith
(through SBG), Sandy DiPasquale, John M. Purcell and David A. Fitz are partners
in SBP.
On February 28, 1997, the Company purchased substantially all the assets of
the Stations from Jupiter for approximately $157.0 million (the "Acquisition").
Certain members of the Company's management or companies controlled by
management received an aggregate of approximately $10.0 million (subject to
possible increase after certain post-closing adjustments) of the Acquisition
consideration. The Company's senior executive officers and other station general
managers have invested $1.9 million in the Company as part of the Acquisition.
The total cost of the Acquisition (including related fees and expenses) was
$167.3 million. The Company financed the Acquisition through (i) $29.8 million
in borrowings under the $35.0 million secured revolving credit facility (the
"Revolving Credit Facility"), (ii) $60.0 million in borrowings under the secured
term loan facility (the "Term Loan," together with the Revolving Credit
Facility, the "Credit Agreement"), (iii) proceeds of $28.5 million from the
issuance of the Redeemable Preferred Stock ($30.0 million aggregate liquidation
preference) and (iv) proceeds of $49.0 million from the issuance of common
equity to Holdings. See "Use of Proceeds," "Description of the Credit Agreement"
and "Description of Redeemable Preferred Stock."
The Company acquired WTOV through SAC and has filed an application with the
FCC to consolidate SAC with and into the Company after the Offering. The Company
owns 100% of the nonvoting stock of SAC, which represents 99% of the equity, and
SBG owns 100% of the voting stock of SAC, which represents 1% of the equity. The
FCC licenses for the Stations are held by subsidiaries of the Company.
RECENT DEVELOPMENT
On May 8, 1997, the Company entered into the WJAC Merger Agreement with
WJAC, pursuant to which WJAC will become a wholly owned subsidiary of the
Company. WJAC, channel 6, is a VHF NBC-affiliated station serving the
Johnstown/Altoona, Pennsylvania market, which is the 92nd largest DMA in the
United States. The approximate purchase price will be $36.0 million including
certain working capital, and the expected closing date will be early in the
fourth quarter of 1997. The Company intends to finance this transaction with the
proceeds of future debt and/or equity financings. The WJAC Merger Agreement is
subject to customary conditions and no assurances can be given as to whether, or
on what terms, such transaction or such financings will be consummated by the
Company.
On April 18, 1997, the Company entered into a letter of intent to acquire
all of the stock of a company that owns two television broadcast stations for
approximately $8.5 million, excluding working capital. The letter of intent is
subject to customary conditions and no assurances can be given as to whether, or
on what terms, such potential acquisition will be consummated by the Company.
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<PAGE> 25
USE OF PROCEEDS
The Company will not receive any cash proceeds from the exchange pursuant
to the Exchange Offer.
The net proceeds from the Original Offering (approximately $95.9 million)
were used (i) to repay the $60.0 million of borrowings outstanding under the
Term Loan and (ii) to repay approximately $30.8 million of borrowings
outstanding under the Revolving Credit Facility. See "Capitalization" and
"Description of the Credit Agreement."
The Company will use the remaining net proceeds received from the Original
Offering to fund future acquisitions and for working capital and other general
corporate purposes. Although the Company is in discussions with potential
acquisition candidates, there can be no assurance that such transactions will be
consummated on favorable terms or that any acquisition, if completed, will be
successful. See "Risk Factors -- Risks Related to the Ability to Implement the
Company's Operating and Acquisition Strategy" and "Business -- Business
Strategy."
Pending use, the Company has invested the remaining net proceeds from the
sale of the Notes in short-term, interest bearing securities.
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<PAGE> 26
CAPITALIZATION
The following table sets forth, as of March 31, 1997, the (i) historical
capitalization of the Company and (ii) the pro forma consolidated capitalization
of the Company after giving effect to the proposed acquisition of WJAC. The
information set forth below should be read in conjunction with the "Selected
Historical Financial Information," the "Unaudited Pro Forma Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Financial Statements of the Company and the
related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
-----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 8,653 $ 2,653
========= =========
Long-term debt:
Revolving Credit Facility(1).............................. $ -- 21,300
11% Senior Subordinated Notes due 2007.................... 100,000 100,000
-------- --------
Total long-term debt................................... 100,000 121,300
Redeemable Preferred Stock(2)............................... 28,861 28,861
Common stockholders' equity:
Common stock, par value $.01 per share; 1,000 shares
issued and outstanding................................. -- --
Additional paid-in capital................................ 49,012 59,012
Accumulated deficit....................................... (1,020) (1,020)
-------- --------
Total common stockholders' equity...................... 47,992 57,992
-------- --------
Total capitalization................................. $176,853 $208,153
========= =========
</TABLE>
- ---------------
(1) The Revolving Credit Facility, which expires in 2004, provides for
borrowings of up to $35.0 million in the aggregate, with permanent quarterly
commitment reductions beginning in 2000. See "Description of the Credit
Agreement."
(2) Consists of 14% Exchangeable Redeemable Preferred Stock, mandatorily
redeemable in 2008 with an aggregate liquidation preference of $30.0
million. Dividends are cumulative and payable quarterly, which prior to 2002
may, at the option of the Company, be paid in additional shares of
Redeemable Preferred Stock. In addition, the Redeemable Preferred Stock is
exchangeable at any time, at the option of the Company, for debt of the
Company. The Credit Agreement and the Indenture limit the Company's ability
to pay cash dividends prior to 2002 and the Company's ability to exchange
the Redeemable Preferred Stock for debt of the Company. See "Description of
Redeemable Preferred Stock."
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<PAGE> 27
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth the selected historical financial
information of the Stations as of the dates and for the periods indicated. The
historical financial information for the three years ended December 31, 1996 has
been derived from the audited financial statements of the Stations and has been
audited by Arthur Andersen LLP, independent auditors, and is included elsewhere
herein. The historical financial information for the two years ended December
31, 1993 has been derived from unaudited financial data of the Stations. The
unaudited information for the three months ended March 31, 1996 has been derived
from the financial records of the Stations for the periods that management owned
and operated the Stations, and information for the three months ended March 31,
1997 has been derived from the financial records of the Stations and the
Company. Statement of Operations Data below station operating income and related
Other Financial Data, as well as Balance Sheet Data, for the Stations for the
years ended, or at, December 31, 1992 through December 31, 1995 have not been
presented because such information is not meaningful for the following reasons:
(i) during such period the Stations were owned and/or operated by persons other
than the Company and management; (ii) they were not owned or operated as a
single unit for any of such periods; and (iii) they were operated as part of
larger units and therefore, allocations of corporate expenses, interest and long
term debt can not appropriately be made to the Stations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements and the related notes thereto included elsewhere in
this Prospectus.
23
<PAGE> 28
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996(1) 1996(1) 1997(1)
------- ------- ------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues........................ $27,219 $28,120 $31,043 $32,905 $ 37,559 $7,500 $ 8,424
Station operating expenses.......... 16,680 17,616 19,822 20,729 18,564 4,412 4,693
Amortization of program rights...... 3,375 3,599 3,123 3,181 3,581 861 925
Depreciation and amortization....... 3,398 3,567 3,695 4,119 10,146 2,434 2,939
------- ------- ------- ------- -------- ------ --------
Station operating income (loss)... $ 3,766 $ 3,338 $ 4,403 $ 4,876 5,268 $ (207) $ (133)
======== ======== ======== ========
Corporate expenses(2)............... 840 165 248
-------- ------ --------
Operating income (loss)........... 4,428 (372) (381)
Interest expense.................... 6,072 1,457 1,699
Other income(3)..................... 1,552 1,499 60
-------- ------ --------
Loss before income taxes............ (92) (330) (2,020)
Provision for income taxes(4)....... -- -- --
-------- ------ --------
Net loss.......................... $ (92) $ (330) (2,020)
========= =======
Dividends and accretion on
Redeemable Preferred Stock(5)..... 361
--------
Loss applicable to common shares.... $ (2,381)
=========
OTHER FINANCIAL DATA:
Broadcast cash flow(6).............. $ 7,150 $ 6,939 $ 7,822 $ 8,624 $ 15,405 $2,232 $ 2,802
Broadcast cash flow margin(7)....... 26.3% 24.7% 25.2% 26.2% 41.0% 29.8% 33.3%
Operating cash flow(8).............. $ 14,565 2,067 $ 2,554
Capital expenditures(9)............. $ 498 $ 1,515 $ 1,287 $ 750 2,966 387 510
Payments for program rights......... 3,389 3,565 3,399 3,552 3,590 856 929
Ratio of earnings to fixed
charges(11)....................... 1.0x $ (330) $ (2,381)
BALANCE SHEET DATA (AT YEAR END):
Cash and cash equivalents........... $ 2,753 $ 8,653
Total assets........................ 106,608 191,561
Total long-term debt, including
current portion................... 65,000 --
Senior subordinated debt............ -- 100,000
Partners' equity.................... 36,313 --
Redeemable Preferred Stock.......... -- 28,861
Stockholders' equity................ -- 47,992
</TABLE>
See notes on following page.
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<PAGE> 29
NOTES TO SELECTED HISTORICAL FINANCIAL DATA
- ---------------
(1) Financial information for 1996 reflects the period that the Stations were
owned by Jupiter during 1996, which began on January 3 with respect to
WEYI, WROC and WTOV and January 17 with respect to KSBW. Management does
not consider the results of operations of the Stations from January 1, 1996
to the dates the Stations were acquired to be significant to the results of
operations of the Stations for the year ended December 31, 1996 or the
three months ended March 31, 1996. Information for the three months ended
March 31, 1997 include two months of combined results of the Stations and
one month of operations of the Company.
(2) Corporate expenses consist primarily of management fees and other corporate
expenses, including corporate salaries.
(3) Other income consists primarily of approximately $1.5 million of
nonrecurring revenues for consulting services provided during 1996.
(4) No provision for income taxes has been reflected for the 1996 periods since
the Stations operated as partnerships and the net loss of such partnerships
was reported by the partners. No provision for income taxes has been
reflected in the 1997 period due to the anticipated losses for the 10 month
period ended December 31, 1997.
(5) Reflects dividend requirements and accretion on the Redeemable Preferred
Stock for the month of March 1997 only.
(6) "Broadcast cash flow" consists of station operating income (loss) plus
depreciation of property and equipment, amortization of intangible assets
and amortization of program rights minus payments on program rights.
Broadcast cash flow is not a measure of performance calculated in
accordance with GAAP and should not be considered in isolation or as a
substitute for net income (loss), cash flows from operating activities and
other income or cash flow statement data prepared in accordance with GAAP
or as a measure of liquidity or profitability.
(7) "Broadcast cash flow margin" is broadcast cash flow divided by net revenues
expressed as a percentage.
(8) "Operating cash flow" consists of station operating income (loss) plus
depreciation of property and equipment, amortization of intangible assets
and amortization of program rights minus payments on program rights,
obligations and corporate expenses. Operating cash flow is not a measure of
performance calculated in accordance with GAAP and should not be considered
in isolation or as a substitute for net income (loss), cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP or as a measure of liquidity or profitability.
(9) Company anticipates capital expenditures to be approximately $2.8 million
for 1997, and approximately $1.6 million per year thereafter.
(10) For purposes of this calculation, net total long-term debt consists of
total long-term debt outstanding, including current portion, net of cash
and cash equivalents.
(11) For purposes of this calculation, "earnings" consist of income (loss)
before income taxes and fixed charges. "Fixed charges" consist of interest
expense, amortization of deferred financing charges, the component of
rental expense believed by management to be representative of the interest
factor thereon and preferred stock dividend requirements and related
accretion. If the ratio is less than 1.0x, the deficiency is shown.
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<PAGE> 30
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information (the "Pro Forma
Financial Information") is based on the year ended December 31, 1996 and the two
month period ended February 28, 1997 Financial Statements of the Stations and
the March 31, 1997 Financial Statements of the Company, which are included
elsewhere in this Prospectus, and has been prepared to illustrate the effects of
the transactions described below.
The following unaudited pro forma statements of operations for the year
ended December 31, 1996 and the three months ended March 31, 1997 gives effect
to the Acquisition, the Original Offering, and the proposed acquisition of WJAC,
as if such transactions had occurred on January 1, 1996. The Stations historical
statement of operations for the year ended December 31, 1996, includes the
period that the Stations were owned by Jupiter and operated by SBP during 1996,
which period began on January 3 with respect to WEYI, WROC and WTOV and January
17 with respect to KSBW. Management does not consider the results of operations
of the Stations from January 1, 1996 to the dates the Stations were acquired to
be significant to the results of operations of the Stations for the year ended
December 31, 1996. The pro forma unaudited balance sheet as of March 31, 1997
has been prepared as if the acquisition of WJAC had occurred on that date.
The Acquisition and the proposed acquisition of WJAC will be accounted for
using the purchase method of accounting. The total purchase costs of the
Acquisition (approximately $167.3 million) has been allocated to the tangible
and intangible assets and liabilities acquired based upon their respective fair
values. The total purchase costs of the proposed WJAC acquisition (approximately
$37.3 million) will be allocated to the tangible and intangible assets and
liabilities acquired based upon their respective fair values. The allocation of
the aggregate purchase price reflected in the Pro Forma Financial Information is
preliminary. The final allocation of the purchase price is contingent upon the
receipt of final appraisals of the acquired assets; however, that allocation is
not expected to differ materially from the preliminary allocation.
The Pro Forma Financial Information is based on the historical financial
statements of the Stations and the Company and the assumptions and adjustments
described in the accompanying notes. The unaudited pro forma statements of
operations do not purport to represent what the Station's results of operations
actually would have been if the Acquisition, the Original Offering and the
proposed acquisition of WJAC had occurred as of the date indicated or what
results will be for any future periods. The Pro Forma Financial Information is
based upon assumptions that the Company believes are reasonable and should be
read in conjunction with the Financial Statements and the related notes thereto
included elsewhere in this Prospectus.
26
<PAGE> 31
STC BROADCASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WJAC PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short-term
investments.................................. $ 8,653 $ 5,517 $(11,517)(a)(b) $ 2,653
Accounts receivable, net....................... 6,836 1,636 (37)(b) 8,435
Current portion of program rights.............. 3,609 162 -- 3,771
Other current assets........................... 927 301 (33)(b) 1,195
-------- ------- -------- --------
TOTAL CURRENT ASSETS.................... 20,025 7,616 (11,587) 16,054
-------- ------- -------- --------
PROPERTY AND EQUIPMENT, net...................... 26,767 2,502 4,998(b)(c) 34,267
PROGRAM RIGHTS, net of current portion........... 6,855 89 -- 6,944
INTANGIBLE ASSETS, net........................... 129,845 -- 46,244(c) 176,089
DEFERRED ACQUISITION AND FINANCING COSTS, net.... 8,068 -- 1,300(c) 9,368
OTHER ASSETS..................................... -- 1,865 (477)(b) 1,388
-------- ------- -------- --------
TOTAL ASSETS............................ $191,560 $12,072 $ 40,468 $244,100
======== ======= ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses.......... $ 3,859 $ 509 $ (33)(b) $ 4,335
Current portion of program rights payable...... 3,603 108 -- 3,711
-------- ------- -------- --------
TOTAL CURRENT LIABILITIES............... 7,462 617 (33) 8,046
-------- ------- -------- --------
PROGRAM RIGHTS PAYABLE, net of current portion... 7,245 62 -- 7,307
SENIOR SUBORDINATED NOTES........................ 100,000 -- -- 100,000
LONG-TERM DEBT, net of current portion........... -- -- 21,300(a) 21,300
DEFERRED INCOME TAXES............................ -- -- 18,000(c) 18,000
OTHER LIABILITIES................................ -- 2,604 -- 2,604
-------- ------- -------- --------
TOTAL LIABILITIES....................... 114,707 3,283 39,267 157,257
-------- ------- -------- --------
REDEEMABLE PREFERRED STOCK....................... 28,861 -- -- 28,861
COMMON STOCKHOLDERS' EQUITY...................... 47,992 8,789 1,211(a) 57,992
-------- ------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY................................ $191,560 $12,072 $ 40,509 $244,110
======== ======= ========== ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Balance Sheet
27
<PAGE> 32
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(DOLLARS IN THOUSANDS)
(a) Reflects the financing of the proposed WJAC acquisition:
<TABLE>
<S> <C>
Sources of Funds for the proposed acquisition of WJAC:
Revolving Credit Facility................................. $ 21,300
Cash and cash equivalents................................. 6,000
Capital contributed by Holdings........................... 10,000
--------
$ 37,300
=========
The adjustment to cash consists of:
Cash and short-term investments not acquired (see (b)
below)................................................. $ (5,517)
Cash used in purchase of WJAC............................. (6,000)
--------
$(11,517)
=========
The adjustment to common stockholders' equity consists of:
Equity contributed by Holdings............................ $ 10,000
Less equity of WJAC at March 31, 1997..................... (8,789)
--------
$ 1,211
=========
</TABLE>
(b) This adjustment reflects the elimination of assets that are not being
acquired and the elimination of liabilities that are not being assumed in
the proposed acquisition of WJAC:
<TABLE>
<S> <C>
Assets:
Cash and short-term investments........................... $ (5,517)
Receivables............................................... (37)
Prepaids.................................................. (33)
Property and equipment.................................... (55)
Other assets.............................................. (477)
Liabilities:
Accounts payable and accrued expenses..................... 33
--------
Net assets not being acquired............................... $ (6,086)
--------
</TABLE>
(c) Reflects the acquisition of WJAC. The proposed WJAC acquisition will be
accounted for using the purchase method of accounting. The Company has not
yet determined the final allocation of the purchase price and, accordingly,
the amounts shown below may differ from the amounts ultimately determined.
The preliminary pro forma allocation of the purchase price is as follows:
<TABLE>
<S> <C>
Purchase price and estimated acquisition and financing
costs..................................................... $ 37,300
Net assets not being acquired............................... 6,086
--------
43,386
Less:
Elimination of WJAC stockholders' equity.................... (8,789)
Estimated additional deferred costs......................... (1,300)
--------
Excess of purchase price over historical amounts to be
allocated................................................. $ 33,297
=========
Allocation of excess purchase price based on preliminary
estimated values:
Property and equipment.................................... $ 5,053
Intangible assets......................................... 46,244
Deferred income taxes..................................... (18,000)
--------
$ 33,297
=========
</TABLE>
28
<PAGE> 33
STC BROADCASTING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
STATION WJAC PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues.................................. $37,559 $10,882 $ (1,337)(a) $ 47,104
Station operating expenses.................... 18,564 7,150 (1,495)(a) 24,219
Amortization of program rights................ 3,581 865 -- 4,446
Depreciation and amortization................. 10,146 566 7,450(a)(b) 18,162
------- ------- -------- --------
Station operating income...................... 5,268 2,301 (7,292) 277
Corporate expenses............................ 840 -- 410(c) 1,250
------- ------- -------- --------
Operating income (loss)....................... 4,428 2,301 (7,702) (973)
Interest expense.............................. 6,072 -- 6,845(d) 12,917
Other income, net............................. 1,552 280 (280)(e) 1,552
------- ------- -------- --------
Income (loss) before income taxes............. (92) 2,581 (14,827) (12,338)
Income taxes.................................. -- 1,071 (871)(f) 200
------- ------- -------- --------
Net income (loss)............................. (92) 1,510 (13,956) (12,538)
Dividends and accretion on Redeemable
Preferred Stock............................. -- -- 4,332(g) 4,332
------- ------- -------- --------
Income (loss) applicable to common shares..... $ (92) $ 1,510 $(18,288) $(16,870)
======== ======== ========== =========
</TABLE>
STC BROADCASTING, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
STATION AND
COMPANY WJAC PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues............................... $ 8,424 $2,769 $ (526)(a) $ 10,667
Station operating expenses................. 4,693 1,950 (450)(a) 6,193
Amortization of program rights............. 925 272 -- 1,197
Depreciation and amortization.............. 2,939 147 1,453(a)(b) 4,539
------- ------ --------- --------
Station operating income (loss)............ (133) 400 (1,529) (1,262)
Corporate expenses......................... 248 -- 64(c) 312
------- ------ --------- --------
Operating income (loss).................... (381) 400 (1,593) (1,574)
Interest expense........................... 1,699 -- 1,531(d) 3,230
Other income, net.......................... 60 82 (82)(e) 60
------- ------ --------- --------
Income (loss) before income taxes.......... (2,020) 482 (3,206) (4,744)
Income taxes............................... -- 174 (124)(f) 50
------- ------ --------- --------
Net profit (loss).......................... (2,020) 308 (3,082) (4,794)
Dividends and accretion on Redeemable
Preferred Stock.......................... 361 -- 722(g) 1,083
------- ------ --------- --------
Income (loss) applicable to common shares.. $(2,381) $ 308 $ (3,804) $ (5,877)
========= ======= ========== ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Statements of Operations.
29
<PAGE> 34
STC BROADCASTING, INC AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) Reflects the revenues and expenses of certain operations of WJAC which are
not being acquired by the Company. A summary of such revenues and expenses
follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ---------------
<S> <C> <C>
Net revenues....................................... (1,337) (526)
Station operating expenses......................... (1,495) (450)
Depreciation and amortization...................... (74) (19)
</TABLE>
(b) Reflects the incremental change in depreciation and amortization expense
due to purchase accounting adjustments to property and equipment and
intangible assets consistent with the depreciation and amortization
policies utilized by the Company and the incremental change in deferred
financing charges and organizational costs.
(c) Reflects the incremental change in management fees and other corporate
expenses including corporate salaries.
(d) Reflects incremental interest expense associated with the Notes and the
proposed acquisition of WJAC, including related borrowings under the
Revolving Credit Facility. The Notes bear interest at 11% per annum and the
Revolving Credit Facility bears interest at various options, which
approximate 9% per annum for the periods presented.
(e) Reflects reduction in interest earned on marketable securities and cash at
WJAC since these assets will not be acquired by Company.
(f) No pro forma federal tax provision has been reflected due to the pro forma
federal net loss. A provision of $200,000 and $50,000 have been provided
for the year ended December 31, 1996 and the three months ended March 31,
1997, respectively, for state income taxes.
(g) Reflects accrued dividends and accretion on the Redeemable Preferred Stock.
30
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The revenues of the Stations are primarily advertising revenues and, to a
much lesser extent, compensation paid by the networks to the Stations for
broadcast network programming and revenues from tower rentals and commercial
production activities. The Stations' primary operating expenses are employee
compensation and related benefits, news gathering and film and syndicated
programming expenditures and promotional costs. A high proportion of the
operating expenses of the Stations are fixed in nature.
In general, television stations receive revenues from advertising sold for
placement within and adjoining its local programming and national network
programming. Advertising is sold in time increments and is priced primarily on
the basis of a program's popularity within the demographic group an advertiser
desires to reach, as measured principally by audience surveys conducted in
February, May and November of each year. The ratings of local television
stations affiliated with a national television network can be affected by
ratings of network programming. In addition, advertising rates are affected by
the number of advertisers competing for the available time, the size and
demographic makeup of the markets served by the television station and the
availability of alternative advertising media in the market areas. Advertising
rates are highest during the most desirable viewing hours, generally during
local news programming, access (the hour before prime time), early fringe (3:00
p.m. to 5:00 p.m.) and prime time.
Most advertising contracts are short-term and generally run for only a few
weeks. A majority of the revenues of the Stations is generated from local
advertising, which is sold primarily by a Station's sales staff, and the
remainder of the advertising revenues represents national advertising, which is
sold by independent national advertising sales representatives. See
"Business -- Advertising Sales." The Stations generally pay commissions to
advertising agencies on local and national advertising, and on national
advertising the Stations also pay additional commissions to the national sales
representatives. Three Stations are represented by Katz Media Corporation and
one Station is represented by TeleRep, Inc. , each an independent national
advertising sales representative firm operating under an agreement that provides
for exclusive representation within the particular market of the Station. In
1996, local advertising comprised 55.8% of the Company's gross spot revenues
(excluding political advertising), and national advertising comprised 44.2% of
the Company's gross spot revenues (excluding political advertising). The net
broadcast revenues of the Stations are generally highest in the second and
fourth quarters of each year, due in part to increases in consumer advertising
in the spring and retail advertising in the period leading up to and including
the holiday season. On a quarterly basis for 1996, first, second, third and
fourth quarter advertising revenues constituted 19.8%, 25.6%, 24.0% and 30.6%,
respectively, of annual advertising revenues. In addition, advertising revenues
are generally higher during election years due to spending by political
candidates, which spending is typically heaviest during the fourth quarter. In
1996, the Stations' advertising revenues benefited from presidential and
congressional elections as well as the NBC broadcast of both the United
States-based Olympic Games and the Super Bowl. Management does not anticipate
that the Company will benefit from any comparable events in 1997.
"Broadcast Cash flow" is defined as station operating income (loss) plus
depreciation of property and equipment, amortization of intangible assets and
amortization of program rights, less payments for program rights. The Company
has included broadcast cash flow data because such data are commonly used as a
measure of performance for broadcast companies and are used by investors to
measure a company's ability to service debt. Broadcast cash flow is not, and
should not be used as an indicator or alternative to operating income, net loss
or cash flow as reflected in the accompanying financial statements, is not
intended to represent funds available for debt service, dividends, reinvestment
or other discretionary uses, is not a measure of financial performance under
generally accepted accounting principles and should not be considered in
isolation or as a substitute
31
<PAGE> 36
for measures of performance prepared in accordance with generally accepted
accounting principles.
The financial information for the three months ended March 31, 1996 set
forth in the tables below includes operations of KSBW since January 1, 1996, and
differs from the presentation under "Selected Historical Financial Information,"
which includes operations of KSBW since January 17, 1996, which is the date
management began operating KSBW.
The following table sets forth certain data for the three years ended
December 31, 1996 and the three months ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- ---------------
1994 1995 1996 1996 1997
------- ------- ------- ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Station operating income (loss)......... $ 4,403 $ 4,876 $ 5,268 $ (203) $ (133)
Add:
Amortization of program rights........ 3,123 3,181 3,581 901 925
Depreciation and amortization......... 3,695 4,119 10,146 2,434 2,939
Less:
Payments for program rights........... (3,399) (3,552) (3,590) (896) (929)
------- ------- ------- ------ ------
Broadcast cash flow..................... $ 7,822 $ 8,624 $15,405 $2,236 $2,802
======== ======== ======== ====== ======
Percentage increase in broadcast cash
flow from prior period................ 10.25% 78.63% 25.31%
======== ======== ======
</TABLE>
TELEVISION REVENUES
The Company's primary types of programming and their contribution by
approximate percentages of 1996 net revenues were NBC and CBS prime time
(18.3%), local news (25.4%), access (9.9%), early fringe (9.1%) and other
programming (25.3%). Similarly, the Company's two largest categories of
advertisers and their approximate percentages of 1996 net revenues were
automotive (20.8%) and retail (8.2%). No individual advertiser accounted for
more than 5.0% of any individual Station's total net revenues in 1996.
Set forth below are the principal types of revenues for the Stations for
the periods indicated and the percentage contribution of each to the total gross
revenues.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
----------------------------------------------------- --------------------------------
1994 1995 1996 1996 1997
--------------- --------------- --------------- -------------- --------------
$ % $ % $ % $ % $ %
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Local(1)................. $16,574 45.3% $18,991 49.5% $20,207 45.8% $4,145 45.4% $4,683 47.6%
National(1).............. 14,138 38.6 14,808 38.6 15,980 36.2 3,548 38.9 3,852 39.1
Political................ 2,332 6.4 201 0.5 3,513 8.0 348 3.8 0 0
Trade and barter(2)...... 1,293 3.5 1,225 3.2 969 2.2 234 2.6 320 3.2
Network
compensation........... 1,698 4.6 2,545 6.6 2,752 6.2 705 7.7 734 7.5
Other.................... 553 1.6 587 1.6 744 1.6 141 1.6 256 2.6
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
$36,588 100.0% $38,357 100.0% $44,165 100.0% $9,121 100.0% $9,845 100.0%
Agency and national sales
representative
commissions(3)........... 5,545 15.2 5,452 14.2 6,606 14.9 1,320 14.5 1,421 14.4
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
Net revenues....... $31,043 84.8% $32,905 85.8% $37,559 85.1% $7,801 85.5% $8,424 85.6%
======== ===== ======== ===== ======== ===== ====== ===== ====== =====
</TABLE>
32
<PAGE> 37
- ---------------
(1) National sales of approximately $0.9 million and $1.0 million for 1994 and
1995, respectively, have been reclassified as local to maintain consistency
with a reclassification of certain national sales in 1996.
(2) Represents value of commercial time exchanged for syndicated programs and
commercial time exchanged for goods and services (trade outs).
(3) Represents commissions paid to local and national advertising agencies and
to national sales representatives.
RESULTS OF OPERATIONS
Prior to January 1996, the Stations (i) were owned and/or operated by
persons other than the Company and the Company's current management, (ii) were
not owned or operated as a single unit and (iii) were operated as part of larger
groups of stations.
Set forth below is a summary of the operations of the Stations for the
years indicated and their percentage of net revenues.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------ % %
1994 1995 1996 CHANGE CHANGE
------------------ ------------------ ------------------ 1995 1996
% OF NET % OF NET % OF NET VERSUS VERSUS
$ REVENUES $ REVENUES $ REVENUES 1994 1995
------- -------- ------- -------- ------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues...................... $31,043 100.0% $32,905 100.0% $37,559 100.0% 6.0% 14.1%
------- ------- -------
Engineering expenses............ 2,024 6.5 2,073 6.3 1,753 4.7 2.4 (15.4)
Program/Production expenses..... 2,843 9.2 2,750 8.4 2,695 7.2 (3.3) (2.0)
News expenses................... 4,650 15.0 5,215 15.8 4,543 12.1 12.2 (12.9)
Sales/Traffic expenses.......... 3,925 12.6 4,136 12.6 3,333 8.9 5.4 (19.4)
Promotion expenses.............. 517 1.7 559 1.7 381 1.0 8.1 (31.8)
General and administrative
expenses...................... 4,941 15.9 4,975 15.1 4,800 12.8 0.7 (3.5)
Trade and barter expenses....... 922 3.0 1,021 3.1 1,059 2.8 10.7 3.7
------- ------- -------
Total station operating
expenses.................... 19,822 63.9 20,729 63.0 18,564 49.5 4.6 (10.4)
------- ------- -------
Amortization of program rights.... 3,123 10.1 3,181 9.7 3,581 9.5 1.9 12.6
Depreciation and amortization..... 3,695 11.9 4,119 12.5 10,146 27.0 11.5 146.3
------- ------- -------
Station operating income........ $ 4,403 14.2% $ 4,876 14.8% $ 5,268 14.0% 10.7% 8.0%
======== ======== ========
Broadcast cash flow............. $ 7,822 25.2% $ 8,624 26.2% $15,405 41.0% 10.3% 78.6%
======== ======== ========
</TABLE>
Set forth below is a summary of the operations of the Stations for the
three-month periods indicated and their percentage of net revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------
1996 1997 % CHANGE
------------------- ------------------- 1997
% OF NET % OF NET VERSUS
$ REVENUES $ REVENUES 1996
------ --------- ------ --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenues............................ $7,801 100.0% $8,424 100.0% 8.0%
Engineering expenses.................. 514 6.6 405 4.8 (21.2)
Program/Production expenses........... 625 8.0 633 7.5 1.3
News expense.......................... 1,190 15.3 1,126 13.4 (5.4)
Sales/Traffic expenses................ 756 9.7 795 9.4 5.2
Promotion expense..................... 91 1.2 147 1.7 61.5
General and administrative expenses... 1,263 16.2 1,294 15.4 2.4
Trade and barter expenses............. 230 2.9 293 3.5 27.4
------ ----- ------ ----- -----
Total station operating
expense..................... 4,669 59.9 4,693 55.7 .1
Amortization of program rights.......... 901 11.5 925 11.0 2.7
Depreciation and amortization........... 2,434 31.2 2,939 34.9 20.7
------ ----- ------ ----- -----
Station operating income
(loss)...................... $ (203) (2.6)% $ (133) (1.6)% 65.5%
====== ======== ====== ======== ========
Broadcast cash flow........... $2,236 28.6% $2,802 33.3% 25.3%
====== ======== ====== ======== ========
</TABLE>
33
<PAGE> 38
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31,
1996.
Net Revenues. Net revenues increased by $0.6 million, or 8.0%, to $8.4
million for the three months ended March 31, 1997 from $7.8 million for the
three months ended March 31, 1996. Local and national revenues were up 13.0% and
8.6%, respectively, over the prior year period. All of the increases were
generated by KSBW and WEYI and were the results of sales initiatives started in
1996. WROC gained minor market share in the first quarter but the Rochester
market was down 5.2% compared to the prior year. WTOV's revenues were
essentially flat with the prior year. The three months ended March 31, 1996 had
approximately $0.4 million of political revenues compared to none in the three
months ended March 31, 1997.
Station Operating Expenses. Station operating expenses for the 1997 period
increased less than .05% over the 1996 period due to management's continued
emphasis on controlling operating costs.
Amortization of Program Rights. Amortization of program rights for the
first quarter of 1997 increased 2.7% over the 1996 period. This increase
reflects the increased costs of continuing programs and the replacement of
certain programs at WEYI with more expensive, higher quality programming.
Depreciation and Amortization. Depreciation and amortization increased $0.5
million to $2.9 million for the period ended March 31, 1997 from $2.4 million
for the comparable period in 1996 due to the revaluation of assets at the time
of the purchase of the Stations by the Company on March 1, 1997.
Station Operating Income (Loss). Station operating loss decreased $0.1
million to a loss of $0.1 million for the three months ended March 31, 1997 from
a loss of $0.2 million for the three months ended March 31, 1996 due to the
reasons above.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net Revenues. Net revenues increased by $4.7 million, or 14.1%, to $37.6
million for the year ended December 31, 1996 from $32.9 million for the year
ended December 31, 1995. Local revenues (net of commissions) in 1996 increased
by approximately $1.0 million, or 6.0%, as compared to 1995, while national
revenues (net of commissions) in 1996 increased by approximately $1.0 million,
or 7.6%, as compared to 1995. Local and national revenues at the Stations were
favorably affected by political elections and primaries, strong economic
activity in each of the Stations' markets and the NBC broadcast of both the
Super Bowl and the United States-based Olympic Games. Advertising in the
automotive and retail categories was particularly strong and amounted to $6.9
million and $2.7 million, respectively. Local revenues increased, in part, due
to the hiring of new sales management and experienced sales personnel, the
sponsorship and broadcasting of local sports and other popular events and the
institution of more efficient sales incentives. National revenues increased, in
part, due to the engagement of the new national sales representative firm at
three of the Stations. Network revenues increased in 1996 by approximately $0.2
million as compared to 1995 as a result of management's renegotiation of a
higher compensation rate at KSBW. Political revenues (net of commissions)
increased in 1996 by approximately $2.7 million as compared to 1995 due to
congressional and presidential primaries and elections. Trade and barter
revenues in 1996 were $0.3 million lower as compared to 1995 due to management's
reduction in the use of trade and barter for general merchandise items. Revenues
associated with production and rental income increased in 1996 by $0.2 million
as compared to 1995 due to higher rental rates and increased local production of
commercials.
Station Operating Expenses. Station operating expenses decreased by $2.2
million, or 10.4%, to $18.5 million for the year ended December 31, 1996 from
$20.7 million for the year ended December 31, 1995. Engineering expenses
decreased in 1996 by $0.3 million from 1995 due to personnel reductions, the
transfer of certain employees to the production department and lower
34
<PAGE> 39
maintenance costs on new operating equipment. Program and production expenses
were flat compared to the prior year even with the transfer of employees from
the engineering department. Operating expenses associated with the news
department decreased in 1996 by $0.7 million as compared to the prior year as a
result of personnel reductions, elimination of certain outside services and
consultants, lower maintenance costs on newer equipment and the elimination of
unnecessary travel. Sales and traffic operating expenses decreased by $0.8
million for the period as compared to 1995 through personnel reductions,
compensation plan changes, unfilled sales and marketing positions and
elimination of unnecessary sales promotion programs. The two open sales
management positions at WEYI were filled by mid-year 1996 and an open sales
management position at WROC was filled in February 1997. On an overall basis,
management of the Company has made an effort to reduce trades on all items other
than film barter. Film barter costs represent a majority of the trade and barter
expense for both years.
Amortization of Syndicated Program and Film Rights. Amortization of
syndicated program and film rights increased by $0.4 million, or 12.6%, to $3.6
million for the year ended December 31, 1996 from $3.2 million for the year
ended December 31, 1995 due to the increased cost of continuing programs and the
replacement of certain programs at WEYI (beginning in September 1996) with more
expensive, high-quality programming intended to generate higher ratings in early
fringe and access, which management believes should increase ratings in access.
Depreciation and Amortization. Depreciation and amortization increased by
$6.0 million to $10.1 million for the year ended December 31, 1996 from $4.1
million for the year ended December 31, 1995 due to the revaluation of assets at
the time of the purchase of the Stations by Jupiter.
Station Operating Income. Station operating income increased by $0.4
million, or 8.0%, to $5.3 million for the year ended December 31, 1996 from $4.9
million for the year ended December 31, 1995 due to the reasons outlined above.
Corporate Expenses. Corporate expenses were $0.8 million for the year ended
December 31, 1996. Prior to the acquisition of the Stations by Jupiter in
January 1996, administrative management fees were not allocated to the station
levels by the prior owners of the Stations.
Operating Income. Operating income decreased by $0.5 million to $4.4
million for the year ended December 31, 1996 from $4.9 million for the year
ended December 31, 1995 due to the reasons outlined above.
Other Income. Other income consists primarily of approximately $1.5 million
of non-recurring revenues from an unaffiliated national television network for
services provided during 1996.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Prior to January 1996, the Stations (i) were owned and/or operated by
persons other than the Company and the Company's current management, (ii) were
not owned or operated as a single unit and (iii) were operated as part of larger
groups of stations, and therefore, allocations of corporate expenses cannot be
appropriately made to the Stations.
Net Revenues. Net revenues increased by $1.9 million, or 6.0%, to $32.9
million for the year ended December 31, 1995 from $31.0 million for the year
ended December 31, 1994. Local revenues (net of commissions) increased in the
year ended December 31, 1995 by approximately $2.2 million, or 15.4%, as
compared to 1994, while national revenues (net of commissions) increased by
approximately $0.4 million, or 3.6%, as compared to 1994. Local revenues in the
other three markets were strong in 1995 due to improved programming, the
strength of automotive advertising and the continued resurgence in the local
Monterey-Salinas economy after the 1992 closing of the Fort Ord military base.
Network revenues were $0.8 million higher for 1995 when compared to 1994 due to
all Stations entering into new long-term affiliation agreements with their
respective networks. Political
35
<PAGE> 40
revenues (net of commissions) were down $1.6 million for 1995 compared to 1994
due to the numerous congressional and local elections in 1994.
Station Operating Expenses. Station operating expenses increased
approximately $0.9 million, or 4.6%, to $20.7 million for the year ended
December 31, 1995 compared to $19.8 million for the year ended December 31,
1994. Management believes that overall expenditures for 1995 were held down due
to the pending sale of the Stations to Jupiter. Expenses associated with the
Stations' news departments for 1995 increased by approximately $0.6 million as
compared to 1994 due primarily to the expansion of the number of newscasts at
WTOV and WEYI. Expenses associated with the Stations' sales and traffic
departments increased approximately $0.2 million for 1995 when compared to 1994.
A majority of this increase was related to sales incentive trips at WEYI. Costs
associated with promotions in 1995 were flat relative to 1994, with increased
expenditures at WEYI in connection with its network affiliation switch and
decreased expenditures at WROC due to cost restraints related to the sale of the
Station to Jupiter. General and administrative expenses were flat for 1995
compared to 1994. Trade and barter and other expenses were flat for 1995 as
compared to 1994.
Amortization of Syndicated Program and Film Rights. Syndicated program and
film rights amortization amounted to approximately $3.1 million for both the
year ended December 31, 1995 and the year ended December 31, 1994.
Depreciation and Amortization. Depreciation and amortization increased by
$0.4 million to $4.1 million in the year ended December 31, 1995 when compared
to the year ended December 31, 1994 due to the purchase of KSBW in late 1994,
which resulted in a revaluation of the Station's assets at the time of purchase.
Station Operating Income. Station operating income increased by $0.5
million, or 10.7%, to $4.9 million for the year ended December 31, 1995 from
$4.4 million for the year ended December 31, 1994 due to the reasons outlined
above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity needs consist primarily of debt service
requirements resulting from indebtedness incurred in connection with the
Acquisition, working capital needs, the funding of capital expenditures,
acquisitions and dividend payment requirements on the Redeemable Preferred
Stock. The Company may incur additional indebtedness in the future, subject to
certain limitations contained in the Indenture and the Credit Agreement and
intends to do so in order to fund future acquisitions as part of its business
strategy. At March 31, 1997, the Company's consolidated long-term indebtedness
consisted solely of the Old Notes. The ability of the Company to implement its
business strategy and to consummate future acquisitions will require significant
additional debt and/or equity capital and no assurances can be given as to
whether, and on what terms, such additional debt and/or equity capital will be
available. The degree to which the Company is leveraged could have a significant
effect on its results of operations.
Interest payments under the Notes represent significant liquidity
requirements for the Company. Loans under the Credit Agreement bear interest at
floating rates based upon the interest rate option selected by the Company. In
addition, the Redeemable Preferred Stock is cumulative, with dividends payable
quarterly, and prior to 2002 may, at the option of the Company be paid in
additional shares of Redeemable Preferred Stock. In the event dividends on the
Redeemable Preferred Stock are paid in cash, dividends would amount to $4.2
million annually. The Credit Agreement and the Indenture limit the Company's
ability to pay cash dividends prior to 2002 and the Company's ability to
exchange the Redeemable Preferred Stock for debt of the Company. See
"Description of the Credit Agreement" and "Description of the Redeemable
Preferred Stock."
The Company's capital expenditures were $1.3 million, $0.8 million and $3.0
million in 1994, 1995 and 1996, respectively. Capital expenditures in 1994 and
1995 consisted primarily of mainte-
36
<PAGE> 41
nance capital expenditures. Capital expenditures in 1996 were intended to
improve the overall operating efficiencies of all the Stations. The Company
estimates that for 1997, approximately $2.8 million of capital expenditures (of
which $510,000 was spent in the first quarter of 1997) will be made as the
Company continues to improve the news gathering and production capabilities of
KSBW, WROC and WEYI. Maintenance capital expenditures for the Stations are
estimated to be approximately $1.6 million per year beginning in 1998. The
Company's ability to make capital expenditures is subject to certain
restrictions under the Credit Agreement. See "Description of the Credit
Agreement."
The Company's principal source of cash to fund its liquidity needs will be
net cash from operating activities, existing cash and cash equivalents and
borrowings under the Revolving Credit Facility. Net cash from operating
activities for the year ended December 31, 1996 was $9.6 million, an increase of
$2.7 million from $6.9 million in the year ended December 31, 1995, primarily as
a result of an increase in broadcast cash flow. The Revolving Credit Facility
contains an initial commitment of $35.0 million, all of which is available for
acquisitions and working capital needs. Commitments under the Revolving Credit
Facility will be automatically and permanently reduced at the end of each fiscal
quarter by 5.0% of the total commitment beginning in 2000. Amounts available
under the Revolving Credit Facility may be used for working capital and general
corporate purposes (including acquisitions), subject to certain limitations. See
"Description of the Credit Agreement."
Based on the current level of operations and anticipated future growth
(both internally generated as well as through acquisitions), the Company
anticipates that its cash flow from operations, together with borrowings under
the Revolving Credit Facility should be sufficient to meet its anticipated
requirements for working capital, capital expenditures, interest payments and
scheduled principal payments. The Company's future operating performance and
ability to service or refinance the Notes and to extend or refinance the
Revolving Credit Facility will be subject to future economic conditions and to
financial, business and other factors, many of which are beyond the Company's
control. The Company regularly enters into program contracts for the right to
broadcast television programs produced by others and program commitments for the
right to broadcast programs in the future. Such programming commitments are
generally made to replace expiring or canceled program rights. Payments under
such contracts are made in cash or the concession of advertising spots to the
program provider to resell, or a combination of both.
On May 8, 1997, the Company entered into the WJAC Merger Agreement pursuant
to which WJAC will become a wholly owned subsidiary of the Company. WJAC,
channel 6, is a VHF NBC-affiliated station serving the Johnstown/Altoona,
Pennsylvania market, which is the 92nd largest DMA in the United States. The
approximate purchase price will be $36.0 million including certain working
capital, and the expected closing date will be early in the fourth quarter of
1997. The Company intends to finance this transaction with the proceeds of
future debt and/or equity financings. The WJAC Merger Agreement is subject to
customary conditions and no assurances can be given as to whether, or on what
terms, such transaction or such financings will be consummated by the Company.
On April 18, 1997, the Company entered into a letter of intent to acquire
all of the stock of a company that owns two television broadcast stations for
approximately $8.5 million, excluding working capital. The letter of intent is
subject to customary conditions and no assurances can be given as to whether, or
on what terms, such potential acquisition will be consummated by the Company.
DEPRECIATION, AMORTIZATION AND INTEREST
Because the Company incurred substantial indebtedness in the Acquisition
for which it has significant debt service requirements, and because the Company
has significant non-cash charges relating to the depreciation and amortization
expense of the fixed assets and goodwill that were
37
<PAGE> 42
acquired in the Acquisition, the Company expects that it will report net losses
for the foreseeable future.
The Acquisition has been accounted for using the purchase method of
accounting, and the total purchase price has been allocated to the assets and
liabilities acquired based upon their respective fair values. As a result, the
Company expects to record depreciation and amortization expenses, as well as
interest expenses, that are significantly in excess of historical levels for the
Stations.
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<PAGE> 43
BUSINESS
THE COMPANY
The Company currently owns and operates four network-affiliated television
broadcast stations located in four distinct and geographically diverse markets,
ranging in size from the 62nd to the 139th largest DMAs in the United States.
Three of the Stations are network affiliates of NBC (one of which is also a
secondary affiliate of ABC) and one Station is a network affiliate of CBS.
The Company was recently organized by management and Hicks Muse with the
goal of becoming a leading owner and operator of network-affiliated television
broadcast stations, serving select "middle-to-small markets" (i.e., those DMAs
ranked from approximately 50 to 150 by Nielsen). Management believes that these
markets provide greater opportunity for the Company to successfully apply its
business strategy of increasing revenues while controlling operating costs and
other expenses. Commercial stations in the Company's target markets generally
face limited competition from other over-the-air broadcasters for audience,
syndicated programming and advertising revenues.
For the year ended December 31, 1996 (throughout which the Stations were
operated by the Company's current management), the Stations' net revenues and
broadcast cash flow increased 14.1% and 78.6%, respectively, from $32.9 million
and $8.6 million, respectively, in 1995 to $37.6 million and $15.4 million,
respectively, in 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In 1996, none of the Stations accounted
for more than 30.0% of the Stations' aggregate net revenues. The Company is
actively pursuing additional acquisitions of television broadcast stations that
it believes will provide similar opportunities to increase broadcast cash flow.
The four markets in which the Company currently operates offer geographic
diversity that reduces the impact on the Company of changes in respective market
economies and provide favorable competitive operating environments. Three of
these markets range from the 62nd to the 70th largest markets in the United
States based on reported market revenues. In the Wheeling, West
Virginia-Steubenville, Ohio DMA, the Company's Station is one of only two
commercial television broadcast stations and in the Flint-Saginaw-Bay City,
Michigan and Rochester, New York DMAs, the Company's Stations are one of only
four commercial television broadcast stations. In the six station
Monterey-Salinas, California DMA, the Company's Station effectively has the only
over-the-air VHF signal capable of reaching a majority of the households in this
market due to the natural barrier formed by the mountains surrounding the
Monterey Bay, which tends to interfere with the competing VHF station located in
San Jose, California. The Company's Stations are the number one ranked station
in the Monterey-Salinas and Wheeling-Steubenville DMAs and the number three
ranked station in the Flint-Saginaw-Bay City and Rochester DMAs. The Company
believes that the Stations are well positioned to achieve long-term growth in
audience share and revenue share because of (i) the limited competition for
viewers from other over-the-air television broadcasters in these markets, (ii)
the strength of the Company's management and (iii) the Stations' favorable
and/or improving rankings within their DMAs. In addition, management believes
that the limited number of other television broadcast stations in these markets
enables the Company to purchase syndicated programming at favorable rates.
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<PAGE> 44
The following table summarizes certain information regarding each Station
and its respective DMA:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
PRIMARY/ NUMBER OF -----------------------------
MARKET SECONDARY COMMERCIAL STATION STATION NET % OF
STATION/CHANNEL: DMA REVENUE NETWORK TV STATIONS RANK IN AUDIENCE REVENUES(1) TOTAL NET
DMA RANK RANK AFFILIATION IN DMA DMA SHARE (IN THOUSANDS) REVENUES
---------------- ---- ------- ----------- ----------- ------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WEYI/25:
Flint-Saginaw-Bay City, MI..... 62 70 NBC 4 3 13% $ 8,061 21.5%
WROC/8:
Rochester, NY.................. 74 62 CBS 4 3 18% $10,994 29.3%
KSBW/8:
Monterey-Salinas, CA........... 122 69 NBC 6(2) 1 22% $10,486 27.9%
WTOV/9:
Wheeling, WV-Steubenville,
OH........................... 139 160 NBC/ABC 2 1 22% $ 8,018 21.3%
</TABLE>
- ---------------
(1) Includes trade and barter revenues and net of agency and sales
representative commissions.
(2) The Company's Station effectively has the only over-the-air VHF signal
capable of reaching a majority of the households in this market. In
addition, of the six stations in this DMA, two are Spanish-language
stations. See "Business -- The Stations -- KSBW: Monterey-Salinas,
California."
BUSINESS STRATEGY
The Company's business strategy is to acquire and operate television
broadcast stations and maximize operating cash flow through both revenue growth
and improved cost control. The Company believes that revenue growth and cost
control may be achieved simultaneously, principally because many of the costs
associated with operating a television station are fixed. The Company's
management team has successfully implemented this strategy with other television
broadcast stations as well as with the Stations. Key components of the Company's
business strategy include:
Controlling Costs. The Company seeks to selectively reduce costs at
acquired stations without adversely affecting growth. Since management assumed
operations of the Stations in January 1996, broadcast cash flow margins at the
Stations increased from 26.2% for 1995 to 41.0% for 1996, in part due to an
approximately $2.2 million reduction in station operating expenses. Broadcast
cash flow margins at each of the Stations increased from 1995 to 1996, including
significant improvements at WEYI (from 13.0% for 1995 to 45.5% for 1996) and
WTOV (from 33.4% for 1995 to 49.0% for 1996). This financial success resulted in
part from management's aggressive cost saving initiatives such as the
elimination of unnecessary sales expenses. After acquiring a station, management
implements a cost control strategy stressing the elimination of unnecessary
costs, budgeting, accountability and disciplined credit and collection
procedures. Management believes that it has created an operating structure that
can profitably accommodate revenue growth. See "Certain Transactions."
Intensifying Sales Efforts. The Company implements an aggressive approach
to sales and marketing designed to increase market revenue share. Management
believes that increases in revenue share are not necessarily dependent on
increases in audience share. Since management assumed operations of the Stations
in January 1996, net revenues of the Stations increased by 14.1% over 1995, due,
in part, to newly implemented initiatives such as: (i) the restructuring and
expansion of the local sales departments at three of the Stations (including the
hiring of new sales management and experienced sales personnel with local market
knowledge); (ii) the engagement of a new national sales representative firm for
three of the Stations; (iii) the sponsorship and broadcasting of local events
and activities, such as highly-rated high school football, offering local
advertisers value-added community identity; and (iv) the institution of more
efficient sales incentives.
Building on Local News Franchises. The Company seeks to increase revenues
by developing a highly-rated, well-differentiated local news product designed to
build viewer loyalty and target
40
<PAGE> 45
specific demographic audiences that appeal to advertisers. Through the
implementation of its strategy, management has succeeded in strengthening the
top-rated local news positions of KSBW (four times the audience ratings of its
nearest news competitor) and WTOV (winner of 10 Associated Press awards in Ohio
and West Virginia) in their respective DMAs. At WROC and WEYI, the local news
programming has been redirected through several initiatives including: (i) the
hiring of a new news director at WROC with prior successful experience
redirecting news operations (whose responsibilities also include overseeing the
news programming at the other Stations); (ii) the hiring of new, experienced
on-air talent (including new anchor teams); (iii) the creation of a new on-air
appearance at WROC through improved set lighting, music, graphics and news room
production equipment; (iv) the reprogramming of local newscasts to include more
exclusive/investigative stories with greater audience appeal; and (v) the
careful selection of top-rated syndicated programming that is broadcast just
prior to and after the local news.
Managing Program Selection. Each Station seeks to cost-effectively purchase
first-run and off-network syndicated programming to target specific demographic
audiences. The Stations have been able to purchase syndicated programming at
rates that management believes are attractive, in part because of the limited
competition for such programming in the Stations' DMAs. WROC, WTOV and KSBW have
contracts (expiring in 1999 and 2000) to air highly-rated programming, such as
The Oprah Winfrey Show, Jeopardy and Wheel of Fortune. In September 1996, WEYI
began airing programming such as Hard Copy and Entertainment Tonight, which had
previously been broadcast by a local competitor. Additional highly-rated
syndicated programming aired by the Stations includes Rosie O'Donnell on WROC
(through September 1997), WTOV and KSBW (beginning in September 1997) and
Seinfeld and Mad About You on WTOV.
Positioning and Branding Stations. The Company seeks to increase revenues
by developing and maintaining a unique, local "brand image" for each Station
within its respective market with which viewers and advertisers can identify.
This strategy integrates local news, programming, promotion and sales efforts
for each Station based on its market's demographics, competition, dynamics and
opportunities. By covering local events in more of the 12 Ohio Valley counties
(including the Wheeling, West Virginia market) than its competitors, WTOV has
been able to increase its profile with viewers and advertisers and differentiate
itself from its local competitors. KSBW continues to reinforce its identity with
viewers as the "Monterey-Salinas" television station with highly-recognized,
established on-air talent, as well as comprehensive local news coverage and
community involvement. WEYI has benefited from its network affiliation and
positioned itself as mid-Michigan's NBC station.
Pursuing Selective Acquisitions. The Company actively seeks to acquire
underperforming television stations that management believes can benefit from
its business strategy. Targeted stations generally have one or more of the
following characteristics: (i) attractive acquisition terms, which may include
station-for-station exchanges; (ii) opportunities to implement effective cost
controls; (iii) opportunities for increased advertising revenue; (iv)
opportunities for increased audience share through improved newscasts and
programming; (v) limited competition from other television broadcasters; and
(vi) market locations that possess attractive projected growth in advertising
revenues. The Company generally targets network-affiliated stations, which
typically have established audiences for their news, sports and entertainment
programming, located in DMAs generally ranked from 50 to 150. Management
believes that these stations can achieve operating margins comparable to larger
market stations, yet may be purchased for lower multiples of cash flow. The
Company believes that because of the limited competition from other television
broadcasters in these middle-to-small markets, there is an opportunity for local
stations to attract large local audience share and thus compete successfully for
advertising revenues with alternative media, such as cable television, radio and
newspapers.
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<PAGE> 46
NETWORK AFFILIATIONS
Each of the Stations is affiliated with a major broadcast network pursuant
to a long-term affiliation agreement. Each affiliation agreement generally
provides the Station with the right to broadcast all programs transmitted by the
network with which the Station is affiliated. In return, the network has the
right to sell nearly all of the advertising time during its broadcasts and pays
a specified network compensation fee to the Station. These payments are subject
to increase or decrease by the network during the term of an affiliation
agreement with provisions for advance notice and a right of termination by the
Station in the event of a reduction. The agreements are generally for 10-year
terms and contain customary renewal provisions, which generally provide for
automatic renewal for successive terms, subject to either party's right to
terminate the agreement at the end of any term upon proper notice. WROC's
network affiliation agreement with CBS expires on January 31, 2005, and WEYI's,
KSBW's and WTOV's network affiliation agreements with NBC expire on January 31,
2005, December 31, 2005 and January 1, 2002, respectively. In addition, WTOV has
a secondary network affiliation agreement with ABC that provides WTOV the right
of first refusal to carry ABC programming events in WTOV's market. This
secondary network affiliation agreement may be terminated at any time by either
party upon notice.
ADVERTISING SALES
General. Television station revenues are primarily derived from the sale of
local and national advertising. Advertising rates are based upon a program's
popularity among the viewers that an advertiser wishes to target, the number of
advertisers competing for the available time, the size and the demographic
composition of the market served by the station, the availability of alternative
advertising media in the market area and the effectiveness of the stations'
sales force. Advertising revenues are positively affected by strong local
economies, national and regional political election campaigns and certain events
such as the Olympic Games or the Super Bowl. Consequently, because television
broadcast stations rely on advertising revenues, declines in advertising
budgets, particularly in recessionary periods, adversely affect the broadcast
industry, and as a result may contribute to a decrease in the revenues of
broadcast television stations. The Company seeks to manage its advertising spot
inventory efficiently to maximize advertising revenues and return on programming
costs.
Local Sales. Approximately 55.8% of net broadcast revenues (excluding
political advertising) in 1996 came from the sale of local advertising time.
Local advertising time is sold by each Station's local sales staff who call upon
advertising agencies and local businesses, which typically include car
dealerships, retail stores and restaurants. Compared to revenues from national
advertising accounts, revenues from local advertising generally are more stable
and, due to a lower cost of sales, more profitable. The Company seeks both to
attract new advertisers to television and to increase the amount of advertising
time sold to existing local advertisers by relying on experienced local sales
forces with strong community ties, producing news and other programming with
local advertising appeal, sponsoring or co-promoting local events and activities
that give local advertisers value-added community identity. The Company places a
strong emphasis on experience of its local sales staff and maintains an on-going
training program for sales personnel. To increase accountability of the
Stations' sales forces, management has implemented initiatives whereby sales
managers are responsible for the effective management of commercial inventory
using input from account executives who are responsible for preparing detailed
reports and projections. To enhance local sale revenues, WEYI, which had
previously operated with no sales management and only two account executives,
has become fully staffed by hiring two sales managers and six additional account
executives. WROC, which, throughout 1996, had operated with only one sales
manager responsible for both national and local sales, recently began
restructuring its sales department by hiring a local sales manager and is
currently recruiting a national sales manager and additional experienced sales
personnel. At WTOV and KSBW, management's objective has been to increase the
accountability of their already successful local sales forces with respect to
each Station's
42
<PAGE> 47
success in generating advertising revenues. WTOV has also promoted a new general
sales manager and a new local sales manager from within the Station. Management
believes that these new managers should have a positive impact on sales based on
their familiarity with the Station, its advertisers and the local market.
National Sales. Approximately 44.2% of net broadcast revenues (excluding
political advertising) in 1996 came from the sale of national advertising time.
National advertising time is sold through national sales representative firms
retained by the Company, which firms call upon businesses, which typically
include automobile manufacturers and dealer groups, telecommunications
companies, fast food franchisors and national retailers (all of which may also
advertise locally). Each Station has a sales manager assigned to work with the
national sales representatives to increase the awareness of the Stations with
national advertisers and, as a result, increase national advertising
expenditures with the Stations. In December 1995, a new national sales
representative, Katz Media Corporation, was engaged for WEYI, WROC and WTOV,
which management believes resulted in increased national sales for these
Stations. The Company believes that the representation of three Stations by the
same agency increases the Company's ability to effectively sell national
advertising. KSBW has a national sales representative agreement with TeleRep,
Inc., which the Company believes contributed to an increase in its national
sales in 1996.
RATINGS
The price of advertising spots is determined in part by a station's overall
ratings and share in a given market, as well as a station's rating among the
particular demographic group that an advertiser may be targeting. There are 211
generally-recognized television "markets" or DMAs in the United States, which
are ranked in size according to various factors based upon actual or potential
audience. Each market is defined as an exclusive geographic area consisting of
all counties in which the home-market commercial stations receive the greatest
percentage of total viewing hours. Currently, Nielsen periodically publishes
data on estimated audiences for the television stations in the various markets
throughout the country. The estimates are expressed in terms of the percentage
of the total potential audience in a market viewing a particular station (the
station's "rating") and the percentage of households actually viewing television
(the station's "share"). In the Stations' DMAs, Nielsen measures viewership by
periodic surveys of selected television viewers through a manual diary system.
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<PAGE> 48
THE STATIONS
WEYI: FLINT-SAGINAW-BAY CITY, MICHIGAN.
Market Overview. WEYI, channel 25, is a UHF NBC-affiliated station serving
Flint, Saginaw and Bay City, Michigan. This DMA is the 62nd largest television
market in the United States with approximately 439,000 television households in
14 counties in eastern Michigan. WEYI is located in a two VHF-station market,
which is one of nine DMAs in the top 75 that have only four commercial
television broadcast stations. WEYI competes directly with a VHF CBS affiliate,
an ABC owned and operated VHF station and a UHF Fox affiliate. The limited
competition in this DMA has contributed to WEYI obtaining favorable advertising
rates and programming costs. See "-- Competition." The economies of Flint,
Saginaw and Bay City, Michigan are centered on manufacturing (primarily
automotive), construction, wholesale and retail trade, health services and
agriculture. Prominent employers in this market include General Motors, Genesys
Health Care System and Citizens Bank. In 1995 (the most recent year for which
actual information is available), total television advertising revenues in this
DMA were reported to be approximately $48.3 million and were projected to grow
at 4.9% per year through 1999.
Station Performance and Strategy. WEYI is ranked third in its DMA based on
its sign-on to sign-off audience share (6:00 a.m. to 2:00 a.m.). Since changing
its affiliation from CBS to NBC in January 1995, WEYI has shown improvement in
its revenue market share and local commercial audience share. The switch to NBC
eliminated certain broadcasting signal overlaps from other CBS affiliates in
adjacent markets and positioned the Company to benefit from the audience
established in the DMA by the previous NBC affiliate, which historically has
been the number one ranked station in this DMA. Since management assumed
operations of WEYI in January 1996, net revenues have increased by approximately
$2.1 million, or 34.7%, primarily through the implementation of several
initiatives, including the complete restructuring of the Station's sales
department. In addition to the engagement of a new national sales representative
firm, management hired a new general sales manager and a new local sales
manager, while recruiting experienced sales personnel from the competing local
television stations, resulting in a more professional image among local
advertising agencies and clients. In 1996, management reduced operating expenses
by approximately $0.7 million, or 14.3%, primarily through the elimination of
unnecessary sales promotions and personnel reductions. To complement the NBC
network programming provided to WEYI, management, in September 1996, added new
syndicated programming, including Hard Copy, Maury Povich and Entertainment
Tonight.
Management believes there are further opportunities for revenue growth at
WEYI through continued implementation of its operating strategy. In this regard,
management is in the process of making significant changes in WEYI's local news
programming including the recent hiring of a new news director. The Station also
intends to hire a new anchor team in the near future.
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<PAGE> 49
The following table sets forth certain information regarding WEYI and the
DMA in which it operates:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995 1996
------- ------- ------- -------
(DOLLARS AND HOUSEHOLDS IN THOUSANDS)
<S> <C> <C> <C> <C>
MARKET DATA:
Market revenues(1)...................... $44,000 $48,000 $48,300 $51,400
Market revenue growth over prior
period(1)............................. 6% 8% 1% 6%
DMA household rank(2)................... 60 60 60 62
Market revenue rank(3).................. -- -- 69 70
Television households(2)................ 448 452 450 439
Total commercial stations (V/U)(2)...... 2/2 2/2 2/2 2/2
STATION DATA:
WEYI broadcast cash flow margin......... 22.4% 13.3% 13.0% 45.5%
WEYI audience rank in market(2)(4)...... 2 3 3 3
WEYI audience share(2)(5)............... 12% 10% 13% 13%
WEYI local commercial audience
share(2)(6)........................... 26% 15% 21% 22%
</TABLE>
- ---------------
(1) Source: BIA, Investing in Television, July 1996; 1996 data is estimated.
(2) Source: Nielsen Station Index: Viewers in Profile; data is for November of
each year reported.
(3) Source: BIA, Investing in Television, July of each year reported; market
revenue rank not reported prior to 1995.
(4) Ranking based on local commercial audience share from sign-on to sign-off
(Sunday to Saturday, 6:00 a.m. to 2:00 a.m.).
(5) Represents the number of television households in the DMA tuned to the
Station as a percentage of the number of television households in the DMA
with a television turned on.
(6) Represents an estimate of the DMA household four-week share of viewing
received by the Station in comparison to the other commercial stations in
the market.
45
<PAGE> 50
WROC: ROCHESTER, NEW YORK.
Market Overview. WROC, channel 8, is a VHF CBS-affiliated station serving
Rochester, New York. This DMA is the 74th largest television market in the
United States with approximately 367,000 television households in four counties
in western New York State and is the 62nd largest DMA in terms of market
revenues. WROC is located in one of nine DMAs in the top 75 with only four
commercial television broadcast stations and competes directly with a VHF ABC
affiliate, a VHF NBC affiliate and a UHF Fox affiliate. See "-- Competition." In
the past four years all four stations in the DMA have changed ownership,
creating an opportunity for WROC to improve its position in its market. The
economy of the Rochester market is centered on manufacturing (primarily high
tech industries), wholesale and retail trade services and agriculture. Prominent
employers with corporate headquarters in this market include Eastman Kodak,
Xerox, Bausch & Lomb and Wegmans Food Markets. In 1995 (the most recent year for
which actual information is available), total advertising revenues in this DMA
were approximately $59.0 million and were projected to grow at 5.5% per year
through 1999.
Station Performance and Strategy. WROC ranked third in its DMA based on its
sign-on to sign-off audience share (6:00 a.m. to 2:00 a.m.). Since management
assumed operations of the Station in January 1996, management has made
significant changes in its local news programming and presentation, including
(i) the hiring of a new news director with past experience redirecting news
operations (whose responsibilities also include overseeing the news programming
at the other Stations); (ii) the hiring of new experienced on-air talent
(including a new anchor team); (iii) the creation of a new on-air appearance
through improved set lighting, music, graphics and production equipment; (iv)
the reprogramming of local newscasts to include more exclusive/investigative
stories with greater audience appeal and (v) the careful selection of top-rated
syndicated programming to lead into and follow the local news. Throughout 1996,
WROC had operated with only one sales manager responsible for both national and
local sales. While net revenues at WROC increased by $0.3 million, or 2.4%, in
1996, broadcast cash flow increased by $0.9 million, or 30.9%, primarily through
personnel reductions and the elimination of unnecessary sales promotions. WROC's
network affiliation provides access to CBS programming, including Big East
Football, NCAA Basketball and the NCAA Basketball Championship Tournament.
Additionally, WROC has purchased the television rights to certain Syracuse
University football and basketball games through the 1998/1999 season that
provides significant viewership in Rochester due to the Station's proximity to
Syracuse. WROC's syndicated programming has helped the ratings of its local news
programming and includes The Oprah Winfrey Show, Jeopardy, Wheel of Fortune,
Coach and Maury Povich.
Management believes that there are further opportunities for revenue growth
at WROC through continued implementation of its business strategy. In this
regard, management has recently hired a local sales manager and is recruiting a
national sales manager and additional sales personnel.
46
<PAGE> 51
The following table sets forth certain information regarding WROC and the
DMA in which it operates:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995 1996
------- ------- ------- -------
(DOLLARS AND HOUSEHOLDS IN THOUSANDS)
<S> <C> <C> <C> <C>
MARKET DATA:
Market revenues(1)...................... $52,900 $58,100 $59,000 $63,200
Market revenue growth over prior
period(1)............................. 9% 2% 2% 7%
Market household rank(2)................ 71 71 73 74
DMA revenue rank(3)..................... -- -- 58 62
Television households(2)................ 364 369 367 367
Total commercial stations (V/U)(2)...... 3/1 3/1 3/1 3/1
STATION DATA:
WROC broadcast cash flow margin......... 18.8% 24.5% 27.1% 34.6%
WROC audience rank in market(2)(4)...... 3 3 3 3
WROC audience share(2)(5)............... 19% 18% 18% 18%
WROC local commercial audience
share(2)(6)........................... 26% 27% 27% 28%
</TABLE>
- ---------------
(1) Source: BIA, Investing in Television, July 1996; 1996 data is estimated.
(2) Source: Nielsen Station Index: Viewers in Profile; data is for November of
each year reported.
(3) Source: BIA, Investing in Television, July of each year reported; market
revenue rank not reported prior to 1995.
(4) Ranking based on local commercial audience share from sign-on to sign-off
(Sunday to Saturday, 6:00 a.m. to 2:00 a.m.).
(5) Represents the number of television households in the DMA tuned to the
Station as a percentage of the number of television households in the DMA
with a television turned on.
(6) Represents an estimate of the DMA household four-week share of viewing
received by the Station in comparison to the other commercial stations in
the market.
47
<PAGE> 52
KSBW: MONTEREY-SALINAS, CALIFORNIA.
Market Overview. KSBW, channel 8, is a VHF NBC-affiliated station serving
Monterey-Salinas, California. This DMA is the 122nd largest television market in
the United States with approximately 203,000 television households in three
counties in central California and is the 69th largest DMA in terms of market
revenue. The mountains surrounding the Monterey Bay form a natural barrier to
outside television signals and create a market in which KSBW effectively has the
only over-the-air VHF signal capable of reaching a majority of the households in
the DMA. KSBW competes directly with a UHF CBS affiliate, a UHF Fox affiliate,
and, to a lesser extent, as a result of the geography of the DMA, a VHF ABC
affiliate in San Jose. Currently, the Fox affiliate provides services to the CBS
affiliate through a local marketing agreement. In addition, the Station competes
with two Spanish-language stations, a UHF Univision affiliate and a UHF
independent station. See "-- Competition." The economy of the Monterey-Salinas
market is centered on agriculture, tourism, retail trade, services and
government. Salinas is a rich agricultural center and one of the nation's major
vegetable producing areas. Prominent employers in this market include Dole
Vegetable Company, University of California at Santa Cruz, Tanimura & Antle,
Household Credit and the Counties of Monterey and Salinas. In 1995 (the most
recent year for which actual information is available), total advertising
revenues in this DMA were approximately $48.5 million and were projected to grow
at 5.3% per year through 1999.
Station Performance and Strategy. KSBW ranked first in its DMA based on its
sign-on to sign-off audience share (6:00 a.m. to 2:00 a.m.) and had twice the
audience share of any other station in its market. As an example of the
Station's involvement in the community, KSBW and community leaders created
PeaceBuilders, a year-round, antiviolence program currently in its third year of
existence. KSBW is the leader in local news programming with over three hours of
local news programming each weekday, which earned an audience share four times
greater than its nearest news competitor. Since management acquired KSBW in
January 1996, net revenues increased $1.0 million, or 11.1%, while broadcast
cash flow increased $1.3 million, or 49.3%, primarily through personnel
reductions and reduced programming costs. In addition to network programming
provided by KSBW's affiliation with NBC, KSBW's syndicated programming includes
The Oprah Winfrey Show, Jeopardy, Wheel of Fortune and (beginning in September
1997) Rosie O'Donnell.
Management believes that there are further opportunities to increase
revenues through the implementation of its operating strategy, including the
development of more sophisticated pricing packages, sales incentives and
accountability systems.
48
<PAGE> 53
The following table sets forth certain information regarding KSBW and the
DMA in which it operates:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995 1996
------- ------- ------- -------
(DOLLARS AND HOUSEHOLDS IN THOUSANDS)
<S> <C> <C> <C> <C>
MARKET DATA:
Market revenues(1)...................... $43,500 $46,000 $48,500 $51,100
Market revenue growth over prior
period(1)............................. 7% 5% 5% 5%
DMA household rank(2)................... 114 115 122 122
Market revenue rank(3).................. -- -- 71 69
Television households(2)................ 207 207 200 203
Total commercial stations (V/U)(2)...... 2/4 2/4 2/4 2/4
STATION DATA:
KSBW broadcast cash flow margin......... 29.8% 26.7% 28.4% 38.2%
KSBW audience rank in market(2)(4)...... 1 1 1 1
KSBW audience share(2)(5)............... 21% 23% 19% 22%
KSBW local commercial audience
share(2)(6)........................... 33% 38% 33% 38%
</TABLE>
- ---------------
(1) Source: BIA, Investing in Television, July 1996; 1996 data is estimated.
(2) Source: Nielsen Station Index: Viewers in Profile; data is for November of
each year reported.
(3) Source: BIA, Investing in Television, July of each year reported; market
revenue rank not reported prior to 1995.
(4) Ranking based on local commercial audience share from sign-on to sign-off
(Sunday to Saturday, 6:00 a.m. to 2:00 a.m.).
(5) Represents the number of television households in the DMA tuned to the
Station as a percentage of the number of television households in the DMA
with a television turned on.
(6) Represents an estimate of the DMA household four-week share of viewing
received by the Station in comparison to the other commercial stations in
the market.
49
<PAGE> 54
WTOV: WHEELING, WEST VIRGINIA-STEUBENVILLE, OHIO.
Market Overview. WTOV, channel 9, is a VHF NBC-affiliated station serving
Wheeling, West Virginia and Steubenville, Ohio. This DMA is the 139th largest
television market in the United States with 158,000 television households in 12
counties in southern Ohio, western Pennsylvania and northern West Virginia.
Wheeling-Steubenville is one of two markets in the top 150 DMAs with only two
commercial television stations. This competitive environment results in
favorable network compensation (approximately $1.0 million at WTOV per year),
advertising rates and programming costs. WTOV competes with a VHF CBS-affiliated
station in Wheeling, and to a lesser extent with ABC programming originating
from Pittsburgh, Pennsylvania. See "-- Competition." In addition, WTOV and the
CBS affiliate are secondary ABC affiliates, however WTOV has the right of first
refusal to carry ABC programming events. The economy of the
Wheeling-Steubenville market is centered on manufacturing (primarily steel),
medical services and government. Prominent employers in this market include
Weirton Steel, Wheeling-Pittsburgh Steel, Ohio Edison and the St. John's Medical
Center. In 1995 (the most recent year for which actual information is
available), total television advertising revenues in this DMA were approximately
$10.6 million and were projected to grow at 5.0% per year until 1999.
Station Performance and Strategy. WTOV ranked first in its DMA based on its
sign-on to sign-off audience share (6:00 a.m. to 2:00 a.m.). WTOV has well
established local news programming serving the Ohio Valley, which has won 10
Associated Press awards in Ohio and West Virginia. The Station's five o'clock
local news segment has regularly achieved a leading 30% to 40% share of the
total viewing audience since its introduction in the fall of 1995. WTOV carries
the Pittsburgh Steelers and provides extensive coverage of college football,
including Ohio State University, and highly-rated Ohio Valley high school
football. Through its annual sponsorship of the "Jamboree in the Hills," an Ohio
Valley country music festival, WTOV offers viewers a popular alternative
unavailable elsewhere and advertisers receive the opportunity to reach those
viewers. In addition to network programming provided by WTOV's affiliation with
NBC, WTOV's syndicated programming includes The Oprah Winfrey Show, Jeopardy,
Wheel of Fortune, Mad About You, Seinfeld, Sally Jessy Raphael and Rosie
O'Donnell. Since management acquired WTOV in January 1996, net revenues have
increased $1.3 million, or 18.8%, through the implementation of several
initiatives, including hiring a new general sales manager and a local sales
manager who were promoted from within the Station, implementing new sales
incentives and accountability systems and engaging a new national sales
representative firm. During the same period, broadcast cash flow has increased
$1.7 million, or 74.1%, as management reduced operating expenses, primarily
through the elimination of unnecessary sales promotions and personnel
reductions.
Management believes there are further opportunities to increase revenues
through continued implementation of its operating strategy, such as more
comprehensive local coverage, broadcasting new and other special events
throughout the Ohio Valley and the development of more sophisticated pricing for
the packages it offers advertisers.
50
<PAGE> 55
The following table sets forth certain information regarding WTOV and the
DMA in which it operates:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1994 1995 1996
------- ------- ------- -------
(DOLLARS AND HOUSEHOLDS IN THOUSANDS)
<S> <C> <C> <C> <C>
MARKET DATA:
Market revenues(1)...................... $12,400 $11,600 $10,600 $11,200
Market revenue growth (decline) over
prior period(1)....................... 5% (7)% (9)% 5%
DMA household rank(2)................... 138 138 138 139
Market revenue rank(3).................. -- -- 148 160
Television households(2)................ 158 158 157 158
Total commercial stations (V/U)(2)...... 2/0 2/0 2/0 2/0
STATION DATA:
WTOV broadcast cash flow margin......... 27.6% 34.1% 33.4% 49.0%
WTOV rank in market(2)(4)............... 2 1 1 1
WTOV audience share(2)(5)............... 21% 22% 23% 22%
WTOV local commercial audience
share(2)(6)........................... 48% 61% 57% 56%
</TABLE>
- ---------------
(1) Source: BIA, Investing in Television, July 1996; 1996 data is estimated.
(2) Source: Nielsen Station Index: Viewers in Profile; data is for November of
each year reported.
(3) Source: BIA, Investing in Television, July of each year reported; market
revenue rank not reported prior to 1995.
(4) Ranking based on local commercial audience share from sign-on to sign-off
(Sunday to Saturday, 6:00 a.m. to 2:00 a.m.).
(5) Represents the number of television households in the DMA tuned to the
Station as a percentage of the number of television households in the DMA
with a television turned on.
(6) Represents an estimate of the DMA household four-week share of viewing
received by the Station in comparison to the other commercial stations in
the market.
51
<PAGE> 56
INDUSTRY BACKGROUND
General. Commercial television broadcasting began in the United States on a
regular basis in the 1940s over a portion of the broadcast spectrum commonly
known as the "VHF Band" (very-high frequency broadcast channels numbered 2
through 13). Television channels were later assigned by the FCC under additional
broadcast spectrum commonly known as the "UHF Band" (ultra-high frequency
broadcast channels numbered 14 through 83; channels 70 through 83 have since
been reallocated to non-broadcast services). The license to operate a broadcast
station is granted by the FCC, and due to spacing requirements and other
considerations, the number of licenses allocated to any one market is limited.
Although UHF stations and VHF stations compete in the same market, UHF
stations historically have suffered a competitive disadvantage, in part because
(i) receivers of many households were originally designed only for VHF
reception, (ii) UHF signals were more affected by terrain and other obstructions
than VHF signals and (iii) VHF stations were able to provide higher quality
signals to a wider area. This historic disadvantage of UHF stations has
gradually declined through (a) carriage on cable systems, (b) improvement in
television receivers, (c) improvement in television transmitters, (d) wider use
of all channel antennae, (e) increased availability of programming and (f) the
development of new networks such as Fox and UPN.
All television stations throughout the United States are grouped into 211
generally recognized DMAs, which are ranked in size according to various
formulae based upon actual or potential audience. Each DMA is defined as an
exclusive geographic area consisting of all counties in which the home-market
commercial stations receive the greatest percentage of total viewing hours.
Television Networks. A majority of commercial television stations in the
United States are affiliated with ABC, CBS or NBC (the "Major Networks"). Each
Major Network provides the majority of its affiliates' programming each day
without charge in exchange for nearly all of the available advertising time in
the programs supplied. Each Major Network sells this advertising time and
retains the revenues. The affiliate receives compensation from the Major Network
and retains the revenue from time sold by the affiliate during breaks in and
between network programs and in programming the affiliate produces or purchases
from non-network sources.
In contrast to stations affiliated with Major Networks, an independent
station supplies over-the-air programming through the acquisition of rights to
broadcast programs through syndication. This syndicated programming is generally
acquired by the independent stations for cash and occasionally barter.
Independent stations that acquire a program through syndication are usually
given exclusive rights to show the program in the station's market for either a
period of years or a number of episodes agreed upon between the independent
station and the syndicator of the programming. Types of syndicated programs
aired on the independent stations include feature films, popular series
previously shown on network television and series produced for direct
distribution to television stations.
Fox has established an affiliation of independent stations, commonly known
as the "fourth network," which operates on a basis similar to the Major
Networks. However, the number of hours per week of programming supplied by Fox
to its affiliates is significantly less than the number of hours supplied by the
Major Networks. As a result, Fox affiliates retain a significantly higher
portion of the available inventory of broadcast time for their own use than
Major Network affiliates.
During 1994, UPN established an affiliation of independent stations that
began broadcasting in January 1995 and operates on a basis similar to Fox.
However, UPN currently supplies fewer hours of programming per week to its
affiliates than Fox. As a result, UPN affiliates retain a significantly higher
portion of the available inventory of broadcast time for their own use than
affiliates of Fox or the Major Networks. UPN has indicated its intention to
increase the amount of programming supplied to its affiliates. In 1994, WB
announced its intention to establish separate affiliations of independent
television stations similar to UPN, and began broadcasting in January 1995.
52
<PAGE> 57
Television Advertising. Television stations derive their revenues primarily
from the sale of local and national advertising. All network-affiliated
stations, including those affiliated with Fox and others, are required to carry
spot advertising sold by their networks. This reduces the amount of advertising
available for sale by the stations. Network affiliates are generally compensated
for the broadcast of network programming according to a formula. Stations
directly sell all of the remaining advertising to be inserted in network
programming and all of the advertising in non-network programming, retaining all
of the revenues received from these sales of advertising, less any commissions
paid. Through barter and cash-plus-barter arrangements, however, a national
syndicated program distributor typically retains a portion of the available
advertising time for programming it supplies, in exchange for no or reduced fees
to the station for such programming.
Since 1975, advertising dollars received by commercial television stations
(excluding trade and barter) have increased at a 9.7% compound annual rate from
$3.0 billion in 1975 to $18.9 billion in 1995, according to Veronis, Suhler &
Associates, an industry research firm. While advertising expenditures fluctuate
with the general economy, declining advertising expenditures have occurred in
only one year since 1975. The Company believes that advertising expenditures on
local television stations will continue to grow due to improved network
programming and the availability of high quality syndicated programming. The
Company believes that it is able to capitalize on these favorable trends as a
result of network affiliations, strong relationships with programming
distributors, national sales representatives and advertisers and local
advertisers.
Advertisers wishing to reach a national audience usually purchase time
directly from the Major Networks, Fox, UPN or WB, or advertise nationwide on an
ad hoc basis. National advertisers who wish to reach a particular region or
local audience often buy advertising time directly from local stations through
national advertising sales representative firms. Additionally, local businesses
purchase advertising time directly from the stations' local sales staffs.
Advertising rates are based upon factors that include the size of the DMA in
which the station operates, a program's popularity among the viewers that an
advertiser wishes to attract, the number of advertisers competing for the
available time, the demographic characteristics of the DMA served by the
station, the availability of alternative advertising media in the DMA,
aggressive and knowledgeable sales forces and development of projects, features
and marketing programs that tie advertiser messages to programming. Because
broadcast television stations rely on advertising revenues, declines in
advertising budgets, particularly in recessionary periods, will adversely affect
the broadcast business. Conversely, increases in advertising budgets targeting
specific demographic groups are based upon the superior coverage of broadcast
television stations or the dominant competitive position of a particular station
and may contribute to an increase in the revenues and operating cash flow of a
particular broadcast television station.
Television Viewing Audience. Nielsen is a national audience measuring
service that periodically publishes data on estimated audiences for television
stations in various DMAs throughout the country. The estimates are expressed in
terms of the percentage of the total potential audience in the DMA viewing a
station, referred to as the station's "rating," and of the percentage of the
audience actually watching the television station, referred to as the station's
"share." This rating service provides such data on the basis of total television
households and of selected demographic groupings in the media markets being
measured. Nielsen uses one of two methods of measuring the station's actual
viewership. In larger DMAs, ratings are determined by a combination of meters
connected directly to selected television sets and periodic surveys of
television viewing, while in smaller DMAs only periodic surveys are completed.
In 1996, all of the DMAs in which the Company operated were survey markets.
53
<PAGE> 58
The following schedule indicates the national household ratings/shares of
the four principal broadcast television networks during the periods indicated:
NATIONAL HOUSEHOLD RATINGS/SHARES
<TABLE>
<CAPTION>
BROADCAST SEASON(A) NBC CBS ABC FOX
- ----------------------------------------------- ------- ------- ------- ------
<S> <C> <C> <C> <C>
1995-1996...................................... 11.6/20 8.8/15 9.6/17 6.5/11
1994-1995...................................... 10.6/18 9.9/17 11.0/19 6.8/11
1993-1994...................................... 10.2/17 12.2/21 11.5/20 6.8/11
1992-1993...................................... 10.4/18 11.9/21 11.3/20 7.0/12
1991-1992...................................... 11.6/20 11.8/21 10.8/19 7.2/13
</TABLE>
- ---------------
(a) Based on Nielsen Television Index; prime time rating from September to
September.
COMPETITION
Competition in the television industry exists on several levels, including
competition for audience, advertisers and programming (including local news).
Competition is continually affected by technological change and innovation,
fluctuations in the popularity of competing entertainment and communications
media (including newspapers, magazines and direct mail), and governmental
restrictions or actions by Congress and federal regulatory bodies (including the
FCC and the Federal Trade Commission), any of which could have a material
adverse effect on the Company's operations. Competition in the television
broadcasting industry occurs primarily in individual DMAs. Generally, a
television broadcast station in one DMA does not compete with television
broadcast stations in other DMAs. Certain competitors are part of larger
organizations with substantially greater financial, technical and other
resources than the Company.
Audience. Stations compete for audience share primarily on the basis of
program popularity, which has a direct effect on advertising rates. A large
amount of the Stations' prime time programming is supplied by NBC and CBS and is
therefore dependent upon the performance of such network programs in attracting
viewers. Non-network time periods are programmed by the Station primarily with
syndicated programs purchased for cash, cash and barter, or barter-only, and
also through self-produced news, public affairs and other entertainment
programming.
The development of methods of television transmission other than
over-the-air broadcasting, and in particular the growth of cable television, has
significantly altered competition for audience share in the television industry.
These other transmission methods can increase competition faced by a broadcast
station by bringing into its market distant broadcasting signals not otherwise
available to the station's audience and also by serving as a distribution system
for programming that originates on the cable system.
Other sources of competition for audience include home entertainment
systems (including video cassette recorder and playback systems, videodiscs and
television game devices), low-power television multipoint distribution systems,
multichannel multipoint distribution systems, wireless cable, internet services,
satellite master antenna television systems and some low-power, in-home
satellite services. In addition, telephone companies may provide channels for
program suppliers to deliver video programming to the home, an arrangement that
the FCC calls "video dial tone." The Company's television stations also face
competition from high-powered direct broadcast satellite services that transmit
programming directly to homes equipped with special receiving antennas or to
cable television systems for transmission to their subscribers. Various
television stations and networks have recently filed suit in federal court
against certain providers of direct broadcast satellite service. The suits
allege that such DBS providers have impermissibly distributed the signals of
distant over-the-air television stations over their systems, in violation of the
Satellite Home Viewer Act. The suits are presently pending.
Further advances in technology may increase competition for household
audiences and advertisers. Video compression techniques, now under development
for use with current cable
54
<PAGE> 59
channels and direct broadcast satellites, are expected to reduce the bandwidth
required for television signal transmission. These compression techniques, as
well as other technological developments, are applicable to all video delivery
systems, including over-the-air broadcasting, and have the potential to provide
vastly expanded programming to highly targeted audiences. Reduction in the cost
of creating additional channel capacity could lower entry barriers for new
channels and encourage the development of increasingly specialized "niche"
programming. This ability to reach very defined audiences may alter the
competitive dynamics for advertising expenditures. The Company is unable to
predict the effect that technological changes will have on the broadcast
television industry or the future results of the Company's operations.
Advertising. Advertising revenues and advertising rates are based upon
factors that include the size of the DMA in which the station operates, a
program's popularity among the viewers that an advertiser wishes to attract, the
number of advertisers competing for the available time, the demographic makeup
of the DMA served by the station, the availability of alternative advertising
media in the DMA, aggressive and knowledgeable sales forces and development of
projects, features and programs that tie advertiser messages to programming.
Prior to and through the 1970s, over-the-air television broadcasting
enjoyed virtual dominance in viewership and television advertising revenues
because over-the-air television stations competed only with each other in most
local markets. Although cable television systems were initially used to
retransmit broadcast television programming to paid subscribers in areas with
poor broadcast signal reception, significant increases in penetration into homes
did not occur until the 1970s and 1980s, notwithstanding signal reception
problems. As the technology of satellite program delivery to cable systems
advanced in the late 1970s, development of programming for cable television
accelerated dramatically, resulting in the emergence of multiple national-scale
program alternatives and the rapid expansion of cable television and higher
subscriber growth rates. Historically, cable operators generally have not sought
to compete with over-the-air broadcast stations for a share of the local news
audience. To the extent they elect to do so, increased competition from cable
operators for local news audiences could have a material adverse effect on the
Company's advertising revenues.
Cable television penetration in the Flint, Rochester, Monterey-Salinas and
Wheeling-Steubenville markets is 65%, 73%, 78% and 78%, respectively, according
to the November 1996 Nielsen Television Market Report. The Stations have elected
both must-carry and retransmission consent rights in connection with their
carriage by local cable providers. Cable-originated programming has emerged as a
competitor for viewers of over-the-air broadcast television programming,
although no single cable programming network regularly attains audience levels
amounting to more than a small fraction of any over-the-air programming. Since
1980, the advertising share of cable networks has increased significantly.
Notwithstanding such increases in cable viewership and advertising, over-the-air
broadcasting remains the dominant distribution system for mass market television
advertising.
Programming. The Company also competes for programming, which involves
negotiating with national program distributors or syndicators that sell
first-run and rerun packages of programming. The Stations compete for exclusive
access to those programs against in-market broadcast station competitors for
syndicated products. Cable systems generally do not compete with local stations
for programming, although various national cable networks from time to time have
acquired programs that would have otherwise been offered to local television
stations.
Other factors that are material to a television station's competitive
position include signal coverage, local program acceptance, network affiliation,
audience characteristics and assigned broadcast frequency. Historically, UHF
stations have suffered a competitive disadvantage in comparison to stations with
VHF broadcast frequencies. This historic disadvantage has gradually declined
through (i) carriage on cable systems, (ii) improvement in television receivers,
(iii) improvement in television transmitters, (iv) wider use of all channel
antennae, (v) increased
55
<PAGE> 60
availability of programming, and (vi) the development of new networks such as
Fox and UPN. In addition, the broadcasting industry is continuously faced with
technological change and innovation, the possible rise in popularity of
competing entertainment and communications media, and governmental restrictions
or actions of federal regulatory bodies, including the FCC and the Federal Trade
Commission, any of which could possibly have a material effect on the Company's
operations and results.
FEDERAL REGULATION OF TELEVISION BROADCASTING
General. The ownership, operation and sale of television stations are
subject to the jurisdiction of the FCC, which acts under authority granted by
the Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
regulates equipment used by stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules or the Communications Act.
The following is a brief summary of certain provisions of the
Communications Act, the Telecommunications Act of 1996 (the "Telecommunications
Act") and specific FCC regulations and policies. Reference should be made to the
Communications Act, the Telecommunications Act, FCC rules and the public notices
and rulings of the FCC for further information concerning the nature and extent
of federal regulation of broadcast stations.
License Grant and Renewal. Television stations operate pursuant to
broadcasting licenses that, in the past, usually were granted by the FCC for
terms of five years. However, in January 1997, pursuant to the terms of the
Telecommunications Act, the FCC increased the terms of such licenses and their
renewal to eight years.
Television licenses are subject to renewal upon application to the FCC.
Under the Telecommunications Act, the FCC is required to grant the renewal
application if it finds (i) that the station has served the public interest,
convenience and necessity; (ii) that there have been no serious violations by
the licensee of the Communications Act or the rules and regulations of the FCC;
and (iii) there have been no other violations by the licensee of the
Communications Act or the rules and regulations of the FCC that, when taken
together, would constitute a pattern of abuse.
All of the Stations are presently operating under regular licenses with
terms expiring as follows: October 1, 1997 (WEYI), June 1, 1999 (WROC), December
1, 1998 (KSBW) and October 1, 1997 (WTOV). There can be no assurance that the
licenses of such stations will be renewed.
Ownership Matters.
General. The Communications Act prohibits the assignment of a broadcast
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. The Company has filed an application seeking FCC consent to
transfer control of WJAC to the Company. The Company intends to file an
application seeking FCC consent to transfer control of WTOV to the Company.
Although the Company believes that such applications will be granted by the FCC,
there can be no assurance that such applications will be granted.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding, or through subsidiaries controlling, broadcast
licenses, the interests of officers, directors and those who, directly or
indirectly, have the right to vote 5% or more of the corporation's stock (or 10%
or more of such stock in the case of insurance companies, investment companies
and bank trust departments that are passive investors) are generally
attributable, except that, in general, no minority voting stock interest will be
attributable if there is a single holder of more than 50% of the outstanding
voting power of the corporation. In addition, under its "cross-interest" policy,
the FCC considers
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and may prohibit the common ownership of an attributable interest in one media
outlet and a non-attributable but significant equity interest in another media
outlet in the same market, joint ventures, and common key employees among
competitors, if it determines that such relationships could have a significant
adverse effect upon economic competition and viewpoint diversity. The FCC has a
pending rulemaking proceeding that, among other things, seeks comment on whether
the FCC should modify its attribution rules by (i) raising the voting stock
attribution benchmark from 5% to 10%; (ii) raising the attribution benchmark for
passive investors from 10% to 20%; and (iii) attributing certain interests held
by limited liability corporations in certain circumstances. More recently, the
FCC has solicited comment on proposed rules that would (i) treat an otherwise
nonattributable equity or debt interest in a licensee as an attributable
interest where the interest holder is a program supplier or the owner of a
broadcast station in the same market and the equity and/or debt holding is
greater than a specified benchmark; (ii) treat a licensee of a television
station which, under a "local marketing agreement" or "LMA," brokers more than
15% of the time on another television station serving the same market, as having
an attributable interest in the brokered station; and (iii) in certain
circumstances, treat the licensee of a broadcast station that sells advertising
time on another station in the same market pursuant to a "joint sales
agreement," or "JSA," as having an attributable interest in the station whose
advertising is being sold. The FCC also has sought comment on, among other
things, (i) whether the cross-interest policy should be applied only in smaller
markets, and (ii) whether non-equity financial relationships such as debt, when
combined with multiple business interrelationships such as LMAs and JSAs, raise
concerns under the cross-interest policy.
The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of a broadcast license by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country (collectively,
"Aliens"). The Communications Act also authorizes the FCC, if the FCC determines
that it would be in the public interest, to prohibit the issuance of a broadcast
license to, or the holding of a broadcast license by, any corporation directly
or indirectly controlled by any other corporation of which more than 25% of the
capital stock is owned of record or voted by Aliens. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. The
Company and its subsidiaries are domestic corporations, and the Company's
ultimate controlling stockholder is a United States citizen. The Articles of
Incorporation of the Company contain limitations on Alien ownership and control
that are substantially similar to those contained in the Communications Act.
Pursuant to the Articles of Incorporation, the Company has the right to
repurchase Alien-owned shares at their fair market value to the extent
necessary, in the judgment of the Board of Directors, to comply with the Alien
ownership restrictions.
National Ownership Rule. Under the FCC's rules, an individual or entity may
own an unlimited number of television stations nationwide, subject to the
restriction that no individual or entity may have an attributable interest in
television stations reaching more than 35% of the national television viewing
audience. Historically, VHF stations have shared a larger portion of the market
than UHF stations. Therefore, only half of the households in the market area of
any UHF station are included when calculating whether an entity or individual
owns television stations reaching more than 35% of the national television
viewing audience. Of the Stations, three are VHF and one is UHF.
Duopoly Rule. Unless applicable waiver standards are met, the television
"duopoly" rule generally prohibits a single individual or entity from having an
attributable interest in two or more television stations with overlapping Grade
B service areas. The FCC has pending a rulemaking proceeding in which it has
proposed to modify the television duopoly rule to permit the common ownership of
television stations in different DMAs, so long as the Grade A signal contours of
the stations do not overlap. Pending resolution of its rulemaking proceeding,
the FCC has adopted an interim waiver policy that permits the common ownership
of television stations in different DMAs
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with no overlapping Grade A signal contours, conditioned on the final outcome of
the rulemaking proceeding. The FCC has also sought comment on whether common
ownership of two television stations in a market should be permitted (i) where
one or more of the commonly owned stations is UHF, (ii) where one of the
stations is in bankruptcy or has been off the air for a substantial period of
time or (iii) where the commonly owned stations have very small audience or
advertising shares, are located in a very large market, and/or a specified
number of independently owned media voices would remain after the acquisition.
See "Summary -- Management and Ownership" and "Risk Factors -- Potential
Conflicts of Interest."
Radio/Television Cross-Ownership Rule. The FCC's radio/television
cross-ownership rule (the "one to a market" rule) generally prohibits a single
individual or entity from having an attributable interest in a television
station and a radio station serving the same market. However, in each of the 25
largest local markets in the United States, provided that there are at least 30
separately owned stations in the particular market, the FCC policy presumptively
allows waivers of the rule to permit the common ownership of one AM, one FM and
one TV station in a market. The Telecommunications Act directs the FCC to extend
this policy to each of the top 50 markets. The FCC has pending a rulemaking
proceeding in which it has solicited comment on whether the one to a market rule
should be modified or eliminated. See "Summary -- Management and Ownership" and
"Risk Factors -- Potential Conflicts of Interest."
The FCC does not apply its presumptive waiver policy in cases involving the
common ownership of one television station and two or more radio stations in the
same service (AM or FM), in the same market. Pending its rulemaking proceeding
to reexamine the one to a market rule, the FCC has stated that it will consider
waivers of the rule in such instances on a case-by-case basis. The FCC has
stated that it expects that any such waivers that are granted will be
conditioned on the outcome of the rulemaking proceeding.
As a result of the one to a market rule, the attributable radio interests
of persons with attributable interests in the Company limit the markets where
the Company may acquire or own television stations. Thomas O. Hicks, for
example, who is the Company's ultimate controlling stockholder, holds
attributable interests in Capstar, Chancellor and GulfStar Communications, Inc.,
which companies own radio stations in various markets throughout the United
States.
Local Television/Cable Cross-Ownership Rule. While the Telecommunications
Act eliminates a previous statutory prohibition against the common ownership of
a television broadcast station and a cable system that serves the same local
market, the Telecommunications Act leaves the current FCC rule in place. The
legislative history of the Act indicates that its repeal of the statutory ban
should not prejudge the outcome of any FCC review of the rule.
Television/Daily Newspaper Cross-Ownership Rule. The FCC's rules prohibit
the common ownership of a television broadcast station and a daily newspaper in
the same market.
Expansion of the Company's television operations on both a local and
national level will continue to be subject to the FCC's ownership rules and any
changes the FCC or Congress may adopt. Concomitantly, any further relaxation of
the FCC's ownership rules may increase the level of competition in one or more
of the markets in which the Company's stations are located, more specifically to
the extent that any of the Company's competitors may have greater resources and
thereby be in a superior position to take advantage of such changes.
Other Matters.
Must-Carry/Retransmission Consent. Pursuant to the Cable Act of 1992,
television broadcasters are required to make triennial elections to exercise
either certain "must-carry" or "retransmission consent" rights in connection
with their carriage by cable systems in each broadcaster's local market. By
electing must-carry rights, a broadcaster demands carriage on a specified
channel on cable systems within its Area of Dominant Influence ("ADI"), in
general as defined by the Arbitron
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1991-92 Television Market Guide. These must-carry rights are not absolute, and
their exercise is dependent on variables such as (i) the number of activated
channels on a cable system; (ii) the location and size of a cable system; and
(iii) the amount of programming on a broadcast station that duplicates the
programming of another broadcast station carried by the cable system. Therefore,
under certain circumstances, a cable system may decline to carry a given
station. Alternatively, if a broadcaster chooses to exercise retransmission
consent rights, it can prohibit cable systems from carrying its signal or grant
the appropriate cable system the authority to retransmit the broadcast signal
for a fee or other consideration.
The most recent election date for must-carry or retransmission consent was
October 1, 1996, such election to be effective for the three-year period from
January 1, 1997 through December 31, 1999. For subsequent elections beginning
with the election to be made by October 1, 1999, the must-carry market will be
the station's DMA, in general as defined by the Nielsen DMA Market and
Demographic Rank Report of the prior year.
Digital Television. The FCC has taken a number of steps to implement
digital television service ("DTV") (including high-definition) in the United
States. In December 1996, the FCC adopted a DTV broadcast standard. On April 3,
1997, the FCC adopted a table of digital channel allotments and rules for the
implementation of DTV. The digital table of allotments provides each existing
television station licensee or permittee with a second broadcast channel to be
used during the transition to DTV, conditioned upon the surrender of one of the
channels at the end of the DTV transition period. Implementation of DTV will
improve the technical quality of television. Furthermore, the implementing rules
permit broadcasters to use their assigned digital spectrum flexibly to provide
either standard- or high-definition video signals and additional services,
including, for example, data transfer, subscription video, interactive
materials, and audio signals. However, the digital table of allotments was
devised on the basis of certain technical assumptions which have not been
subjected to extensive field testing and which, along with specific digital
channel assignments, are the subject of petitions for reconsideration of the
FCC's April 3, 1997 decision. Conversion to DTV may reduce the geographic reach
of the Company's stations or result in increased interference, with, in either
case, a corresponding loss of population coverage. DTV implementation will
impose additional costs on the Company, primarily due to the capital costs
associated with construction of DTV facilities and increased operating costs
both during and after the transition period. The FCC has set a target date of
2006 for expiration of the transition period, subject to biennial reviews to
evaluate the progress of DTV, including the rate of consumer acceptance.
Programming and Operation.
General. The Communications Act requires broadcasters to serve the "public
interest." The FCC has relaxed or eliminated many of the more formalized
procedures it had developed in the past to promote the broadcast of certain
types of programming responsive to the needs of a station's community of
license. FCC licensees continue to be required, however, to present programming
that is responsive to community issues, and to maintain certain records
demonstrating such responsiveness. Complaints from viewers concerning a
station's programming often will be considered by the FCC when it evaluates
renewal applications of a licensee, although such complaints may be filed at any
time and generally may be considered by the FCC at any time. Stations also must
pay regulatory and application fees, and follow various rules promulgated under
the Communications Act that regulate, among other things, political advertising,
sponsorship identifications, the advertisement of contests and lotteries,
obscene and indecent broadcasts, and technical operations, including limits on
radiofrequency radiation (the FCC has recently adopted more stringent guidelines
on radiofrequency radiation, which will apply to broadcasters beginning on
September 1, 1997). In addition, licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities,
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. Failure to observe these or
other rules and policies can result in the imposition of various sanctions,
including monetary forfeitures, or the
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grant of a "short" (i.e., less than the full) license renewal term or, for
particularly egregious violations, the denial of a license renewal application
or the revocation of a license.
Children's Television Programming. Pursuant to legislation enacted in 1991,
all television stations have been required to broadcast some television
programming designed to meet the educational and informational needs of children
16 years of age and under. The legislation and FCC rules also limit the amount
of commercial matter that may be broadcast during children's programming. In
August 1996, the FCC adopted new rules setting forth more stringent children's
programming requirements. Specifically, as of September 1, 1997, television
stations will be required to broadcast a minimum of three hours per week of
"core" children's educational programming, which the FCC defines as programming
that (i) has serving the educational and informational needs of children 16
years of age and under as a significant purpose; (ii) is regularly scheduled,
weekly and at least 30 minutes in duration; and (iii) is aired between the hours
of 7:00 a.m. and 10:00 p.m. Furthermore, as of January 2, 1997, "core"
children's educational programs, in order to qualify as such, must be identified
as educational and informational programs over the air at the time they are
broadcast, and must be identified in the station's children's programming
reports required to be placed in stations' public inspection files.
Additionally, as of January 2, 1997, television stations must identify and
provide information concerning "core" children's programming to publishers of
program guides and listings. A television station found not to have complied
with the "core" programming requirements or the children's commercial
limitations could face sanctions, including monetary fines and the possible
non-renewal of its broadcasting license.
Television Violence. The Telecommunications Act directed the broadcast and
cable television industries to develop and transmit an encrypted rating in all
video programming that, when used in conjunction with so-called "V-Chip"
technology, would permit the blocking of programs with a common rating. On
January 17, 1997, an industry proposal was submitted to the FCC describing a
voluntary ratings system under which all video programming would be designated
in one of six categories. Pursuant to the Telecommunications Act, the FCC has
initiated a proceeding to determine whether to accept the industry proposal or
to establish and implement an alternative system for rating and blocking video
programming. The FCC has indicated that it will commence a separate proceeding
shortly addressing technical issues related to the "V-Chip." The Company cannot
predict whether the FCC will accept the industry proposal regarding the rating
and blocking of video programming, or how changes in this proposal could affect
the Company's business.
Closed Captioning. The Telecommunications Act directs the FCC to adopt
rules requiring closed captioning of all broadcast television programming,
except where captioning would be economically burdensome. The FCC is conducting
a rulemaking proceeding to implement such rules.
Proposed Changes. The Congress and the FCC have under consideration, and in
the future may consider and adopt, new laws, regulations and policies regarding
a wide variety of matters that could affect, directly or indirectly, the
operation, ownership and profitability of the Company's broadcast stations,
result in the loss of audience share and advertising revenues for the Stations,
and affect the ability of the Company to acquire additional broadcast stations
or finance such acquisitions. In addition to the changes and proposed changes
noted above, such matters include, for example, the license renewal process,
spectrum use fees, political advertising rates, potential restrictions on the
advertising of certain products (beer, wine and hard liquor, for example), and
the rules and policies to be applied in enforcing the FCC's equal employment
opportunity regulations. Other matters that could affect the Company's broadcast
properties include technological innovations and developments generally
affecting competition in the mass communications industry, such as direct radio
and television broadcast satellite service, the continued establishment of
wireless cable systems and low power television stations, digital television and
radio technologies, and the advent of telephone company participation in the
provision of video programming service.
Other Considerations. The foregoing summary does not purport to be a
complete discussion of all provisions of the Communications Act or other
congressional acts or of the regulations and
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policies of the FCC. For further information, reference should be made to the
Communications Act, other congressional acts, and regulations and public notices
promulgated from time to time by the FCC. There are additional regulations and
policies of the FCC and other federal agencies that govern political broadcasts,
public affairs programming, equal opportunity employment and other matters
affecting the Company's business and operations.
EMPLOYEES
As of March 31, 1997, the Stations had approximately 296 full-time and 27
part-time employees. WEYI has a contract with United Auto Workers that expires
on August 7, 1998 with respect to 46 employees. WROC has a contract with the
American Federation of Television and Radio Artists ("AFTRA") that expires on
March 2, 1999 with respect to 22 employees, and WROC has entered into a contract
with the National Association of Broadcast Employees and
Technicians/Communications Workers of America ("NABET") that expires on May 31,
2000 with respect to 35 employees. Four non-union employees of WROC have
recently applied to become members of NABET. WTOV has a contract with AFTRA that
expires January 28, 1999 and a contract with International Brotherhood of
Electrical Workers that expires on November 30, 1997 with respect to 22 and 19
employees, respectively. No significant labor problems have been experienced by
the Stations, and the Company considers its overall labor relations to be good.
However, there can be no assurance that the Company's collective bargaining
agreements will be renewed in the future or that the Company will not experience
a prolonged labor dispute, which could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors -- Labor Relations."
PROPERTIES
Each Station's real properties generally include main offices, studios and
transmitter/antenna sites. The transmitter/antenna sites generally are located
so as to provide maximum signal strength and market coverage.
The Company owns all transmitter/antenna sites and studio and main office
space associated with each of the Stations. The Company generally considers its
facilities to be suitable and of adequate sizes for its current and intended
purposes. The Company does not anticipate any difficulties leasing or purchasing
additional space, if required. The Company owns all of its other equipment,
consisting principally of transmitting antennae, transmitters, studio equipment
and general office equipment. The towers, antennae and other transmission
equipment used by the Stations are generally in good condition, although
opportunities to upgrade facilities are continuously reviewed.
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The principal executive offices of the Company are located at 3839 4th
Street North, Suite 420, St. Petersburg, Florida 33703. The telephone number of
the Company at that address is (813) 821-7900. The following table generally
describes the Company's principal properties in each of its markets of
operations:
<TABLE>
<CAPTION>
OWNED APPROXIMATE
STATION AND PROPERTY TYPE OF OR SIZE EXPIRATION
LOCATION FACILITY AND USE LEASED (SQUARE FEET) OF LEASE
-------------------- ---------------- --------- ------------- ----------
<S> <C> <C> <C> <C>
WEYI:
Clio, Michigan............... Main Office/Studio Owned 18,000 --
Tower/Antenna Site Owned (1) --
Saginaw, Michigan............ Satellite Sales Office Leased 1,200 2/14/99
WROC:
Rochester, New York.......... Main Office/Studio Owned 45,000 --
Brighton, New York........... Tower/Antenna Site Owned 2,400 --
KSBW:
Salinas, California.......... Main Office/Studio Owned 33,000 --
Santa Clara County,
California................. Tower/Antenna Site Owned 2,400 --
Monterey County, California... Back-up
Antenna/Microwave Site Owned 1,900 --
Gilroy, California........... Satellite News and Sales Office Leased 720 (2)
Santa Cruz, California....... Satellite News and Sales Office Leased 720 (2)
WTOV:
Steubenville Township,
Ohio....................... Main Office/Studio Owned 12,750 --
Tower/Antenna Site Owned (1) --
Pultney Township, Ohio....... Microwave/Relay Owned 450 --
Wheeling, West Virginia...... Satellite Sales Office Leased 973 8/31/98
</TABLE>
- ---------------
(1) Main Office/Studio and Tower/Antenna Site are at the same location.
(2) Lease is on a month-to-month basis. The Company does not anticipate any
difficulties leasing or acquiring alternative space, if required.
LEGAL PROCEEDINGS
The Stations from time to time are involved in litigation incidental to the
conduct of their business. The Stations are not a party to any lawsuit or
proceeding that, in the opinion of the Company, will have a material adverse
effect on the Company.
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MANAGEMENT AND DIRECTORS
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Holdings and the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Robert N. Smith............ 52 President of Holdings and Chief Executive Officer
and Director of Holdings and the Company
Sandy DiPasquale........... 49 President and Chief Operating Officer of the Company
and Executive Vice President and Chief Operating
Officer of Holdings
David A. Fitz.............. 52 Senior Vice President and Chief Financial Officer of
Holdings and the Company
John M. Purcell............ 54 Regional Vice President of Holdings and the Company
Eric C. Neuman............. 52 Vice President and Director of Holdings and the
Company
John R. Muse............... 46 Chairman of the Board of Directors of Holdings and
the Company
Michael J. Levitt.......... 38 Director of Holdings and the Company
John H. Massey............. 57 Director of Holdings and the Company
</TABLE>
Mr. Smith has served in the broadcast industry for 17 years and served as
President of Holdings and Chief Executive Officer and Director of Holdings and
the Company since their formation. Since 1985, Mr. Smith has served as President
and majority stockholder of SBG, which owns, operates and manages seven
television stations in addition to the Stations, and has served as Chief
Executive Officer of SBP, an affiliate of SBG. From 1983 to 1985, Mr. Smith
served as an officer, director and part owner of Heritage Broadcasting Company,
which was the licensee of WCTI-TV, New Bern, North Carolina. Mr. Smith first
became involved with the television broadcast industry as an attorney in the
Broadcast Bureau of the FCC from 1971 to 1974. Thereafter, Mr. Smith's career
included substantial government service, including serving on the White House
Staff in 1977 and as Assistant Director for Community Services Administration
from 1977 to 1979, prior to returning full time to the broadcast industry in
1983.
Mr. DiPasquale has served in the broadcast industry for 17 years and served
as President of the Company and Executive Vice President and Chief Operating
Officer of Holdings since their formation. Since 1996, Mr. DiPasquale has served
as Chief Operating Officer of SBP and has been responsible for the day-to-day
operations of the Stations. From November 1994 to the closing of the acquisition
of the Stations by Jupiter in January 1996, Mr. DiPasquale was associated with
SBG. From 1989 to 1994, Mr. DiPasquale served as President, Chief Executive
Officer and was a part owner of SD Communications, Inc., KBS Limited Partnership
and KBS, Inc., which were the owners of KWCH-TV, Wichita, Kansas, and its
affiliated stations in Hays, Goodland and Dodge City, Kansas. From 1986 to 1988,
Mr. DiPasquale served as President and General Manager and was a partner in
WGRZ-TV, Buffalo, New York. Prior to such time, Mr. DiPasquale served in sales
and management positions at various television broadcast stations in the Buffalo
area.
Mr. Fitz has served in the broadcast industry for 20 years and served as
Senior Vice President and Chief Financial Officer of Holdings and the Company
since their formation. Since 1996, Mr. Fitz has served as Chief Financial
Officer of SBP and as an officer and director of each of the SBG affiliated
companies. Mr. Fitz has held various positions with SBG affiliated companies
since 1986. Prior to joining SBG, Mr. Fitz served for nine years as Executive
Vice President and Chief Financial Officer of the Broadcast Division of Gulf
Broadcast Company, which at that time owned six
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television and eight radio broadcast stations. Prior to that time, Mr. Fitz was
a manager with KPMG Peat Marwick, which he joined in 1969.
Mr. Purcell has served in the broadcast industry for 35 years and served as
Regional Vice President of Holdings and the Company since their formation. Since
1996, Mr. Purcell has served as Senior Vice President of SBP and General Manager
of WROC-TV, Rochester, New York. From November 1994 to the closing of the
acquisition of the Stations by Jupiter in January 1996, Mr. Purcell was
associated with SBG. From 1986 to September 1994, Mr. Purcell served as Vice
President and General Manager of WHTM-TV, Harrisburg, Pennsylvania, an SBG-owned
station. Prior to such time, Mr. Purcell served as President and General Manager
of WGHP-TV, Greensboro, North Carolina, and as Vice President and Director of
Sales of WTSP-TV, Tampa/St. Petersburg, Florida.
Mr. Neuman has served as Vice President and as a director of the Company
and Holdings since its formation. Since May 1993, Mr. Neuman has been an officer
of Hicks Muse and is currently serving as Senior Vice President. Mr. Neuman has
served as a Vice President and director of Chancellor since April 1996 and as an
Executive Vice President and Director of Capstar since October 1996. From 1985
to 1993, Mr. Neuman was a Managing General Partner of Communications Partners,
Ltd., a private investment firm specializing in media and communications
businesses.
Mr. Muse has served as Chairman of the Board of Directors of the Company
and Holdings since its formation. Mr. Muse is Chief Operating Officer of Hicks
Muse. Prior to the formation of Hicks Muse in 1989, Mr. Muse headed the
merchant/investment banking operations of Prudential Securities in the
Southwestern region of the United States. Mr. Muse serves as Chairman of Atrium
Companies, Inc., Hedstrom Corporation and Hat Brands, Inc. and serves as
director of The Morningstar Group, Inc., Crain Holdings Corp., Ghirardelli
Chocolate Company, Olympus Real Estate Corporation, Mandeville S.A. and
Productos del Monte, S.A. de C.V.
Mr. Levitt has served as a director of the Company and Holdings since its
formation. Mr. Levitt is a Managing Director and Principal of Hicks Muse. Before
joining Hicks Muse, Mr. Levitt was a Managing Director and Deputy Head of
Investment Banking with Smith Barney Inc. from 1993 through 1995. From 1986
through 1993, Mr. Levitt was with Morgan Stanley & Co. Incorporated, most
recently as a Managing Director responsible for the New York-based Financial
Entrepreneurs Group. Mr. Levitt also serves as a director of Atrium Companies,
Inc., Ghirardelli Chocolate Company and International Home Foods, Inc.
Mr. Massey has served as a director of the Company and Holdings since its
formation. Until August 2, 1996, Mr. Massey served as the Chairman of the Board
and Chief Executive Officer of Life Partners Group, Inc., an insurance holding
company, having assumed those offices in October 1994. Prior to joining Life
Partners, he served, since 1992, as the Chairman of the Board of, and currently
serves as a director of, FSW Holdings, Inc., a regional investment banking firm.
Since 1986, Mr. Massey has served as a director of Gulf-California Broadcast
Company, a private holding company, that was sold in May 1996. From 1986 to
1992, he also was President of Gulf-California Broadcast Company. From 1976 to
1986, Mr. Massey was President of Gulf Broadcast Company, which owned and
operated 6 television stations and 11 radio stations in major markets in the
United States. Mr. Massey currently serves as a director of Chancellor, Central
Texas Bankshare Holdings, Inc., Hill Bank and Trust Co., Hill Bancshares
Holdings, Inc., Bank of The Southwest of Dallas, Texas, Columbus State Bank,
Columbine JDS Systems, Inc. and The Paragon Group, Inc.
In May 1997, the Board of Directors of the Company established an Executive
Committee to which Messrs. Massey, Muse and Neuman have been appointed, and an
Audit Committee and Compensation Committee to which Messrs. Levitt, Massey and
Neuman have been appointed. Directors of the Company are elected by Holdings,
the sole stockholder of the Company.
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DIRECTOR COMPENSATION
Directors of the Company who also are employees of the Company, Holdings or
Hicks Muse serve without additional compensation. Independent directors receive
an annual retainer of $12,000. These independent directors also receive $1,000
for each meeting of the Board of Directors attended and $1,000 for each
committee meeting attended. In addition, the independent directors are
reimbursed for any expenses incurred in connection with their attendance at such
meetings. Currently, John H. Massey is the Company's only independent director.
EXECUTIVE COMPENSATION
In connection with the Acquisition, each of Robert N. Smith, Sandy
DiPasquale, David A. Fitz and John M. Purcell has entered into five-year
employment agreements with the Company and Holdings. Each employment agreement
is subject to automatic successive one-year renewal terms that take effect
unless notice of non-renewal is given by either party to the agreement at least
120 days prior to the expiration of the initial term or annual extension, as the
case may be. The compensation provided to Messrs. Smith, DiPasquale, Fitz and
Purcell under their respective agreements includes an annual base salary of
$250,000 each, subject to adjustment at the sole discretion of the board of
directors of Holdings, and an annual bonus based upon criteria to be established
by the board of directors of Holdings at the beginning of each fiscal year.
These executives are also entitled to participate in certain benefit plans of
Holdings. If prior to the fourth anniversary of the consummation of the
Acquisition (the "Employment Date"), the executive officer terminates his
employment for good reason (as defined) or Holdings or the Company terminate his
employment for any reason other than for cause (as defined), then such executive
officer shall be paid his salary and shall continue to be covered by certain
employee benefit plans for 12 months or until the third anniversary of the
Employment Date, whichever period is longer; provided, however, that continued
coverage under any employee benefit plan of Holdings or the Company shall
terminate upon such executive officer becoming eligible for comparable benefits
pursuant to new employment. In the event of a change of control (as defined in
the agreements) prior to the fourth anniversary of the Employment Date, either
Holdings, the Company or the executive officer may terminate the employment
agreement concurrently with sale and receive the salary and benefits on the same
terms described in the preceding sentence.
Mr. Smith's employment agreement requires him to devote his best efforts
and such time, attention, knowledge and skill to the operation of the Stations
as is necessary to manage and supervise the Stations and the Company. Mr. Fitz's
employment agreement requires him to devote his best efforts and his working
time, attention, knowledge and skill solely to the operation of the Stations;
provided, however, that Mr. Fitz is permitted to devote reasonable time to
advisory services and oversight duties in connection with Mr. Smith's
investments in other business enterprises having an interest in or operating a
television station within certain excluded markets in which Mr. Smith currently
holds an interest in a television station (the "Excluded Markets") and any
acquisition or investment in up to three additional excluded stations (the
"Excluded Stations").
Each employment agreement also contains a noncompetition provision, which
provides that during the term of each agreement and for a period of two years
thereafter (or one year, if Hicks Muse or its affiliates cease to own any of the
Stations) and during any period in which the executive officer is receiving
severance payments pursuant to the employment agreement, such executive officer
will not engage in the television broadcast business within the DMA of any
Station. Mr. Smith's employment agreement permits him to invest in, become
employed by or otherwise render services to or for (i) another business
enterprise (other than the Company) having an interest in or operating a
television station within the Excluded Markets and (ii) after an opportunity to
acquire or invest shall have been presented to the Company and the Company shall
have declined in writing to make such acquisition or investment, the Excluded
Stations. Mr. Fitz's employment agreement permits him to invest in, become
employed by or otherwise render services to or for another business enterprise
(other than the Company) having an interest in or operating a television station
within the Excluded Markets.
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MANAGEMENT'S PARTICIPATION IN THE COMPANY
Robert N. Smith (through SBG), Sandy DiPasquale, David A. Fitz and John M.
Purcell and three other station general managers purchased an aggregate of 3.8%
of the Class A limited partnership interests of the Partnership for $1.9 million
and own 100% of the Class B limited partnership interests of the Partnership.
The return on such Class B ownership interests is based on the performance of
the Company. Neither the Class A nor the Class B limited partnership interests
entitle the holder to any right to participate in the management or control of
the Partnership or its business.
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CERTAIN TRANSACTIONS
In connection with the Acquisition, Holdings and the Company entered into a
ten-year agreement (the "Monitoring and Oversight Agreement") with an affiliate
of Hicks Muse ("Hicks Muse Partners") pursuant to which Holdings and the Company
have agreed to pay Hicks Muse Partners an annual fee payable quarterly for
oversight and monitoring services to the Company. The annual fee is adjustable
on January 1 of each calendar year to an amount equal to 0.2% of the budgeted
consolidated annual net sales of the Company and its subsidiaries for the
then-current fiscal year. Upon the acquisition by the Company and its
subsidiaries of another entity or business, the fee shall be adjusted
prospectively in the same manner using the pro forma consolidated annual net
sales of the Company and its subsidiaries. In no event shall the annual fee be
less than $75,000. John R. Muse, Chairman of the Board of Directors of Holdings
and the Company, and Michael J. Levitt, director of Holdings and the Company,
are each principals of Hicks Muse Partners. Hicks Muse Partners is also entitled
to reimbursement for any expenses incurred by it in connection with rendering
services allocable to the Company under the Monitoring and Oversight Agreement.
In addition, Holdings and the Company, jointly and severally, have agreed to
indemnify Hicks Muse Partners, its affiliates, and their respective directors,
officers, controlling persons, agents and employees from and against all claims,
liabilities, losses, damages, expenses and fees related to or arising out of or
in connection with the services rendered by Hicks Muse Partners under the
Monitoring and Oversight Agreement and not resulting primarily from the bad
faith, gross negligence, or willful misconduct of Hicks Muse Partners. The
Monitoring and Oversight Agreement makes available the resources of Hicks Muse
Partners concerning a variety of financial and operational matters. The Company
does not believe that the services that have been and will continue to be
provided to the Company by Hicks Muse Partners could otherwise be obtained by
the Company without the addition of personnel or the engagement of outside
professional advisors. In the Company's opinion, the fees provided for under the
Monitoring and Oversight Agreement reasonably reflect the benefits received and
to be received by Holdings and the Company.
In connection with the Acquisition, Holdings and the Company entered into a
ten-year agreement (the "Financial Advisory Agreement"), pursuant to which Hicks
Muse Partners received a financial advisory fee of $2.5 million at the closing
of the Acquisition as compensation for its services as financial advisor to the
Company in connection with the Acquisition. Hicks Muse Partners also is entitled
to receive a fee equal to 1.5% of the "transaction value" (as defined) for each
"add-on transaction" (as defined) in which the Company is involved. The term
"transaction value" means the total value of the add-on transaction including
without limitation, the aggregate amount of the funds required to complete the
add-on transaction (excluding any fees payable pursuant to the Financial
Advisory Agreement), including the amount of any indebtedness, preferred stock
or similar terms assumed (or remaining outstanding). The term "add-on
transaction" means any future proposal for a tender offer, acquisition, sale,
merger, exchange offer, recapitalization, restructuring or other similar
transaction directly involving the Company or any of its subsidiaries, and any
other person or entity. In addition, Holdings and the Company, jointly and
severally, have agreed to indemnify Hicks Muse Partners, its affiliates, and
their respective directors, officers, controlling persons, agents and employees
from and against all claims, liabilities, losses, damages, expenses and fees
related to or arising out of or in connection with the services rendered by
Hicks Muse Partners under the Financial Advisory Agreement and not resulting
primarily from the bad faith, gross negligence, or willful misconduct of Hicks
Muse Partners. The Financial Advisory Agreement makes available the resources of
Hicks Muse Partners concerning a variety of financial and operation matters. The
Company does not believe that the services that have been and will continue to
be provided by Hicks Muse Partners could otherwise be obtained by the Company
without the addition of personnel or the engagement of outside professional
advisors. In the Company's opinion, the fees provided for under the Financial
Advisory Agreement reasonably reflect the benefits received and to be received
by the Company.
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<PAGE> 72
In connection with the Acquisition, affiliates of Hicks Muse purchased
$25.0 million of the Redeemable Preferred Stock for a purchase price of
approximately $24.1 million (or 96.5% of the initial liquidation preference of
such shares) and received in connection therewith warrants to purchase shares of
common stock of Holdings. The Hicks Muse affiliates, along with the other
purchaser of the Redeemable Preferred Stock and warrants, received certain
registration rights with respect to the shares of common stock of Holdings
issuable upon exercise of the warrants.
In 1996, the Stations paid SBP approximately $840,000 for certain
management services provided by SBP to the Stations.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company has 1,000 shares of common stock, $0.01 par value per share,
issued and outstanding, all of which are owned by Holdings. All of the capital
stock of Holdings is owned by the Partnership, which is controlled by Thomas O.
Hicks. For a description of the Company's management interest in the
Partnership, see "Management and Directors -- Management's Participation in the
Company." For a description of the relationship between Hicks Muse and the
Company, see "Certain Transactions".
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DESCRIPTION OF THE CREDIT AGREEMENT
The Credit Agreement, agented by The Chase Manhattan Bank ("Chase") and
NationsBank of Texas, N.A., provides for a seven year revolving credit facility
(the "Revolving Credit Facility") of $35.0 million expiring on February 27,
2004. Commitments under the Revolving Credit Facility will be automatically and
immediately reduced at the end of each fiscal quarter by the product of (x) one
quarter of the percentage set forth opposite each calendar year set forth below
(except with respect to 2004, during which there will be one reduction on
February 27, 2004 in the percentage set forth below opposite the year 2004) and
(y) the amount of the total Revolving Credit Facility commitments then in effect
as of December 31, 1999:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000............................................. 20%
2001............................................. 20%
2002............................................. 20%
2003............................................. 20%
2004............................................. 20%
</TABLE>
The Revolving Credit Facility bears interest at an annual rate, at the
Company's option, equal to the "ABR plus the Applicable Margin" ("ABR Loans") or
the "Eurodollar Rate plus the Applicable Margin" ("Eurodollar Loans"). As used
herein "ABR" means the highest of (i) the rate of interest publicly announced by
Chase as its prime rate in effect at its principal office in New York City, (ii)
the secondary market rate for three-month certificates of deposit (grossed up
for maximum statutory reserve requirements) plus 1% and (iii) the federal funds
effective rate from time to time plus 0.5%. "Eurodollar Rate" means the rate
(grossed up for maximum statutory reserve requirements for eurocurrency
liabilities) at which eurodollar deposits for one, two, three, six, or to the
extent available to all lenders under the Credit Agreement, nine or twelve
months as selected by the Company are offered to Chase in the interbank
eurodollar market in the approximate amount of Chase's share of the applicable
loan. "Applicable Margin" means (a) 1.50%, in the case of ABR Loans, and (b)
2.75%, in the case of Eurodollar Loans. Interest rates on the credit facilities
may be reduced quarterly in the event the Company meets certain financial tests
relating to consolidated leverage.
The Credit Agreement provides for first priority security interests in all
of the tangible and intangible assets of the Company and its direct and indirect
subsidiaries. In addition, the loans under the Credit Agreement will be
guaranteed by Holdings and the Company's current direct and indirect and any
future subsidiaries. Additionally, the Company will be required to apply 66 2/3%
of excess cash flow (as defined in the Credit Agreement), 100% of the net
proceeds of certain dispositions of material assets (other than inventory in the
ordinary course of business and subject to a capacity and basket for
reinvestment), 100% of the net proceeds of the issuance or sale of equity by the
Company or any of its Subsidiaries and 100% of the net proceeds of the
incurrence of certain indebtedness (including the Notes) to the repayment of the
Credit Agreement.
The Credit Agreement contains certain financial and operating maintenance
covenants including a maximum consolidated leverage ratio of (upon issuance of
the Notes) initially 7.0:1, a minimum consolidated fixed charge coverage ratio
of 1.05:1 and a consolidated interest coverage ratio of (upon issuance of the
Notes) initially 1.25:1. In addition, the Company will be limited in the amount
of annual payments that may be made for capital expenditures and corporate
overhead.
The operating covenants of the Credit Agreement include limitations on the
ability of the Company to (i) incur additional indebtedness (including film
debt), other than certain permitted indebtedness, (ii) permit additional liens
or encumbrances, other than certain permitted liens, (iii) make any investments
in other persons, other than certain permitted investments, (iv) become
obligated with respect to contingent obligations, other than certain permitted
contingent obligations and (v) make restricted payments (including dividends on
its common stock). The operating
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<PAGE> 74
covenants will also include restrictions on certain specified fundamental
changes, such as mergers and asset sales, transactions with shareholders and
affiliates and business outside the ordinary course as currently conducted,
amendments or waivers of certain specified agreements and the issuance of
guarantees or other credit enhancements.
If for any reason the Company is unable to comply with the terms of the
Credit Agreement, including the covenants included therein, such noncompliance
would result in an event of default under the Credit Agreement and could result
in acceleration of the payment of the indebtedness outstanding under the Credit
Agreement.
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<PAGE> 75
DESCRIPTION OF REDEEMABLE PREFERRED STOCK
In connection with the Acquisition, the Company issued 300,000 shares of
Redeemable Preferred Stock with an aggregate liquidation preference of $30.0
million, or $100 per share. The Redeemable Preferred Stock is entitled to
quarterly dividends that will accrue at a rate per annum of 14%. Prior to
February 28, 2002, dividends may be paid in either additional whole shares of
Redeemable Preferred Stock or cash, at the Company's option, and only in cash
following that date. The Indenture and the Credit Agreement prohibit the payment
of cash dividends until May 31, 2002. Pursuant to the terms of the securities
purchase agreement under which the Company sold the Redeemable Preferred Stock,
the Company has the right to repurchase the Redeemable Preferred Stock at any
time and from time to time prior to March 1, 1998, at $96.50 per share of
Redeemable Preferred Stock, plus an amount equal to accrued and unpaid dividends
through the repurchase date.
Optional Redemption. The Redeemable Preferred Stock is redeemable, in whole
or in part, at any time on and after February 28, 2002 at the option of the
Company, at the redemption prices (expressed as percentages of the liquidation
preference thereof) set forth below, if redeemed during the twelve-month period
commencing on February 28 of each of the years set forth below, plus accumulated
and unpaid dividends to the date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 106.20%
2003........................................................ 104.64
2004........................................................ 103.08
2005........................................................ 101.52
2006 and thereafter......................................... 100.00
</TABLE>
Notwithstanding the foregoing, on or prior to February 28, 2001, the
Company may, at its option, use the net cash proceeds of any Public Equity
Offering or Major Asset Sales (as defined in the Certificate of Designation for
the Redeemable Preferred Stock) to redeem the Redeemable Preferred Stock, in
part, at a redemption price equal to 114% of the then effective liquidation
preference, if redeemed during the twelve-month period commencing on February
28, 1997, 112% of the then effective liquidation preference if redeemed during
the twelve-month period commencing on February 28, 1998, 111% of the then
effective liquidation preference if redeemed during the twelve-month period
commencing on February 28, 1999, and 109% of the then effective liquidation
preference if redeemed during the twelve-month period commencing on February 28,
2000, plus, in each case, accumulated and unpaid dividends to the date of
redemption; provided, however, that after any such redemption the shares of
Redeemable Preferred Stock outstanding must equal at least 75% of the aggregate
number of shares of Redeemable Preferred Stock originally issued.
Mandatory Redemption. The Redeemable Preferred Stock is also be subject to
mandatory redemption (subject to contractual and other restrictions with respect
thereto and to the legal availability of funds therefor) in whole on February
28, 2008, at a price equal to the then effective liquidation preference thereof,
plus all accumulated and unpaid dividends to the date of redemption.
Exchange. The Company may, at its option, subject to certain conditions,
including its ability to incur additional indebtedness under the Indenture and
the Credit Agreement, on any scheduled dividend payment date occurring on or
after the Redeemable Preferred Stock issuance date, exchange the Redeemable
Preferred Stock, in whole but not in part, for Company's 14% Subordinated
Exchange Debentures due 2008 (the "Exchange Debentures"). Holders of the
Redeemable Preferred Stock are entitled to receive $1.00 principal amount of
Exchange Debentures for each $1.00 in liquidation preference of Redeemable
Preferred Stock including, to the extent necessary, Exchange Debentures in
principal amounts of less than $1,000.
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Voting Rights. Holders of the Redeemable Preferred Stock have no voting
rights, except as otherwise required by law, and, provided further, that the
holders of the Redeemable Preferred Stock, voting together as a single class,
shall have the right to elect the lesser of two directors or 25% of the total
number of directors constituting the Board of Directors of the Company upon the
occurrence of certain events including, but not limited to the failure by the
Company on or after February 28, 2002, to pay cash dividends in full on the
Redeemable Preferred Stock for six or more quarterly dividend periods, the
failure by the Company to discharge any mandatory redemption or repayment
obligation with respect to the Redeemable Preferred Stock, the breach or
violation of one or more of the covenants contained in the Certificate of
Designation or the failure by the Company to repay at final stated maturity, or
the acceleration of the final stated maturity of, certain indebtedness of the
Company.
Change of Control. The Certificate of Designation for the Redeemable
Preferred Stock provides that, upon the occurrence of a change of control (as
defined in the Certificate of Designation for the Redeemable Preferred Stock),
each holder will have the right to require that the Company repurchase all or a
portion of such holder's Redeemable Preferred Stock in cash at a purchase price
equal to 101% of the then current effective liquidation preference thereof, plus
an amount in cash equal to all accumulated and unpaid dividends per share to the
date of repurchase.
Certain Covenants. The Certificate of Designation for the Redeemable
Preferred Stock and the indenture for the Exchange Debentures contain covenants
customary for securities comparable to the Redeemable Preferred Stock and the
Exchange Debentures, including covenants that restrict the ability of the
Company and its subsidiaries to incur additional indebtedness, pay dividends and
make certain other restricted payments, and merge or consolidate with any other
person or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially of the assets of the Company. Such covenants are substantially
identical to those covenants contained in the Indenture.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on March 25, 1997, in the Original
Offering. In connection with that placement, the Company entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of that Registration Statement, offer to the holders
of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which generally may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement further
provides that the Company must use its best efforts to (i) cause the
Registration Statement with respect to the Exchange Offer to be declared
effective on or before September 21, 1997 and (ii) consummate the Exchange Offer
on or before November 5, 1997. Except as provided below, upon the completion of
the Exchange Offer, the Company's obligations with respect to the registration
of the Old Notes and the New Notes will terminate. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part and the summary herein of certain provisions
thereof does not purport to be complete and is qualified in its entirety by
reference thereto. As a result of the filing and the effectiveness of the
Registration Statement, certain liquidated damages provided for in the
Registration Rights Agreement will not become payable by the Company. Following
the completion of the Exchange Offer (except as set forth in the paragraph
immediately below), holders of Old Notes not tendered will not have any further
registration rights and those Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes could be adversely affected upon completion of the Exchange Offer.
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<PAGE> 77
In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving the New Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a distribution of the New Notes,
(iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes and (iv) neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the Company.
Pursuant to the Registration Rights Agreement, the Company is required to file a
"shelf" registration statement for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old Notes if (i) because of any
change in law or applicable interpretations of the staff of the Commission, the
Company is not permitted to effect the Exchange Offer, (ii) the Exchange Offer
is not consummated within 225 days of the Original Offering, (iii) any holder of
Private Exchange Securities (as defined) requests within 60 days after the
Exchange Offer, (iv) any applicable law or interpretations do not permit any
holder of Old Notes to participate in the Exchange Offer, (v) any holder of Old
Notes participates in the Exchange Offer and does not receive freely
transferrable New Notes in exchange for Old Notes or (vi) the Company so elects.
In the event that the Company is obligated to file a "shelf" registration
statement, it will be required to keep such "shelf" registration statement
effective for at least three years. Other than as set forth in this paragraph,
no holder will have the right to participate in the "shelf" registration
statement nor otherwise to require that the Company register such holder's
shares of Old Notes under the Securities Act. See "-- Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any person receiving such New Notes, whether or not
such person is the registered holder (other than any such holder or such other
person which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder or such
other person and neither the holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives New Notes for its
own account in exchange for Old Notes, where the Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes
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<PAGE> 78
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.
As of June 1, 1997, Old Notes representing $100,000,000 aggregate principal
amount were outstanding and there was one registered holder, a nominee of DTC.
This Prospectus, together with the Letter of Transmittal, is being sent to such
registered Holder and to others believed to have beneficial interests in the Old
Notes. The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company. If any tendered Old
Notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, certificates for any such
unaccepted Old Notes will be returned, without expense, to the tendering holder
thereof as promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"The Exchange Offer -- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will issue a notice of any extension by press
release or other public announcement prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. The
Company reserves the right, in its sole discretion, (i) to delay accepting any
Old Notes, to extend the Exchange Offer or, if any of the conditions set forth
under "The Exchange Offer -- Certain Conditions to Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "The Exchange Offer -- Book Entry Transfer," to tender
in the Exchange Offer a holder must complete, sign, and date the Letter of
Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the Letter
of Transmittal or copy to the Exchange Agent prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, prior to the Expiration
Date or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if that procedure is available, into the
Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-
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<PAGE> 79
entry transfer described below, must be received by the Exchange Agent prior to
the Expiration Date, or (iii) the holder must comply with the guaranteed
delivery procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth under "The Exchange Offer -- Exchange Agent" prior to
the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of tender
as to particular Old Notes. The Company's interpreta-
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<PAGE> 80
tion of the terms and conditions of the Exchange Offer (including the
instructions in the Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Although the Company intends to notify holders of defects or irregularities with
respect to tenders of Old Notes, neither the Company, the Exchange Agent, nor
any other person shall incur any liability for failure to give such
notification. Tenders of Old Notes will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the registered holder, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where the Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures
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<PAGE> 81
for transfer. However, although delivery of Old Notes may be effected through
book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or copy thereof, with any required signature guarantees and any
other required documents, must, in any case other than as set forth in the
following paragraph, be transmitted to and received by the Exchange Agent at the
address set forth under "The Exchange Offer -- Exchange Agent" on or prior to
the Expiration Date or the guaranteed delivery procedures described below must
be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 pm., New
York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
(for DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth on the back cover page
of this Prospectus prior to 5:00 pm., New York City time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form,
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the
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<PAGE> 82
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are not exchanged for any reason will be returned to the holder thereof without
cost to such holder as soon as practicable after withdrawal, rejection of
tender, or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures under "The Exchange
Offer -- Procedures for Tendering" at any time on or prior to the Expiration
Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA"). In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. U.S. Trust Company of Texas, N.A. has been appointed as Exchange Agent
for the Exchange Offer. Questions, requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<C> <C>
By Registered or Certified Mail: By Hand:
U.S. Trust Company of Texas, N.A. U.S. Trust Company of Texas, N.A.
P.O. Box 841 111 Broadway
Attn: Corporate Trust Services Lower Level
Cooper Station Attn: Corporate Trust Services
New York, New York 10276-0841 New York, New York 10006-1906
By Overnight Courier: By Facsimile:
U.S. Trust Company of Texas, N.A. (212) 420-6504
770 Broadway, 13th Floor For Information or
Corporate Trust Operations Confirmation by Telephone:
New York, New York 10003 (800) 225-2398
</TABLE>
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
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FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$ , which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
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<PAGE> 84
DESCRIPTION OF NEW NOTES
GENERAL
The New Notes are to be issued under the Indenture, dated as of March 25,
1997 (the "Indenture"), between the Company and U.S. Trust Company of Texas,
N.A., as trustee (the "Trustee"), a copy of which is available upon request to
the Company. The Old Notes were also issued pursuant to the Indenture. Upon the
effectiveness of the Exchange Offer, the Indenture will be subject to and
governed by the Trust Indenture Act. The following summary of certain provisions
of the Indenture and the Notes does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of the
Indenture (including the definitions of certain terms therein and those terms
made a part thereof by the Trust Indenture Act of 1939, as amended) and the
Notes.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially shall
be the corporate trust office of the Trustee in New York, New York), except
that, at the option of the Company, payment of interest may be made by check
mailed to the address of the holders as such address appears in the note
registrar.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as paying agent and registrar for the Notes. The Notes may be presented
for registration of transfer and exchange at the offices of the Registrar, which
initially will be the Trustee's corporate trust office. The Company may change
any paying agent and registrar without notice to holders of the Notes.
PRINCIPAL, MATURITY AND INTEREST
The Notes will be unsecured, senior subordinated obligations of the Company
and will be limited to $100,000,000 aggregate principal amount at any one time
outstanding (including any New Notes that may be issued from time to time in
exchange for the Old Notes as described under "The Exchange Offer"), and will
mature on March 15, 2007. Interest on the Notes will accrue at a rate per annum
equal to 11% and will be payable in cash semiannually on March 15 and September
15 commencing on September 15, 1997 to holders of record on the immediately
preceding March 1 and September 1. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from March 25, 1997. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
OPTIONAL REDEMPTION
The Notes may be redeemed at any time on or after March 15, 2002, in whole
or in part, at the option of the Company, at the redemption prices (expressed as
a percentage of the principal amount thereof on the applicable redemption date)
set forth below, plus accrued and unpaid interest, if any, to the redemption
date, if redeemed during the 12-month period beginning on March 15 of each of
the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002........................................................ 105.500%
2003........................................................ 103.667%
2004........................................................ 101.833%
2005 and thereafter......................................... 100.000%
</TABLE>
In addition, prior to March 15, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings to redeem up to 25%
of the principal amount of the Notes at a redemption price equal to 111.0% of
the principal amount thereof plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption, at least 75% of the
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<PAGE> 85
aggregate principal amount of the Notes originally issued would remain
outstanding immediately after giving effect to such redemption. Any such
redemption will be required to occur on or prior to the date that is one year
after the receipt by the Company of the proceeds of a Public Equity Offering.
The Company shall effect such redemption on a pro rata basis.
In addition, prior to March 15, 2002, the Company may, at its option,
redeem the Notes upon a Change of Control. See "-- Change of Control."
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, in the absence of such requirements or if the Notes are not
so listed, on a pro rata basis, provided that no Notes of $1,000 or less shall
be redeemed in part. Notice of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each holder of
Notes to be redeemed at its registered address. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
holder thereof upon cancellation of the original Note. On and after the
redemption date, interest ceases to accrue on the Notes or portions of them
called for redemption.
CHANGE OF CONTROL
The Indenture provides that, upon the occurrence of a Change of Control,
each holder will have the right to require that the Company purchase all or a
portion of such holder's Notes in cash pursuant to the offer described below
(the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following the date on which the Company
becomes aware that a Change of Control has occurred, if the purchase of the
Notes would violate or constitute a default under any other Indebtedness of the
Company, then the Company shall, to the extent needed to permit such purchase of
Notes, either (i) repay all such Indebtedness and terminate all commitments
outstanding thereunder or (ii) obtain the requisite consents, if any, under any
such Indebtedness required to permit the purchase of the Notes as provided
below. The Company will first comply with the covenant in the preceding sentence
before it will be required to make the Change of Control Offer or purchase the
Notes pursuant to the provisions described below.
Within 30 days following the date on which the Company becomes aware that a
Change of Control has occurred, the Company must send, by first-class mail
postage prepaid, a notice to each holder of Notes, which notice shall govern the
terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
45 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
such Notes to the paying agent and registrar for the Notes at the address
specified in the notice prior to the close of business on the business day prior
to the Change of Control Payment Date.
In addition, the Indenture provides that, prior to March 15, 2002, upon the
occurrence of a Change of Control, the Company will have the option to redeem
the Notes in whole but not in part (a "Change of Control Redemption") at a
redemption price equal to 100% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date plus the Applicable Premium. In order to
effect a Change of Control Redemption, the Company must send a notice to each
holder of the Notes, which notice shall govern the terms of the Change of
Control Redemption. Such notice
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<PAGE> 86
must be mailed to holders of the Notes within 30 days following the date the
Change of Control occurred (the "Change of Control Redemption Date") and state
that the Company is effecting a Change of Control Redemption in lieu of a Change
of Control Offer.
"Applicable Premium" means, with respect to a Note at any Change of Control
Redemption Date, the greater of (i) 1.0% of the principal amount of such Note
and (ii) the excess of (A) the present value at such time of (1) the redemption
price of such Note at March 15, 2002 (such redemption price being described
under "-- Optional Redemption") plus (2) all semi-annual payments of interest
through March 15, 2002 computed using a discount rate equal to the Treasury Rate
plus 100 basis points over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) that
has become publicly available at least two business days prior to the Change of
Control Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Change of Control Redemption Date to March 15, 2002; provided,
however, that if the period from the Change of Control Redemption Date to March
15, 2002 is not equal to the constant maturity of a United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given except that if the period from the Change of Control
Redemption Date to March 15, 2002 is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the purchase of Notes
pursuant to a Change of Control Offer.
This "Change of Control" covenant will not apply in the event of (a)
changes in a majority of the board of directors of the Company or Holdings so
long as a majority of the board of directors continues to consist of Continuing
Directors and (b) certain transactions with Permitted Holders. In addition, this
covenant is not intended to afford holders of Notes protection in the event of
certain highly leveraged transactions, reorganizations, restructurings, mergers
and other similar transactions that might adversely affect the holders of Notes,
but would not constitute a Change of Control. The Company could, in the future,
enter into certain transactions including certain recapitalizations of the
Company, that would not constitute a Change of Control with respect to the
Change of Control purchase feature of the Notes, but would increase the amount
of indebtedness outstanding at such time. However, the Indenture contains
limitations on the ability of the Company and its Subsidiaries to incur
additional Indebtedness and the ability of the Company to engage in certain
mergers, consolidations and sales of assets, whether or not a Change of Control
is involved, subject, in each case, to limitations and qualifications. See
"-- Certain Covenants -- Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock" and "-- Certain Covenants -- Merger,
Consolidation and Sale of Assets" below.
With respect to the sale of "all or substantially all" the assets of the
Company, which would constitute a Change of Control for purposes of the
Indenture, the meaning of the phrase "all or substantially all" varies according
to the facts and circumstances of the subject transaction, has no clearly
established meaning under relevant law and is subject to judicial
interpretation. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company and,
therefore, it may be unclear whether a Change of Control has occurred and
whether the Notes should be subject to a Change of Control Offer.
The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company and its Subsidiaries may also contain prohibitions
of certain events that would constitute a Change of
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<PAGE> 87
Control or require such Senior Indebtedness to be repurchased upon a Change of
Control. Moreover, the exercise by the holders of their right to require the
Company to repurchase the Notes could cause a default under such Senior
Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase of the Company. Finally, the Company's
ability to pay cash to the holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of the
Credit Agreement may prohibit the Company's prepayment of the Notes prior to
their scheduled maturity. Consequently, if the Company is not able to prepay the
Indebtedness under the Credit Agreement and any other Senior Indebtedness
containing similar restrictions or obtain requisite consents, as described
above, the Company will be unable to fulfill its repurchase obligations if
holders of the Notes exercise their repurchase rights following a Change of
Control, thereby resulting in a default under the Indenture.
None of the provisions in the Indenture relating to a purchase of the Notes
upon a Change of Control is waivable by the board of directors of the Company.
Without the consent of each holder of the Notes affected thereby, after the
mailing of the notice of a Change of Control Offer, no amendment to the
Indenture may, directly or indirectly, affect the Company's obligation to
purchase the outstanding Notes or amend, modify or change the obligation of the
Company to consummate a Change of Control Offer or waive any default in the
performance thereof or modify any of the provisions of the definitions with
respect to any such offer.
RANKING AND SUBORDINATION
The payment of the principal of, premium (if any), and interest on the
Notes is subordinated in right of payment, to the extent set forth in the
Indenture, to the payment when due of all Senior Indebtedness of the Company.
However, payment from the money or the proceeds of U.S. Government Obligations
held in any defeasance trust described under "Defeasance" below is not
subordinate to any Senior Indebtedness or subject to the restrictions described
herein. As of December 31, 1996, on a pro forma basis after giving effect to the
Acquisition and the Original Offering, the Company would not have had any Senior
Indebtedness outstanding. Although the Indenture contains limitations on the
amount of additional Indebtedness that the Company and its Subsidiaries may
incur, under certain circumstances the amount of such additional Indebtedness
could be substantial and, in any case, all or a portion of such Indebtedness may
be Senior Indebtedness. See "Certain Covenants -- Limitation on Indebtedness"
below.
"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, as (x) all obligations under the Credit Agreement and (y) all
other Indebtedness of the Company, including interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Subsidiary whether or not a claim
for post-filing interest is allowed in such proceeding) and premium, if any,
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations in respect
of such Indebtedness are not superior in right of payment to the Notes;
provided, however, that Senior Indebtedness will not include (1) any obligation
of the Company to any Subsidiary, (2) any liability for federal, state, foreign.
local or other taxes owed or owing by the Company, (3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities) or (4)
any Indebtedness, guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness and
any Subordinated Obligations.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not incur, directly or indirectly, any Indebtedness that is subordinate or
junior in
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<PAGE> 88
ranking in any respect to Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be
subordinate or junior to Secured Indebtedness merely because it is unsecured.
Secured Indebtedness is not deemed to be Senior Indebtedness merely because it
is secured.
The Company may not pay principal of, premium (if any), or interest on the
Notes or make any deposit pursuant to the provisions described under
"Satisfaction and Discharge or Indenture; Defeasance" below and may not
otherwise purchase or retire any Notes (collectively, "pay the Notes") if (i)
any Senior Indebtedness is not paid when due or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, the default has been cured
or waived or is no longer continuing and/or any such acceleration has been
rescinded or such Senior Indebtedness has been paid in full; provided, however,
that the Company may pay the Notes without regard to the foregoing if the
Company and the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness with respect to which either of the
events set forth in clause (i) or (ii) of this sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Notes (except (i) in Qualified Capital
Stock issued by the Company to pay interest on the Notes or issued in exchange
for the Notes, (ii) in securities substantially identical to the Notes issued by
the Company in payment of interest accrued thereon or (iii) in securities issued
by the Company which are subordinated to the Senior Indebtedness at least to the
same extent as the Notes and having a Weighted Average Life to Maturity at least
equal to the remaining Weighted Average Life to Maturity of the Notes) for a
period (a "Payment Blockage Period") commencing upon the receipt by the Trustee
(with a copy to the Company) of written notice (a "Blockage Notice") of such
default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a Payment Blockage Period and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice, (ii) because the default giving rise
to such Blockage Notice has been cured or waived or is no longer continuing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
but subject to the provisions of the first sentence of this paragraph and the
provisions of the immediately succeeding paragraph, the Company may resume
payments on the Notes after the end of such Payment Blockage Period. Not more
than one Blockage Notice may be given, and not more than one payment Blockage
Period may occur, in any consecutive 360-day period, irrespective of the number
of defaults with respect to Designated Senior Indebtedness during such period.
Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization or bankruptcy of or
similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders of the Notes are entitled to receive any
payment, and until the Senior Indebtedness is paid in full, any payment or
distribution to which holders of the Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of the Senior
Indebtedness as their interests may appear. If a distribution is made to holders
of the Notes that, due to the subordination provisions, should not have been
made to them, such holders are required to hold it in trust for the holders of
Senior Indebtedness and pay it over to them as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the Representative (if any) of any
issue of Designated Senior Indebtedness which is then outstanding; provided,
however, that the Company and the Trustee shall
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be obligated to notify such a Representative only if such Representative has
delivered or caused to be delivered an address for the service of such a notice
to the Company and the Trustee (and the Company and the Trustee shall only be
obligated to deliver the notice to the address so specified). If a notice is
required pursuant to the immediately preceding sentence, the Company may not pay
the Notes (except payment (i) in Qualified Capital Stock issued by the Company
to pay interest on the Notes or issued in exchange for the Notes, (ii) in
securities substantially identical to the Notes issued by the Company in payment
of interest accrued thereon or (iii) securities issued by the Company which are
subordinated to the Senior Indebtedness at least to the same extent as the Notes
and have a Weighted Average Life to Maturity at lease equal to the remaining
Weighted Average Life to Maturity of the Notes), until five business days after
the respective Representative of the Designated Senior Indebtedness receives
notice (at the address specified in the preceding sentence) of such acceleration
and, thereafter, may pay the Notes only if the subordination provisions of the
Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the holders of the Notes, and
creditors of the Company who are not holders of Senior Indebtedness (including
holders of the Notes) may recover less, ratably, than holders of Senior
Indebtedness. In addition, the Indenture does not prohibit the transfer or
contribution of assets of the Company to its Wholly-Owned Subsidiaries. In the
event of any such transfer or contribution, holders of the Notes will be
effectively subordinated to the claims of creditors of such subsidiaries against
such assets.
CERTAIN COVENANTS
Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock. (a) The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur"), any
Indebtedness (other than Permitted Indebtedness) and the Company will not issue
any Disqualified Capital Stock and its Subsidiaries will not issue any Preferred
Stock; provided, however, that the Company and its Subsidiaries may incur
Indebtedness or issue shares of such Capital Stock if, in either case, the
Company's Leverage Ratio at the time of incurrence of such Indebtedness or the
issuance of such Capital Stock, as the case may be, after giving pro forma
effect to such incurrence or issuance as of such date and to the use of proceeds
therefrom is less than 7.0 to 1.
(b) In addition, the Indenture provides that the Company will not incur any
Secured Indebtedness (other than Senior Indebtedness) unless contemporaneously
therewith effective provision is made to secure the Notes equally and ratably
with such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien.
Limitation on Layering. The Indenture provides that the Company will not
incur any Indebtedness if such Indebtedness is subordinate or junior in ranking
in any respect to any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is contractually subordinated in right of payment
to all Senior Subordinated Indebtedness (including the Notes).
Limitation on Restricted Payments. (a) The Indenture provides that neither
the Company nor any of its Subsidiaries will, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment and immediately
after giving effect thereto:
(i) a Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted
Payment; or
(ii) the Company is not able to incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock" covenant; or
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(iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined by the
board of directors of the Company in good faith) exceeds the sum of (a) (x)
100% of the aggregate Consolidated Cash Flow of the Company (or, in the
event such Consolidated Cash Flow shall be a deficit, minus 100% of such
deficit) accrued subsequent to the Issue Date to the most recent date for
which financial information is available to the Company, taken as one
accounting period, less (y) 1.4 times Consolidated Interest Expense for the
same period, plus (b) 100% of the aggregate net proceeds, including the
fair market value of property other than cash as determined by the board of
directors of the Company in good faith, received subsequent to February 28,
1997 by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to February 28, 1997 of
Qualified Capital Stock of the Company (excluding (i) any net proceeds from
issuances and sales financed directly or indirectly using funds borrowed
from the Company or any Subsidiary of the Company, until and to the extent
such borrowing is repaid, but including the proceeds from the issuance and
sale of any securities convertible into or exchangeable for Qualified
Capital Stock to the extent such securities are so converted or exchanged
and including any additional proceeds received by the Company upon such
conversion or exchange and (ii) any net proceeds received from issuances
and sales that are used to consummate a transaction described in clauses
(2) and (3) of paragraph (b) below), plus (c) without duplication of any
amount included in clause (iii)(b) above, 100% of the aggregate net
proceeds, including the fair market value of property other than cash
(valued as provided in clause (iii)(b) above), received by the Company as a
capital contribution subsequent to February 28, 1997, plus (d) the amount
equal to the net reduction in Investments (other than Permitted
Investments) made by the Company or any of its Subsidiaries in any Person
resulting from (i) repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an
unaffiliated purchaser and repayments of loans or advances or other
transfers of assets by such Person to the Company or any Subsidiary of the
Company or (ii) the redesignation of Unrestricted Subsidiaries as
Subsidiaries (valued in each case as provided in the definition of
"Investment") not to exceed, in the case of any Subsidiary, the amount of
Investments previously made by the Company or any Subsidiary in such
Unrestricted Subsidiary, which amount was included in the calculation of
Restricted Payments; provided, however, that no amount shall be included
under this clause (d) to the extent it is already included in Consolidated
Cash Flow, plus (e) the aggregate net cash proceeds received by a Person in
consideration for the issuance of such Person's Capital Stock (other than
Disqualified Capital Stock) that are held by such Person at the time such
Person is merged with and into the Company in accordance with the "Merger,
Consolidation and Sale of Assets" covenant subsequent to the Issue Date;
provided, however, that concurrently with or immediately following such
merger the Company uses an amount equal to such net cash proceeds to redeem
or repurchase the Company's Capital Stock, plus (f) $2,500,000.
(b) Notwithstanding the foregoing, these provisions will not prohibit: (1)
the payment of any dividend or the making of any distribution within 60 days
after the date of its declaration if such dividend or distribution would have
been permitted on the date of declaration; (2) the purchase, redemption or other
acquisition or retirement of any Capital Stock of the Company or any warrants,
options or other rights to acquire shares of any class of such Capital Stock
either (x) solely in exchange for shares of Qualified Capital Stock or other
rights to acquire Qualified Capital Stock or (y) through the application of the
net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock or warrants,
options or other rights to acquire Qualified Capital Stock or (z) in the case of
Disqualified Capital Stock, solely in exchange for, or through the application
of the net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of, Disqualified Capital Stock that has a redemption
date no earlier than, and requires the payment of current dividends or
distributions in cash no earlier than, in each case, the Disqualified Capital
Stock being purchased, redeemed or
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otherwise acquired or retired; (3) the acquisition of Indebtedness of the
Company that is subordinate or junior in right of payment to the Notes either
(x) solely in exchange for shares of Qualified Capital Stock (or warrants,
options or other rights to acquire Qualified Capital Stock), for shares of
Disqualified Capital Stock that have a redemption date no earlier than, and
require the payment of current dividends or distributions in cash no earlier
than, in each case, the maturity date and interest payments dates, respectively,
of the Indebtedness being acquired, or for Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes, at least to the extent
that the Indebtedness being acquired is subordinated to the Notes and has a
Weighted Average Life to Maturity no less than that of the Indebtedness being
acquired or (y) through the application of the net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of shares
of Qualified Capital Stock (or warrants, options or other rights to acquire
Qualified Capital Stock), shares of Disqualified Capital Stock that have a
redemption date no earlier than, and require the payment of current dividends or
distributions in cash no earlier than, in each case, the maturity date and
interest payments dates, respectively, of the Indebtedness being refinanced, or
Indebtedness of the Company that is subordinate or junior in right of payment to
the Notes at least to the extent that the Indebtedness being acquired is
subordinated to the Notes and has a Weighted Average Life to Maturity no less
than that of the Indebtedness being refinanced; (4) payments by the Company to
repurchase, or to enable Holdings to repurchase, Capital Stock or other
securities from employees of the Company or Holdings in an aggregate amount not
to exceed $2,000,000; (5) payments to enable Holdings to redeem or repurchase
stock purchase or similar rights granted by Holdings with respect to its Capital
Stock in an aggregate amount not to exceed $500,000; (6) payments, not to exceed
$100,000 in the aggregate, to enable Holdings to make cash payments to holders
of its Capital Stock in lieu of the issuance of fractional shares of its Capital
Stock; (7) payments made pursuant to any merger, consolidation or sale of assets
effected in accordance with the "Merger, Consolidation and Sale of Assets"
covenant; provided, however, that no such payment may be made pursuant to this
clause (7) unless, after giving effect to such transaction (and the incurrence
of any Indebtedness in connection therewith and the use of the proceeds
thereof), the Company would be able to incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock" covenant such that after incurring that $1.00 of additional Indebtedness,
the Leverage Ratio would be less than 6.0 to 1; (8) payments to enable Holdings
or the Company to pay dividends on its Capital Stock (other than Disqualified
Capital Stock) after the first Public Equity Offering in an annual amount not to
exceed 6.0% of the gross proceeds (before deducting underwriting discounts and
commissions and other fees and expenses of the offering) received from shares of
Capital Stock (other than Disqualified Capital Stock) sold for the account of
the issuer thereof (and not for the account of any stockholder) in such initial
Public Equity Offering; (9) payments by the Company to fund the payment by any
direct or indirect holding company thereof of audit, accounting, legal or other
similar expenses, to pay franchise or other similar taxes and to pay other
corporate overhead expenses, so long as such dividends are paid as and when
needed by its respective direct or indirect holding company and so long as the
aggregate amount of payments pursuant to this clause (9) does not exceed
$500,000 in any calendar year; (10) payments by the Company to fund taxes of
Holdings for a given taxable year in an amount equal to the lesser of (x) the
Company's "separate return liability" and (y) the portion of the tax liability
of the "affiliated group" (within the meaning of Section 1504 (a) (I) of the
Code (as defined)) of which the Company is a member in accordance with the
method described in Treasury Regulations Section 1.1552-1 (a) (I) pursuant to
(x) or (y) of this clause (10) to the extent that the Company files a combined
or consolidated income tax return with Holdings under any state or local income
tax law for a taxable year, the payment by the Company to Holdings to fund such
tax liability for such taxable year shall be provided for in a manner as similar
as possible to that provided for United States federal income taxes (for
purposes of this clause (10) "separate return liability" for a given taxable
year shall mean the hypothetical United States tax liability of the Company
defined as if the Company had filed its own U.S. federal tax return for such
taxable year) and (11) on and after May 31, 2002, the payment of cash dividends
in respect of the Company's
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14% Redeemable Preferred Stock, par value $.01; provided, however, that in the
case of clauses (3), (4), (5), (6), (7), (8) and (11), no Event of Default shall
have occurred or be continuing at the time of such payment or as a result
thereof. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, amounts expended pursuant to clauses (1), (4),
(5), (6), (7), (8) and (11) shall be included in such calculation.
Merger, Consolidation and Sale of Assets. The Indenture provides that the
Company may not, in a single transaction or a series of related transactions,
consolidate with or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, another
Person or adopt a plan of liquidation unless (i) either (1) the Company is the
surviving or continuing Person or (2) the Person (if other than the Company)
formed by such consolidation or into which the Company is merged or the Person
that acquires by conveyance, transfer or lease the properties and assets of the
Company substantially as an entirety or in the case of a plan of liquidation,
the Person to which assets of the Company have been transferred, shall be a
corporation, partnership or trust organized and existing under the laws of the
United States or any State thereof or the District of Columbia; (ii) such
surviving Person shall assume all of the obligations of the Company under the
Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after giving effect to
such transaction and the use of the proceeds therefrom (on a pro forma basis,
including giving effect to any Indebtedness incurred or anticipated to be
incurred in connection with such transaction), the Company (in the case of
clause (1) of the foregoing clause (i)) or such Person (in the case of clause
(2) of the foregoing clause (i)) shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant; (iv) immediately after giving effect to
such transactions, no Default or Event of Default shall have occurred or be
continuing; and (v) the Company has delivered to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer complies
with the Indenture and that all conditions precedent in the Indenture relating
to such transaction have been satisfied. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties
and assets of one or more Subsidiaries, the Capital Stock of which constitutes
all or substantially all of the properties or assets of the Company, will be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company. Notwithstanding the foregoing clauses (ii) and (iii), (1)
any Subsidiary of the Company may consolidate with, merge into or transfer all
or part of its properties and assets to the Company and (2) the Company may
merge with a corporate Affiliate thereof incorporated solely for the purpose of
reincorporating the Company in another jurisdiction in the U.S. to realize tax
or other benefits.
Limitation on Asset Sales. The Indenture provides that neither the Company
nor any of its Subsidiaries will consummate an Asset Sale unless (i) the Company
or the applicable Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (as determined in good faith by management of the
Company or, if such Asset Sale involves consideration in excess of $2,500,000,
by the board of directors of the Company, as evidenced by a board resolution),
(ii) at least 75% of the consideration received by the Company or such
Subsidiary, as the case may be, from such Asset Sale is in the form of cash or
Cash Equivalents (other than to the extent that the Company is exchanging all or
substantially all the assets of one or more broadcast businesses operated by the
Company (including by way of the transfer of capital stock) for all or
substantially all the assets (including by way of the transfer of capital stock)
constituting one or more broadcast businesses operated by another Person, in
which event, to such extent, the foregoing requirement with respect to the
receipt of cash or Cash Equivalents shall not apply) and is received at the time
of such disposition and (iii) upon the consummation of an Asset Sale, the
Company applies, or causes such Subsidiary to apply, such Net Cash Proceeds
within 180 days of receipt thereof either (A) to repay any Senior Indebtedness
of the Company or any Indebtedness of a Subsidiary of the Company
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(and, to the extent such Senior Indebtedness relates to principal under a
revolving credit or similar facility, to obtain a corresponding reduction in the
commitments thereunder), (B) to reinvest, or to be contractually committed to
reinvest pursuant to a binding agreement, in Productive Assets and, in the
latter case, to have so reinvested within 360 days of the date of receipt of
such Net Cash Proceeds or (C) to purchase Notes and other Senior Subordinated
Indebtedness, pro rata tendered to the Company for purchase at a price equal to
100% of the principal amount thereof (or the accreted value of such other Senior
Subordinated Indebtedness, if such other Senior Subordinated Indebtedness is
issued at a discount) plus accrued interest thereon, if any, to the date of
purchase pursuant to an offer to purchase made by the Company as set forth below
(a "Net Proceeds Offer"); provided, however, that the Company may defer making a
Net Proceeds Offer until the aggregate Net Cash Proceeds from Asset Sales not
otherwise applied in accordance with this covenant equal or exceed $5,000,000.
Subject to the deferral right set forth in the final proviso of the
preceding paragraph, each notice of a Net Proceeds Offer will be mailed, by
first-class mail, to holders of Notes not more than 180 days after the relevant
Asset Sale or, in the event the Company or a Subsidiary has entered into a
binding agreement as provided in (B) above, within 180 days following the
termination of such agreement but in no event later than 360 days after the
relevant Asset Sale. Such notice will specify, among other things, the purchase
date (which will be no earlier than 30 days nor later than 45 days from the date
such notice is mailed, except as otherwise required by law) and will otherwise
comply with the procedures set forth in the Indenture. Upon receiving notice of
the Net Proceeds Offer, holders of Notes may elect to tender their Notes in
whole or in part in integral multiples of $1,000. To the extent holders properly
tender Notes in an amount which, together with all other Senior Subordinated
Indebtedness so tendered, exceeds the Net Proceeds Offer, Notes and other Senior
Subordinated Indebtedness of tendering holders will be repurchased on a pro rata
basis (based upon the aggregate principal amount tendered). To the extent that
the aggregate principal amount of Notes tendered pursuant to any Net Proceeds
Offer, which, together with the aggregate principal amount or aggregate accreted
value, as the case may be, of all other Senior Subordinated Indebtedness so
tendered, is less than the amount of Net Cash Proceeds subject to such Net
Proceeds Offer, the Company may use any remaining portion of such Net Cash
Proceeds not required to fund the repurchase of tendered Notes and other Senior
Subordinated Indebtedness for any purposes otherwise permitted by the Indenture.
Upon the consummation of any Net Proceeds Offer, the amount of Net Cash Proceeds
subject to any future Net Proceeds Offer from the Asset Sales giving rise to
such Net Cash Proceeds shall be deemed to be zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the repurchase of Notes
pursuant to a Net Proceeds Offer.
Limitation on Asset Swaps. The Indenture provides that the Company will
not, and will not permit any Subsidiary to, engage in any Asset Swaps, unless:
(i) at the time of entering into such Asset Swap, and immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (ii) in the event
such Asset Swap involves an aggregate amount in excess of $1.0 million, the
terms of such Asset Swap have been approved by a majority of the members of the
board of directors of the Company and (iii) in the event such Asset Swap
involves an aggregate amount in excess of $5.0 million, the Company has received
a written opinion from an independent investment banking firm of nationally
recognized standing that such Asset Swap is fair to the Company or such
Subsidiary, as the case may be, from a financial point of view.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Indenture provides that neither the Company nor any of its
Subsidiaries will, directly or indirectly, create or otherwise cause to permit
to exist or become effective, by operation of the charter of such Subsidiary or
by reason of any agreement, instrument, judgment, decree, rule, order, statute
or governmental regulation, any encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock; (b) make loans or advances or pay
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any Indebtedness or other obligation owed to the Company or any of its
Subsidiaries; or (c) transfer any of its property or assets to the Company,
except for such encumbrances or restrictions existing under or by reason of: (1)
applicable law; (2) the Indenture; (3) customary non-assignment provisions of
any lease governing a leasehold interest of the Company or any Subsidiary; (4)
any instrument governing Acquired Indebtedness, which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired; (5)
agreements existing on the Issue Date (including the Credit Agreement) as such
agreements are from time to time in effect; provided, however, that any
amendments or modifications of such agreements that affect the encumbrances or
restrictions of the types subject to this covenant shall not result in such
encumbrances or restrictions being less favorable to the Company in any material
respect, as determined in good faith by the board of directors of the Company,
than the provisions as in effect before giving effect to the respective
amendment or modification; (6) any restriction with respect to such a Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition; (7) an agreement effecting a refinancing,
replacement or substitution of Indebtedness issued, assumed or incurred pursuant
to an agreement referred to in clause (2), (4) or (5) above or any other
agreement evidencing Indebtedness permitted under the Indenture; provided,
however, that the provisions relating to such encumbrance or restriction
contained in any such refinancing, replacement or substitution agreement or any
such other agreement are no less favorable to the Company in any material
respect as determined in good faith by the board of directors of the Company
than the provisions relating to such encumbrance or restriction contained in
agreements referred to in such clause (2), (4) or (5); (8) restrictions on the
transfer of the assets subject to any Lien imposed by the holder of such Lien;
or (9) a licensing agreement to the extent such restrictions or encumbrances
limit the transfer of property subject to such licensing agreement.
Limitations on Transactions with Affiliates. The Indenture provides that
neither the Company nor any of its Subsidiaries will, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with or for the benefit of any of its Affiliates (other than
transactions between the Company and a Wholly Owned Subsidiary of the Company or
among Wholly Owned Subsidiaries of the Company) (an "Affiliate Transaction"),
other than Affiliate Transactions on terms that are no less favorable than those
that might reasonably have been obtained in a comparable transaction on an
arm's-length basis from a person that is not an Affiliate; provided, however,
that for a transaction or series of related transactions involving value of
$1,000,000 or more, such determination will be made in good faith by a majority
of members of the board of directors of the Company and by a majority of the
disinterested members of the board of directors of the Company, if any;
provided, further, that for a transaction or series of related transactions
involving value of $5,000,000 or more, the board of directors of the Company has
received an opinion from a nationally recognized investment banking firm that
such Affiliate Transaction is fair, from a financial point of view, to the
Company or such Subsidiary. The foregoing restrictions will not apply to (1)
reasonable and customary directors' fees, indemnification and similar
arrangements and payments thereunder, (2) any obligations of the Company under
the Financial Monitoring and Oversight Agreements or any employment agreement,
noncompetition or confidentiality agreement with any officer of the Company
(provided that each amendment of any of the foregoing agreements shall be
subject to the limitations of this covenant), (3) reasonable and customary
investment banking, financial advisory, commercial banking and similar fees and
expenses paid to any of the Initial Purchasers and their Affiliates, (4) any
Restricted Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (5) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the board of directors of the Company, (6) loans or advances to
employees in the ordinary course of business of the Company or any of its
Subsidiaries consistent with past practices, (7) payments made in
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connection with the Acquisition, including fees to Hicks Muse, as described in
the Offering Memorandum and (8) the issuance of Capital Stock of the Company
(other than Disqualified Stock).
Reports. The Indenture provides that so long as any of the Notes are
outstanding, the Company will provide to the holders of Notes and file with the
Commission, to the extent such submissions are accepted for filing by the
Commission, copies of the annual reports and of the information, documents and
other reports that the Company would have been required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act regardless of
whether the Company is then obligated to file such reports.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on the Notes when the same becomes due and
payable and the Default continues for a period of 30 days (whether or not such
payment is prohibited by the provisions described under "-- Ranking and
Subordination" above); (ii) the failure to pay principal of or premium, if any,
on any Notes when such principal or premium, if any, becomes due and payable, at
maturity, upon redemption or otherwise (whether or not such payment is
prohibited by the provisions described under "-- Ranking and Subordination"
above); (iii) a default in the observance or performance of any other covenant
or agreement contained in the Notes or the Indenture, which default continues
for a period of 30 days after the Company receives written notice thereof
specifying the default from the Trustee or holders of at least 25% in aggregate
principal amount of outstanding Notes; (iv) the failure to pay at the final
stated maturity (giving effect to any extensions thereof) the principal amount
of any Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness, if the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions thereof)
or which has been accelerated, aggregates $5,000,000 or more at any time in each
case after a 10-day period during which such default shall not have been cured
or such acceleration rescinded; (v) one or more judgments in an aggregate amount
in excess of $5,000,000 (which are not covered by insurance as to which the
insurer has not disclaimed coverage) being rendered against the Company or any
of its Significant Subsidiaries and such judgment or judgments remain
undischarged or unstayed for a period of 60 days after such judgment or
judgments become final and nonappealable; and (vi) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any of its Significant
Subsidiaries.
Upon the happening of any Event of Default specified in the Indenture, the
Trustee may, and the Trustee upon the request of holders of 25% in principal
amount of the outstanding Notes shall, or the holders of at least 25% in
principal amount of outstanding Notes may, declare the principal of all the
Notes, together with all accrued and unpaid interest and premium, if any, to be
due and payable by notice in writing to the Company and the Trustee specifying
the respective Event of Default and that it is a "notice of acceleration" (the
"Acceleration Notice"), and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the Credit Agreement,
will become due and payable upon the first to occur of an acceleration under the
Credit Agreement or five business days after receipt by the Company and the
agent under the Credit Agreement of such Acceleration Notice (unless all Events
of Default specified in such Acceleration Notice have been cured or waived). If
an Event of Default with respect to bankruptcy proceedings relating to the
Company or any Significant Subsidiaries occurs and is continuing, then such
amount will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of the Notes.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the holders of a majority in principal amount of the Notes then outstanding (by
notice to the Trustee) may rescind and cancel such declaration and its
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consequences if (i) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction, (ii) all existing Events of Default
have been cured or waived except nonpayment of principal of or interest on the
Notes that has become due solely by such declaration of acceleration, (iii) to
the extent the payment of such interest is lawful, interest (at the same rate
specified in the Notes) on overdue installments of interest and overdue payments
of principal, which has become due other than by such declaration of
acceleration, has been paid, (iv) the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default of the type described in clause (vi) of the
description of Events of Default in the first paragraph above, the Trustee has
received an Officers' Certificate and Opinion of Counsel that such Default or
Event of Default has been cured or waived. The holders of a majority in
principal amount of the Notes may waive any existing Default or Event of Default
under the Indenture, and its consequences, except a default in the payment of
the principal of or interest on any Notes.
The Company is required to deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, a certificate indicating whether the
signing officers know of any Default or Event of Default that occurred during
the previous year and whether the Company has complied with its obligations
under the Indenture. In addition, the Company will be required to notify the
Trustee of the occurrence and continuation of any Default or Event of Default
promptly after the Company becomes aware of the same.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default thereunder should occur and be continuing,
the Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the holders of the
Notes unless such holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Subject to such provision for
security or indemnification and certain limitations contained in the Indenture,
the holders of a majority in principal amount of the outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its obligations under the Indenture at any time
by delivering all outstanding Notes to the Trustee for cancellation and paying
all sums payable by it thereunder. The Company, at its option, (i) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations of the Company to register the transfer or exchange of such
Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and
hold moneys for payment in trust) or (ii) need not comply with certain of the
restrictive covenants with respect to the Indenture, if the Company deposits
with the Trustee, in trust, U.S. legal tender or U.S. Government Obligations or
a combination thereof that, through the payment of interest and premium thereon
and principal in respect thereof in accordance with their terms, will be
sufficient to pay all the principal of and interest and premium on the Notes on
the dates such payments are due in accordance with the terms of such Notes as
well as the Trustee's fees and expenses. To exercise either such option, the
Company is required to deliver to the Trustee (A) an opinion of counsel or a
private letter ruling issued to the Company by the Internal Revenue Service (the
"IRS") to the effect that the holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of the deposit and
related defeasance and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
option had not been exercised and, in the case of an opinion of counsel
furnished in connection with a discharge pursuant to clause (i) above,
accompanied by a private letter ruling issued to the Company by the IRS to such
effect, (B) subject to certain qualifications, an opinion of counsel to the
effect that funds so deposited will not be subject to avoidance under applicable
bankruptcy law and (C) an officers' certificate and an opinion of counsel to the
effect that the Company has complied with all conditions
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precedent to the defeasance. Notwithstanding the foregoing, the opinion of
counsel required by clause (A) above need not be delivered if all Notes not
theretofore delivered to the Trustee for cancellation (i) have become due and
payable, (ii) will become due and payable on the maturity date within one year
or (iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company.
MODIFICATION OF THE INDENTURE
From time to time, the Company and the Trustee, together, without the
consent of the holders of the Notes, may amend or supplement the Indenture for
certain specified purposes, including curing ambiguities, defects or
inconsistencies. Other modifications and amendments of the Indenture may be made
with the consent of the holders of a majority in principal amount of the then
outstanding Notes, except that, without the consent of each holder of the Notes
affected thereby, no amendment may, directly or indirectly: (i) reduce the
amount of Notes whose holders must consent to an amendment; (ii) reduce the rate
of or change the time for payment of interest, including defaulted interest, on
any Notes; (iii) reduce the principal of or change the fixed maturity of any
Notes, or change the date on which any Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price thereof; (iv) make any
Notes payable in money other than that stated in the Notes and the Indenture;
(v) make any change in provisions of the Indenture protecting the right of each
holder of a Note to receive payment of principal of, premium on and interest on
such Note on or after the due date thereof or to bring suit to enforce such
payment or permitting holders of a majority in principal amount of the Notes to
waive Default or Event of Default; or (vi) after the Company's obligation to
purchase the Notes arises under the Indenture, amend, modify or change the
obligation of the Company to make or consummate a Change of Control Offer or a
Net Proceeds Offer or waive any default in the performance thereof or modify any
of the provisions or definitions with respect to any such offers.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it requires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged with
the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (excluding any Sale and Leaseback Transaction or any pledge of
assets or stock by the Company or any of its Subsidiaries) to any Person other
than the Company or a Wholly Owned Subsidiary of the Company of (i) any Capital
Stock of any Subsidiary of the Company or (ii) any other property or assets of
the Company or any Subsidiary of the Company other than in the ordinary course
of business; provided, however, that for purposes of the "Limitation on Asset
Sales" covenant, Asset Sales shall not include (a) a transaction or series of
related transactions in which the Company or its Subsidiaries receive aggregate
consideration of less than $500,000, (b) transactions permitted under the
"Limitation on Asset Swaps" covenant or (c) transactions covered by the "Merger,
Consolidation and Sale of Assets" covenant.
"Asset Swap" means the execution of a definitive agreement, subject only to
FCC approval, if applicable, and other customary closing conditions, that the
Company in good faith believes will be satisfied, for a substantially concurrent
purchase and sale, or exchange, of Productive Assets between the Company or any
of its Subsidiaries and another Person or group of affiliated Persons; provided
that any amendment to or waiver of any closing condition that individually or in
the aggregate is material to the Asset Swap shall be deemed to be a new Asset
Swap.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated) of capital stock of such Person and (ii) with respect to any Person
that is not a corporation, any and all partnership or other equity interests of
such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP, and for purposes of this definition, the amount of such
obligation at any date shall be the capitalized amount of such obligation at
such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the
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full faith and credit of the United States, in each case maturing within one
year from the date of acquisition thereof; (ii) marketable direct obligations
issued by any state of the United States of America or any political subdivision
of any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either Standard & Poor's Corporation
or Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Corporation or at least
P-1 from Moody's Investors Service, Inc.; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200,000,000; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds that invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in compliance with the
provisions of the Indenture), other than to Hicks Muse, any of its Affiliates,
officers and directors or Robert N. Smith or any of his Affiliates (the
"Permitted Holders"); or (ii) a majority of the board of directors of the
Company or Holdings shall consist of Persons who are not Continuing Directors;
or (iii) the acquisition by any Person or Group (other than the Permitted
Holders or any direct or indirect Subsidiary of any Permitted Holder, including
without limitation Holdings) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary voting
power for the election of directors of the Company or Holdings.
"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used in
the ordinary course of business of the Company and its Subsidiaries.
"Consolidated Cash Flow" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary or
nonrecurring gains or losses), (B) Consolidated Interest Expense and (C)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount, (b) the net cost under Interest Swap Obligations (including any
amortization of discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges owed with
respect to letters of credit, bankers' acceptance financing or similar
facilities, and (e) all accrued interest and (ii) the interest component of
Capitalized Lease Obligations paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided,
however, that there shall be excluded therefrom, without duplica-
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tion, (a) gains and losses from Asset Sales (without regard to the $500,000
limitation set forth in the definition thereof) or abandonments or reserves
relating thereto and the related tax effects, (b) items classified as
extraordinary or nonrecurring gains and losses, and the related tax effects
according to GAAP, (c) the net income (or loss) of any Person acquired in a
pooling of interests transaction accrued prior to the date it becomes a
Subsidiary of such first referred to Person or is merged or consolidated with it
or any of its Subsidiaries, (d) the net income of any Subsidiary to the extent
that the declaration of dividends or similar distributions by that Subsidiary of
that income is restricted by contract, operation of law or otherwise, (e) the
net income of any Person, other than a Subsidiary, except to the extent of the
lesser of (x) dividends or distributions paid to such first referred to Person
or its Subsidiary by such Person and (y) the net income of such Person (but in
no event less than zero), and the net loss of such Person shall be included only
to the extent of the aggregate Investment of the first referred to Person or a
consolidated Subsidiary of such Person and any non-cash expenses attributable to
grants or exercises of employee stock options.
"Consolidated Non-Cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries (excluding any such charges constituting an
extraordinary or nonrecurring item) reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.
"Continuing Director" means, as of the date of determination, any Person
who (i) was a member of the board of directors of the Company or Holdings on the
Issue Date, (ii) was nominated for election or elected to the board of directors
of the Company or Holdings, as the case may be, with the affirmative vote of a
majority of the Continuing Directors who were members of such board of directors
at the time of such nomination or election or (iii) is a representative of a
Permitted Holder.
"Credit Agreement" means the Credit Agreement, dated as of February 28,
1997, among the Company, The Chase Manhattan Bank, as agent, NationsBank of
Texas, N.A., as documentation agent, and any other financial institutions from
time to time party thereto, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of lenders
(or other institutions).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) all obligations under the Credit
Agreement and (ii) any other Senior Indebtedness of the Company which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $20,000,000 and is specifically designated by the Company
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of the Indenture.
"Disqualified Capital Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is
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redeemable at the sole option of the holder thereof (except, in each case, upon
the occurrence of a Change of Control), in whole or in part, on or prior to the
final maturity date of the Notes.
"Financial Monitoring and Oversight Agreements" means, collectively, the
Monitoring and Oversight Agreement among the Company, Holdings and Hicks Muse
Partners, as in effect on the Issue Date, and the Financial Advisory Agreement
among the Company, Holding and Hicks Muse Partners, as in effect on the Issue
Date.
"GAAP" means generally accepted accounting principles as in effect in the
United States of America as of the Issue Date.
"Indebtedness" means with respect to any Person, without duplication, any
liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which is secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured. The amount of
Indebtedness of any Person at any date shall be the outstanding principal amount
of all unconditional obligations described above, as such amount would be
reflected on a balance sheet prepared in accordance with GAAP, and the maximum
liability at such date of such Person for any contingent obligations described
above.
"Interest Swap Obligations" means the obligations of any Person under any
interest rate protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate hedge or
arrangement.
"Investment" means (i) any transfer or delivery of cash, stock or other
property of value in exchange for Indebtedness, stock or other security or
ownership interest in any Person by way of loan, advance, capital contribution,
guarantee or otherwise and (ii) an investment deemed to have been made by the
Company at the time any entity which was a Subsidiary of the Company ceases to
be such a Subsidiary in an amount equal to the value of the loans and advances
made to, and any remaining ownership interest in, such entity immediately
following such entity ceasing to be a Subsidiary of the Company. The amount of
any non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of the Company unless the
fair market value of such Investment exceeds $1,000,000, in which case the fair
market value shall be determined conclusively in good faith by the Board of
Directors of the Company at the time such Investment is made.
"Issue Date" means the date on which the Notes are originally issued.
"Leverage Ratio" shall mean, as to any Person, the ratio of (i) the
aggregate outstanding amount of Indebtedness of the Company and its Subsidiaries
as of the date of calculation on a consolidated basis in accordance with GAAP
plus the aggregate liquidation preference of all Disqualified Capital Stock of
the Company and of all outstanding Preferred Stock of Subsidiaries of the
Company to (ii) the Consolidated Cash Flow of the Company for the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
determination.
For purposes of this definition, the aggregate outstanding principal amount
of Indebtedness of the Person and its Subsidiaries for which such calculation is
made shall be determined on a pro forma basis as if the Indebtedness giving rise
to the need to perform such calculation had been incurred and the proceeds
therefrom had been applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the Four Quarter
Period.
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In addition to the foregoing, for purposes of this definition, "Consolidated
Cash Flow" shall be calculated on a pro forma basis after giving effect to (i)
the incurrence of the Indebtedness of such Person and its Subsidiaries (and the
application of the proceeds therefrom) giving rise to the need to make such
calculation and any incurrence (and the application of the proceeds therefrom)
or repayment of other Indebtedness, other than the incurrence or repayment of
Indebtedness pursuant to working capital facilities, at any time subsequent to
the beginning of the Four Quarter Period and on or prior to the date of
determination, as if such incurrence (and the application of the proceeds
thereof), or the repayment, as the case may be, occurred on the first day of the
Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (including any
Person that becomes a Subsidiary as a result of such Asset Acquisition)
incurring, assuming or otherwise becoming liable for Indebtedness) at any time
on or subsequent to the first day of the Four Quarter Period and on or prior to
the date of determination, as if such Asset Sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Indebtedness and also
including any Consolidated Cash Flow associated with such Asset Acquisition)
occurred on the first day of the Four Quarter Period and (iii) cost savings
resulting from employee terminations, facilities consolidations and closings,
standardization of employee benefits and compensation practices, consolidation
of property, casualty and other insurance coverage and policies, standardization
of sales representation commissions and other contract rates, and reductions in
taxes other than income taxes (collectively, "Cost Savings Measures"), which
cost savings the Company reasonably believes in good faith could have been
achieved during the Four Quarter Period as a result of such Asset Acquisition
(regardless of whether such cost savings could then be reflected in pro forma
financial statements under GAAP, Regulation S-X promulgated by the Commission or
any other regulation or policy of the Commission), less the amount of any
additional expenses that the Company reasonably estimates would result from
anticipated replacement of any items constituting Cost Savings Measures in
connection with such Asset Acquisitions; provided, however, that both (A) such
cost savings and Cost Savings Measures were identified and such cost savings
were quantified in an officer's certificate delivered to the Trustee at the time
of the consummation of the Asset Acquisition and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90 days
of such Asset Acquisition to effect the Cost Savings Measures identified in such
officer's certificate (regardless, however, of whether the corresponding cost
savings have been achieved). Furthermore, in calculating "Consolidated Interest
Expense" for purposes of the calculation of "Consolidated Cash Flow," (i)
interest on Indebtedness determined on a fluctuating basis as of the date of
determination (including Indebtedness actually incurred on the date of the
transaction giving rise to the need to calculate the Leverage Ratio) and which
will continue to be so determined thereafter shall be deemed to have accrued at
a fixed rate per annum equal to the rate of interest on such Indebtedness as in
effect on the date of determination and (ii) notwithstanding (i) above, interest
determined on a fluctuating basis, to the extent such interest is covered by
Interest Swap Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents (including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents)
received by the Company or any of its Subsidiaries from such Asset Sale net of
(i) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions, recording fees, title insurance premiums, appraisers,
fees and costs reasonably incurred in preparation of any asset or property for
sale), (ii) taxes paid or reasonably estimated to be payable (calculated based
on the combined state, federal and foreign statutory tax rates applicable to the
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Company or the Subsidiary engaged in such Asset Sale) and (iii) repayment of
Indebtedness secured by assets subject to such Asset Sale; provided, however,
that if the instrument or agreement governing such Asset Sale requires the
transferor to maintain a portion of the purchase price in escrow (whether as a
reserve for adjustment of the purchase price or otherwise) or to indemnify the
transferee for specified liabilities in a maximum specified amount, the portion
of the cash or Cash Equivalents that is actually placed in escrow or segregated
and set aside by the transferor for such indemnification obligation shall not be
deemed to be Net Cash Proceeds until the escrow terminates or the transferor
ceases to segregate and set aside such funds, in whole or in part, and then only
to the extent of the proceeds released from escrow to the transferor or that are
no longer segregated and set aside by the transferor.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing, or otherwise relating to, any
Indebtedness.
"Permitted Indebtedness" means, without duplication, (i) Indebtedness
outstanding on the Issue Date; (ii) Indebtedness of the Company or a Subsidiary
incurred under the Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed the sum of the aggregate commitments pursuant to the
Credit Agreement as in effect on the Issue Date; (iii) Indebtedness evidenced by
or arising under the Notes and the Indenture; (iv) Interest Swap Obligations;
provided, however, that such Interest Swap Obligations are entered into to
protect the Company from fluctuations in interest rates of its Indebtedness; (v)
additional Indebtedness of the Company or any of its Subsidiaries not to exceed
$10,000,000 in principal amount outstanding at any time (which amount may, but
need not, be incurred under the Credit Agreement); (vi) Refinancing
Indebtedness; (vii) Indebtedness owed by the Company to any Wholly Owned
Subsidiary of the Company or by any Subsidiary of the Company to the Company or
any Wholly Owned Subsidiary of the Company; (viii) guarantees by Subsidiaries of
any Indebtedness permitted to be incurred pursuant to the Indenture; (ix)
Indebtedness in respect of performance bonds, bankers' acceptances and surety or
appeal bonds provided by the Company or any of its Subsidiaries to their
customers in the ordinary course of their business; (x) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in each case incurred in connection
with the disposition of any business assets or Subsidiaries of the Company
(other than guarantees of Indebtedness or other obligations incurred by any
Person acquiring all or any portion of such business assets or Subsidiaries of
the Company for the purpose of financing such acquisition) in a principal amount
not to exceed the gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness incurred pursuant to this clause (x), when
taken together with all Indebtedness incurred pursuant to this clause (x) and
then outstanding, shall not exceed $7,500,000; and (xi) Indebtedness represented
by Capitalized Lease Obligations, mortgage financings or purchase money
obligations, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property used in
a related business or incurred to refinance any such purchase price or cost of
construction or improvement, in each case incurred no later than 365 days after
the date of such acquisition or the date of completion of such construction or
improvement; provided, however, that the principal amount of any Indebtedness
incurred pursuant to this clause (xi) shall not exceed $3,000,000 at any time
outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company to acquire the stock or assets of any Person (or
Acquired Indebtedness acquired in connection with a transaction in which such
Person becomes a Subsidiary of the Company) engaged in the broadcast business or
businesses reasonably related thereto; provided, however, that if any such
Investment or series of related Investments involves an Investment by the
Company in excess of $5,000,000, the Company is able, at the time of such
investment and immediately after
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<PAGE> 104
giving effect thereto, to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of
Additional Indebtedness and Issuance of Disqualified Capital Stock" covenant,
(ii) Investments received by the Company or its Subsidiaries as consideration
for a sale of assets, (iii) Investments by the Company or any Wholly Owned
Subsidiary of the Company in any Wholly Owned Subsidiary of the Company (whether
existing on the Issue Date or created thereafter) or any Person that after such
Investments, and as a result thereof, becomes a Wholly Owned Subsidiary of the
Company and Investments in the Company by any Wholly Owned Subsidiary of the
Company, (iv) Investments in cash and Cash Equivalents, (v) Investments in
securities of trade creditors, wholesalers or customers received pursuant to any
plan of reorganization or similar arrangement, (vi) loans or advances to
employees of the Company or any Subsidiary thereof for purposes of purchasing
the Company's Capital Stock and other loans and advances to employees made in
the ordinary course of business consistent with past practices of the Company or
such Subsidiary, and (vii) additional Investments in an aggregate amount not to
exceed $1,000,000 at any time outstanding.
"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Productive Assets" means assets of a kind used or usable by the Company
and its Subsidiaries in broadcast businesses or businesses reasonably related
thereto, and specifically includes assets acquired through Asset Acquisitions.
"Public Equity Offering" means an underwritten public offering of Capital
Stock (other than Disqualified Capital Stock) of the Company or Holdings (to the
extent, in the case of Holdings, that the net cash proceeds thereof are
contributed to the common or non-redeemable preferred equity capital of the
Company), pursuant to an effective registration statement filed with the
Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Refinancing Indebtedness" means any refinancing by the Company of
Indebtedness of the Company or any of its Subsidiaries incurred in accordance
with the "Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant (other than pursuant to clause (iii) or
(iv) of the definition of Permitted Indebtedness) that does not (i) result in an
increase in the aggregate principal amount of Indebtedness (such principal
amount to include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing Indebtedness) of such
Person or (ii) create Indebtedness with (A) a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being refinanced or (B) a final maturity earlier than the final maturity of the
Indebtedness being refinanced.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Senior Indebtedness; provided, however, that
if, and for so long as, any issue of Senior Indebtedness lacks such a
representative, then the Representative for such issue of Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such issue of Senior Indebtedness.
"Restricted Payment" means (i) the declaration or payment of any dividend
or the making of any other distribution (other than dividends or distributions
payable in Qualified Capital Stock or in options, rights or warrants to acquire
Qualified Capital Stock) on shares of the Company's Capital Stock, (ii) the
purchase, redemption, retirement or other acquisition for value of any Capital
Stock of the Company, or any warrants, rights or options to acquire shares of
Capital Stock of the Company, other than through the exchange of such Capital
Stock or any warrants, rights or options to acquire shares of any class of such
Capital Stock for Qualified Capital Stock or warrants, rights or
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<PAGE> 105
options to acquire Qualified Capital Stock, (iii) the making of any principal
payment on, or the purchase, defeasance, redemption, prepayment, decrease or
other acquisition or retirement for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, of, any
Indebtedness of the Company or its Subsidiaries that is subordinated or junior
in right of payment to the Notes or (iv) the making of any Investment (other
than a Permitted Investment).
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.
"Secured Indebtedness" means any Indebtedness of the Company or a
subsidiary secured by a Lien.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.
"Significant Subsidiary" means for any Person each Subsidiary of such
Person which (i) for the most recent fiscal year of such Person accounted for
more than 5% of the consolidated net income of such Person or (ii) as at the end
of such fiscal year, was the owner of more than 5% of the consolidated assets of
such Person.
"Subsidiary," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, through one or more
intermediaries, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the time,
directly or indirectly, through one or more intermediaries, owned by such
Person; provided, however, that notwithstanding the foregoing, SAC shall be
deemed to be a "Subsidiary" of the Company. Notwithstanding anything in the
Indenture to the contrary, all references to the Company and its consolidated
Subsidiaries or to financial information prepared on a consolidated basis in
accordance with GAAP shall be deemed to include the Company and its Subsidiaries
as to which financial statements are prepared on a combined basis in accordance
with GAAP and to financial information prepared on such a combined basis.
Notwithstanding anything in the Indenture to the contrary, an Unrestricted
Subsidiary shall not be deemed to be a Subsidiary for purposes of the Indenture.
"Unrestricted Subsidiary" means a Subsidiary of the Company created after
the Issue Date and so designated by a resolution adopted by the board of
directors of the Company; provided, however, that (a) neither the Company nor
any of its other Subsidiaries (other than Unrestricted Subsidiaries) (1)
provides any credit support for any Indebtedness of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Indebtedness) or (2) is
directly or indirectly liable for any Indebtedness of such Subsidiary and (b) at
the time of designation of such Subsidiary, such Subsidiary has no property or
assets (other than de minimis assets resulting from the initial capitalization
of such Subsidiary). The board of directors may designate any Unrestricted
Subsidiary to be a Subsidiary; provided, however, that immediately after giving
effect to such designation (x) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant and (y) no Default or Event of Default
shall have occurred or be continuing. Any designation pursuant to this
definition by the board of directors of the Company shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the resolution of
the Company's board of directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or
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<PAGE> 106
instrumentality thereof) for the payment of which the full faith and credit of
the United States of America is pledged and which are not callable or redeemable
at the issuer's option.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities (other than directors' qualifying
shares) which normally have the right to vote in the election of directors are
owned by such Person or any Wholly-Owned Subsidiary of such Person; provided,
however, that "Wholly Owned Subsidiary" shall also include SAC and any other
Restricted Subsidiary of which in excess of 95% of the common equity securities
are owned by the Company or another Wholly-Owned Subsidiary and which is
organized for the purpose of facilitating the acquisition of any broadcasting
business that, but for the formation of such Person, the Company and its
Restricted Subsidiaries could not acquire under applicable laws related to the
ownership of broadcast businesses.
BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the New Notes initially will be
represented by one or more permanent global certificates in definitive, duly
registered form (the "Global Notes"). The Global Notes will be deposited on the
Issue Date with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC") and registered in the name of a nominee of DTC.
The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of New Notes
of the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts with DTC ("participants") or persons who
hold interests through participants. QIBs and institutional Accredited Investors
who are not QIB's may hold their interests in the Global Notes directly through
DTC if they are participants in such system, or indirectly through organizations
which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
New Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the New Notes represented by such Global Notes for all
purposes under the Indenture. No beneficial owner of an interest in the Global
Notes will be able to transfer that interest except in accordance with DTC's
procedures.
Payments of the principal of, premium (if any) and interest on, the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any and interest on the Global Notes, will credit
participants' accounts with payments in amount proportionate to their respective
beneficial interests in the principal amount of the Global
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<PAGE> 107
Notes as shown on the records of DTC or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in the Global
Notes held through such participants will be governed by standing instructions
and customary practice, as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell New Notes to persons in
states which require physical delivery of the Notes, or to pledge such
securities, such holder must transfer its interest in a Global Note, in
accordance with the normal procedures of DTC.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more participants
to whose account the DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of New Notes as to
which such participant or participants has or have given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Issuer within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.
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<PAGE> 108
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a significant modification of the terms of the Old Notes
and, therefore such exchange should not constitute an exchange for federal
income tax purposes. Accordingly, such exchange should have no federal income
tax consequences to holders of Old Notes.
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<PAGE> 109
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1997, all dealers effecting transactions in the New
Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the
Company by Weil, Gotshal & Manges LLP, Dallas, Texas and New York, New York.
INDEPENDENT AUDITORS
The consolidated balance sheet of the Company as of March 1, 1997, the
combined balance sheet of the Stations as of December 31, 1996, the combined
statements of operations, partners' equity and cash flows of the Stations for
the year ended December 31, 1996 and the combined statements of operations and
cash flows of the Stations for each of the two years ended December 31, 1995
included in this Prospectus have been audited by Arthur Andersen LLP,
independent auditors, as stated in their reports, and are included herein in
reliance upon said firm as experts in giving said reports.
The consolidated balance sheets of WJAC as of December 31, 1996 and 1995
and the consolidated statements of earnings, stockholders' equity, and cash
flows for each of the two years ended December 31, 1996 included in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report appearing herein, and are included in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
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<PAGE> 110
STC BROADCASTING, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STC Broadcasting, Inc. and Subsidiaries
Report of Independent Public Accountants.................. F-3
Consolidated Balance Sheet -- March 1, 1997............... F-4
Notes to Consolidated Balance Sheet....................... F-5
STC Broadcasting, Inc. and Subsidiaries
Unaudited Interim Consolidated Financial
Statements -- March 31, 1997
Consolidated Balance Sheet -- March 31, 1997.............. F-11
Consolidated Statement of Operations for the one month
period ended March 31, 1997............................ F-12
Consolidated Statement of Stockholders' Equity for the one
month period ended March 31, 1997...................... F-13
Consolidated Statement of Cash Flows for the one month
period ended March 31, 1997............................ F-14
Notes to Consolidated Financial Statements................ F-15
Television Stations WEYI, WROC, WTOV and KSBW
Report of Independent Public Accountants.................. F-17
Combined Balance Sheet -- December 31, 1996............... F-18
Combined Statement of Operations for the year ended
December 31, 1996...................................... F-19
Combined Statement of Partners' Equity for the year ended
December 31, 1996...................................... F-20
Combined Statement of Cash Flows for the year ended
December 31, 1996...................................... F-21
Notes to Combined Financial Statements.................... F-22
Television Stations WEYI, WROC and WTOV
Report of Independent Public Accountants.................. F-29
Combined Statements of Operations for the years ended
December 31, 1995 and
1994................................................... F-30
Combined Statements of Cash Flows for the years ended
December 31, 1995 and
1994................................................... F-31
Notes to Combined Financial Statements.................... F-32
Television Station KSBW
Report of Independent Public Accountants.................. F-35
Statements of Operations for the years ended December 31,
1995 and 1994.......................................... F-36
Statements of Cash Flows for the years ended December 31,
1995 and 1994.......................................... F-37
Notes to Financial Statements............................. F-38
WJAC, Incorporated and Subsidiaries
Independent Auditors' Report.............................. F-41
Consolidated Balance Sheets -- December 31, 1996 and
1995................................................... F-42
Consolidated Statements of Earnings for the years ended
December 31, 1996 and 1995............................. F-43
</TABLE>
F-1
<PAGE> 111
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996 and 1995................. F-44
Consolidated Statements of Cash Flows for the years ended
December 31, 1996 and 1995............................. F-45
Notes to Consolidated Financial Statements................ F-46
WJAC, Incorporated and Subsidiaries
Unaudited Interim Consolidated Financial
Statements -- March 31, 1997
Consolidated Balance Sheet -- March 31, 1997.............. F-54
Consolidated Statement of Earnings for the three months
ended March 31, 1997................................... F-55
Consolidated Statement of Stockholders' Equity for the
three months ended March 31, 1997...................... F-56
Consolidated Statement of Cash Flows for the three months
ended March 31, 1997................................... F-57
Notes to Consolidated Financial Statements................ F-58
</TABLE>
F-2
<PAGE> 112
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
STC Broadcasting, Inc.:
We have audited the accompanying consolidated balance sheet of STC
Broadcasting, Inc. and subsidiaries as of March 1, 1997. This balance sheet is
the responsibility of the Company's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of STC Broadcasting,
Inc. and subsidiaries as of March 1, 1997, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
May 23, 1997
F-3
<PAGE> 113
STC BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET--MARCH 1, 1997
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 879,455
Accounts receivable, net of allowance for doubtful
accounts of $296,534................................... 6,967,985
Current portion of program rights......................... 3,623,712
Other current assets...................................... 508,812
------------
Total current assets.............................. 11,979,964
------------
PROPERTY AND EQUIPMENT...................................... 26,920,478
------------
INTANGIBLE ASSETS:
FCC licenses.............................................. 30,858,162
Network affiliation agreements............................ 97,717,514
Other..................................................... 1,889,276
------------
Total intangible assets........................... 130,464,952
------------
OTHER ASSETS:
Deferred acquisition and financing costs.................. 4,164,490
Program rights, net of current portion.................... 7,116,358
------------
Total other assets................................ 11,280,848
------------
Total assets...................................... $180,646,242
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 755,940
Accrued compensation...................................... 76,210
Accrued other............................................. 376,610
Credit Agreement indebtedness............................. 90,800,000
Current portion of program rights payable................. 3,623,441
------------
Total current liabilities......................... 95,632,201
PROGRAM RIGHTS PAYABLE, net of current portion.............. 7,502,059
REDEEMABLE PREFERRED STOCK.................................. 28,500,000
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share, authorized, issued
and outstanding 1,000 shares........................... 10
Additional paid-in capital................................ 49,011,972
------------
Total stockholders' equity........................ 49,011,982
------------
Total liabilities and stockholders' equity........ $180,646,242
============
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-4
<PAGE> 114
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET
MARCH 1, 1997
1. ORGANIZATION AND NATURE OF OPERATIONS:
The accompanying balance sheet presents the consolidated financial position
as of March 1, 1997, of STC Broadcasting, Inc. and subsidiaries (the "Company").
The Company was incorporated on November 1, 1996, and is a wholly owned
subsidiary of Sunrise Television Corp. ("Sunrise"). The Company owns the
following commercial television stations (the "Stations"), which were acquired
on March 1, 1997:
<TABLE>
<CAPTION>
STATION DESIGNATED MARKET AREA NETWORK AFFILIATION
------- ---------------------- -------------------
<S> <C> <C>
WEYI-TV................. Flint, Saginaw-Bay City, NBC
Michigan
WROC-TV................. Rochester, New York CBS
KSBW-TV................. Salinas-Monterey, NBC
California
WTOV-TV................. Wheeling, West Virginia NBC
and Steubenville, Ohio
</TABLE>
On March 1, 1997, the Company acquired the Stations from Jupiter/Smith TV
Holdings, L.P. and Smith Broadcasting Partners, L.P. for approximately
$163,117,000, including working capital (the "Acquisition"). The accompanying
consolidated balance sheet reflects the Acquisition under the purchase method of
accounting. Accordingly, the acquired assets and assumed liabilities were
recorded at fair value as of the date of acquisition. The acquisition price was
allocated as follows:
<TABLE>
<S> <C>
Property and equipment...................................... $ 26,920,000
Intangible assets........................................... 130,086,000
Working capital............................................. 6,111,000
------------
$163,117,000
============
</TABLE>
The Acquisition was funded by $90,800,000 in borrowings under the Credit
Agreement (see Note 5) and the sale of preferred and common stock (see Notes 6
and 7) in the approximate amount of $77,500,000, net of expenses.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying balance sheet includes the consolidated accounts of the
Company. All material intercompany items and transactions have been eliminated.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents.
Concentration of Risk and Accounts Receivable
The Company serves the markets shown in Note 1 above. Accordingly, the
revenue potential of the Company is dependent on the economy in these diverse
areas. The Company monitors their accounts receivable through continuing credit
evaluations. Historically, the Stations have not had significant uncollectible
accounts.
F-5
<PAGE> 115
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
Program Rights
The Company has agreements with distributors for the rights to television
programming over contract periods which generally run from one to four years.
Each contract is recorded as an asset and liability when the license agreement
is signed. Program rights and the corresponding obligation are classified as
current or long-term based on the estimated usage and payment terms. The
capitalized cost of program rights is amortized on a straight-line basis over
the period of the program rights agreements, which approximates amortization
based on the estimated number of showings.
Property and Equipment
Property and equipment acquired in the Acquisition were recorded at the
estimate of fair value based upon independent appraisals and property and
equipment acquired subsequent thereto will be recorded at cost. Property and
equipment will be depreciated using the straight-line method over the estimated
useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings................................................... 20-39 years
Broadcast equipment......................................... 5-15 years
Automobiles................................................. 3 years
Furniture and computers..................................... 5 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred, whereas expenditures for renewals and betterments are capitalized.
Intangible Assets
Intangible assets consist principally of values assigned to the Federal
Communications Commission (FCC) licenses and network affiliation agreements of
the Stations. Intangible assets are being amortized on the straight-line basis
over 15 years. Intangible assets are periodically evaluated for impairment using
a measurement of fair value.
Impairment of Long-Lived Assets
Long-lived assets and identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
should be addressed. The Company has determined, there has been no impairment in
the carrying value of long-lived assets of Stations, as of March 1, 1997.
Deferred Charges
Deferred financing costs will be amortized over the applicable loan period
(seven years) on a straight-line basis, and deferred acquisition and
organization costs will be amortized over a 60-month period on a straight-line
basis.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities. The
preparation of financial statements in conformity with generally accepted
accounting principles also requires management to make estimates and assumptions
that affect the disclosures of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
F-6
<PAGE> 116
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
3. PROPERTY AND EQUIPMENT:
The major classes of property and equipment are as follows at March 1,
1997:
<TABLE>
<S> <C>
Land and improvements....................................... $ 2,208,649
Buildings................................................... 5,691,714
Broadcast equipment......................................... 16,980,910
Automobiles................................................. 388,667
Furniture and computers..................................... 1,650,538
-----------
Total property and equipment...................... $26,920,478
===========
</TABLE>
4. OBLIGATIONS FOR PROGRAM RIGHTS:
The aggregate scheduled maturities of program rights obligations subsequent
to March 1, 1997, are as follows:
<TABLE>
<S> <C>
1998........................................................ $ 3,623,441
1999........................................................ 3,561,335
2000........................................................ 2,782,289
2001........................................................ 1,158,435
-----------
$11,125,500
===========
</TABLE>
5. CREDIT AGREEMENT:
To finance the Acquisition described in Note 1, the Company entered into a
Credit Agreement with Chase Manhattan Bank and NationsBank of Texas, N.A. (the
"Credit Agreement"), as agents for borrowings up to $95.0 million.
The Credit Agreement provides for (i) a seven-year term loan facility in
the amount of $60.0 million, maturing on February 27, 2004 (the "Term Loan") and
(ii) a seven-year revolving credit facility in the amount of $35.0 million,
expiring on February 27, 2004 (the "Revolving Credit Facility"). In connection
with the March 25, 1997, private placement of $100.0 million, 11% Senior
Subordinated Notes (the "11% Notes"), all amounts outstanding under the Term
Loan were repaid and the Term Loan was terminated (see Note 9). Commitments
under the Revolving Credit Facility will be reduced starting in the year 2000.
The Revolving Credit Facility will bear interest at an annual rate, at the
Company's option, equal to the "ABR, as defined in the Credit Agreement, plus
the Applicable Margin" (9.75% at March 1, 1997) or the "Eurodollar Rate, as
defined in the Credit Agreement, plus the Applicable Margin" (8.13% at March 1,
1997). Interest rates on the revolving facility may be reduced quarterly in the
event the Company meets certain financial tests relating to consolidated
leverage.
The Credit Agreement provides for first priority security interests in all
of the tangible and intangible assets of the Company and its direct and indirect
subsidiaries. In addition, the loans under the Credit Agreement are guaranteed
by Sunrise and the Company's current direct and indirect and any future
subsidiaries. The Credit Agreement contains certain financial and operating
maintenance covenants including a maximum consolidated leverage ratio of
initially 7.0:1, a minimum consolidated fixed charge coverage rate of 1.05:1 and
a consolidated interest coverage ratio of initially 1.25:1. In addition, the
Company is limited in the amount of annual payments that may be made for capital
expenditures and corporate overhead.
F-7
<PAGE> 117
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
The operating covenants of the Credit Agreement include limitations on the
ability of the Company to (i) incur additional indebtedness (including film
debt), other than certain permitted indebtedness, (ii) permit additional liens
or encumbrances, other than certain permitted liens, (iii) make any investments
in other persons, other than certain permitted investments, (iv) become
obligated with respect to contingent obligations, other than certain permitted
contingent obligations, and (v) make restricted payments (including dividends on
its common stock). The operating covenants also include restrictions on certain
specified fundamental changes, such as mergers and asset sales, transactions
with shareholders and affiliates and business outside the ordinary course as
currently conducted, amendments or waivers of certain specified agreements and
the issuance of guarantees or other credit enhancements.
6. REDEEMABLE PREFERRED STOCK:
In connection with the Acquisition, the Company issued Redeemable Preferred
Stock with an aggregate liquidation preference of $30.0 million, or $100 per
share, which will be entitled to quarterly dividends that will accrue at a rate
per annum of 14%. Prior to February 28, 2002, dividends may be paid in either
additional whole shares of Redeemable Preferred Stock or cash, at the Company's
option, and only in cash following that date. The Indenture and the Credit
Agreement prohibit the payment of cash dividends until May 31, 2002. Pursuant to
the terms of the securities purchase agreement, the Company has the right to
repurchase the Redeemable Preferred Stock at any time and from time to time
prior to March 1, 1998, at $96.50 per share of Redeemable Preferred Stock, plus
an amount equal to accrued and unpaid dividends through the repurchase date.
The Redeemable Preferred Stock is subject to mandatory redemption (subject
to contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) in whole on February 28, 2008, at a price equal
to the then effective liquidation preference thereof, plus all accumulated and
unpaid dividends to the date of redemption. Prior to February 28, 2008, the
Company has various options on redemption of the Redeemable Preferred Stock at
various redemption prices exceeding the liquidation preference.
The Company may, at its option, subject to certain conditions, including
its ability to incur additional indebtedness under the 11% Notes and the Credit
Agreement, on any scheduled dividend payment date occurring on or after the
Redeemable Preferred Stock issuance date, exchange the Redeemable Preferred
Stock, in whole but not in part, for the Company's 14% Subordinated Exchange
Debentures due 2008 (the "Exchange Debentures"). Holders of the Redeemable
Preferred Stock will be entitled to receive $1.00 principal amount of Exchange
Debentures for each $1.00 in liquidation preference of Redeemable Preferred
Stock.
Holders of the Redeemable Preferred Stock have no voting rights, except as
otherwise required by law; however, the holders of the Redeemable Preferred
Stock, voting together as a single class, shall have the right to elect the
lesser of two directors or 25% of the total number of directors constituting the
Board of Directors of the Company upon the occurrence of certain events,
including but not limited to, the failure by the Company on or after February
28, 2002, to pay cash dividends in full on the Redeemable Preferred Stock for
six or more quarterly dividend periods, the failure by the Company to discharge
any mandatory redemption or repayment obligation with respect to the Redeemable
Preferred Stock, the breach or violation of one or more of the covenants
contained in the Certificate of Designation, or the failure by the Company to
repay at final stated maturity, or the acceleration of the final stated maturity
of, certain indebtedness of the Company.
The Certificate of Designation for the Redeemable Preferred Stock and the
indenture for the Exchange Debentures will contain covenants customary for
securities comparable to the Redeemable Preferred Stock and the Exchange
Debentures, including covenants that restrict the ability of
F-8
<PAGE> 118
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
the Company and its subsidiaries to incur additional indebtedness, pay dividends
and make certain other restricted payments, to merge or consolidate with any
other person or to sell, assign, transfer, lease, convey, or otherwise dispose
of all or substantially all of the assets of the Company. Such covenants are
substantially identical to those covenants contained in the 11% Notes.
7. TRANSACTIONS WITH AFFILIATES:
In connection with the Acquisition, Sunrise and the Company entered into a
ten-year agreement (the "Monitoring and Oversight Agreement") with an affiliate
of Hicks Muse ("Hicks Muse Partners") pursuant to which Sunrise and the Company
have agreed to pay Hicks Muse Partners an annual fee payable quarterly for
oversight and monitoring services to the Company. The annual fee is adjustable
on January 1 of each calendar year to an amount equal to 0.2% of the budgeted
consolidated annual net sales of the Company and its subsidiaries for the
then-current fiscal year. The Monitoring and Oversight Agreement makes available
the resources of Hicks Muse Partners concerning a variety of financial and
operational matters. The Company does not believe that the services that have
been, and will continue to be provided to the Company by Hicks Muse Partners
could otherwise be obtained by the Company without the addition of personnel or
the engagement of outside professional advisors. In the Company's opinion, the
fees provided for under the Monitoring and Oversight Agreement reasonably
reflect the benefits received and to be received, by Sunrise and the Company.
In connection with the Acquisition, Sunrise and the Company entered into a
ten-year agreement (the "Financial Advisory Agreement") pursuant to which Hicks
Muse Partners received a financial advisory fee of $2.5 million at the closing
of the Acquisition as compensation for its services as financial advisor to the
Company in connection with the Acquisition. Hicks Muse Partners also is entitled
to receive a fee equal to 1.5% of the "transaction value" (as defined) for each
"add-on transaction" (as defined) in which the Company is involved. The term
"transaction value" means the total value of the add-on transaction including,
without limitation, the aggregate amount of the funds required to complete the
add-on transaction (excluding any fees payable pursuant to the Financial
Advisory Agreement), including the amount of any indebtedness, preferred stock
or similar terms assumed (or remaining outstanding). The term "add-on
transaction" means any future proposal for a tender offer, acquisition, sale,
merger, exchange offer, recapitalization, restructuring or other similar
transaction directly involving the Company or any of its subsidiaries, and any
other person or entity. The Financial Advisory Agreement makes available the
resources of Hicks Muse Partners concerning a variety of financial and
operational matters. The Company does not believe that the services that have
been, and will continue to be provided by Hicks Muse Partners could otherwise be
obtained by the Company without the addition of personnel or the engagement of
outside professional advisors. In the Company's opinion, the fees provided for
under the Financial Advisory Agreement reasonably reflect the benefits received
and to be received by the Company.
In connection with the Acquisition, affiliates of Hicks Muse purchased
$25.0 million of the Redeemable Preferred Stock for a purchase price of
approximately $24.1 million (or 96.5% of the initial liquidation preference of
such shares) and received in connection therewith warrants to purchase shares of
common stock of Sunrise. The Hicks Muse affiliates, along with the other
purchaser of the Redeemable Preferred Stock and warrants, received certain
registration rights with respect to the shares of common stock of Sunrise
issuable upon exercise of the warrants.
The Company has elected to participate in a Hicks Muse affiliate insurance
program which covers automobiles, buildings, equipment, libel and slander,
liability and earthquake damage. The Company pays actual invoice costs and no
employee of Hicks Muse is compensated for these
F-9
<PAGE> 119
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
services other than through the above Monitoring and Oversight Agreement.
Management believes the amounts paid are reasonable and representative of the
services provided.
The Company has elected to participate in the Sunrise health, life, vision
and dental program, long and short-term disability, travel accident and
long-term care program. The Company is charged the same costs as any other
participating affiliate.
A defined contribution savings plan (401k) is provided to employees of the
Company by Sunrise. Employees of the Company who have been employed for six
months, who have attained the age of 21 years and who have completed 1,000 hours
of service are generally eligible to participate. Certain employees represented
by various unions have elected not to participate in the Plan or have
established their own plans.
8. COMMITMENTS AND CONTINGENCIES:
The Company is subject to legal proceedings and claims in the ordinary
course of business. In the opinion of management, the amount of ultimate
liability with respect to these actions will not materially affect the financial
position or results of operations of the Company.
9. SUBSEQUENT EVENTS:
On March 25, 1997, the Company completed a private placement of
$100,000,000 principal amount of its 11% Senior Subordinated Notes due March 15,
2007. Proceeds from the sale of the 11% Notes were used to repay all outstanding
term loans and revolving credit borrowings under the Company's existing Credit
Agreement and for general working capital purposes.
On April 18, 1997, the Company entered into a letter of intent to acquire
the stock of a company that owns two television broadcast stations for
approximately $8,500,000, excluding working capital. The letter of intent is
subject to customary conditions and no assurances can be given as to whether, or
on what terms, such potential acquisition will be consummated by the Company.
On May 8, 1997, the Company entered into an agreement and plan of merger
with WJAC, Incorporated to acquire WJAC's issued and outstanding common stock.
WJAC, Incorporated owns and operates the NBC affiliate for the
Johnstown/Altoona, PA market. The approximate purchase will be $36,000,000,
including working capital, and the expected closing date will be in the fourth
quarter of 1997. The Company plans to finance this transaction with the proceeds
of future debt and/or equity financings. The WJAC Merger Agreement is subject to
customary conditions and no assurances can be given as to whether, or on what
terms, such transaction or such financing will be consummated by the Company.
F-10
<PAGE> 120
STC BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET -- MARCH 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 8,652,795
Accounts receivable, net of allowance for doubtful
accounts of $305,074................................... 6,836,466
Current portion of program rights......................... 3,609,491
Other current assets...................................... 926,699
------------
Total current assets.............................. 20,025,451
------------
PROPERTY & EQUIPMENT, net................................... 26,767,127
------------
INTANGIBLE ASSETS, net:
FCC licenses.............................................. 30,460,718
Network affiliation agreements............................ 96,440,405
Other..................................................... 2,944,254
------------
Net intangible assets............................. 129,845,377
------------
OTHER ASSETS:
Deferred acquisition and financing costs,net of
accumulated amortization of $176,500................... 8,068,001
Program rights, net of current portion.................... 6,854,658
------------
Total other assets................................ 14,922,659
------------
Total assets...................................... $191,560,614
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 2,359,911
Accrued interest.......................................... 305,424
Accrued compensation...................................... 581,690
Accrued other............................................. 611,996
Current portion of program rights payable................. 3,603,238
------------
Total current liabilities......................... 7,462,259
SENIOR SUBORDINATED NOTES................................... 100,000,000
PROGRAM RIGHTS PAYABLE, net of current portion.............. 7,244,599
REDEEMABLE PREFERRED STOCK.................................. 28,861,364
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share, authorized, issued
and outstanding 1,000 shares........................... 10
Additional paid-in capital................................ 49,011,972
Accumulated deficit....................................... (1,019,590)
------------
Total stockholders' equity........................ 47,992,392
------------
Total liabilities & stockholders' equity.......... $191,560,614
============
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-11
<PAGE> 121
STC BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE ONE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Net revenues................................................ $ 3,196,672
Operating expenses.......................................... 818,095
Amortization of program rights.............................. 304,121
Selling, general and administrative expenses................ 710,424
Depreciation................................................ 305,135
Amortization................................................ 899,683
Corporate overhead.......................................... 101,885
-----------
Operating income............................................ 57,329
-----------
Interest income............................................. 13,240
Interest expense............................................ (735,915)
Other income, net........................................... 7,120
-----------
Net loss.................................................... (658,226)
Preferred dividends and accretion........................... (361,364)
-----------
Net loss applicable to common shareholders.................. $(1,019,590)
===========
Loss per common share....................................... $ (1,019.59)
===========
Weighted average number of common shares outstanding........ 1,000
===========
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-12
<PAGE> 122
STC BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE ONE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
COMMON ADDITIONAL ACCUMULATED STOCKHOLDERS'
STOCK PAID-IN CAPITAL DEFICIT EQUITY
------ --------------- ----------- -------------
<S> <C> <C> <C> <C>
Balance at February 28, 1997......... $-- $ -- $ -- $ --
Net loss applicable to common
shareholders....................... (1,019,590) (1,019,590)
Issuance of common stock............. 10 49,011,972 -- 49,011,982
--- ----------- ----------- -----------
Balance at March 31, 1997............ $10 $49,011,972 $(1,019,590) $47,992,392
=== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-13
<PAGE> 123
STC BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE ONE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net loss.................................................... $ (658,226)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation.............................................. 305,135
Amortization.............................................. 899,683
Amortization of program rights............................ 304,121
Payments on program rights................................ (308,064)
Change in operating assets and liabilities net of effects
from acquisition of the Stations:
Increase in accounts receivable........................... (171,394)
Increase in prepaid and other assets...................... (583,083)
Increase in accounts payable and accrued expenses......... 2,971,059
-------------
Net cash provided by operating activities......... 2,759,231
-------------
Cash Flows From Investing Activities:
Acquisition of Jupiter/Smith stations....................... (163,116,856)
Capital expenditures........................................ (257,061)
-------------
Net cash used in investing activities............. (163,373,917)
-------------
Cash Flow from Financing Activities:
Proceeds from credit agreement............................ 90,800,000
Proceeds from senior subordinated debt.................... 100,000,000
Repayment of credit agreement............................. (90,800,000)
Proceeds from sale of preferred stock, net................ 28,500,000
Proceed from sale of common stock, net.................... 49,011,982
Deferred acquisition and debt refinancing costs
incurred............................................... (8,244,501)
-------------
Net cash provided by financing activities......... 169,267,481
-------------
Net increase in cash and cash equivalents................... 8,652,795
Cash and cash equivalents, beginning of period.............. --
-------------
Cash and cash equivalents, end of period.................... $ 8,652,795
=============
Supplemental disclosure of cash flow information:
Non cash items:
New program contracts..................................... $ 28,200
Preferred dividends and accretion......................... $ 361,364
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
F-14
<PAGE> 124
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include those of STC
Broadcasting, Inc. and its subsidiaries (the "Company"). Significant
intercompany transactions and accounts have been eliminated. The Company owns
and operates the following commercial television stations (the "Stations"),
which were acquired on March 1, 1997:
<TABLE>
<CAPTION>
NETWORK
STATION MARKET AFFILIATION
------- ------ -----------
<S> <C> <C>
WEYI-TV............... Flint, Saginaw-Bay City, Michigan NBC
WROC-TV............... Rochester, New York CBS
KSBW-TV............... Salinas-Monterey, California NBC
WTOV-TV............... Wheeling, West Virginia and Steubenville, Ohio NBC
</TABLE>
The accompanying consolidated financial statements are condensed interim
financial statements and do not include all disclosures required by general
accepted accounting principles. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The interim financial statements are
unaudited but include all adjustments, which are of a normal recurring nature,
that the Company considers necessary for a fair presentation of results for such
period. Operating results of interim periods are not necessarily indicative of
results for a full year.
2. ACQUISITIONS
On March 1, 1997, the Company acquired the Stations from Jupiter/Smith TV
Holdings, L.P. and Smith Broadcasting Partners, L.P. for approximately
$163,117,000, including working capital. The accompanying financial statements
reflect the acquisition of the Stations under the purchase method of accounting.
Accordingly, the acquired assets and assumed liabilities were recorded at fair
value as of the date of acquisition based upon independent appraisals. The
acquisition price was allocated as follows:
<TABLE>
<S> <C>
Property and Equipment...................................... $ 26,920,000
Intangible Assets........................................... 130,086,000
Working Capital............................................. 6,111,000
------------
$163,117,000
============
</TABLE>
The acquisition was funded by $90,800,000 in borrowings under the Credit
Agreement (as defined below) and the sale of preferred and common stock in the
approximate amount of $77,500,000.
3. LONG TERM DEBT
On March 25, 1997, the Company completed a private placement of
$100,000,000 principal amount of its 11% Senior Subordinated Notes (the "11%
Notes") due March 15, 2007. Proceeds from the sale of the 11% Notes were used to
repay all outstanding term loan and revolving credit borrowings under the
Company's existing bank credit agreement (the "Credit Agreement"). The remaining
net proceeds from the sale of the 11% Notes will be used to fund future
acquisitions and general working capital purposes. The $60,000,000 term portion
of the Credit Agreement was cancelled upon repayment in accordance with the
original terms.
F-15
<PAGE> 125
STC BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's Credit Agreement currently provides for borrowings up to
$35,000,000 that can be used for acquisitions, working capital, and for general
corporate expenses. There were no outstanding balances under the Credit
Agreement as of March 31, 1997.
4. PENDING ACQUISITIONS
On April 18, 1997, the Company entered into a letter of intent to acquire
all of the stock of a company that owns two television broadcast stations for
approximately $8,500,000, excluding working capital. The letter of intent is
subject to customary conditions and no assurances can be given as to whether, or
on what terms, such potential acquisition will be consummated by the Company.
On May 8, 1997, the Company entered into an agreement and plan of merger
(the "Merger Agreement") with WJAC, Incorporated ("WJAC"), pursuant to which
WJAC will become a wholly owned subsidiary of the Company. WJAC owns and
operates the NBC affiliate for the Johnstown/Altoona, Pennsylvania market. The
approximate purchase price will be $36,000,000 including working capital, and
the expected closing date will be in the fourth quarter of 1997. The Company
intends to finance this transaction with the proceeds of future debt and/or
equity financings. The Merger Agreement is subject to customary conditions and
no assurances can be given as to whether, or on what terms, such transaction or
such financings will be consummated by the Company.
F-16
<PAGE> 126
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Jupiter/Smith TV Holdings, L.P.:
We have audited the accompanying combined balance sheet of Smith Television
of Michigan, L.P., Smith Television of Rochester, L.P., Smith
Television -- WTOV, L.P., and Smith Television of Salinas-Monterey, L.P., and
their respective licensed subsidiaries, (collectively, the "Partnerships") as of
December 31, 1996, and the related combined statements of operations, partners'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Partnerships' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the Partnerships as
of December 31, 1996, and the results of their operations and their cash flows
for the year then ended in conformity with generally accepted accounting
principles.
As discussed in Note 2, on February 28, 1997, Jupiter/Smith TV Holdings,
L.P. and Smith Broadcasting Partners, L.P. sold substantially all of the assets
of the Partnerships to STC Broadcasting, Inc. and Smith Acquisition Company.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 7, 1997 (except with respect
to the matter discussed in Note 2, as to
which the date is February 28, 1997)
F-17
<PAGE> 127
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
COMBINED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,752,634
Accounts receivable, net of allowance for doubtful
accounts of $222,706................................... 7,981,853
Current portion of program rights......................... 2,570,373
Prepaid and other assets.................................. 570,694
------------
Total current assets.............................. 13,875,554
------------
PROPERTY AND EQUIPMENT, net................................. 26,228,333
PROGRAM RIGHTS, net of current portion...................... 541,443
INTANGIBLE ASSETS, net...................................... 59,437,889
DEFERRED FINANCING AND ORGANIZATIONAL COSTS, net............ 6,524,667
------------
TOTAL ASSETS...................................... $106,607,886
============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses..................... $ 2,192,240
Current portion of program rights......................... 2,552,512
Credit Agreement Indebtedness, current portion............ 3,930,000
------------
Total current liabilities......................... 8,674,752
------------
PROGRAM RIGHTS PAYABLE, net of current portion.............. 549,838
CREDIT AGREEMENT INDEBTEDNESS, net of current portion....... 61,070,000
------------
TOTAL LIABILITIES................................. 70,294,590
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY............................................ 36,313,296
------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $106,607,886
============
</TABLE>
The accompanying notes are an integral part of this combined balance sheet.
F-18
<PAGE> 128
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
REVENUES:
Broadcasting revenues, net of agency and national
representative commissions of $6,605,677............... $34,063,438
Network compensation...................................... 2,752,359
Other revenue............................................. 742,995
-----------
Net revenues...................................... 37,558,792
-----------
EXPENSES:
Station operating expenses................................ 10,050,393
Amortization of program rights............................ 3,580,799
Selling, general and administrative expenses.............. 8,513,562
Depreciation.............................................. 4,285,734
Amortization.............................................. 5,860,048
Corporate Overhead........................................ 840,135
-----------
Total operating expenses.......................... 33,130,671
-----------
Operating income.................................. 4,428,121
INTEREST INCOME............................................. 92,882
INTEREST EXPENSE, CREDIT AGREEMENT.......................... 6,072,477
OTHER INCOME, net........................................... 1,459,770
-----------
NET LOSS.................................................... $ (91,704)
===========
</TABLE>
The accompanying notes are an integral part of this combined financial
statement.
F-19
<PAGE> 129
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
COMBINED STATEMENT OF PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
TOTAL
-----------
<S> <C>
PARTNERS' EQUITY, beginning of year......................... --
Partners' contributions during the year................... 36,405,000
Net loss, year ended December 31, 1996.................... (91,704)
-----------
PARTNERS' EQUITY, December 31, 1996......................... $36,313,296
===========
</TABLE>
The accompanying notes are an integral part of this combined financial
statement.
F-20
<PAGE> 130
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
COMBINED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (91,704)
Adjustments to reconcile net loss to net cash provided by
operating activities --
Depreciation and amortization.......................... 10,145,782
Amortization of program rights......................... 3,580,799
Payments on syndicated program and film obligations.... (3,590,265)
Increase in accounts receivable........................ (1,292,494)
Increase in other current assets....................... (398,791)
Increase in accounts payable and accrued expenses...... 1,259,338
Loss on disposal of property and equipment............. 33,118
------------
Net cash provided by operating activities......... 9,645,783
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of television stations....................... (105,353,237)
Capital expenditures...................................... (2,965,697)
Proceeds from disposal of property and equipment.......... 65,889
Other..................................................... (45,104)
------------
Net cash used in investing activities............. (108,298,149)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit agreement............................ 68,300,000
Principal payments on credit agreement.................... (3,300,000)
Partners' contributions................................... 36,405,000
------------
Net cash provided by financing activities......... 101,405,000
------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 2,752,634
CASH AND CASH EQUIVALENTS, beginning of year................ --
------------
CASH AND CASH EQUIVALENTS, end of year...................... $ 2,752,634
============
</TABLE>
The accompanying notes are an integral part of this combined financial
statement.
F-21
<PAGE> 131
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION AND NATURE OF OPERATIONS:
The accompanying financial statements present the combined financial
position as of December 31, 1996 and the combined results of operations and cash
flows for the year then ended of four limited partnerships: Smith Television of
Michigan, L.P., Smith Television of Rochester, L.P., Smith-Television-WTOV,
L.P., and Smith Television of Salinas-Monterey, L.P., and their respective
licensed subsidiaries, (collectively, the "Partnerships"). The Partnerships own
the following commercial television stations: WEYI, Saginaw, Flint, and Bay
City, Michigan; WROC, Rochester, New York; WTOV, Wheeling, West Virginia and
Steubenville, Ohio; and KSBW, Monterey-Salinas, California (collectively, the
"Stations"). Stations WEYI, WTOV and KSBW are NBC affiliates and station WROC is
a CBS affiliate. The Partnerships are controlled by Jupiter/Smith TV Holdings,
L.P. ("Jupiter/Smith") and Smith Broadcasting Partners, L.P. ("SBP"). The
Partnerships were formed on December 13, 1995, and acquired the Stations in
January 1996 for a total purchase price of approximately $105,400,000, including
transaction fees and working capital.
The combined financial statements reflect the acquisitions of the Stations
under the purchase method of accounting. Accordingly, the acquired assets and
liabilities were recorded at fair value as of the date of acquisition. The
acquisition price of approximately $105,400,000 was allocated based upon
appraised values resulting in approximately $27,600,000, $71,800,000, and
$6,000,000 being assigned to property and equipment, intangibles (including
deferred financing and organizational costs), and working capital, respectively.
The transaction was funded by the Credit Agreement discussed in Note 8 and
partners' contributions. Management does not consider the results of operations
of the Stations from January 1, 1996, to the dates the Stations were acquired to
be significant.
2. SALE OF THE ASSETS OF THE PARTNERSHIPS:
On February 28, 1997, Jupiter/Smith and SBP completed the sale of
substantially all of the assets of the Partnerships to STC Broadcasting, Inc.
("STC") and Smith Acquisition Company ("SAC") for an aggregate sales price of
approximately $157,000,000. In connection with the sale, STC and SAC will assume
the Partnerships' television programming obligations, certain accounts payable
and accrued liabilities, and certain other obligations relating to the
operations of the Stations after the closing date. The Partnerships will retain
all other liabilities of the Partnerships, including the Credit Agreement with
Chase Manhattan Bank, as discussed in Note 8.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying financial statements include the combined accounts of the
Partnerships. The Partnerships are combined because of common ownership,
management and relationship of operations. All material items and transactions
between the Partnerships have been eliminated.
Cash and Cash Equivalents
The Partnerships consider all highly liquid investments with a maturity of
three months or less to be cash equivalents.
F-22
<PAGE> 132
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Concentration of Risk and Accounts Receivable
The Partnerships serve the Saginaw, Flint, and Bay City, Michigan;
Rochester, New York; Wheeling, West Virginia and Steubenville, Ohio; and
Monterey and Salinas, California, demographic areas. Accordingly, the revenue
potential of the Partnerships is dependent on the economy in these diverse
areas. The Partnerships monitor their accounts receivable through continuing
credit evaluations. Historically, the Partnerships have not had significant
uncollectible accounts.
Program Rights
The Partnerships have agreements with distributors for the rights to
television programming over contract periods which generally run from one to
four years. Each contract is recorded as an asset and liability when the license
period begins and the program is available for its first showing. Program rights
and the corresponding obligation are classified as current or long-term based on
the estimated usage and payment terms. The capitalized cost of program rights is
amortized on a straight-line basis over the period of the program rights
agreements, which approximates amortization based on the estimated number of
showings.
Property and Equipment
Property and equipment acquired in purchase transactions are recorded at
the estimate of fair value based upon independent appraisals and property and
equipment acquired subsequent thereto are recorded at cost. Property and
equipment are depreciated using the straight-line method over the estimated
useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings................................................... 39 years
Broadcast equipment......................................... 5-15 years
Automobiles................................................. 3 years
Furniture and computers..................................... 5 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred, whereas expenditures for renewals and betterments are capitalized.
Intangible Assets
Intangible assets consist principally of values assigned to the Federal
Communications Commission (FCC) licenses and network affiliation agreements of
the Stations. Intangible assets are being amortized on the straight-line basis
primarily over 15 years. Intangible assets are periodically evaluated for
impairment using a measurement of fair value.
Impairment of Long-Lived Assets
Long-lived assets and identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
should be addressed. The Partnerships have determined there has been no
impairment in the carrying value of long-lived assets of Stations as of December
31, 1996.
F-23
<PAGE> 133
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred Charges
Deferred charges include net financing costs of $4,555,479 at December 31,
1996, which are being amortized over the applicable loan period (7 years) on a
straight-line basis, and net organization costs of $1,969,188 at December 31,
1996, which are being amortized over a 60-month period on a straight-line basis.
Deferred charges are net of accumulated amortization of $1,244,132 at December
31, 1996.
Trade/Barter Transactions
Trade/barter transactions involve the exchange of advertising time for
products and/or services. Trade/barter transactions are recorded based on the
fair market value of the products and/or services received. Revenue is recorded
when advertising schedules air and expense is recognized when products and/or
services are used or received.
Income Taxes
No income tax provision has been included in the financial statements since
income or loss of the Partnerships is required to be reported by the partners on
their respective income tax returns.
Allocation of Partnerships' Income
The Partnerships' income for the year ended December 31, 1996 is allocated
as described by the Partnership Agreement.
Supplemental Cash Flow Disclosures
Cash paid for interest during 1996 was $5,974,847. In addition, the
Partnerships acquired new contracts for television program obligations in the
amount of $698,861 during 1996.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
reported amounts of revenues and expenses during the reporting period. The
preparation of financial statements in conformity with generally accepted
accounting principles also requires management to make estimates and assumptions
that affect the disclosures of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
F-24
<PAGE> 134
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY AND EQUIPMENT:
The major classes of property and equipment are as follows at December 31,
1996:
<TABLE>
<S> <C>
Land and improvements....................................... $ 2,432,561
Buildings................................................... 5,761,872
Broadcast equipment......................................... 19,624,542
Automobiles................................................. 907,765
Furniture and computers..................................... 1,705,735
-----------
30,432,475
Less -- Accumulated depreciation............................ (4,204,142)
-----------
$26,228,333
===========
</TABLE>
5. INTANGIBLE ASSETS:
Intangible assets consisted of the following at December 31, 1996:
<TABLE>
<S> <C>
FCC licenses................................................ $13,483,025
Network affiliation agreements.............................. 42,696,479
Other intangibles........................................... 7,874,301
-----------
64,053,805
Less -- Accumulated amortization............................ (4,615,916)
-----------
$59,437,889
===========
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consisted of the following at
December 31, 1996:
<TABLE>
<S> <C>
Accounts payable............................................ $ 821,215
Accrued interest............................................ 97,630
Accrued payroll, commissions, and bonuses................... 402,256
Payable to former owner..................................... 149,376
Other....................................................... 721,763
----------
$2,192,240
==========
</TABLE>
7. OBLIGATIONS FOR PROGRAM RIGHTS:
Current and noncurrent obligations for program rights recorded on the
accompanying December 31, 1996 combined balance sheet are $2,552,512 and
$549,838 (all related to 1998), respectively. In addition, the Partnerships have
entered into noncancelable commitments for future program rights aggregating
$7,640,019 at December 31, 1996. Program contract obligations and the assets
related to these commitments have not been recognized in the accompanying
combined financial statements as all of the conditions specified in Statement of
Financial Accounting Standards No. 63, "Financial Reporting by Broadcasters,"
have not been met.
See Note 2 regarding the sale of the Partnerships' assets which will
include the assignment and assumption of all outstanding program obligations,
including future contracts.
F-25
<PAGE> 135
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
8. LONG-TERM DEBT:
At December 31, 1996, outstanding bank debt consisted of the following:
<TABLE>
<S> <C>
Initial term loan........................................... $37,000,000
Revolving credit loan....................................... 12,500,000
Standby term loan........................................... 15,500,000
-----------
$65,000,000
===========
</TABLE>
To finance the acquisitions described in Note 1 and to provide for future
operating capital, the Partnerships entered into a Credit Agreement with Chase
Manhattan Bank, N.A. (the "Credit Agreement"), as administrative agent, for
borrowings of up to $72,000,000, bearing interest at a blended effective rate of
7.63% at December 31, 1996. The borrowings are collateralized by all of the
assets and outstanding Partnership interests.
The aggregate scheduled maturities of long-term debt subsequent to December
31, 1996 are as follows:
<TABLE>
<S> <C>
1997.................................................. $ 3,000,000
1998.................................................. 6,500,000
1999.................................................. 8,000,000
2000.................................................. 11,500,000
2001.................................................. 11,500,000
2002.................................................. 24,500,000
-----------
$65,000,000
===========
</TABLE>
In addition to the scheduled debt repayments discussed above, the
Partnerships are required to make prepayments of 66.7% of Excess Cash Flow (as
defined in the Credit Agreement). The required payment due at March 31, 1997
amounts to approximately $2,730,000, of which $1,800,000 has been prepaid at
December 31, 1996. The remaining $930,000 is included in the current portion of
Credit Agreement.
Under the Credit Agreement, the Partnerships have the option to maintain
domestic and Eurodollar loans. Interest on borrowings under this agreement are
at varying rates based, at the Partnerships' option, on the banks' prime rate or
the London Interbank Offering Rate (LIBOR), plus a fixed percent, and are
adjusted based upon the ratio of total debt to earnings before interest, taxes,
depreciation, and amortization. The weighted average interest rate during 1996
was 9.08%. Additionally, commitment fees of 0.5% are payable quarterly.
The Partnerships enter into interest rate swap agreements to reduce the
impact of changes in interest rates on its floating rate debt. The Partnerships
had one outstanding interest rate swap agreement with the commercial bank in the
Credit Agreement in the amount of $58,000,000, declining in amount to its
expiration date of September 30, 1998. The floating interest rates are based
upon the three month LIBOR rate and the measurement and settlement is performed
quarterly. Settlements of these agreements are recorded as adjustments to
interest expense in the relevant period. The counterparties to these agreements
are major national financial institutions.
F-26
<PAGE> 136
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Under the existing Credit Agreement, the Partnerships agree to abide by
restrictive covenants which place limitations upon payments of cash
distributions, issuance of Partnership interests, investment transactions and
the incurrence of additional obligations. In addition, the Partnerships must
maintain specified levels of operating cash flow and comply with other financial
covenants.
9. AFFILIATE TRANSACTIONS:
The Partnerships pay SBP, the general partner of the Partnerships, to
provide certain management services. Payments amounted to $690,135 in 1996 and a
$150,000 bonus is included in accounts payable as of December 31, 1996.
Management believes these amounts are reasonable and representative of the
services provided. The agreement terminates upon the sale of the Stations'
assets.
The Partnerships have elected to participate in an affiliate insurance
program which covers automobiles, buildings, equipment, libel and slander,
liability and earthquake damage. The Partnerships pay actual invoice costs and
no employee of the affiliate or SBP is compensated for these services other than
through the above management fee. Management believes the amounts paid are
reasonable and representative of the services provided.
The Partnerships have elected to participate in an affiliate health, life,
vision and dental program, long and short term disability, travel accident and
long-term care program. The Partnerships are charged the same costs as any other
participating affiliate. No employee of the affiliate or SBP is compensated for
these services other than through the above management fee. Management believes
the amounts paid are reasonable and representative of the services provided.
A defined contribution savings plan (401k) is provided to employees of the
Partnerships by an affiliate. Employees of the Partnerships who have been
employed for six months, who have attained the age of 21 years and who have
completed 1,000 hours of service are generally eligible to participate. Certain
employees represented by various unions have elected not to participate in the
Plan or have established their own plans. Amounts contributed to the plan by the
Partnerships amounted to $131,429 in 1996.
10. OTHER INCOME:
Other income for the year ended December 31, 1996 consisted of the
following:
<TABLE>
<S> <C>
Payment received from an unaffiliated network, net.......... $1,500,000
Loss on disposal of equipment............................... (33,118)
Other....................................................... (7,112)
----------
$1,459,770
==========
</TABLE>
During 1996, the Partnerships agreed to provide certain services to an
unaffiliated national television network and agreed to potentially swap one of
its Stations for one of the unaffiliated network's stations. The Partnerships
have provided all services required by the network. The Partnerships received
$1,500,000 for these services.
F-27
<PAGE> 137
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION -- WTOV, L.P., AND
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
11. COMMITMENTS AND CONTINGENCIES:
The Partnerships lease sales offices and minor transmission sites. Rent
expense for the year ended December 31, 1996 was $53,845.
The Partnerships are subject to legal proceedings and claims in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position or results of operations of the Partnerships.
F-28
<PAGE> 138
TELEVISION STATIONS WEYI, WROC, AND WTOV
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To STC Broadcasting, Inc.:
We have audited the accompanying combined statements of operations and cash
flows of television stations WEYI, WROC and WTOV, stations owned by Television
Station Partners, L.P., for the years ended December 31, 1995 and 1994. These
financial statements are the responsibility of the management of STC
Broadcasting, Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
television stations WEYI, WROC and WTOV for the years ended December 31, 1995
and 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 7, 1997
F-29
<PAGE> 139
TELEVISION STATIONS WEYI, WROC, AND WTOV
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
REVENUES:
Broadcasting revenues, net of agency and national
representative commissions of $3,793,321 and
$3,640,676, respectively............................... $21,267,176 $20,051,728
Network compensation...................................... 1,893,670 1,253,917
Other revenue............................................. 306,600 351,563
----------- -----------
Net revenues...................................... 23,467,446 21,657,208
----------- -----------
EXPENSES:
Station operating expenses................................ 14,957,246 13,995,579
Amortization of program rights............................ 2,189,842 1,923,842
Depreciation and amortization............................. 1,341,200 1,384,532
----------- -----------
Total operating expenses.......................... 18,488,288 17,303,953
----------- -----------
Operating income.................................. 4,979,158 4,353,255
----------- -----------
OTHER EXPENSES.............................................. (623,082) (322,265)
----------- -----------
NET INCOME.................................................. $ 4,356,076 $ 4,030,990
============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-30
<PAGE> 140
TELEVISION STATIONS WEYI, WROC, AND WTOV
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 4,356,076 $ 4,030,990
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation and amortization.......................... 1,341,200 1,384,532
Amortization of program rights......................... 2,189,842 1,923,842
Payments on program rights............................. (2,565,029) (2,345,845)
Increase in accounts receivable........................ (558,277) (452,568)
Decrease in other assets............................... 198,125 296,351
Decrease in accounts payable and accrued liabilities... (489,685) (208,645)
Other.................................................. (81,338) (64,467)
----------- -----------
Net cash provided by operating activities......... 4,390,914 4,564,190
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment....................... (323,571) (774,657)
----------- -----------
Net cash used in investing activities............. (323,571) (774,657)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net transfers to Television Station Partners, L.P......... (3,889,426) (3,427,199)
----------- -----------
Net cash used in financing activities............. (3,889,426) (3,427,199)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 177,917 362,334
CASH AND CASH EQUIVALENTS, beginning of year................ 531,993 169,659
----------- -----------
CASH AND CASH EQUIVALENTS, end of year...................... $ 709,910 $ 531,993
============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-31
<PAGE> 141
TELEVISION STATIONS WEYI, WROC, AND WTOV
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. ORGANIZATION AND NATURE OF OPERATIONS:
The accompanying financial statements present the combined results of
operations and cash flows for the years ended December 31, 1995 and 1994, of
three commercial television stations: WEYI, Saginaw, Flint and Bay City,
Michigan; WROC, Rochester, New York; and WTOV, Wheeling, West Virginia and
Steubenville, Ohio (collectively, the "Stations"). Stations WEYI and WTOV are
NBC affiliates and station WROC is a CBS affiliate. The Stations are owned by
Television Station Partners, L.P. (the "Partnership"), a Delaware limited
partnership which was organized on May 24, 1989. The Stations, along with
another television station, were acquired by the Partnership on July 7, 1989.
2. AGREEMENT TO SELL THE STATIONS:
On April 13, 1995, the Partnership entered into an agreement to sell the
Stations to Jupiter/Smith Television Holdings, L.P. (the "Buyer") for
approximately $63,200,000 plus an amount equal to the excess of the current
assets over the current liabilities assumed by the Buyer, as defined in the
Asset Purchase Agreement, to be paid in cash at the closing of the sale. On
January 3, 1996, the sale of the Stations was finalized for a total sales price
of $73,150,000, including transaction fees and working capital.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying combined financial statements include the combined
accounts of the Stations. The Stations are combined because of common ownership,
management and relationship of operations. All material items and transactions
between the Stations have been eliminated.
Cash and Cash Equivalents
The Stations consider all highly liquid investments with a maturity of
three months or less to be cash equivalents.
Concentration of Risk and Accounts Receivable
The Stations serve the Saginaw, Flint, and Bay City, Michigan; Rochester,
New York; Steubenville, Ohio, and Wheeling, West Virginia, demographic areas.
Accordingly, the revenue potential of the Stations is dependent on the economy
in these areas. The Stations monitor their accounts receivable through
continuing credit evaluations. Historically, the Stations have not had
significant uncollectible accounts that had not previously been provided for in
the allowance for doubtful accounts.
Program Rights
Program rights and the corresponding contractual obligations are recorded
at gross cost when purchased and when the programs are available for their first
showing. The capitalized cost of program rights is amortized on a straight-line
basis over the period of the program rights agreements, or usage, whichever
yields the greater accumulated amortization.
F-32
<PAGE> 142
TELEVISION STATIONS WEYI, WROC, AND WTOV
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings and tower......................................... 20-30 years
Automobiles................................................. 3 years
Furniture and fixtures...................................... 5-8 years
Machinery and equipment..................................... 5-20 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred.
Intangible Assets
Intangible assets are comprised principally of values assigned to the
Federal Communications Commission licenses and network affiliation agreements
arising from the acquisition of the Stations. Intangible assets are being
amortized on the straight-line basis primarily over 40 years. Intangible assets
are periodically evaluated for impairment using a measurement of fair value.
Impairment of Long-Lived Assets
Long-lived assets and identifiable intangibles to be held and used are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount should be addressed. The Partnership has determined
that as of December 31, 1995, there has been no impairment in the carrying value
of the long-lived assets of the Stations.
Trade/Barter Transactions
Trade/barter transactions involve the exchange of advertising time for
products and/or services. Trade/barter transactions are recorded based on the
fair market value of the products and/or services received. Revenue is recorded
when advertising schedules air and expense is recognized when products and/or
services are used.
Income Taxes
No income tax provision has been included in the financial statements since
income or loss of the Stations is required to be reported by the partners of the
Partnership on their respective income tax returns.
Supplemental Cash Flow Disclosures
Property and equipment totaling $115,097 and $98,730 was acquired in 1995
and 1994, respectively, in exchange for advertising time. In addition, the
Stations acquired new contracts for television program obligations in the amount
of $310,044 and $8,983,788 in 1995 and 1994, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-33
<PAGE> 143
TELEVISION STATIONS WEYI, WROC, AND WTOV
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. AFFILIATE TRANSACTIONS:
The Partnership's general partner is entitled to a management fee pursuant
to a management agreement. These management fees are for services rendered on
behalf of the Partnership's four stations and are not allocated to or accounted
for on the individual stations' financial statements. Management fees due to the
general partner were approximately $919,000 and $1,377,000 for the years ended
December 1995 and 1994, respectively.
5. COMMITMENTS AND CONTINGENCIES:
The Stations are subject to legal proceedings and claims in the ordinary
course of business. In the opinion of the management of STC Broadcasting, Inc.,
the amount of ultimate liability with respect to these actions will not
materially affect the results of operations of the Stations.
F-34
<PAGE> 144
TELEVISION STATION KSBW
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To STC Broadcasting, Inc.:
We have audited the accompanying statements of operations and cash flows of
television station KSBW, a station owned by E.P. Communications, Inc., for the
years ended December 31, 1995 and 1994. These financial statements are the
responsibility of the management of STC Broadcasting, Inc. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of television
station KSBW for the years ended December 31, 1995 and 1994, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
February 7, 1997
F-35
<PAGE> 145
TELEVISION STATION KSBW
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
REVENUES:
Broadcasting revenues, net of agency and national
representative commissions of $1,658,863 and
$1,903,886, respectively............................... $8,505,825 $8,739,544
Network compensation...................................... 650,581 444,698
Other revenue............................................. 281,149 201,227
---------- ----------
Net revenues...................................... 9,437,555 9,385,469
---------- ----------
EXPENSES:
Station operating expenses................................ 5,771,698 5,826,363
Amortization of program rights............................ 990,709 1,198,996
Depreciation and amortization............................. 2,777,619 2,310,676
---------- ----------
Total operating expenses.......................... 9,540,026 9,336,035
---------- ----------
Station operating (loss) income................... (102,471) 49,434
Management fees paid to affiliate......................... -- 276,000
---------- ----------
Operating loss.................................... (102,471) (226,566)
OTHER EXPENSES.............................................. (11,309) (141,303)
---------- ----------
NET LOSS.................................................... $ (113,780) $ (367,869)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-36
<PAGE> 146
TELEVISION STATION KSBW
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $ (113,780) $ (367,869)
Adjustments to reconcile net loss to net cash provided by
operating activities --
Depreciation and amortization.......................... 2,777,619 2,310,676
Amortization of program rights......................... 990,709 1,198,996
Payments on program rights............................. (986,955) (1,053,534)
(Increase) decrease in accounts receivable............. (241,804) 366,358
(Increase) decrease in other assets.................... (16,764) 386,217
Increase (decrease) in accounts payable and accrued
liabilities.......................................... 69,938 (246,861)
Other.................................................. 27,812 56,836
----------- -----------
Net cash provided by operating activities......... 2,506,775 2,650,819
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment....................... (426,025) (512,138)
----------- -----------
Net cash used in investing activities............. (426,025) (512,138)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from GHTV, Inc.............................. -- 477,544
Net transfers to GHTV, Inc. and E.P. Communications,
Inc.................................................... (2,089,240) (2,730,301)
----------- -----------
Net cash used in financing activities............. (2,089,240) (2,252,757)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS................... (8,490) (114,076)
CASH AND CASH EQUIVALENTS, beginning of year................ 174,888 288,964
----------- -----------
CASH AND CASH EQUIVALENTS, end of year...................... $ 166,398 $ 174,888
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 147
TELEVISION STATION KSBW
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. ORGANIZATION AND NATURE OF OPERATIONS:
The accompanying financial statements present the results of operations and
cash flows for the years ended December 31, 1995 and 1994, of television station
KSBW (the "Station"). The Station is an NBC affiliate that serves the Salinas
and Monterey, California, demographic markets. The Station, along with another
television station, is owned by E.P. Communications, Inc. ("EPC"), an S
corporation incorporated in the state of California on March 3, 1994. The
Station was acquired by E.P. Communications, Inc. on September 21, 1994 from
GHTV, Inc. for approximately $22,727,965.
The financial statements reflect the acquisition of the Station by EPC
under the purchase method of accounting. Accordingly, the acquired assets and
liabilities were recorded at fair value as of the date of EPC's acquisition of
the Station.
2. AGREEMENT TO SELL THE TELEVISION STATION:
On August 31, 1995, EPC signed a letter of intent to sell the Station to
Jupiter/Smith Television Holdings, L.P. (the "Buyer") for approximately
$28,000,000 plus an amount equal to the excess of the current assets over the
current liabilities assumed by the Buyer, as defined in the Asset Purchase
Agreement, to be paid in cash at the closing of the sale. On January 17, 1996,
the sale of the Station was finalized for a total sales price of $32,250,000,
including transaction fees and working capital.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
The Station considers all highly liquid investments with a maturity of
three months or less to be cash equivalents.
Concentration of Risk and Accounts Receivable
The Station serves the Salinas and Monterey, California, demographic areas.
Accordingly, the revenue potential of the Station is dependent on the economy in
this area. The Station monitors its accounts receivable through continuing
credit evaluations. Historically, the Station has not had significant
uncollectible accounts that had not previously been provided for in the
allowance for doubtful accounts.
Program Rights
Program rights and the corresponding contractual obligations are recorded
at gross cost when the license period begins and the programs are available for
their first showing. The capitalized cost of program and film rights is
amortized on a straight-line basis over the period of the program and film
rights agreements, which approximates amortization based on the estimated number
of showings.
F-38
<PAGE> 148
TELEVISION STATION KSBW
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Property and Equipment
Property and equipment acquired in purchase transactions are recorded at
the estimate of fair value based upon independent appraisals and property and
equipment acquired subsequent thereto are recorded at cost. Property and
equipment are depreciated using the straight-line method over the estimated
useful lives of the assets, as follows:
<TABLE>
<S> <C>
Buildings and tower......................................... 25-30 years
Automobiles................................................. 3-5 years
Furniture and fixtures...................................... 5-10 years
Machinery and equipment..................................... 5-20 years
</TABLE>
Expenditures for maintenance and repairs are charged to operations as
incurred.
Intangible Assets
Intangible assets are comprised principally of values assigned to the
Federal Communications Commission license and network affiliation agreement
arising from the acquisition of the Station. Intangible assets are being
amortized on the straight-line basis primarily over 40 years. Intangible assets
are periodically evaluated for impairment using a measurement of fair value.
Impairment of Long-Lived Assets
Long-lived assets and identifiable intangibles to be held and used are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount should be addressed. Management has determined that as
of December 31, 1995, there has been no impairment in the carrying value of the
long-lived assets of the Station.
Trade/Barter Transactions
Trade/barter transactions involve the exchange of advertising time for
products and/or services. Trade/barter transactions are recorded based on the
fair market value of the products and/or services received. Revenue is recorded
when advertising schedules air and expense is recognized when products and/or
services are used.
Income Taxes
EPC is incorporated as an S corporation. Accordingly, for federal income
tax purposes, EPC is not subject to an income tax at the corporate level since
EPC's net income or loss is required to be reported by its shareholders on their
respective income tax returns.
During the first nine months of 1994, when the Station was owned by GHTV,
Inc., income taxes were not computed and allocated to the Station on a
stand-alone basis. Accordingly, no tax provision or benefit has been reflected
in the 1994 statement of operations.
Supplemental Cash Flow Disclosures
Property and equipment totaling $15,000 was acquired in 1994 in exchange
for advertising time. In addition, the Station acquired new contracts for
television program obligations in the amounts of $859,560 and $677,840 in 1995
and 1994, respectively.
F-39
<PAGE> 149
TELEVISION STATION KSBW
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
4. AFFILIATE TRANSACTIONS:
Corporate expenses, debt and related interest expense of EPC are not
allocated to its stations. Accordingly, such items are not reflected on the
accompanying statement of operations.
For the first nine months of 1994, the Station paid its former owner, GHTV,
Inc., for certain direct general and administrative services. Payments amounted
to approximately $276,000 in 1994.
5. COMMITMENTS AND CONTINGENCIES:
The Station is subject to legal proceedings and claims in the ordinary
course of its business. In the opinion of the management of STC Broadcasting,
Inc., the amount of ultimate liability with respect to these actions will not
materially affect the results of operations of the Station.
F-40
<PAGE> 150
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
WJAC, Incorporated and Subsidiaries:
We have audited the accompanying consolidated balance sheets of WJAC,
Incorporated and subsidiaries (the "Company") as of December 31, 1996 and 1995,
and the related consolidated statements of earnings, stockholders' equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated 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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
1996 and 1995, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
As described in Note 6 to the consolidated financial statements, effective
January 1, 1995, the Company changed its method of accounting for postretirement
benefits other than pensions.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 28, 1997
(May 8, 1997 as to Note 11)
F-41
<PAGE> 151
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,727,632 $ 1,472,653
Short-term investments.................................... 3,857,852 3,516,394
Accounts receivable -- trade (net of allowance of $20,000
in 1996 and 1995)...................................... 2,142,031 1,655,964
Program rights -- current portion......................... 188,718 125,400
Prepaid expenses.......................................... 107,562 97,759
Deferred income taxes..................................... 25,156 28,879
Accrued interest receivable............................... 15,319 22,331
Other current assets...................................... 22,926 14,815
----------- -----------
Total current assets.............................. 8,087,196 6,934,195
----------- -----------
PROPERTY, PLANT AND EQUIPMENT -- At cost:
Land and land improvements................................ 103,792 102,892
Buildings................................................. 2,320,253 2,300,598
Equipment and fixtures.................................... 7,220,845 6,886,064
----------- -----------
9,644,890 9,289,554
Less accumulated depreciation............................. (7,159,439) (6,700,122)
----------- -----------
2,485,451 2,589,432
----------- -----------
DEFERRED INCOME TAXES....................................... 650,322 685,865
----------- -----------
OTHER ASSETS................................................ 1,410,464 1,284,428
----------- -----------
$12,633,433 $11,493,920
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade................................. $ 101,612 $ 54,788
Dividends payable......................................... 213,052 213,052
Accrued salaries and wages................................ 70,200 64,105
Payroll taxes and withholdings............................ 42,465 43,553
Accrued vacation pay...................................... 169,503 157,319
Deferred compensation -- current portion.................. 12,780 12,780
Program rights payable -- current portion................. 94,220 97,677
Accrued income taxes...................................... 163,162 170,045
Deferred revenue.......................................... 343,897 215,452
----------- -----------
Total current liabilities......................... 1,210,891 1,028,771
----------- -----------
PROGRAM RIGHTS PAYABLE -- Less current portion.............. 107,289 7,042
----------- -----------
DEFERRED COMPENSATION....................................... 400,250 341,154
----------- -----------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS................. 2,206,759 2,061,262
COMMITMENTS (See Note 10)................................... -- --
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized, 37,750 shares;
issued, 30,436 shares.................................. 50,000 50,000
Additional paid-in capital 9,435 9,435
Retained earnings......................................... 8,938,528 8,280,603
Less unrealized losses on investments..................... (71,669) (66,297)
Less treasury stock -- at cost, 7,314 shares.............. (218,050) (218,050)
----------- -----------
8,708,244 8,055,691
----------- -----------
$12,633,433 $11,493,920
============ ============
</TABLE>
See notes to consolidated financial statements.
F-42
<PAGE> 152
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
REVENUE:
Broadcasting.............................................. $ 9,842,395 $ 8,795,276
Hockey team............................................... 904,894 460,968
Production and recording.................................. 59,432 82,875
Other operating........................................... 74,793 1,005
----------- -----------
Total revenue..................................... 10,881,514 9,340,124
----------- -----------
EXPENSES:
General and administrative................................ 2,017,239 1,748,105
News...................................................... 1,408,476 1,297,644
Selling................................................... 1,316,999 1,107,481
Technical and production.................................. 839,236 809,160
Program and promotion..................................... 421,280 327,637
Amortization of program rights............................ 865,065 428,438
Depreciation and amortization............................. 566,105 558,964
Direct costs of hockey operations......................... 745,449 364,979
Maintenance -- buildings and transmitters................. 289,794 290,344
Other operating........................................... 111,118 54,356
----------- -----------
Total expenses.................................... 8,580,761 6,987,108
----------- -----------
OPERATING INCOME............................................ 2,300,753 2,353,016
OTHER INCOME AND EXPENSES................................... 280,380 287,708
----------- -----------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE................................... 2,581,133 2,640,724
INCOME TAXES................................................ (1,071,000) (1,064,000)
----------- -----------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE................................................. 1,510,133 1,576,724
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (net of
deferred income tax benefit of $763,288................... -- (1,144,934)
----------- -----------
NET EARNINGS................................................ $ 1,510,133 $ 431,790
============ ============
EARNINGS PER SHARE AMOUNTS:.................................
Earnings before cumulative effect of change in
accounting principle................................... $ 49.62 $ 51.80
Cumulative effect of change in accounting principle....... -- (37.62)
----------- -----------
Net earnings.............................................. $ 49.62 $ 14.18
============ ============
</TABLE>
See notes to consolidated financial statements.
F-43
<PAGE> 153
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED
COMMON PAID-IN RETAINED LOSSES ON TREASURY STOCKHOLDERS'
STOCK CAPITAL EARNINGS INVESTMENTS STOCK EQUITY
------- ---------- ---------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1994................... $50,000 $9,435 $8,701,021 $(227,458) $(218,050) $8,314,948
Net earnings........... -- -- 431,790 -- -- 431,790
Unrealized gain on
investments -- net
of deferred tax
expense of
$111,994............ -- -- -- 161,161 -- 161,161
Cash dividends --
$28.00 per share.... -- -- (852,208) -- -- (852,208)
------- ------ ---------- --------- --------- ----------
BALANCE, DECEMBER 31,
1995................... 50,000 9,435 8,280,603 (66,297) (218,050) 8,055,691
Net earnings........... -- -- 1,510,133 -- -- 1,510,133
Unrealized loss on
investments -- net
of deferred tax
benefit of $3,734... -- -- -- (5,372) -- (5,372)
Cash dividends --
$28.00 per share.... -- -- (852,208) -- -- (852,208)
------- ------ ---------- --------- --------- ----------
BALANCE, DECEMBER 31,
1996................... $50,000 $9,435 $8,938,528 $ (71,669) $(218,050) $8,708,244
======== ======== ========== ========== ========== ===========
</TABLE>
See notes to consolidated financial statements.
F-44
<PAGE> 154
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings.............................................. $1,510,133 $ 431,790
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Cumulative effect of change in accounting principle.... -- 1,144,934
Depreciation and amortization.......................... 566,105 558,964
Deferred compensation expense.......................... 59,096 24,653
Deferred income taxes.................................. 43,000 (87,000)
Amortization of program rights......................... 865,065 428,438
Payments for program rights............................ (875,307) (495,952)
Accounts receivable -- trade........................... (486,067) (97,398)
Accounts payable -- trade.............................. 46,824 3,624
Deferred revenue....................................... 128,445 136,602
Prepaid pension cost................................... (110,688) (53,793)
Increase in cash surrender value -- life insurance..... (33,237) (33,794)
Postretirement benefits other than pensions............ 145,497 153,040
Accrued income taxes................................... (6,883) (59,013)
Other.................................................. (2,817) 119,167
---------- ----------
Net cash provided by operating activities......... 1,849,166 2,174,262
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment................ (398,936) (426,941)
Purchases of short-term investments....................... (924,436) (685,494)
Net proceeds from sale of short-term investments.......... 582,978 1,019,359
Payment for purchase of Webworks, Inc., net of $29,586
cash acquired.......................................... -- (45,414)
Payment for purchase of Johnstown Chiefs, Inc., net of
$1,500 cash acquired................................... -- (598,500)
Other..................................................... (1,585) (9,678)
---------- ----------
Net cash used in investing activities............. (741,979) (746,668)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES -- Dividends paid...... (852,208) (905,471)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 254,979 522,123
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 1,472,653 950,530
---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $1,727,632 $1,472,653
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -- Income
taxes paid................................................ $1,005,138 $1,210,013
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-45
<PAGE> 155
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization -- WJAC, Incorporated (the "Parent") is an NBC affiliate
broadcast television station located in Johnstown, PA and is the parent holding
company of the Johnstown Chiefs, Inc. and Webworks, Inc. (collectively, the
"Company"). The Johnstown Chiefs, Inc. are a minor league hockey team which was
purchased in May 1995. Webworks, Inc. maintains a page on the Internet used by
advertisers for which it receives a fee and began operations in November 1995.
The consolidated financial statements include the results of operations of the
Johnstown Chiefs, Inc. since the date of acquisition and Webworks, Inc. since
the start of operations. All significant transactions between the Parent and
subsidiaries are eliminated.
b. Short-Term Investments -- Short-term investments consist principally of
tax-exempt bonds, mutual funds and corporate equity securities. The Company
accounts for investments under Statement of Financial Accounting Standards
("SFAS") No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." SFAS No. 115 requires certain investments to be categorized as
either trading, available-for-sale, or held-to-maturity. At December 31, 1996
and 1995, all of the Company's investments were categorized as
available-for-sale and are carried at fair value with unrealized gains and
losses recorded as a separate component of stockholders' equity.
c. Property, Plant and Equipment -- Depreciation is provided over the
estimated useful lives (three to ten years) of the related assets on the
straight-line method except that depreciation of broadcasting equipment is
provided by accelerated methods. Depreciation expense for the years ended
December 31, 1996 and 1995 approximated $501,000 and $521,000, respectively.
d. Program Rights and Program Rights Payable -- The asset and liability for
program rights are recorded at cost when the license period begins. The
capitalized costs are being expensed based on the number of future showings and
the related revenue forecasted for those showings.
e. Other Assets Amortization -- Goodwill is amortized over ten years and
the non-compete agreement is amortized over the life of the agreement.
f. Program Barter Transactions -- The Company purchases certain programming
which provides advertising time to the syndicator during the airing of the
programs. The estimated fair value of advertising revenue received in program
barter transactions is recognized as revenue and a corresponding program cost
when the air time is used by the advertiser. Program barter revenue and expense
of approximately $337,000 is included as an increase to broadcasting revenue and
amortization of program rights for the year ended December 31, 1996. No amounts
were recorded for the year ended December 31, 1995.
g. Income Taxes -- The Company accounts for deferred taxes under the
provisions of SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires
the use of the liability method of accounting for deferred income taxes.
Deferred income tax liabilities and assets reflect temporary differences between
financial statement reporting and income tax reporting. The Company's temporary
differences primarily relate to unrealized losses on investments, vacation pay
expense, depreciation, pension costs, postretirement benefits other than
pensions and deferred compensation expense.
h. Earnings Per Share Amounts -- The earnings per share amounts for the
years ended December 31, 1996 and 1995 are calculated using the issued and
outstanding common shares (30,436 in 1996 and 1995).
F-46
<PAGE> 156
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
i. Statements of Cash Flows -- For purposes of the consolidated statements
of cash flows, the Company considers ready asset deposits and short-term money
market funds held by a broker purchased with an original maturity of three
months or less to be cash equivalents.
j. Use of Estimates in Preparation of the Consolidated Financial
Statements -- The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities as of the date of the consolidated financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The significant estimates used by
management are those used in determining depreciation of property, plant and
equipment, program rights costs, amortization of goodwill, deferred tax assets
and program barter transactions.
k. New Accounting Pronouncement -- In March 1995, the Financial Accounting
Standards Board issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of." SFAS No. 121
requires the long-lived assets and identifiable intangibles, including goodwill,
that an entity expects to hold and use be evaluated based on the fair value of
the asset whenever events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. Management considers the
undiscounted cash flow expected to be generated by the use of the asset and its
eventual disposition to determine when, and if, an impairment has occurred. SFAS
No. 121 was implemented by the Company on January 1, 1996. The effect of
implementation of SFAS No. 121 did not have a material impact on the
consolidated financial statements.
l. Reclassifications -- Certain reclassifications have been made to the
1995 consolidated financial statements in order to conform to the 1996
presentation.
2. ACQUISITIONS
The Parent acquired the Johnstown Chiefs, Inc. in May 1995 for $600,000 and
Webworks, Inc. in November 1995 for $75,000. The purchase price of these
acquisitions were recorded as follows:
<TABLE>
<S> <C>
Goodwill.................................................... $531,866
Cash........................................................ 31,086
Non-compete agreement....................................... 50,000
Equipment and fixtures...................................... 41,860
Advanced ticket sales....................................... 77,350
Other....................................................... 21,688
Deferred revenue............................................ (78,850)
--------
$675,000
=========
</TABLE>
These acquisitions were accounted for under the purchase method of
accounting.
The following unaudited financial information for the Company assumes that
the aforementioned acquisitions had occurred at the beginning of the year ended
December 31, 1995;
<TABLE>
<S> <C>
Total revenue............................................... $9,797,980
Earnings before cumulative effect of change in accounting
principle................................................. 1,545,705
Net earnings................................................ 400,771
Earnings per share.......................................... 13.17
</TABLE>
F-47
<PAGE> 157
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. SHORT-TERM INVESTMENTS
Debt and equity securities in the available-for-sale category included in
short-term investments and their respective unrealized holding gains and losses
at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
UNREALIZED HOLDING
FAIR VALUE GAINS (LOSSES)
----------------------- ---------------------
1996 1995 1996 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Debt securities..................... $1,812,310 $1,808,742 $ (13,323) $ 6,387
Equity securities................... 2,045,542 1,707,652 (114,210) (124,814)
---------- ---------- --------- ---------
$3,857,852 $3,516,394 $(127,533) $(118,427)
========== ========== ========== ==========
</TABLE>
The net change in the unrealized holding loss account was a loss of $9,106
for 1996 and a gain of $273,156 for 1995. Gross realized gains from the sale of
securities classified as available-for-sale for the year ended December 31, 1996
and 1995 were approximately $1,700 and $13,000, respectively. For the purpose of
determining gross realized gains and losses, the cost of securities sold is
based upon specific identification. The total cost of short-term investments was
$3,985,385 and $3,634,821 at December 31, 1996 and 1995, respectively.
The estimated fair value of debt securities in the available-for-sale
category by contractual maturity at December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
FAIR VALUE
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Due within one year....................................... $ 404,103 $ 452,047
Due after one year through five years..................... 706,262 411,517
Due after five years through ten years.................... 167,177 382,150
Due after ten years....................................... 534,768 563,028
---------- ----------
$1,812,310 $1,808,742
========== ==========
</TABLE>
4. OTHER ASSETS
Other assets as of December 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Goodwill (net of accumulated amortization of $84,217 in
1996 and $31,029 in 1995)............................... $ 447,649 $ 500,837
Prepaid pension cost...................................... 494,061 383,373
Cash surrender value -- life insurance.................... 305,210 271,973
Program rights -- less current portion.................... 118,112 74,398
Non-compete agreement (net of accumulated amortization of
$15,831 in 1996 and $5,831 in 1995)..................... 34,169 44,169
Other..................................................... 11,263 9,678
---------- ----------
$1,410,464 $1,284,428
========== ==========
</TABLE>
5. PENSION PLAN
The Company has two noncontributory, defined benefit pension plans covering
principally all full-time salaried and hourly employees and certain part-time
employees. Pension expense allocable
F-48
<PAGE> 158
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to the Company for the years ended December 31, 1996 and 1995 was approximately
$5,000 and $17,000, respectively.
The Company's pension benefits are based on a formula which takes into
consideration an employee's compensation and years of service. The Company's
funding policy is to make annual contributions to the plans based upon the
funding standards developed by the plans' actuary. The actuary uses the
Projected Unit Credit actuarial cost method. The Company's contributions for
1996 and 1995 at least equaled the minimum funding requirements of ERISA.
The Company's actuarial present value of accumulated benefit obligation was
$1,426,077 and $1,100,186, and included vested benefits of $1,224,399 and
$883,789, for 1996 and 1995, respectively.
The following table sets forth the plans' funded status and the amounts
recognized in the Company's consolidated balance sheets as of December 31, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Plan assets at fair value consisting principally of
marketable securities................................... $2,143,962 $1,852,309
Actuarial present value of projected benefit obligation
for service rendered to date............................ 1,696,211 1,315,607
---------- ----------
Plan assets in excess of projected benefit obligation..... 447,751 536,702
Unrecognized net loss (gain).............................. 140,364 (45,840)
Unrecognized net asset at October 1, 1989, being
recognized over 15 years................................ (94,054) (107,489)
---------- ----------
$ 494,061 $ 383,373
========== ==========
</TABLE>
Pension expense for the years ended December 31, 1996 and 1995 included the
following components:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Service cost -- benefits earned during the period.......... $ 61,693 $ 56,736
Interest cost on projected benefit obligation.............. 103,225 92,330
Actual return on plan assets............................... (194,485) (248,621)
Net amortization and deferral:
Actual versus expected return on plan assets............. 47,556 129,701
Unrecognized net asset................................... (13,435) (13,435)
--------- ---------
Pension expense............................................ $ 4,554 $ 16,711
========== ==========
</TABLE>
The principal actuarial assumptions for the plans were as follows for 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
----- ------
<S> <C> <C>
Weighted average discount rate used in determining the
actuarial present value of the benefit obligations........ 7.00% 8.00%
Expected weighted average long-term rate of return on plan
assets.................................................... 7.50% 7.50%
Compensation increases...................................... 4.50% 4.50%
</TABLE>
6. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors health and life insurance plans covering certain
full-time employees and retirees. The plans are funded only as benefit payments
are required. Effective January 1, 1995,
F-49
<PAGE> 159
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company adopted SFAS No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions," whereby the cost of the health and life insurance
postretirement benefits is accrued during the employees active service period.
The Company elected to immediately recognize the accumulated benefit obligation
rather than amortize it over future periods. The cumulative effect of this
accounting change as of January 1, 1995 was to decrease net earnings by
$1,144,934, net of a deferred income tax benefit of $763,288. The effect of the
accounting change was to increase benefit expense by approximately $148,000 for
the year ended December 31, 1995.
The plans also include cost sharing coverage provisions, such as
co-insurance and deductibles. The health insurance plan coordinates benefits
with Medicare coverage for participants that are 65 years and older.
The components of the net postretirement benefit cost for the years ended
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Service cost -- benefits earned during the year............. $ 65,666 $ 64,930
Interest cost on the projected benefit obligation........... 141,291 146,873
Amortization of net gain.................................... (4,180) --
-------- --------
Net postretirement benefit cost............................. $202,777 $211,803
========= =========
</TABLE>
The status of the Company's unfunded postretirement benefit obligation at
December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Retirees................................................ $ 296,580 $ 821,559
Fully eligible active plan participants................. 80,385 75,108
Other active plan participants.......................... 335,524 922,136
---------- ----------
Accumulated postretirement benefit obligations............ 712,489 1,818,803
Unrecognized net gain..................................... 1,494,270 242,459
---------- ----------
Accrued postretirement benefit cost....................... $2,206,759 $2,061,262
========== ==========
</TABLE>
The principal actuarial assumptions for the plan were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Weighted average discount rate used in determining the
actuarial present value of the projected postretirement
benefit obligation........................................ 7.50% 8.00%
Assumed health care cost trend rates:
First four years (five years for 1995):................... 8.00% 8.00%
Next five years:.......................................... 7.00% 7.00%
Thereafter:............................................... 6.00% 6.00%
</TABLE>
The 1996 actuarial valuation includes as an experience gain that, beginning
in 1997, certain existing Medicare eligible retirees and all new Medicare
retirees will be receiving coverage under a managed care program.
A 1% increase in the assumed health care cost trend rates would increase
the service and interest components of the net postretirement benefit cost for
the year ended December 31, 1996 by approximately $13,000, as well as increase
the December 31, 1996 accumulated postretirement benefit obligation by
approximately $87,000.
F-50
<PAGE> 160
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. AGREEMENTS WITH EMPLOYEES
Under the terms of salary continuation agreements with four employees, the
Company is to provide monthly postretirement compensation for a maximum period
of 15 years, or until death, whichever occurs first. The present value of the
future payments required under each of the agreements is being charged to
operations over the remaining service periods of the employee. The total amount
charged to operations related to these agreements approximated $59,000 and
$37,000 during 1996 and 1995, respectively.
The Company has a long-term employment contract with the president of the
Company which expires in April 2001. The contract provides for, among other
things, salary continuation in the event of disability or termination for other
than just cause (see Note 11).
Certain employees are covered under a collective bargaining agreement.
8. OTHER INCOME AND EXPENSES
Other income and expenses for the years ended December 31, 1996 and 1995
consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Interest income............................................. $224,748 $230,073
Dividends................................................... 56,260 41,342
Miscellaneous -- net........................................ (628) 16,293
-------- --------
$280,380 $287,708
========= =========
</TABLE>
9. INCOME TAXES
The income tax provision for the years ended December 31, 1996 and 1995 is
summarized as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current:
Federal................................................. $ 756,000 $ 825,000
State................................................... 272,000 326,000
---------- ----------
1,028,000 1,151,000
---------- ----------
Deferred:
Federal................................................. (3,500) (81,000)
State................................................... 46,500 (6,000)
---------- ----------
43,000 (87,000)
---------- ----------
$1,071,000 $1,064,000
========== ==========
</TABLE>
F-51
<PAGE> 161
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reconciliations between the statutory federal income tax rate and the
Company's effective income tax rate as a percentage of earnings before income
taxes and cumulative effect of change in accounting principle are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Statutory federal income tax rate........................... 34% 34%
State taxes, net of federal tax benefit..................... 8 8
Other....................................................... (1) (2)
-- --
Effective income tax rate................................... 41% 40%
==== ====
</TABLE>
The tax effects of significant items comprising the Company's total
deferred tax assets and total deferred tax liabilities as of December 31, 1996
and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits other than pensions............. $ 895,944 $ 865,730
Deferred compensation................................... 162,502 154,019
Operating loss carryforwards............................ 132,728 106,284
Valuation allowance on operating loss carryforwards..... (132,728) (106,284)
Other................................................... 76,846 73,585
---------- ----------
Total deferred tax assets................................. $1,135,292 $1,093,334
---------- ----------
Deferred tax liabilities:
Prepaid pension cost.................................... $ 220,728 $ 152,297
Differences between book and tax basis of property,
plant and equipment.................................. 187,396 181,587
Other................................................... 51,690 44,706
---------- ----------
Total deferred tax liabilities............................ $ 459,814 $ 378,590
---------- ----------
</TABLE>
At December 31, 1996 and 1995, the Johnstown Chiefs, Inc. has remaining
preacquisition net operating loss carryforwards for federal tax purposes of
approximately $312,600. Also, the Johnstown Chiefs, Inc. has approximately
$265,000 of loss carryforward for state income tax purposes at December 31,
1996. The carryforwards expire in varying amounts through 2011 for federal tax
purposes and through 1999 for state tax purposes. The ability of the Company to
utilize these carryforwards is dependent on the ability of the Johnstown Chiefs,
Inc. to generate income during the carryforward period. As a result, the
potential tax benefit of these net operating loss carryforwards and deferred
taxes from purchase date basis differences have been fully reserved with a
valuation allowance at December 31, 1996 and 1995. Unamortized purchase date
basis differences were approximately $90,000 and $150,000 at December 31, 1996
and 1995, respectively.
No additional deferred tax valuation allowance is deemed necessary as a
result of management's evaluation of the likelihood that all of the deferred tax
assets will be realized.
10. COMMITMENTS
In addition to program rights payable as reflected in the consolidated
financial statements, the Company has contracted the right to broadcast certain
programs in the future. The total commitment to be paid under these contracts to
broadcast future programs was approximately $1,268,000 at December 31, 1996, and
payments will begin primarily at the time of initial broadcast.
F-52
<PAGE> 162
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SUBSEQUENT EVENTS
On April 7, 1997, the Company signed a Separation Agreement with the
president of the Company which provided severance of approximately $1,250,000
and the payment of $200,000 for a one year noncompetition agreement. As a result
of the Separation Agreement, the provisions of the long-term employment contract
described in Note 7 were fulfilled. At December 31, 1996, there was
approximately $225,000 included in the Company's deferred compensation liability
related to this employee.
On May 5, 1997 the Board of Directors of the Parent approved the sale of
the stock of the Johnstown Chiefs, Inc. (the "Chiefs") to a major shareholder of
the Parent for $50,000 plus additional amounts if that company is later sold for
the purpose of moving the team out of the Johnstown, Pennsylvania area before
the 2000-2001 hockey season. The proposed sales price for the stock is less than
the carrying amount of the net assets. The sale of the stock of the Chiefs is
subject to the approval of the shareholders.
On May 8, 1997, the Parent entered into an Agreement and Plan of Merger
(the "Agreement") whereby, upon the closing (expected before December 31, 1997),
the Parent becomes a wholly owned subsidiary of STC Broadcasting, Inc. and the
stockholders of the Parent will receive approximately $36,000,000, plus or minus
a calculated net current asset adjustment. The Agreement provides for the
proceeds from a sale of the stock of the Chiefs to be distributed to the current
shareholders of the Parent.
F-53
<PAGE> 163
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,791,284
Short-term investments.................................... 3,725,248
Accounts receivable -- trade (net of allowance of
$20,000)............................................... 1,635,944
Program rights -- current portion......................... 161,523
Prepaid expenses.......................................... 136,794
Deferred income taxes..................................... 138,103
Accrued interest receivable............................... 14,459
Other current assets...................................... 12,985
-----------
Total current assets.............................. 7,616,340
-----------
PROPERTY, PLANT AND EQUIPMENT -- At cost:
Land and land improvements............................. 103,792
Buildings.............................................. 2,320,253
Equipment and fixtures................................. 7,357,442
-----------
9,781,487
Less accumulated depreciation............................. (7,279,687)
-----------
2,501,800
-----------
DEFERRED INCOME TAXES....................................... 535,364
-----------
OTHER ASSETS................................................ 1,418,577
-----------
$12,072,081
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable -- trade................................. $ 78,430
Accrued salaries and wages................................ 43,247
Payroll taxes and withholdings............................ 43,935
Accrued vacation pay...................................... 168,597
Deferred compensation -- current portion.................. 12,780
Program rights payable -- current portion................. 107,523
Accrued income taxes...................................... 138,294
Deferred revenues......................................... 24,488
-----------
Total current liabilities......................... 617,294
-----------
PROGRAM RIGHTS PAYABLE -- Less current portion.............. 62,166
-----------
DEFERRED COMPENSATION....................................... 397,055
-----------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS................. 2,206,759
-----------
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized, 37,750 shares;
issued, 30,436 shares.................................. 50,000
Additional paid-in capital................................ 9,435
Retained earnings......................................... 9,033,298
Less unrealized losses on investments..................... (85,876)
Less treasury stock -- at cost, 7,314 shares.............. (218,050)
-----------
8,788,807
-----------
$12,072,081
===========
</TABLE>
See notes to unaudited consolidated financial statements.
F-54
<PAGE> 164
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
THREE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
REVENUE:
Broadcasting.............................................. $2,229,260
Hockey team............................................... 499,098
Production and recording.................................. 13,581
Other operating........................................... 26,665
----------
Total revenue..................................... 2,768,604
----------
EXPENSES:
General and administrative................................ 492,749
News...................................................... 377,667
Selling................................................... 298,613
Technical and production.................................. 213,878
Program and promotion..................................... 114,388
Amortization of program rights............................ 271,963
Depreciation and amortization............................. 147,368
Direct costs of hockey operations......................... 308,578
Maintenance -- buildings and transmitters................. 70,172
Other operating........................................... 73,252
----------
Total expenses.................................... 2,368,628
----------
OPERATING INCOME............................................ 399,976
OTHER INCOME AND EXPENSES................................... 82,017
----------
EARNINGS BEFORE INCOME TAXES................................ 481,993
INCOME TAXES................................................ (174,171)
----------
NET EARNINGS................................................ $ 307,822
==========
Earnings per share.......................................... $ 10.11
==========
</TABLE>
See notes to unaudited consolidated financial statements.
F-55
<PAGE> 165
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL UNREALIZED
COMMON PAID-IN RETAINED LOSSES ON
STOCK CAPITAL EARNINGS INVESTMENTS
------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996.............. $50,000 $9,435 $8,938,528 $(71,669)
Net Earnings............................ -- -- 307,822 --
Unrealized loss on investments.......... -- -- -- (14,207)
Cash Dividends -- $7.00 per share....... -- -- (213,052) --
------- ------ ---------- --------
BALANCE, MARCH 31, 1997................. $50,000 $9,435 $9,033,298 $(85,876)
======= ====== ========== ========
<CAPTION>
TREASURY STOCKHOLDERS'
STOCK EQUITY
--------- -------------
<S> <C> <C>
BALANCE, DECEMBER 31, 1996.............. $(218,050) $8,708,244
Net Earnings............................ -- 307,822
Unrealized loss on investments.......... (14,207)
Cash Dividends -- $7.00 per share....... -- (213,052)
--------- ----------
BALANCE, MARCH 31, 1997................. $(218,050) $8,788,807
========= ==========
</TABLE>
See notes to unaudited consolidated financial statements.
F-56
<PAGE> 166
WJAC, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings.............................................. $ 307,822
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization.......................... 147,368
Deferred compensation expense.......................... (3,195)
Deferred income taxes.................................. 11,884
Accounts receivable -- trade........................... 506,087
Program rights......................................... 56,313
Accounts payable -- trade.............................. (23,182)
Deferred revenue....................................... (319,409)
Program rights payable................................. (31,820)
Prepaid pension cost................................... (45,321)
Increase in cash surrender value -- life insurance..... (8,311)
Accrued vacation....................................... (906)
Accrued income taxes................................... (24,868)
Prepaid expense and other current assets............... (18,431)
Accrued salaries & payroll taxes....................... (25,483)
----------
Net cash provided by operating activities......... 528,548
----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment................ (147,316)
Net proceeds from sale of short-term investments.......... 108,524
----------
Net cash used in investing activities............. (38,792)
----------
CASH FLOWS FROM FINANCING ACTIVITIES -- Dividends paid...... (426,104)
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 63,652
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 1,727,632
----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $1,791,284
==========
</TABLE>
See notes to unaudited consolidated financial statements.
F-57
<PAGE> 167
WJAC, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997
BASIS OF PRESENTATION
The accompanying consolidated financial statements, which include WJAC,
Incorporated and its subsidiaries (the "Company"), as of March 31, 1997 and for
the three months then ended are unaudited. Significant intercompany transactions
and accounts have been eliminated. In the opinion of management, all adjustments
necessary for the fair presentation of such financial information have been
included. These adjustments are of a normal recurring nature. There have been no
changes in accounting policies since the year ended December 31, 1996.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. These financial statements, footnotes, and discussions should
be read in conjunction with the December 31, 1996 and 1995 financial statements
and related footnotes contained elsewhere in the Prospectus.
SUBSEQUENT EVENTS
On April 7, 1997, the Company signed a Separation Agreement with the
president of the Company which provided severance of approximately $1,250,000
and the payment of $200,000 for a one year noncompetition agreement. As a result
of the Separation Agreement, the provisions of the long-term employment contract
described in Note 7 were fulfilled. At December 31, 1996, there was
approximately $225,000 included in the Company's deferred compensation liability
related to this employee.
On May 5, 1997 the Board of Directors of the Parent approved the sale of
the stock of the Johnstown Chiefs, Inc. (the "Chiefs") to a major shareholder of
the Parent for $50,000 plus additional amounts if that company is later sold for
the purpose of moving the team out of the Johnstown, PA area before the
2000-2001 hockey season. The proposed sales price for the stock is less than the
carrying amount of the net assets. The sale of the stock of the Chiefs is
subject to the approval of shareholders.
On May 8, 1997, the Company entered into an agreements and plan of merger
(the "Merger Agreement") with STC Broadcasting, Inc. ("STC"), pursuant to which
the Company will become a wholly owned subsidiary of STC. The company owns and
operates the NBC affiliate for the Johnstown/Altoona, Pennsylvania market. The
approximate purchase price will be $36,000,000 plus or minus a calculated net
current asset adjustment, and the expected closing date will be in the fourth
quarter of 1997. The hockey operation will not be part of the sale to STC. The
Agreement provides for the proceeds from a sale of the stock of the Chiefs to be
distributed to the current shareholders of the Parent.
F-58
<PAGE> 168
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE NEW NOTES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE NEW NOTES BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE NEW NOTES
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN A CHANGE IN FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
- ------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information........................ i
Certain Definitions and Market and Industry
Data....................................... ii
Summary...................................... 1
Risk Factors................................. 13
The Acquisition.............................. 20
Recent Development........................... 20
Use of Proceeds.............................. 21
Capitalization............................... 22
Selected Historical Financial Information.... 23
Unaudited Pro Forma Financial Information.... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 31
Business..................................... 38
Management and Directors..................... 62
Certain Transactions......................... 66
Securities Ownership of Certain Beneficial
Owners..................................... 67
Description of the Credit Agreement.......... 68
Description of Redeemable Preferred Stock.... 70
The Exchange Offer........................... 71
Description of New Notes..................... 79
Certain Federal Income Tax Considerations.... 103
Plan of Distribution......................... 104
Legal Matters................................ 104
Independent Auditors......................... 104
Index to Financial Statements................ F-1
</TABLE>
- ------------------------------------------------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
OFFER TO EXCHANGE
ALL OUTSTANDING
11% SENIOR SUBORDINATED NOTES
DUE 2007
FOR
11% SENIOR SUBORDINATED NOTES
DUE 2007
STC BROADCASTING, INC.
---------------------
PROSPECTUS
---------------------
, 1997
<PAGE> 169
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the securities
being registered are estimated (other than with respect to the SEC registration
fee) to be as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $30,304
Printing and Engraving Expenses............................. *
Accounting Fees and Expenses................................ *
Legal Fees and Expenses..................................... *
Miscellaneous............................................... *
-------
Total............................................. *
========
</TABLE>
- ---------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Certificate of Incorporation of STC Broadcasting,
Inc. ("the Registrant") provides for the mandatory indemnification of the
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware (the "Delaware Code"). Pursuant to
Section 145 of the Delaware Code, the Registrant has the discretionary power to
indemnify its present and former directors and officers against expenses
actually and reasonably incurred by them in connection with any suit (other than
an action by or in the right of the Registrant) to which such directors and
officers were, are, or are threatened to be made, a party by reason of their
serving in such positions, so long as they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interest of the
corporation for which they served in such positions, and with respect to any
criminal action, they had no reasonable cause to believe their conduct was
unlawful.
Under the Delaware Code, a corporation may also indemnify any person who
was or is a party to an action brought by or in the right of the Registrant, but
only for actual or reasonable defense and settlement expenses and not for any
satisfaction of a judgment or settlement of the claim itself, and with the
further limitation that in such actions no indemnification shall be made in the
event of any adjudication that such director or officer is liable to the
corporation unless the court, upon application, finds that in light of all the
circumstances such person is fairly and reasonably entitled to indemnity for
such expenses. The Delaware Code further provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or director may be entitled under any bylaws, agreements, vote
of stockholders or disinterested directors, or otherwise.
The above discussion of the Amended and Restated Certificate of
Incorporation of the Registrant and of Section 145 of the Delaware Code is not
intended to be exhaustive and is qualified in its entirety by such Certificate
of Incorporation and the Delaware Code.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in this Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the
II-1
<PAGE> 170
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On February 24, 1997, the Registrant issued 1,000 shares of its common
stock, par value $.01 per share, to Sunrise Television Corp. in a private
transaction for a cash purchase price of $1,000 in reliance on the exemption,
set forth in Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), from the registration requirement set forth in Section 5 of
the Securities Act.
On February 28, 1997, the Registrant sold 300,000 shares of its 14%
Redeemable Preferred Stock in a private placement in reliance on Section 4(2) of
the Securities Act for a cash purchase price of $30,000,000.
On March 25, 1997, the Registrant sold $100,000,000 aggregate principal
amount of its 11% Senior Subordinated Notes due 2007 (the "Old Notes") in a
private placement in reliance on Section 4(2) under the Securities Act, at a
price equal to 100% of the stated principal amount of such Old Notes.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
2.1 -- Asset Purchase Agreement, dated as of November 4, 1996,
by and among Smith Television of Michigan, L.P., Smith
Television of Michigan License, L.P., Smith Television of
Rochester, L.P., Smith Television of Rochester License,
L.P., Smith Television of Salinas-Monterey, L.P., Smith
Television of Salinas-Monterey License, L.P., as Sellers,
and STV Acquisition Company (now known as STC
Broadcasting, Inc.), as Buyer*
2.2 -- Asset Purchase Agreement, dated as of November 4, 1996,
by and among Smith Television-WTOV, L.P. and Smith
Television-WTOV License, L.P., as Sellers, and Smith
Acquisition Company, as Buyer*
2.3 -- Agreement and Plan of Merger, dated as of May 9, 1997, by
and among STC Broadcasting, Inc., WJAC Acquisition Corp.
and WJAC, Incorporated*
3.1 -- Amended and Restated Certificate of Incorporation of STV
Acquisition Company (now known as STC Broadcasting,
Inc.)*
3.2 -- Certificate of Designation for the 14% Redeemable
Preferred Stock*
3.3 -- Certificate of Amendment to the Certificate of
Designation for the 14% Redeemable Preferred Stock*
3.4 -- Amended and Restated Bylaws of STC Broadcasting, Inc.*
4.1 -- Indenture, dated as of March 25, 1997, between STC
Broadcasting, Inc. and U.S. Trust Company of Texas, N.A.,
relating to the outstanding 11% Senior Subordinated Notes
due 2007*
4.2 -- Form of Old Note (included in Exhibit 4.1, Exhibit A)*
4.3 -- Form of New Note (included in Exhibit 4.1, Exhibit B)*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the validity
of securities registered hereby+
</TABLE>
II-2
<PAGE> 171
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.1 -- Credit Agreement, dated as of February 28, 1997, by and
among STC Broadcasting, Inc., as Borrower, NationsBank of
Texas, N. A., as Documentation Agent, The Chase Manhattan
Bank, as Administrative and Syndication Agent, and the
lenders party thereto*
10.2 -- Guarantee and Collateral Agreement, dated as of February
28, 1997, by STC Broadcasting, Inc., certain of its
subsidiaries, and Sunrise Television Corp. in favor of
The Chase Manhattan Bank*
10.3 -- First Amendment, dated March 25, 1997, to the Credit
Agreement, dated February 28, 1997, by and among STC
Broadcasting, Inc., as Borrower, NationsBank of Texas, N.
A., as Documentation Agent, The Chase Manhattan Bank, as
Administrative and Syndication Agent, and the lenders
party thereto*
10.4 -- Exchange and Registration Rights Agreement, dated March
25, 1997, by and among STC Broadcasting, Inc., Chase
Securities Inc., NationsBanc Capital Markets, Inc. and
Schroder Wertheim & Co., Incorporated*
10.5 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and Robert N. Smith*
10.6 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and David A. Fitz*
10.7 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and Sandy DiPasquale*
10.8 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and John M. Purcell*
10.9 -- Monitoring and Oversight Agreement, dated as of February
28, 1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc. and Hicks, Muse & Co. Partners, L.P.*
10.10 -- Financial Advisory Agreement, dated as of February 28,
1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc. and Hicks, Muse & Co. Partners, L.P.*
10.11 -- Securities Purchase Agreement, dated as of February 28,
1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc., Hicks, Muse, Tate & Furst Equity Fund
III, L.P. and Chase Equity Associates*
10.12 -- Deposit Escrow Agreement, dated as of November 4, 1996,
by and among Smith Television of Michigan, L.P., Smith
Television of Michigan License, L.P., Smith Television of
Rochester, L.P., Smith Television of Rochester License,
L.P., Smith Television of Salinas-Monterey, L.P., Smith
Television of Salinas-Monterey License, L.P., Smith
Television-WTOV, L.P. and Smith Television-WTOV License,
L.P., Hicks, Muse, Tate & Furst Equity Fund III, L.P.,
STV Acquisition Company (now known as STC Broadcasting,
Inc.) and Smith Acquisition Company*
10.13 -- Promissory Note, dated February 28, 1997, by Smith
Acquisition Company, in the original principal amount of
$28,500,000, payable to STC Broadcasting, Inc.*
10.14 -- Letter Agreement, dated November 4, 1996, by and among
STV Acquisition Company (now known as STC Broadcasting,
Inc.), Smith Acquisition Company and Robert N. Smith*
10.15 -- Letter Agreement, dated February 28, 1997, by and among
Smith Broadcasting Partners, L.P., SBP II, L.P. and Smith
Acquisition Company*
10.16 -- Affiliation Agreement, dated July 10, 1995, between
National Broadcasting Company, Inc. and WEYI Associates
(WEYI-TV)*
</TABLE>
II-3
<PAGE> 172
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.17 -- Letter Agreement, dated December 15, 1995, between NBC
Television Network and Smith Broadcasting Group, Inc., on
behalf of Smith Television of Michigan License, L.P.
(WEYI-TV)*
10.18 -- Affiliation Agreement, dated January 12, 1995, between
CBS Television Network and Television Station Partners,
L.P. (WROC-TV)*
10.19 -- Affiliation Agreement, dated December 20, 1995, among the
National Broadcasting Company, Inc., Television Station
Partners, L.P. and WTOV Associates (WTOV-TV)*
10.20 -- Affiliation Agreement, dated March 8, 1995, between
American Broadcasting Companies, Inc. and WTOV Associates
(WTOV-TV)*
10.21 -- Affiliation Agreement, dated March 20, 1996, between
National Broadcasting Company, Inc. and Smith
Broadcasting Partners, L.P. (KSBW-TV)*
10.22 -- Collective Bargaining Agreement, dated August 8, 1994,
between WEYI-TV and International Union, United
Automobile, Aerospace and Agricultural Implement Workers
of America*
10.23 -- Collective Bargaining Agreement, dated June 1, 1993,
between Television Station Partners (WROC-TV) and
American Federation of Television and Radio Artists*
10.24 -- Collective Bargaining Agreement, dated June 1, 1996,
between WROC-TV and National Association of Broadcast
Employees and Technicians*
10.25 -- Collective Bargaining Agreement, dated May , 1997,
between WROC-TV and the American Federation of Television
and Radio Artists+
10.26 -- Agreement, dated December 1, 1994, between International
Brotherhood of Electrical Workers and Television Station
Partners (WTOV-TV)*
10.27 -- Agreement, dated January 29, 1996, between American
Federation of Television and Radio Artists and Smith
Broadcasting Group, Inc. (WTOV-TV)*
10.28 -- Purchase Agreement, dated March 19, 1997, by and among
STC Broadcasting, Inc., Chase Securities Inc.,
NationsBanc Capital Markets, Inc. and Schroder Wertheim &
Co., Incorporated*
10.29 -- Shareholders' Voting Agreement, dated May 9, 1997, by and
among STC Broadcasting, Inc., WJAC Acquisition Corp. and
certain shareholders of WJAC, Incorporated*
10.30 -- Deposit Escrow Agreement, dated May 9, 1997, by and among
STC Broadcasting, Inc., WJAC Acquisition Corp., WJAC,
Incorporated and Mellon Bank, N.A.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges of STC
Broadcasting, Inc.*
21.1 -- Subsidiaries of STC Broadcasting, Inc.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in
Exhibit 5.1)+
23.2 -- Consent of Arthur Andersen LLP, independent auditors*
23.3 -- Consent of Deloitte & Touche LLP*
</TABLE>
II-4
<PAGE> 173
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
24.1 -- Power of Attorney (included in the signature pages in
Part II of this Registration Statement)*
25.1 -- Statement of Eligibility and Qualifications of U.S. Trust
Company of Texas, N.A., on Form T-1*
27.1 -- Financial Data Schedule*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment
(b) Financial Statement Schedules:
All schedules are omitted since the required information is not present or
is not present in the amounts sufficient to require submission of the schedules,
or because the information required is included in the financial statements and
notes thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(h) See Item 14.
II-5
<PAGE> 174
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on June 19, 1997.
STC BROADCASTING, INC.
By: /s/ ROBERT N. SMITH
---------------------------------
Robert N. Smith,
Chief Executive Officer
Each person whose signature to this Registration Statement appears below
hereby appoints Robert N. Smith and David A. Fitz, and each of them
individually, any one of whom may act without the joinder of the other, as his
agent and attorney-in-fact to sign on his behalf individually and in the
capacity stated below and to file all pre- and post-effective amendments to this
Registration Statement, which may make such changes and additions to this
Registration Statement as such agent and attorney-in-fact may deem necessary or
appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT N. SMITH Chief Executive Officer and June 19, 1997
------------------------- Director (Principal Executive
Robert N. Smith Officer)
/s/ DAVID A. FITZ Senior Vice President and Chief June 19, 1997
------------------------- Financial Officer (Principal
David A. Fitz Accounting and Financial
Officer)
/s/ JOHN R. MUSE Chairman of the Board of June 19, 1997
------------------------- Directors
John R. Muse
/s/ MICHAEL J. LEVITT Director June 19, 1997
--------------------------
Michael J. Levitt
/s/ JOHN H. MASSEY Director June 19, 1997
---------------------------
John H. Massey
/s/ ERIC C. NEUMAN Director June 19, 1997
---------------------------
Eric C. Neuman
</TABLE>
II-6
<PAGE> 175
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 -- Asset Purchase Agreement, dated as of November 4, 1996,
by and among Smith Television of Michigan, L.P., Smith
Television of Michigan License, L.P., Smith Television of
Rochester, L.P., Smith Television of Rochester License,
L.P., Smith Television of Salinas-Monterey, L.P., Smith
Television of Salinas-Monterey License, L.P., as Sellers,
and STV Acquisition Company (now known as STC
Broadcasting, Inc.), as Buyer*
2.2 -- Asset Purchase Agreement, dated as of November 4, 1996,
by and among Smith Television-WTOV, L.P. and Smith
Television-WTOV License, L.P., as Sellers, and Smith
Acquisition Company, as Buyer*
2.3 -- Agreement and Plan of Merger, dated as of May 9, 1997, by
and among STC Broadcasting, Inc., WJAC Acquisition Corp.
and WJAC, Incorporated*
3.1 -- Amended and Restated Certificate of Incorporation of STV
Acquisition Company (now known as STC Broadcasting,
Inc.)*
3.2 -- Certificate of Designation for the 14% Redeemable
Preferred Stock*
3.3 -- Certificate of Amendment to the Certificate of
Designation for the 14% Redeemable Preferred Stock*
3.4 -- Amended and Restated Bylaws of STC Broadcasting, Inc.*
4.1 -- Indenture, dated as of March 25, 1997, between STC
Broadcasting, Inc. and U.S. Trust Company of Texas, N.A.,
relating to the outstanding 11% Senior Subordinated Notes
due 2007*
4.2 -- Form of Old Note (included in Exhibit 4.1, Exhibit A)*
4.3 -- Form of New Note (included in Exhibit 4.1, Exhibit B)*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the validity
of securities registered hereby+
10.1 -- Credit Agreement, dated as of February 28, 1997, by and
among STC Broadcasting, Inc., as Borrower, NationsBank of
Texas, N. A., as Documentation Agent, The Chase Manhattan
Bank, as Administrative and Syndication Agent, and the
lenders party thereto*
10.2 -- Guarantee and Collateral Agreement, dated as of February
28, 1997, by STC Broadcasting, Inc., certain of its
subsidiaries, and Sunrise Television Corp. in favor of
The Chase Manhattan Bank*
10.3 -- First Amendment, dated March 25, 1997, to the Credit
Agreement, dated February 28, 1997, by and among STC
Broadcasting, Inc., as Borrower, NationsBank of Texas, N.
A., as Documentation Agent, The Chase Manhattan Bank, as
Administrative and Syndication Agent, and the lenders
party thereto*
10.4 -- Exchange and Registration Rights Agreement, dated March
25, 1997, by and among STC Broadcasting, Inc., Chase
Securities Inc., NationsBanc Capital Markets, Inc. and
Schroder Wertheim & Co., Incorporated*
10.5 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and Robert N. Smith*
10.6 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and David A. Fitz*
10.7 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and Sandy DiPasquale*
10.8 -- Employment Agreement, dated as of February 28, 1997, by
and between Sunrise Television Corp., STC Broadcasting,
Inc. and John M. Purcell*
</TABLE>
<PAGE> 176
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.9 -- Monitoring and Oversight Agreement, dated as of February
28, 1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc. and Hicks, >Muse & Co. Partners, L.P.*
10.10 -- Financial Advisory Agreement, dated as of February 28,
1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc. and Hicks, Muse & Co. Partners, L.P.*
10.11 -- Securities Purchase Agreement, dated as of February 28,
1997, by and among Sunrise Television Corp., STC
Broadcasting, Inc., Hicks, Muse, Tate & Furst Equity Fund
III, L.P. and Chase Equity Associates*
10.12 -- Deposit Escrow Agreement, dated as of November 4, 1996,
by and among Smith Television of Michigan, L.P., Smith
Television of Michigan License, L.P., Smith Television of
Rochester, L.P., Smith Television of Rochester License,
L.P., Smith Television of Salinas-Monterey, L.P., Smith
Television of Salinas-Monterey License, L.P., Smith
Television-WTOV, L.P. and Smith Television-WTOV License,
L.P., Hicks, Muse, Tate & Furst Equity Fund III, L.P.,
STV Acquisition Company (now known as STC Broadcasting,
Inc.) and Smith Acquisition Company*
10.13 -- Promissory Note, dated February 28, 1997, by Smith
Acquisition Company, in the original principal amount of
$28,500,000, payable to STC Broadcasting, Inc.*
10.14 -- Letter Agreement, dated November 4, 1996, by and among
STV Acquisition Company (now known as STC Broadcasting,
Inc.), Smith Acquisition Company and Robert N. Smith*
10.15 -- Letter Agreement, dated February 28, 1997, by and among
Smith Broadcasting Partners, L.P., SBP II, L.P. and Smith
Acquisition Company*
10.16 -- Affiliation Agreement, dated July 10, 1995, between
National Broadcasting Company, Inc. and WEYI Associates
(WEYI-TV)*
10.17 -- Letter Agreement, dated December 15, 1995, between NBC
Television Network and Smith Broadcasting Group, Inc., on
behalf of Smith Television of Michigan License, L.P.
(WEYI-TV)*
10.18 -- Affiliation Agreement, dated January 12, 1995, between
CBS Television Network and Television Station Partners,
L.P. (WROC-TV)*
10.19 -- Affiliation Agreement, dated December 20, 1995, among the
National Broadcasting Company, Inc., Television Station
Partners, L.P. and WTOV Associates (WTOV-TV)*
10.20 -- Affiliation Agreement, dated March 8, 1995, between
American Broadcasting Companies, Inc. and WTOV Associates
(WTOV-TV)*
10.21 -- Affiliation Agreement, dated March 20, 1996, between
National Broadcasting Company, Inc. and Smith
Broadcasting Partners, L.P. (KSBW-TV)*
10.22 -- Collective Bargaining Agreement, dated August 8, 1994,
between WEYI-TV and International Union, United
Automobile, Aerospace and Agricultural Implement Workers
of America*
10.23 -- Collective Bargaining Agreement, dated June 1, 1993,
between Television Station Partners (WROC-TV) and
American Federation of Television and Radio Artists*
10.24 -- Collective Bargaining Agreement, dated June 1, 1996,
between WROC-TV and National Association of Broadcast
Employees and Technicians*
10.25 -- Collective Bargaining Agreement, dated May , 1997,
between WROC-TV and the American Federation of Television
and Radio Artists+
</TABLE>
<PAGE> 177
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.26 -- Agreement, dated December 1, 1994, between International
Brotherhood of Electrical Workers and Television Station
Partners (WTOV-TV)*
10.27 -- Agreement, dated January 29, 1996, between American
Federation of Television and Radio Artists and Smith
Broadcasting Group, Inc. (WTOV-TV)*
10.28 -- Purchase Agreement, dated March 19, 1997, by and among
STC Broadcasting, Inc., Chase Securities Inc.,
Nationsbanc Capital Markets, Inc. and Schroder Wertheim &
Co., Incorporated*
10.29 -- Shareholders' Voting Agreement, dated May 9, 1997, by and
among STC Broadcasting, Inc., WJAC Acquisition Corp. and
certain shareholders of WJAC, Incorporated*
10.30 -- Deposit Escrow Agreement, dated May 9, 1997, by and among
STC Broadcasting, Inc., WJAC Acquisition Corp., WJAC,
Incorporated and Mellon Bank, N.A.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges of STC
Broadcasting, Inc.*
21.1 -- Subsidiaries of STC Broadcasting, Inc.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in
Exhibit 5.1)+
23.2 -- Consent of Arthur Andersen LLP, independent auditors*
23.3 -- Consent of Deloitte & Touche LLP*
24.1 -- Power of Attorney (included in the signature pages in
Part II of this Registration Statement)*
25.1 -- Statement of Eligibility and Qualifications of U.S. Trust
Company of Texas, N.A., on Form T-1*
27.1 -- Financial Data Schedule*
99.1 -- Form of Letter of Transmittal*
99.2 -- Form of Notice of Guaranteed Delivery*
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by amendment
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
SMITH TELEVISION OF MICHIGAN, L.P.,
SMITH TELEVISION OF MICHIGAN LICENSE, L.P.,
SMITH TELEVISION OF ROCHESTER, L.P.,
SMITH TELEVISION OF ROCHESTER LICENSE, L.P.,
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.,
AND
SMITH TELEVISION OF SALINAS-MONTEREY LICENSE, L.P.
AS SELLERS
AND
STV ACQUISITION COMPANY
AS BUYER
DATED AS OF NOVEMBER 4, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND REFERENCES .................... 2
ARTICLE 2 SALE AND PURCHASE OF ASSETS; ESCROW DEPOSIT; 2
PURCHASE PRICE; AMOUNTS; ASSUMPTION OF LIABILITIES
2.1. Asset Sale and Purchase of Assets. ................ 2
2.1.1. FCC Licenses. .............................. 2
2.1.2. Real and Leased Property Interests. ........ 3
2.1.3. Tangible Personal Property. ................ 3
2.1.4. Intellectual Property. ..................... 3
2.1.5. Program Contracts. ......................... 3
2.1.6. Trade-out Agreements. ...................... 4
2.1.7. Broadcast Time Sales Agreement. ............ 4
2.1.8. Operating Contracts. ....................... 4
2.1.9. Prepaid Items. ............................. 4
2.1.10. Vehicles. ................................. 4
2.1.11. Files and Records. ........................ 4
2.1.12. Auxiliary Facilities. ..................... 5
2.1.13. Permits and Licenses. ..................... 5
2.1.14. Accounts Receivable. ...................... 5
2.1.15. Goodwill. ................................. 5
2.2. Excluded Assets. .................................. 5
2.2.1. Cash. ...................................... 5
2.2.2. Personal Property Disposed Of. ............. 5
2.2.3. Insurance. ................................. 5
2.2.4. Employee Plans and Assets. ................. 6
2.2.5. Right to Tax Refunds. ...................... 6
2.2.6. Certain Books and Records. ................. 6
2.2.7. Third-Party Claims. ........................ 6
2.2.8. Rights Under this Agreement. ............... 6
2.2.9. Interests in Licensees. .................... 7
2.2.10. Name. ..................................... 7
2.2.11. Excluded Contracts and Unrelated Assets. .. 7
2.3. Escrow Deposit. ................................... 7
2.4. Purchase Price. ................................... 7
2.5. Payment of Purchase Price. ........................ 8
2.6. Net Working Capital Amount. ....................... 8
2.7. Allocation of Purchase Price. ..................... 10
2.8. Assumption of Liabilities. ........................ 10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLER ...... 11
3.1. Organization and Standing. ........................ 11
3.2. Authorization. .................................... 11
3.3. Compliance with Laws. ............................. 11
3.4. Consents and Approvals; No Conflicts. ............. 12
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3.5. Financial Statements; Undisclosed Liabilities. ... 12
3.6. Absence of Certain Changes or Events. ............ 13
3.7. Absence of Litigation. ........................... 13
3.8. Assets. .......................................... 14
3.9. FCC Matters. ..................................... 14
3.10. Real Property. .................................. 14
3.11. Condition of Tangible Assets. ................... 15
3.12. Intellectual Property. .......................... 15
3.13. Reports and Records. ............................ 16
3.14. Station Contracts. .............................. 16
3.15. Taxes. .......................................... 16
3.16. Employee Benefit Plans. ......................... 17
3.17. Labor Relations. ................................ 18
3.18. Environmental Matters. .......................... 19
3.19. Transactions With Affiliates .................... 19
3.20. Insurance. ...................................... 20
3.21. Interpretation of Certain Provisions. ........... 20
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER ...... 20
4.1. Organization and Standing. ....................... 20
4.2. Authorization. ................................... 20
4.3. Compliance with Laws. ............................ 21
4.4. Consents and Approvals; No Conflicts. ............ 21
4.5. Availability of Funds. ........................... 21
4.6. Qualification of Buyer. .......................... 22
4.7. No Outside Reliance. ............................. 22
4.8. Interpretation of Certain Provisions. ............ 22
ARTICLE 5. PRE-CLOSING FILINGS .......................... 23
5.1. Applications for FCC Consent. .................... 23
5.2. Hart-Scott-Rodino. ............................... 23
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLER ........... 23
6.1. Negative Covenants. .............................. 23
6.1.1. Dispositions; Mergers. .................... 23
6.1.2. Accounting Principles and Practices. ...... 24
6.1.3. Trade-out Agreements. ..................... 24
6.1.4. Broadcast Time Sales Agreements. .......... 24
6.1.5. Network Affiliation Agreements and Local
Marketing Arrangements..................... 24
6.1.6. Additional Agreements. .................... 24
6.1.7. Breaches. ................................. 24
6.1.8. Employee Matters. ......................... 24
6.1.9. Actions Affecting FCC Licenses. ........... 25
6.1.10. Programming. ............................. 25
6.1.11. Affiliated Transactions. ................. 25
6.2. Affirmative Covenants. ........................... 25
6.2.1. Preserve Existence. ....................... 25
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6.2.2. Normal Operations. ........................ 25
6.2.3. Maintain FCC Licenses. .................... 26
6.2.4. Network Affiliation. ...................... 26
6.2.5. Station Contracts. ........................ 26
6.2.6. Taxes. .................................... 26
6.2.7. Partnership Action. ....................... 26
6.2.8. Access. ................................... 26
6.2.9. Insurance. ................................ 27
6.2.10. Financial Statements. .................... 27
6.3. Consents. ........................................ 27
6.4. Confidentiality. ................................. 27
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER ............ 28
7.1. Confidentiality. ................................. 28
7.2. Corporate Action. ................................ 29
7.3. Access. .......................................... 29
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER .......................... 30
8.1. Possession and Control. .......................... 30
8.2. Risk of Loss. .................................... 30
8.3. Public Announcements. ............................ 31
8.4. Employee Matters. ................................ 31
8.4.1. Transferred Employees. .................... 31
8.4.2 Vacation and Sick Leave. ................... 32
8.4.3 Severance Benefits. ........................ 32
8.4.4 Represented Employees. ..................... 32
8.4.5. COBRA Obligations. ........................ 33
8.4.6. Seller Benefits Plans. .................... 34
8.4.7. 401(k) Plans. ............................. 34
8.4.8. Employment Contracts. ..................... 34
8.5. Allocation of Purchase Price. .................... 34
8.6. Disclosure Schedules. ............................ 35
8.7. Bulk Sales Laws. ................................. 35
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO
CLOSE 35
9.1. Representations and Covenants. ................... 35
9.2. Required Consents. ............................... 36
9.3. Delivery of Documents. ........................... 36
9.4. FCC Order. ....................................... 36
9.5. Hart-Scott-Rodino. ............................... 36
9.6 Legal Proceedings. ............................... 36
9.7 WTOV Purchase Agreement. ......................... 36
ARTICLE 10. CONDITIONS PRECEDENT TO SELLERS'
OBLIGATION TO CLOSE.................................... 37
10.1. Representations and Covenants. .................. 37
10.2. Delivery by Buyer. .............................. 37
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TABLE OF CONTENTS (continued)
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10.3. FCC Order. ...................................... 37
10.4. Hart-Scott-Rodino. .............................. 37
10.5. Legal Proceedings. .............................. 37
10.6. WTOV Purchase Agreement. ........................ 38
ARTICLE 11. THE CLOSING ................................. 38
11.1. Closing. ........................................ 38
11.2. Delivery by Seller. ............................. 38
11.2.1. Agreements and Instruments ............... 38
11.2.2. Consents. ................................ 39
11.2.3. Certified Resolutions. ................... 39
11.2.4. Officers' Certificates. .................. 39
11.2.5. Organizational Documents. ................ 39
11.2.6. Deposit .................................. 39
11.3. Delivery by Buyer. .............................. 39
11.3.1. Purchase Price Payment. .................. 39
11.3.2. Agreements and Instruments. .............. 39
11.3.3. Certified Resolutions. ................... 40
11.3.4. Officers' Certificate. ................... 40
ARTICLE 12. SURVIVAL; INDEMNIFICATION ................... 40
12.1. Survival of Representations. .................... 40
12.2. Indemnification by Sellers. ..................... 41
12.3. Indemnification by Buyer. ....................... 41
12.4. Limitations on Indemnification .................. 42
12.5. Conditions of Indemnification. .................. 43
12.6. Cure of Breach .................................. 44
ARTICLE 13. TERMINATION ................................. 45
13.1. Termination ..................................... 45
13.2. Effect of Termination ........................... 46
ARTICLE 14. REMEDIES .................................... 47
14.1. Default by Buyer. ............................... 47
14.2. Final Order Delay by Buyer. ..................... 47
14.3. Default by Seller. .............................. 47
14.4. Liquidated Damages. ............................. 48
14.5. Specific Performance. ........................... 48
ARTICLE 15. GENERAL PROVISIONS .......................... 48
15.1. Additional Actions, Documents and Information. .. 48
15.2. Brokers. ........................................ 49
15.3. Expenses and Taxes. ............................. 49
15.4. Notices. ........................................ 49
15.5. Waiver. ......................................... 51
15.6. Benefit and Assignment. ......................... 51
15.7. Entire Agreement; Amendment. .................... 53
15.8. Severability. ................................... 53
15.9. Headings. ....................................... 53
15.10. Governing Law; Jurisdiction. ................... 53
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15.11. Signature in Counterparts. ..................... 54
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SCHEDULES
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Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.4 Intellectual Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Operating Contracts
Schedule 2.1.9 Deposits; Prepaid Expenses
Schedule 2.1.10 Vehicles
Schedule 2.2.11 Excluded Contracts and Unrelated Assets
Schedule 2.6.2 Pro Forma Calculation of Net Working Capital Amount
Schedule 3.4.1 Consents
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.10 Encumbrances on Real Property and Leasehold Interests
Schedule 3.11 Condition of Tangible Assets
Schedule 3.12.1 Consents for Intellectual Property Transfer
Schedule 3.16 Employee Benefit Plans
Schedule 3.17.1 Collective Bargaining Agreements
Schedule 3.18 Environmental Matters
Schedule 3.19 Transactions with Affiliates
Schedule 3.20 Insurance
Schedule 6.1.8 Employee Matters
Schedule 9.2 Required Consents and Approvals
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EXHIBITS
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EXHIBIT A Form of Deposit Escrow Agreement
EXHIBIT B Form of Indemnity Escrow Agreement
EXHIBIT D Form of Bill of Sale and Assignment of Assets
EXHIBIT D Form of Assignment of FCC Licenses
EXHIBIT E Form of Assignment of Contracts and Leases
EXHIBIT F Form of Assumption Agreement
EXHIBIT G Forms of Special or Limited Warranty Deeds
EXHIBIT H Form of Transfer Tax Documents
</TABLE>
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<PAGE> 9
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of this
4th day of November, 1996 by and among SMITH TELEVISION OF MICHIGAN, L.P., a
Delaware limited partnership ("Smith Michigan"), SMITH TELEVISION OF MICHIGAN
LICENSE, L.P., a Delaware limited partnership ("Michigan Licensee"), SMITH
TELEVISION OF ROCHESTER, L.P., a Delaware limited partnership ("Smith
Rochester"), SMITH TELEVISION OF ROCHESTER LICENSE, L.P., a Delaware limited
partnership ("Rochester Licensee"), SMITH TELEVISION OF SALINAS-MONTEREY, L.P.,
a Delaware limited partnership ("Smith Salinas-Monterey"), and SMITH TELEVISION
OF SALINAS-MONTEREY LICENSE, L.P., a Delaware limited partnership
("Salinas-Monterey Licensee") (each of the foregoing entities shall be referred
to herein individually as a "Seller" and collectively as the "Sellers") and STV
ACQUISITION COMPANY, a Delaware corporation ("Buyer").
WHEREAS, Michigan Licensee is the licensee of television broadcast station
WEYI, Channel 25, Saginaw, Michigan ("WEYI") pursuant to certain authorizations
issued by the FCC and Smith Michigan operates WEYI and owns or leases certain
assets used in connection with the operation of WEYI;
WHEREAS, Rochester Licensee is the licensee of television broadcast
station WROC-TV, Channel 8, Rochester, New York ("WROC") pursuant to certain
authorizations issued by the FCC and Smith Rochester operates WROC and owns and
leases certain assets used in connection with the operation of WROC;
WHEREAS, Salinas-Monterey Licensee is the licensee of television broadcast
station KSBW, Channel 8, Salinas, California ("KSBW") pursuant to certain
authorizations issued by the FCC and Smith Salinas-Monterey operates KSBW and
owns or leases certain assets used in connection with the operation of KSBW;
WHEREAS, Smith Michigan, Michigan Licensee, Smith Rochester, Rochester
Licensee, Smith Salinas-Monterey, and Salinas-Monterey Licensee desire to sell,
assign and transfer the FCC authorizations for WEYI, WROC, and KSBW
(individually, a "Station" and collectively, the "Stations"), the Stations and
the assets and businesses of the Stations as described below, and Buyer desires
to acquire the Stations, the FCC authorizations for the Stations, and the
assets and businesses of the Stations as described below, all on the terms
described in this Agreement.
<PAGE> 10
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and
incorporated herein for all purposes of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise specified, all references herein to "Articles" or "Sections"
are to Articles or Sections of this Agreement.
ARTICLE 2
SALE AND PURCHASE OF ASSETS; ESCROW DEPOSIT;
PURCHASE PRICE; AMOUNTS; ASSUMPTION OF LIABILITIES
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, upon the Closing,
each Seller shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer shall purchase, acquire, pay for and accept from each Seller, all of each
Seller's right, title and interest in, to and under all real, personal and
mixed assets, rights, benefits and privileges, both tangible and intangible,
wheresoever located, owned, leased or used by each Seller in connection with
the business and operations of the Stations (collectively, the "Assets"); but
excluding the Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all of each Seller's
right, title and interest in, to and under the following:
2.1.1. FCC LICENSES.
All licenses, permits and other authorizations issued by the
FCC to any Seller for the operation of the Stations (the "FCC Licenses"),
including without limitation those listed in Schedule 2.1.1, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto.
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2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property owned by any Seller including,
without limitation, all land, fee interests, easements and other interests of
every kind and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon owned by any
Seller ("Real Property"), all of which are listed or described in Schedule
2.1.2.
(b) All the real property leasehold interests of any Seller
including, without limitation, leases and subleases of any land, easements and
other real property leasehold interests of every kind and description in real
property, buildings, structures, fixtures, appurtenances, towers and antennae,
and other improvements thereon leased by any Seller in connection with the
business and operations of the Stations ("Leased Property"), all of which are
listed or described in Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings, machinery,
computers, equipment, inventory, spare parts, supplies, office materials and
other tangible property of every kind and description maintained, owned, leased
or used by any Seller in connection with the business and operations of the
Stations, together with any replacements thereof and additions thereto made
before the Closing, and less any retirements or dispositions thereof made
before the Closing in the Ordinary Course of Business, including, without
limitation, those items which have a book value in excess of $10,000 and which
are set forth and identified in Schedule 2.1.3.
2.1.4. INTELLECTUAL PROPERTY.
All of the service marks, copyrights, franchises, trademarks, trade
names, jingles, slogans, logotypes and other intangible assets maintained,
owned or used by any Seller in connection with the business and operations of
the Stations (including any and all applications, registrations, extensions and
renewals relating thereto) (the "Intellectual Property"), and all of the
rights, benefits and privileges associated therewith including, without
limitation, those set forth and identified in Schedule 2.1.4 and the right to
use the call letters for the Stations and the right to sue for past
infringement of Intellectual Property to the extent necessary to enforce
Buyer's rights to such Intellectual Property.
2.1.5. PROGRAM CONTRACTS.
The program licenses and contracts under which any Seller is
authorized to broadcast programs on the Stations, all of which are listed on
Schedule 2.1.5, including without limitation, (a) all program (cash and
non-cash) licenses and contracts, and (b) any other such program contracts that
are entered
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into between the date of this Agreement and the Closing Date in accordance with
the terms of this Agreement (collectively the "Program Contracts").
2.1.6. TRADE-OUT AGREEMENTS.
All contracts and agreements (excluding Program Contracts)
pursuant to which any Seller has sold, traded or bartered commercial air time
on the Stations in consideration for any property or services in lieu of or in
addition to cash, which are set forth and described in Schedule 2.1.6
(collectively, the "Trade-out Agreements").
2.1.7. BROADCAST TIME SALES AGREEMENT.
All contracts and agreements pursuant to which any Seller
has sold commercial air time on the Stations for cash (collectively the "Time
Sales Agreements").
2.1.8. OPERATING CONTRACTS.
The other contracts and agreements listed on Schedule 2.1.8
(including, without limitation, employment agreements and talent contracts,
collective bargaining agreements, network affiliation agreements and national
and local advertising representation agreements for the Stations), together
with all contracts and agreements that will be entered into between the date of
this Agreement and the Closing Date in accordance with the terms of this
Agreement (collectively, the "Operating Contracts" and together with the
Program Contracts, and the Trade-out Agreements and the Time Sales Agreements,
the "Station Contracts").
2.1.9. PREPAID ITEMS.
All deposits and prepaid expenses of the Stations, including,
without limitation, those set forth and described in Schedule 2.1.9.
2.1.10. VEHICLES.
All automotive equipment and motor vehicles maintained,
owned, leased or otherwise used by any Seller in connection with the business
and operations of the Stations, including, without limitation, those set forth
and described in Schedule 2.1.10.
2.1.11. FILES AND RECORDS.
All engineering, business and other books, papers, logs,
files and records pertaining to the business and operations of the Stations, but
not the organizational documents and records or other partnership records of any
Seller.
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2.1.12. AUXILIARY FACILITIES.
All translators, earth stations, and other auxiliary
facilities, and all applications therefor owned, leased or otherwise used by
any Seller in connection with the business and operations of the Stations.
2.1.13. PERMITS AND LICENSES.
All permits, approvals, orders, authorizations, consents,
licenses, certificates, franchises, exemptions of, or filings or registrations
with, any court or Governmental Authority (other than the FCC) in any
jurisdiction, which have been issued or granted to or are owned or used by any
Seller in connection with the business and operations of the Stations and all
pending applications therefor.
2.1.14. ACCOUNTS RECEIVABLE.
All Accounts Receivable arising out of the business and
operations of the Stations.
2.1.15. GOODWILL.
The business of the Stations as a "going concern," customer
relationships and goodwill.
2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement, there
shall be excluded from the Assets and retained by Sellers, to the extent in
existence as of the Closing Date, the following assets (collectively, the
"Excluded Assets"):
2.2.1. CASH.
All cash and cash equivalents held by any Seller, all
interest payable in connection with any such cash, cash equivalents or short
term investments, bank balances and rights in and to bank accounts, marketable
and other securities of any Seller.
2.2.2. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or consumed in the
Ordinary Course of Business as permitted by this Agreement.
2.2.3. INSURANCE.
All contracts of insurance and all insurance plans and the
assets thereof; provided, however, in the event of any loss or damage by fire or
other
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<PAGE> 14
casualty or other cause occurring prior to the Closing Date, insurance proceeds
received by any Seller with respect to such loss or damage shall belong to and
be paid over to the Buyer to the extent that such proceeds have not been used
to restore, replace or repair such damaged Assets, provided, further, upon the
receipt by Buyer of such insurance proceeds , Sellers shall have no further
liability to Buyer to the extent of the insurance proceeds received by Buyer
for any such loss or damage (pursuant to the indemnification provisions of this
Agreement or otherwise).
2.2.4. EMPLOYEE PLANS AND ASSETS.
All Plans, Benefit Arrangements, Qualified Plans and Welfare
Plans and the assets thereof.
2.2.5. RIGHT TO TAX REFUNDS.
Any and all claims of any Seller with respect to any Tax
refunds.
2.2.6. CERTAIN BOOKS AND RECORDS.
All of each (a) Seller's organizational documents and other
partnership records, and originals of account books of original entry, (b)
duplicated copies of any books, records, accounts, checks, payment records, Tax
records (including payroll, unemployment, real estate and other Tax records) and
other similar books, records and information of any Seller relating to such
Seller's operation of the business of the Stations prior to the Closing, (c) all
records prepared by or on behalf of Sellers in connection with the sale of the
Stations, and (d) all records and documents relating to any Excluded Assets.
2.2.7. THIRD-PARTY CLAIMS.
All rights and claims of any Seller whether mature,
contingent or otherwise, against third parties relating to the business and
operations of the Stations during the period prior to the Closing, whether in
tort, contract, or otherwise, except for rights and claims relating to past
infringement of Intellectual Property to the extent necessary to enforce Buyer's
rights to such Intellectual Property.
2.2.8. RIGHTS UNDER THIS AGREEMENT.
All of each Seller's rights under or pursuant to this
Agreement or any other rights in favor of Sellers pursuant to the other
agreements contemplated hereby.
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2.2.9. INTERESTS IN LICENSEES.
All of the following general partnership interests: (a) the
general partnership interest of Smith Michigan in Michigan Licensee, (b) the
general partnership interest of Smith Rochester in Rochester Licensee, and (c)
the general partnership interest of Smith Salinas-Monterey in Salinas-Monterey
Licensee.
2.2.10. NAME.
All rights to the name "Smith Television," "Smith
Broadcasting" or "Jupiter/Smith" or any logo or variation thereof and the
goodwill associated therewith.
2.2.11. EXCLUDED CONTRACTS AND UNRELATED ASSETS.
The contracts, agreements and any other assets listed on
Schedule 2.2.11.
2.3. ESCROW DEPOSIT.
For and in partial consideration of the execution and delivery of
this Agreement, simultaneously with the execution and delivery of this Agreement
and the WTOV Purchase Agreement, Buyer and the WTOV Buyer are jointly depositing
in escrow with the Deposit Escrow Agent an original, irrevocable letter of
credit (the "Letter of Credit") issued for the joint benefit of Sellers and the
WTOV Seller by Chase Manhattan Bank, N.A. for an amount equal to Seven Million
Eight Hundred Fifty Thousand Dollars ($7,850,000), such Letter of Credit to be
held as an earnest money deposit (the "Deposit"), in accordance with the terms
and conditions of the Deposit Escrow Agreement.
2.4. PURCHASE PRICE.
For and in consideration of the conveyances and assignments described
herein and in addition to the assumption of Liabilities as set forth in Section
2.8, Buyer agrees to pay to Sellers, and Sellers agree to accept from Buyer, an
amount equal to ONE HUNDRED TWENTY-EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS
($128,500,000) (the "Base Purchase Price"), plus or minus (as the case may be)
the Net Working Capital Amount as provided for in Section 2.6 (collectively,
the "Purchase Price"). The Purchase Price shall be payable as described in
Section 2.5. The Purchase Price shall be allocated among the Assets in
accordance with Section 8.5.
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2.5. PAYMENT OF PURCHASE PRICE.
The Purchase Price shall be payable to Sellers at the Closing as
follows:
2.5.1. Buyer shall deliver an amount equal to One Million Five
Hundred Thousand Dollars ($1,500,000) (the "Three-Station Indemnity Escrow
Amount") to the Indemnity Escrow Agent by wire transfer of immediately
available federal funds to an account identified in writing by the Indemnity
Escrow Agent. The Three-Station Indemnity Escrow Amount, together with the
WTOV Indemnity Escrow Amount delivered pursuant to the WTOV Purchase Agreement
(collectively, the "Indemnity Escrow Amount") shall be held by the Indemnity
Escrow Agent in accordance with the terms and conditions of the Indemnity
Escrow Agreement. After the Closing Date, in the event that Buyer has any
Losses pursuant to Section 12 hereof, such Losses shall be paid from the
Indemnity Escrow Amount. On the date that is one year after the Closing Date,
the Indemnity Escrow Agent shall deliver to Sellers and the WTOV Seller any
remaining Indemnity Escrow Amount (to the extent not subject to any pending
claims) pursuant to the terms of the Indemnity Escrow Agreement.
2.5.2. Buyer shall deliver the balance of the Purchase Price by wire
transfer of immediately available federal funds to an account which will be
identified by Sellers not less than two (2) days prior to the Closing Date.
2.6. NET WORKING CAPITAL AMOUNT.
2.6.1. ESTIMATED NET WORKING CAPITAL AMOUNT. At least three (3) days
prior to the Closing Date, Sellers shall deliver to Buyer in writing and in
reasonable detail a good faith estimate of the Net Working Capital (the
"Estimated Net Working Capital") as of the Closing Date. The Purchase Price
shall be (a) increased by the amount, if any, by which the Estimated Net
Working Capital exceeds zero dollars ($0), or (b) decreased by the amount, if
any, by which the Estimated Net Working Capital is less than zero dollars ($0)
(such increase or decrease, as the case may be, is referred to herein as the
"Estimated Net Working Capital Amount").
2.6.2. FINAL NET WORKING CAPITAL AMOUNT. Within forty-five (45) days
after the Closing Date, Buyer shall deliver to Sellers in writing and in
reasonable detail a good faith determination of the Net Working Capital as of
the Closing Date ("Final Net Working Capital Amount"). Sellers shall assist
Buyer in making such determination and Buyer shall provide Sellers with
reasonable access to the properties, books and records relating to the Stations
for the purpose of determining the Final Net Working Capital Amount. Sellers
shall have the right to review the computations and workpapers used in
connection with Buyer's calculation of the Final Net Working Capital Amount.
If Sellers disagree with the
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amount of the Final Net Working Capital Amount determined by Buyer, Sellers
shall so notify Buyer in writing within twenty-five (25) days after the date of
receipt of Buyer's Final Net Working Capital Amount, specifying in detail any
point of disagreement; provided, however, if Sellers fail to notify Buyer in
writing of Sellers' disagreement within such twenty-five (25) day period,
Buyer's determination of the Final Net Working Capital Amount shall be final,
conclusive and binding on Sellers and Buyer. After the receipt of any notice
of disagreement, Buyer and Sellers shall negotiate in good faith to resolve any
disagreements regarding the Final Net Working Capital Amount. If any such
disagreement cannot be resolved by Sellers and Buyer within twenty-five (25)
days after Buyer has received notice from Sellers of the existence of such
disagreement, Buyer and Sellers shall jointly retain the accounting firm of
Ernst & Young LLP or another nationally recognized public accounting firm (the
"Accounting Firm") to review the Buyer's determination of the Final Net Working
Capital Amount and to resolve as soon as possible all points of disagreement
raised by Sellers. All determinations made by the Accounting Firm with respect
to the Final Net Working Capital Amount shall be final, conclusive and binding
on Buyer and Sellers. The fees and expenses of the Accounting Firm incurred in
connection with any such determination shall be shared one-half by Buyer and
one-half by Sellers.
Subject to the ultimate resolution of any disagreement with respect to the
calculation of the Final Net Working Capital Amount, if the Final Net Working
Capital Amount is such that Buyer's payment of the Estimated Net Working
Capital Amount is an underpayment to Sellers for the actual Net Working
Capital, then Buyer shall pay Sellers in cash an amount equal to such
underpayment within two (2) business days following the final determination of
the Final Net Working Capital Amount. Subject to the ultimate resolution of
any disagreement with respect to the calculation of the Final Net Working
Capital Amount, if the Final Net Working Capital Amount is such that Buyer's
payment of the Estimated Net Working Capital Amount is an overpayment to
Sellers for the actual Net Working Capital, then Sellers shall pay Buyer in
cash an amount equal to such overpayment within two (2) business days following
the determination of the Final Net Working Capital Amount. Any amounts paid
pursuant to this Section 2.6.2 shall be by wire transfer of immediately
available funds for credit to the recipient at a bank account identified by
such recipient in writing.
Buyer and Sellers agree that prior to the date of the final determination
of the Final Net Working Capital Amount pursuant to this Section 2.6.2 (by the
Accounting Firm or otherwise), neither party will destroy any records
pertaining to, or necessary for, the final determination of the Final Net
Working Capital Amount.
Schedule 2.6.2 contains a pro forma calculation of the Net Working Capital
Amount for the Jupiter/Smith Stations based on financial statements referred to
in Section 3.5.1 hereof as if the Closing occurred as of September 30,
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<PAGE> 18
1996. Schedule 2.6.2 is attached hereto solely for the purpose of
demonstrating by example the manner in which the Net Working Capital Amount for
the Jupiter/Smith Stations shall be calculated as of the Closing Date.
2.7. ALLOCATION OF PURCHASE PRICE.
Sellers and Buyer agree to allocate the Base Purchase Price among
the Stations for all purposes (including financial, accounting and Tax
purposes) as follows:
<TABLE>
<S> <C> <C>
(a) WEYI $36,500,000
(b) WROC $47,000,000
(c) KSBW $45,000,000
</TABLE>
The Purchase Price shall be allocated among classes of Assets as provided for
in Section 8.5.
2.8. ASSUMPTION OF LIABILITIES.
2.8.1. At the Closing, the Buyer shall assume, and shall agree to
pay, perform and discharge and shall agree to indemnify and hold Sellers
harmless from (a) all Liabilities arising after and relating to the period
after the Closing Date under the Station Contracts and the FCC Licenses, (b)
all Liabilities arising out of events occurring after the Closing Date related
to the businesses or operations of the Stations or Buyer's ownership of the
Assets, (c) all Liabilities for which Buyer receives an adjustment to the Base
Purchase Price in connection with the calculation of the Final Net Working
Capital Amount to the extent of the amount of such adjustment as reflected in
the Final Net Working Capital Amount, and (d) all Liabilities of Sellers to
employees of the Stations to be assumed by Buyer in accordance with Section 8.4
hereof.
2.8.2. Except for the Liabilities expressly assumed by Buyer as set
forth in Section 2.8.1 hereof, Buyer assumes no other Liabilities of any kind or
description.
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<PAGE> 19
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLER
Each Seller with respect to the Station and Assets owned by such
Seller represents and warrants to Buyer as follows:
3.1. ORGANIZATION AND STANDING.
Each Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified to do business as a foreign limited partnership and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. Seller has
the full partnership power and authority to own, lease and otherwise to hold
and operate the Assets, to carry on the business of the Stations as now
conducted, and to enter into and perform the terms of this Agreement, the other
Seller Documents and the transactions contemplated hereby and thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of
the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action of the partners of Seller and by any other necessary limited
partnership actions of Seller (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This
Agreement and the Deposit Escrow Agreement constitute, and upon execution and
delivery each other Seller Document will constitute, valid and binding
agreements and obligations of Seller, enforceable against Seller in accordance
with their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
3.3. COMPLIANCE WITH LAWS.
Seller is in compliance in all material respects with all Laws
applicable to Seller, to the Assets, to the Stations and to its respective
businesses and operations. Seller has obtained and holds all permits, licenses
and approvals (none of which has been modified or rescinded and all of which are
in full force and effect) from all Governmental Authorities necessary in order
to conduct the operations of the Stations as presently conducted, except for
such permits, licenses and approvals for which the failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect.
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<PAGE> 20
3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person in connection with any material Station Contract,
except that certain of the Station Contracts may be assigned only with the
consent of third parties, as specified in Schedule 3.4.1.
3.4.2 The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority where the failure to make such
filing or obtain such consent will have a Material Adverse Effect, except as
follows: (a) filings required under Hart-Scott-Rodino, (b) consents to the
assignment of the FCC Licenses to Buyer by the FCC, and (c) filings, if any,
with respect to real estate transfer taxes.
3.4.3. Assuming all consents, approvals, authorizations and other
actions described in Section 3.4.1 and Section 3.4.2 have been obtained and all
filings and notifications described in Section 3.4.1 and Section 3.4.2 have been
made, the execution, delivery and performance of this Agreement and the other
Seller Documents by Seller do not and will not (a) conflict with or violate any
Law applicable to Seller, the Assets or the Stations or by which any of the
Assets or the Stations is subject or affected, (b) conflict with or result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under any contract or agreement to which
Seller is a party or by which Seller is bound or to which any of the Assets or
the Stations is subject or affected, (c) result in the creation of any
Encumbrance upon the Assets, or (d) conflict with or violate the organizational
documents of Seller; except where any such conflict, violation or breach would
not, individually or in the aggregate, have a Material Adverse Effect.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
3.5.1. Seller has provided to Buyer unaudited balance sheets of the
Jupiter/Smith Stations as of September 30, 1996 and the unaudited statements of
income and cash flow for the nine month period ended September 30, 1996. The
financial statements referred to in this Section 3.5.1 (a) present fairly in
all material respects the financial condition of the Jupiter/Smith Stations as
of the respective dates and the results of operations and cash flows for the
respective periods indicated, and (b) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
that the financial statements referred to in this Section 3.5.1 (x) do not
contain all footnotes required under generally accepted accounting principles
and (y) are subject to (i) normal year-end audit adjustments and (ii)
adjustments in connection with the
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<PAGE> 21
resolution of outstanding working capital matters with previous owners of the
Jupiter/Smith Stations, none of which, individually or in the aggregate, is
material).
3.5.2. There exist no Liabilities of any of the Stations relating to,
or arising out of, the business or operations of the Stations, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on the
unaudited balance sheets as of September 30, 1996 (the "Current Balance Sheet
Date") referred to in Section 3.5.1 and (b) for Liabilities that were incurred
after the Current Balance Sheet Date in the Ordinary Course of Business.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth and described in Schedule 3.6, since the Current
Balance Sheet Date, there has been no Material Adverse Effect (or event that
reasonably could be expected to have a Material Adverse Effect). Since the
Current Balance Sheet Date, Seller has conducted the business of the Stations
in the Ordinary Course of Business, and Seller has not (a) incurred loss of, or
injury to, any of the Assets as the result of any fire, explosion, flood,
windstorm, earthquake, labor trouble, riot, accident, act of God or public
enemy or armed forces, or other casualty, except for such losses or injuries
which have been cured in accordance with Section 8.2; (b) incurred, or become
subject to, any Liability, except current Liabilities incurred in the Ordinary
Course of Business; (c) discharged or satisfied any Encumbrance or paid any
Liability other than current Liabilities shown in the balance sheets furnished
pursuant to Section 3.5, current Liabilities incurred since the Current Balance
Sheet Date in the Ordinary Course of Business, and Liabilities (including,
without limitation, partial and complete prepayments) arising under any credit
or loan agreement between Seller and its lenders; (d) mortgaged, pledged or
subjected to any Encumbrance any of its Assets other than Encumbrances in
connection with Liabilities arising under any credit or loan agreement between
Seller and its lenders; (e) sold, exchanged, transferred or otherwise disposed
of any of its Assets, or canceled any debts or claims; (f) written down the
value of any Assets or written off as uncollectible any Accounts Receivable,
except write-downs and write-offs in the Ordinary Course of Business; (g)
entered into any transactions other than in the Ordinary Course of Business;
(h) made any material change in any method of accounting or accounting
practice; or (i) made any agreement to do any of the foregoing.
3.7. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.7 as of the date hereof, there is
no action, suit, investigation, claim, arbitration or litigation pending or, to
Seller's knowledge, threatened against Seller, the Assets, or the Stations by
or before any Governmental Authority that, individually or in the aggregate,
would be reasonably
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<PAGE> 22
likely to (a) have a Material Adverse Effect, or (b)
challenge or seek to prevent, enjoin, alter or materially delay the transaction
contemplated hereby.
3.8. ASSETS.
Except for the Excluded Assets, the Assets include all of the assets
or property used in the business of the Stations as presently operated. Except
for leased or licensed Assets, Seller is the owner of, and has good title to,
the Assets free and clear of any Encumbrances, except for and subject only to
(a) the Permitted Encumbrances, and (b) those Encumbrances listed in Schedule
3.8 which shall be discharged and removed on or prior to the Closing Date. At
the Closing, Buyer shall acquire good title to, and all right, title and
interest in and to the Assets, free and clear of all Encumbrances, except for
the Permitted Encumbrances.
3.9. FCC MATTERS.
Seller holds the FCC Licenses listed as held by Seller on Schedule
2.1.1. The FCC Licenses constitute all of the licenses, permits and
authorizations from the FCC that are required for the business and operations of
the Stations. The FCC Licenses are valid and in full force and effect through
the dates set forth on Schedule 2.1.1, unimpaired by any condition which would
reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect. The Stations have been operated by Sellers in all material
respects in accordance with the terms of the FCC Licenses. Except as set forth
on Schedule 3.9, no application, action or proceeding is pending for the renewal
or modification of any of the FCC Licenses, and, except for actions or
proceedings affecting television broadcast stations generally, no application,
complaint, action or proceeding is pending or, to Seller's knowledge, threatened
that may result in the (a) the revocation, modification, non-renewal or
suspension of any of the FCC Licenses, (b) the issuance of a cease-and-desist
order, or (c) the imposition of any administrative or judicial sanction with
respect to the Stations. Seller has no knowledge of any facts, conditions or
events relating to Seller or the Stations including, without limitation,
Seller's compliance with the Children's Television Act, that would reasonably be
expected to cause the FCC to deny the assignment of the FCC Licenses as provided
for in this Agreement. Seller has filed with the FCC all reports, forms and
statements required by the FCC to be filed by Seller relating to the Stations,
including, without limitation, applications for renewal of authority required by
applicable Laws.
3.10. REAL PROPERTY.
3.10.1. Seller has good and marketable title to the Real Property
listed in Schedule 2.1.2, free and clear of all Encumbrances, except for (a)
those items listed in Schedule 3.10, and (b) Permitted Encumbrances.
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<PAGE> 23
3.10.2. Seller has a valid leasehold interest in all Leased Property
listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists all leases
and subleases pursuant to which any of the Leased Property is leased by Seller.
Seller is the owner and holder of all the Leased Property purported to be
granted by such leases and subleases. Each such lease and sublease is in full
force and effect and constitutes a legal, valid and binding obligation of, and
is legally enforceable against Seller and to the knowledge of Seller, each
other party thereto and grants the leasehold interest it purports to grant.
Seller has complied with all of the material provisions of such leases and
subleases and is not in default thereunder in any material respect, and to
Seller's knowledge, there has not occurred any event which (whether with or
without notice, lapse of time or the happening or occurrence of any other
event) would constitute such a default.
3.10.3 The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased or used by
Seller in the business and operations of the Stations.
3.10.4. All buildings, structures, fixtures and other improvements
on the Real Property are in operating condition and adequate repair (ordinary
wear and tear excepted) for the purposes to which they are currently devoted.
3.10.5. To the knowledge of Seller, no portion of the Real Property
or any building, structure, fixture or improvement thereon is the subject of, or
affected by, any condemnation, eminent domain or inverse condemnation proceeding
currently instituted or pending.
3.10.6. Seller has delivered to Buyer copies of title policies and
surveys prepared in connection with Seller's acquisition of the Real Property.
3.11. CONDITION OF TANGIBLE ASSETS.
Except as set forth on Schedule 3.11, all tangible Assets presently
in use are in operating condition and adequate repair (ordinary wear and tear
excepted) for the purposes to which they are currently devoted.
3.12. INTELLECTUAL PROPERTY.
Schedule 2.1.4 contains a true, correct and complete listing of all
Intellectual Property owned or licensed by or registered in the name of Seller
which is used in the business and operations of the Stations, all of which is
transferable to Buyer by the sole act and deed of Seller; and except as set
forth in Schedule 3.12.1 no consent on the part of any other person is
necessary to validate the transfer to Buyer of such Intellectual Property.
Seller pays no royalty to anyone with respect to the Intellectual Property.
Seller owns or possesses all rights to use all such Intellectual Property
material to the conduct of the business of the Stations. Seller
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<PAGE> 24
does not have any knowledge and Seller has not received any notice to the
effect that any service rendered by Seller relating to the business of the
Stations may infringe on any Intellectual Property right or other legally
protectable right of another. Seller has the right to the use of the call
letters "WEYI", "WROC-TV," or "KSBW" (as applicable) pursuant to the rules and
regulations of the FCC.
3.13. REPORTS AND RECORDS.
All material returns, reports and statements relating to the
Stations required to be filed by Seller with the FCC or any other Governmental
Authority have been filed and when filed were correct and complete in all
material respects. All such reports, returns and statements shall continue to
be filed on a current basis until the Closing Date, and will be correct and
complete in all material respects when filed. All documents required by the
FCC's rules to be placed in the Stations' public files by Seller have been
placed and are being held in such files. All logs and business records of every
type and nature relating to the business and operations of the Stations have
been maintained in all material respects in accordance with the rules and
regulations of the FCC.
3.14. STATION CONTRACTS.
The Station Contracts set forth in Schedules 2.1.5, 2.1.6 and
2.1.8 are all of the contracts and agreements relating to the Assets, to the
Stations or to the business and operations thereof, other than (a) Time Sales
Agreements; (b) contracts and agreements which are terminable on no more than
sixty (60) days notice without the payment of a premium or penalty; and (c)
contracts and agreements which do not require payments of more than $10,000 per
contract per year or $150,000 per year in the aggregate per Station. Complete
and correct copies of all such Station Contracts have been made available to
Buyer and (a) each such Station Contract is in full force and effect; (b) Seller
is not in breach or default of the terms of any Station Contract in any material
respect; (c) none of the material rights of Seller under any such Station
Contract will be subject to termination or modification, nor will a default
occur, as a result of the consummation of the transactions contemplated hereby,
except to the extent that failure to obtain the prior consent to assignment
thereof (to the extent set forth on Schedule 3.4.1) of any party thereto shall
or could be interpreted to constitute a termination or modification of or a
default under any such Station Contract, and (d) to the knowledge of Seller, no
other party to any such Station Contract is in material breach or default of the
terms thereunder.
3.15. TAXES.
3.15.1. Seller has (or, in the case of returns becoming due after
the date hereof and on or before the Closing Date, will have prior to the
Closing Date)
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<PAGE> 25
duly filed all Seller Tax Returns required to be filed by Seller on or before
the Closing Date with respect to all applicable Taxes. In the case of any
Seller Tax Returns which receive an extension for their date of filing, such
Seller Tax Returns will be considered due on, and not considered required to be
filed before, the extended due date. To the Seller's knowledge, all of Seller
Tax Returns are (or, in the case of returns becoming due after the date hereof
and on or before the Closing Date, will be) true and complete in all material
respects. Seller: (a) has paid all Taxes due to any Governmental Authority in
connection with any of Seller Tax Returns; or (b) has established (or, in the
case of amounts becoming due after the date hereof, prior to the Closing Date
will have established) adequate reserves (in conformity with generally accepted
accounting principles consistently applied) for the payment of such Taxes.
3.15.2. There is no action, suit, proceeding, audit, investigation
or claim pending or, to the knowledge of Seller, threatened in respect of any
Taxes associated with, or which would become a lien against, the Assets or
operations of the Stations for which Seller may become liable, nor has any
deficiency or claim for any such Taxes been proposed, asserted or, to the
knowledge of Seller, threatened. There is no Station Contract, waiver or
consent providing for an extension of time with respect to the assessment or
collection of any Taxes associated with, or which would become a lien against,
the Assets or operations of the Stations against Seller, and no power of
attorney granted by Seller with respect to any related tax matters is currently
in force.
3.16. EMPLOYEE BENEFIT PLANS.
3.16.1. Schedule 3.16 lists all Plans and Benefit Arrangements
maintained by or contributed to by Smith Broadcasting Group, Inc. ("SBG") for
the benefit of the employees of the Stations (collectively, the "Benefit
Plans"). Each Benefit Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by applicable Law, including,
without limitation, ERISA and the Code.
3.16.2. Schedule 3.16 sets forth a list of all Qualified Plans. All
Qualified Plans and any related trust agreements or annuity agreements (or any
other funding document) have been maintained in compliance with ERISA and the
Code (including, without limitation, the requirements for Tax qualification
described in Section 401 thereof). The trusts established under such Plans are
exempt from federal income taxes under Section 501(a) of the Code.
3.16.3. Schedule 3.16 lists all funded Welfare Plans that provide
benefits to current or former employees of Seller or its beneficiaries. The
funding under each Welfare Plan does not exceed and has not exceeded the
limitations under Sections 419A(b) and 419A(c) of the Code. Neither SBG nor
Seller is subject
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<PAGE> 26
to taxation on the income of any Welfare Plan's welfare
benefit fund (as such term is defined in Section 419(e) of the Code) under
Section 419A(g) of the Code.
3.16.4. Except as required by applicable Law, neither SBG nor
Seller has any post-retirement medical, life insurance or other benefits
promised, provided or otherwise due now or in the future to current, former or
retired employees of Seller.
3.16.5. Except as set forth in Schedule 3.16, SBG has (a) filed or
caused to be filed all returns and reports on the Plans that it is required to
file and (b) paid or made adequate provision for all fees, interest, penalties,
assessments or deficiencies that have become due pursuant to those returns or
reports or pursuant to any assessment or adjustment that has been made relating
to those returns or reports. All other fees, interest, penalties and
assessments that are payable by or for SBG and/or Seller have been timely
reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from SBG and/or Seller or from any other person that
are or could become an Encumbrance on any Asset or could otherwise adversely
affect the businesses or Assets. SBG has collected or withheld all amounts that
are required to be collected or withheld by it to discharge its obligations, and
all of those amounts have been paid to the appropriate Governmental Authority or
set aside in appropriate accounts for future payment when due. SBG has
furnished to Buyer true and complete copies of all documents setting forth the
terms and funding of each Plan (including, without limitation, copies of each
severance benefit arrangement and vacation pay plan).
3.17. LABOR RELATIONS.
3.17.1. Except as set forth in Schedule 3.17.1, there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending or threatened between Seller and any union or
collective bargaining unit representing such employees. Seller is in compliance
in all material respects with all Laws relating to the employment or the
workplace, including, without limitation, provisions relating to wages, hours,
collective bargaining, safety and health, work authorization, equal employment
opportunity, immigration and the withholding of income taxes, unemployment
compensation, worker's compensation, employee privacy and right to know and
social security contributions. Except as set forth in Schedule 3.17.1 hereto,
there are no collective bargaining agreements relating to the Stations or the
business and operations thereof and Seller has not agreed to recognize any union
or other collective bargaining unit, nor has any union or collective bargaining
unit been certified as representing any of Seller's employees.
3.17.2. Seller has provided to Buyer a true and complete list dated
as of August 1, 1996 of all employees of Seller who perform significant services
at the Stations.
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<PAGE> 27
3.18. ENVIRONMENTAL MATTERS.
3.18.1 Schedule 3.18 sets forth all environmental reports and
assessments prepared for and/or delivered to Seller in connection with Seller's
acquisition and operation of the Real Property.
3.18.2. To the knowledge of Seller, the information set forth in
Schedule 3.18 is true, correct and complete in all material respects. Since
Seller's acquisition of the Stations, Seller has operated the Stations, the Real
Property and all improvements thereon in material compliance with all
Environmental Laws.
3.18.3 Except as set forth in Schedule 3.18, there are no pending
or, to the knowledge of Seller, threatened actions, suits, claims, or other
legal proceedings based on (and Seller has not received any notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental Authority
arising out of or attributable to): (a) the current or past presence at any part
of the Real Property of Hazardous Materials; (b) the current or past release or
threatened release into the environment from the Real Property (including,
without limitation, into any storm drain, sewer, septic system or publicly owned
treatment works) of any Hazardous Materials; (c) the off-site disposal of
Hazardous Materials originating on or from the Real Property or the businesses
or Assets of Seller; (d) any facility operations or procedures of Seller which
do not conform to requirements of the Environmental Laws; or (e) any violation
of Environmental Laws at any part of the Real Property arising from Seller's
activities involving Hazardous Materials. To the knowledge of Seller, Seller
has been duly issued all permits, licenses, certificates and approvals required
under any Environmental Law, except for such permits the failure to obtain, will
not have, individually or in the aggregate, a Material Adverse Effect.
3.18.4 Based on the information set forth in Schedule 3.18, the Real
Property contains no underground storage tanks, or underground piping
associated with such tanks, used currently or in the past for Hazardous
Materials.
3.19. TRANSACTIONS WITH AFFILIATES
Except as set forth in Schedule 3.19 attached hereto, Seller is
not now, and since January 1, 1996, has not been, a party, directly or
indirectly, to any contract, lease, arrangement or transaction which is material
to the business or operations of any Station, whether for the purchase, lease or
sale of property, for the rendition of services or otherwise, with any affiliate
of Seller, or any officer, director, employee, proprietor, partner or
shareholder of Seller. The terms and conditions of the transactions involving
Seller and any affiliate of Seller which are identified on Schedule 3.19 are
described briefly therein.
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<PAGE> 28
3.20. INSURANCE.
Schedule 3.20 contains a list and brief summary of all policies of
title, property, fire, casualty, liability, life, workmen's compensation, libel
and slander, and other forms of insurance of any kind relating to the Assets or
the business and operations of the Stations and held by Seller. All such
policies: (a) are in full force and effect; (b) are sufficient for compliance in
all material respects by Seller with all requirements of Law and of all material
agreements to which Seller is a party; and (c) are valid, outstanding, and
enforceable policies.
3.21. INTERPRETATION OF CERTAIN PROVISIONS.
Seller has not relied and is not relying on the specification of any
dollar amount in any representation or warranty made in this Agreement or any
Schedule hereto to indicate that such amounts, or higher or lower amounts, are
or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Sellers as follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and by the Closing Date will be
duly qualified to do business as a foreign corporation where such qualification
is necessary unless the failure to be so qualified would not materially and
adversely affect Buyer's ability to consummate the transactions contemplated by
this Agreement. Buyer has the full corporate power and corporate authority to
enter into and perform the terms of this Agreement and the other Buyer
Documents and to carry out the transactions contemplated hereby and thereby.
4.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and of the
other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
actions of Buyer (none of which actions has been modified or rescinded and all
of which actions are in full force and effect). This Agreement and the Deposit
Escrow Agreement constitute, and upon execution and delivery each such
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<PAGE> 29
other Buyer Document will constitute, a valid and binding agreement and
obligation of Buyer, enforceable against Buyer in accordance with its
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
4.3. COMPLIANCE WITH LAWS.
As of the Closing Date, Buyer shall have obtained and shall hold all
material permits, licenses and approvals (none of which will have been modified
or rescinded and all of which shall be in full force and effect) from all
Governmental Authorities necessary in order to conduct the operations of the
Stations as presently conducted and to own, use and maintain the Assets.
4.4. CONSENTS AND APPROVALS; NO CONFLICTS.
4.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Buyer, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority where the failure to make
such filing or obtain such consent will have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by this Agreement,
except as follows: (a) filings required under Hart-Scott-Rodino, (b) approvals
of the assignment of the FCC Licenses to Buyer by the FCC, and (c) based upon
Sellers' representations set forth in Section 3.4.1, certain of the Station
Contracts may be assigned only with the consent of third parties, as specified
in Schedule 3.4.1.
4.4.2. Assuming all consents, approvals, authorizations and other
actions described in Section 4.4.1 have been obtained and all filings and
notifications described in Section 4.4.1 have been made, the execution, delivery
and performance of this Agreement and the other Buyer Documents by Buyer do not
and will not (a) conflict with or violate any Law applicable to Buyer, (b)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) of any
contract or agreement to which Buyer is a party or by which Buyer is bound, or
(c) conflict with or violate the organizational documents of Buyer.
4.5. AVAILABILITY OF FUNDS.
Buyer will have available on the Closing Date sufficient funds to
enable it to consummate the transactions contemplated hereby.
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4.6. QUALIFICATION OF BUYER.
Buyer is, and pending Closing will be legally, technically,
financially and otherwise qualified under the Communications Act and all rules,
regulations and policies of the FCC to acquire and operate the Stations. There
are no facts or proceedings which would reasonably be expected to disqualify
Buyer under the Communications Act or otherwise from acquiring or operating any
of the Stations or would cause the FCC not to approve the assignment of the FCC
Licenses to Buyer. Buyer has no knowledge of any fact or circumstance relating
to Buyer or any of Buyer's affiliates that would reasonably be expected to (a)
cause the filing of any objection to the assignment of the FCC Licenses to
Buyer, or (b) lead to a delay in the processing by the FCC of the applications
for such assignment. No waiver of any FCC rule or policy is necessary to be
obtained for the grant of the applications for the assignment of the FCC
Licenses to Buyer, nor will processing pursuant to any exception or rule of
general applicability be requested or required in connection with the
consummation of the transactions herein.
4.7. NO OUTSIDE RELIANCE.
Buyer has not relied and is not relying on any statement,
representation or warranty not made in this Agreement, any Schedule hereto or
any certificate to be delivered to Buyer at the Closing pursuant to this
Agreement. Buyer is not relying on any projections or other predictions
contained or referred to in the Schedules or other materials that have been or
may hereafter be provided to Buyer or any of its Affiliates, agents or
representatives, and Sellers make no representations or warranties with respect
to any such projections or other predictions.
4.8. INTERPRETATION OF CERTAIN PROVISIONS.
Buyer has not relied and is not relying on the specification of any
dollar amount in any representation or warranty made in this Agreement or any
Schedule hereto to indicate that such amounts, or higher or lower amounts, are
or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
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ARTICLE 5.
PRE-CLOSING FILINGS
5.1. APPLICATIONS FOR FCC CONSENT.
As promptly as practicable and no later than November 15, 1996,
Sellers and Buyer shall jointly file applications for the Stations with the FCC
requesting the consent of the FCC to the assignment of the FCC Licenses for the
Stations from Sellers to Buyer. Sellers and Buyer will diligently take, or
fully cooperate in the taking of, all necessary and proper steps, and provide
any additional information reasonably requested in order to obtain promptly the
requested consents and approvals of the applications by the FCC; provided,
however, that none of the parties hereto shall have any obligation to
participate in any evidentiary hearing.
5.2. HART-SCOTT-RODINO.
As promptly as practicable and no later than November 22, 1996,
Sellers and Buyer shall complete any filing that may be required pursuant to
Hart-Scott-Rodino (each an "HSR Filing"), or shall mutually agree that no such
filing is required. Sellers and Buyer shall diligently take, or fully cooperate
in the taking of, all necessary and proper steps, and provide any additional
information reasonably requested in order to comply with, the requirements of
Hart-Scott-Rodino.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Each Seller covenants and agrees with Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Closing, Seller will not, without the prior
consent of Buyer, do or agree to do any of the following:
6.1.1. DISPOSITIONS; MERGERS.
Sell, assign, lease or otherwise transfer or dispose of any
of the Assets other than in the Ordinary Course of Business; or merge or
consolidate with or into any other entity or enter into any contracts or
agreements relating thereto.
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6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any of Seller's accounting principles or
practices or any method of applying such principles or practices.
6.1.3. TRADE-OUT AGREEMENTS.
Enter into any Trade-out Agreement except in the Ordinary
Course of Business.
6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into any Time Sales Agreement except in the Ordinary
Course of Business.
6.1.5. NETWORK AFFILIATION AGREEMENTS AND LOCAL MARKETING
ARRANGEMENTS.
Acquire or enter into any network affiliation agreements,
local marketing arrangements, joint operating agreements, time brokerage
agreements or other similar contracts.
6.1.6. ADDITIONAL AGREEMENTS.
Acquire or enter into any new Station Contracts not referred
to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend, alter,
modify or otherwise change any existing Station Contract, except for Station
Contracts obligating Seller to make payments of less than $50,000 per contract
per year and $250,000 per year in the aggregate per Station (collectively,
"Additional Agreements").
6.1.7. BREACHES.
Do or omit to do any act which will cause a material breach
of any Station Contract.
6.1.8. EMPLOYEE MATTERS.
Except as set forth on Schedule 6.1.8, enter into or become
subject to any employment, labor, union, or professional service contract not
terminable at will, or any bonus, pension, insurance, profit sharing, incentive,
deferred compensation, severance pay, retirement, hospitalization, employee
benefit, or other similar plan; or increase the compensation payable or to
become payable to any employee, or pay or arrange to pay any bonus payment to
any employee, except in the Ordinary Course of Business.
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6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action which may jeopardize the validity or
enforceability of or rights under the FCC Licenses.
6.1.10. PROGRAMMING.
Program or broadcast any Program Contract or syndicated
program, except in the Ordinary Course of Business.
6.1.11. AFFILIATED TRANSACTIONS.
Except for the transactions described in Schedule 3.19,
enter any transaction with any affiliate of Seller, including, without
limitation, any renewal, extension, modification or other change in, any
existing contract or agreement to which an affiliate of Seller is a party or
any other transaction involving an affiliate of Seller which will have
continued effectiveness after the Closing Date.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Closing Date, each Seller will:
6.2.1. PRESERVE EXISTENCE.
Preserve its partnership existence and business organization
intact, maintain its existing franchises and licenses, use commercially
reasonable efforts to preserve for the Buyer the relationships of the Stations
with suppliers, customers, employees and others with whom the Stations have
business relationships, and keep all Assets substantially in their present
condition, ordinary wear and tear excepted.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this Agreement
(including, without limitation, Section 6.1), (a) carry on the businesses and
activities of the Stations, including without limitation, the sale of
advertising time, entering into other contracts and agreements, or purchasing
and scheduling of programming, in the Ordinary Course of Business; (b) pay or
otherwise satisfy all obligations (cash and barter) of the Stations in the
Ordinary Course of Business; (c) maintain its books of account, records, and
files in substantially the same manner as heretofore; (d) maintain its Assets in
customary repair, maintenance and condition, except to the extent of normal wear
and tear, and repair or replace, consistently with the Ordinary Course of
Business, any Asset that may be damaged or destroyed and (e) continue to collect
and write-off Accounts Receivables in the Ordinary Course of Business.
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6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of the FCC Licenses, and comply in all
material respects with all requirements of the FCC Licenses and the rules and
regulations of the FCC and all other applicable Laws.
6.2.4. NETWORK AFFILIATION.
Use its reasonable efforts to maintain in full force and
effect Seller's present network affiliation agreements for the Stations (and any
and all modifications and renewals thereof).
6.2.5. STATION CONTRACTS.
Pay and perform its obligations in the Ordinary Course of
Business under the Station Contracts and under any Additional Agreements that
shall be entered into between the date hereof and the Closing pursuant to
Section 6.1.6, in accordance with the respective terms and conditions of such
Station Contracts.
6.2.6. TAXES.
Pay or discharge all Taxes when due and payable in the
Ordinary Course of Business.
6.2.7. PARTNERSHIP ACTION.
Take all partnership action (including, without limitation,
all partner action) under the Laws of any state having jurisdiction over Seller
necessary to effectuate the transactions contemplated by this Agreement and by
the other Seller Documents.
6.2.8. ACCESS.
Cause to be afforded to representatives of Buyer reasonable
access during normal business hours to offices, properties, assets, books and
records, contracts and reports of the Stations, as Buyer shall from time to time
reasonably request; provided, however, that such investigation shall only be
upon reasonable notice and shall not unreasonably disrupt the personnel or
operations of Seller or the Stations. All requests for access to the offices,
properties, assets, books and records, contracts and reports of the Stations
shall be made to such representatives as Seller shall designate in writing, who
shall be solely responsible for coordinating all such requests and all access
permitted hereunder. Buyer acknowledges and agrees that neither Buyer nor its
representatives shall contact any of the employees, customers, suppliers,
partners, or other associates or affiliates of Seller or the Stations, in
connection with the transactions contemplated
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hereby, whether in person or by telephone, mail or other means of
communication, without the specific prior written authorization of such
representatives of Seller.
6.2.9. INSURANCE.
Maintain in full force and effect all of its existing
casualty, liability, and other insurance through the day following the Closing
Date in amounts not less than those in effect on the date hereof.
6.2.10. FINANCIAL STATEMENTS.
Provide Buyer with unaudited monthly statements of assets
and liabilities of Seller relating to the business and operations of the
Stations, and statements of revenues and expenses reflecting the results of
business and operations of the Stations for October, 1996 and for each month
thereafter, within forty-five (45) days after the end of each such month.
6.3. CONSENTS.
Prior to, on and after the Closing, Seller shall take all reasonable
action required to obtain all consents, approvals and agreements of any third
parties necessary to authorize, approve or permit the consummation of the
transactions contemplated by this Agreement, including, without limitation, any
consent of the parties to the Station Contracts designated as necessary in
Schedule 3.4.1 in order to consummate the transactions contemplated hereby
(collectively, the "Restricted Contracts"). Notwithstanding anything to the
contrary set forth in this Agreement or otherwise, to the extent that the
consent or approval of any third party is required under any Restricted
Contract, Seller shall only be required to use reasonable efforts (not
involving the payment by Seller of any money to any party to any such
Restricted Contract) to obtain such consents and approvals.
6.4. CONFIDENTIALITY.
Seller shall, at all times, maintain strict confidentiality with
respect to all documents and information furnished to Sellers by or on behalf of
Buyer. Nothing shall be deemed to be confidential information that: (a) is
known to Sellers at the time of its disclosure to Sellers; (b) becomes publicly
known or available other than through disclosure by Sellers; (c) is received by
Sellers from a third party not actually known by Sellers to be bound by a
confidentiality agreement with or obligation to Buyer; or (d) is independently
developed by Sellers. Notwithstanding the foregoing provisions of this Section
6.3, Sellers may disclose such confidential information (x) to the extent
required or deemed advisable to comply with applicable Laws; (y) to its
officers, directors, employees, representatives, financial advisors, attorneys,
accountants, and agents with respect to the transactions contemplated hereby (so
long as such parties agree to maintain the confidentiality
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of such information, subject to clauses (x) and (z) of this sentence); and (z)
to any Governmental Authority in connection with the transactions contemplated
hereby. In the event this Agreement is terminated, Sellers will return to
Buyer all documents and other material prepared or furnished by Buyer relating
to the transactions contemplated hereunder, whether obtained before or after
the execution of this Agreement. In the event that Seller is requested or
required (including without limitation by oral question, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar legal process) to disclose any confidential information, Seller will
promptly notify Buyer of such request or requirements so that Buyer may, as it
may elect, either seek an appropriate protective order or waive Seller's
compliance with the provisions of this Section 6.3. In the event that such
protection or other remedy is not obtained or that the Buyer waives compliance,
Seller agree to furnish only that portion of the confidential information which
Seller is advised by counsel is legally required and to exercise Seller's
reasonable efforts to obtain assurance that confidential treatment will be
accorded such confidential information.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Sellers as follows:
7.1. CONFIDENTIALITY.
Buyer shall, at all times prior to the Closing, maintain strict
confidentiality with respect to all documents and information furnished to
Buyer by or on behalf of Sellers. Nothing shall be deemed to be confidential
information that: (a) is known to Buyer at the time of its disclosure to
Buyer; (b) becomes publicly known or available other than through disclosure by
Buyer; (c) is received by Buyer from a third party not actually known by Buyer
to be bound by a confidentiality agreement with or obligation to Sellers; or
(d) is independently developed by Buyer. Notwithstanding the foregoing
provisions of this Section 7.1, Buyer may disclose such confidential
information (x) to the extent required or deemed advisable to comply with
applicable Laws; (y) to its officers, directors, partners, employees,
representatives, financial advisors, attorneys, accountants, agents,
underwriters, lenders, investors and any other potential sources of financing
with respect to the transactions contemplated hereby (so long as such parties
agree to maintain the confidentiality of such information, subject to clauses
(x) and (z) of this sentence); and (z) to any Governmental Authority in
connection with the transactions contemplated hereby or the financing thereof.
In the event this Agreement is terminated, Buyer will return to Sellers all
documents and other material prepared or furnished by Sellers relating to the
transactions contemplated by this Agreement, whether obtained before or after
the execution of this Agreement. In the event that Buyer is requested or
required (including without limitation by oral
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question, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar legal process) to disclose any
confidential information, Buyer will promptly notify Seller of such request or
requirements so that Seller may, as it may elect, either seek an appropriate
protective order or waive Buyer's compliance with the provisions of this
Section 7.1. In the event that such protection or other remedy is not obtained
or that the Seller waives compliance, Buyer agrees to furnish only that portion
of the confidential information which Buyer is advised by counsel is legally
required and to exercise Buyer's reasonable efforts to obtain assurance that
confidential treatment will be accorded such confidential information.
7.2. CORPORATE ACTION.
Prior to the Closing, Buyer shall take all corporate action
(including, without limitation, all shareholder action) under the Laws of any
state having jurisdiction over Buyer necessary to effectuate the transactions
contemplated by this Agreement and the other Buyer Documents.
7.3. ACCESS.
For a period of seven (7) years from and after the Closing Date,
Buyer shall cause to be afforded to representatives of Sellers reasonable access
during normal business hours to the offices, books and records, contracts and
reports of the Stations which relate to the operations of the Stations during
the period during which the Stations were owned by Sellers, as Sellers shall
from time to time reasonably request for Sellers' reasonable business purposes;
provided, however, that such investigation shall only be upon reasonable notice
and shall not disrupt the personnel or operations of Buyer or the Stations. All
requests for access to the offices, books and records, contracts and reports of
the Stations shall be made to such representatives as Buyer shall designate in
writing, who shall be solely responsible for coordinating all such requests and
all access permitted hereunder. For a period of seven (7) years from and after
the Closing Date, Buyer shall not dispose of any books and records, contracts
and reports of the Stations which relate to the operations of the Stations
during the period during which the Stations were owned by Sellers without
consulting with Sellers prior to disposal thereof and taking any reasonable
action requested by Sellers with respect to retention and transfer to Sellers
thereof.
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ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1. POSSESSION AND CONTROL.
Between the date hereof and the Closing Date, Buyer shall not
directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Stations, and such
operation, including complete control and supervision of all programming, shall
be the sole responsibility of Sellers. On and after the Closing Date, Sellers
shall have no control over, or right to intervene, supervise, direct or
participate in, the business and operations of the Stations.
8.2. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause to the
Assets until the Closing Date shall be upon Sellers. In the event of any such
loss or damage prior to the Closing Date which causes a Material Adverse
Effect, Sellers shall have the right to restore, replace or repair the damaged
Assets to their previous condition at Sellers' sole cost and expense. In the
event that as of the Closing Date, any such loss or damage shall not have been
restored, replaced, or repaired and Sellers desire to restore, replace or
repair such damaged Assets, Sellers shall have the right to defer the Closing
Date, by written notice to Buyer, until such date (the "Extended Closing Date")
which is the later to occur of (a) the date which is nine (9) months after the
date of this Agreement, or (b) the date which is sixty (60) days after the date
on which such loss or damage occurred. In the event that any such loss or
damage shall not be restored, replaced, or repaired as of the Extended Closing
Date, Buyer shall, at its option, either:
(a) proceed with the Closing and receive at Closing, the insurance
proceeds or an assignment of the right to receive such insurance proceeds, as
applicable, to which Sellers otherwise would be entitled, whereupon Sellers
shall have no further liability to Buyer for such loss or damage (pursuant to
the indemnification provisions of this Agreement or otherwise); or
(b) terminate this Agreement by written notice to Sellers and receive the
immediate return of the Deposit, whereupon no party to this Agreement shall
have any liability to any other party to this Agreement, and this Agreement in
its entirety shall be deemed null, void and of no further force and effect,
except for the provisions set forth in Section 13.2 (which shall survive such
termination).
Buyer and Sellers acknowledge and agree that nothing in this Section 8.2
shall be deemed to waive any requirement that the representations and
warranties be restated at Closing as provided for in Section 9.1 of this
Agreement.
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8.3. PUBLIC ANNOUNCEMENTS.
Between the date hereof and the Closing Date, Sellers and Buyer shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated herein and shall not issue any such press release or make any such
public statement without the prior written consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may,
without the prior written consent of the other party, issue such press release
or make such public statement as may be required by Law or any listing
agreement with a national securities exchange to which Sellers or Buyer is a
party if it has used all reasonable efforts to consult with the other party and
to obtain such party's consent but has been unable to do so in a timely manner.
8.4. EMPLOYEE MATTERS.
8.4.1. TRANSFERRED EMPLOYEES.
(a) Upon consummation of the Closing hereunder, Buyer shall offer
employment to each of the employees of the Stations, who are actively employed
as of the Closing Date by the Sellers, at a comparable salary, position and
place of employment as held by each such employee immediately prior to the
Closing Date, and Buyer shall adopt employee benefit plans, policies and
arrangements covering such employees substantially similar to the Benefit Plans
of Sellers in effect as of the date hereof. Buyer shall also offer employment
to each employee of the Station who is temporarily absent from active
employment on the Closing Date upon termination of such temporary absence
provided such employee is able to perform the essential functions of the
position such employee held prior to such absence and any such employee shall
be treated as a "Transferred Employee" (as defined herein) from and after the
Closing Date.
(b) To the extent such employees accept employment with Buyer
(collectively, "Transferred Employees"), such Transferred Employees will be
included in Buyer's employee benefit plans and will be subject to Buyer's
employment policies, as generally applicable to Buyer's employees who are
similarly situated. Buyer agrees that Transferred Employees shall be credited
under all of Buyer's applicable employee benefit plans covering such employees
with their service at any of the Jupiter/Smith Stations for purposes of
determining any period of eligibility to participate or to vest in benefits to
the same extent such service was counted under the Benefit Plans of Sellers.
Buyer agrees that during the ninety (90) day period immediately following the
Closing Date Buyer shall not (i) terminate any Transferred Employee except for
termination for good cause, or (ii) adversely change the terms of any
Transferred Employee's employment; provided, however, thereafter, subject to
applicable laws, Buyer shall have the right, at any time thereafter, to dismiss
any or all Transferred Employees at any
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time thereafter, with or without cause, and to change the terms and conditions
of their employment (including compensation and employee benefit plans,
policies or arrangements, provided to them).
8.4.2. VACATION AND SICK LEAVE.
In furtherance of and not in limitation of the obligations
and liabilities of Buyer set forth in Section 8.4.1, Buyer shall assume,
without duplication of benefits, the obligations and liabilities of Sellers to
Transferred Employees as of the Closing Date for unused and unpaid vacation and
sick leave, but only to the extent reflected in the employee records of
Sellers. Except as otherwise required by applicable law, Buyer shall provide,
without duplication of benefits, all Transferred Employees with vacation time
or sick leave, as the case may be, rather than cash in lieu thereof, for such
unused and unpaid vacation and sick leave in accordance with Buyer's policies.
Buyer shall be liable for, and shall indemnify, defend and hold harmless
Sellers from and against, all Liabilities of Sellers to Transferred Employees
with respect to unused sick leave and unused vacation leave.
8.4.3. SEVERANCE BENEFITS.
In furtherance of and not in limitation of the obligations
and liabilities of Buyer set forth in Section 8.4.1, with respect to each
Transferred Employee, Buyer shall establish a severance benefit plan similar to
the severance plan of Sellers set forth on Schedule 3.16.1. Transferred
Employees shall be credited under Buyer's severance benefit plan with their
service at any of the Jupiter/Smith Stations for purposes of determining the
amount of severance benefits to which they may be entitled under such plan;
provided, however, that any service at any of the Jupiter/Smith Stations for
which severance had previously been paid shall be disregarded. Buyer shall be
liable for, and shall indemnify, defend and hold harmless Sellers from and
against any and all claims by Transferred Employees after the Closing Date for
severance benefits to the extent not provided by Buyer's severance benefits
plans adopted pursuant to Buyer's obligation set forth in Section 8.4.1 to
provide employee benefit plans substantially similar to the severance benefits
plan of Sellers set forth on Schedule 3.16.1.
8.4.4. REPRESENTED EMPLOYEES.
(a) In furtherance of and not in limitation of the obligations and
liabilities of Buyer set forth in Section 8.4.1, upon consummation of the
Closing hereunder, Buyer shall: (i) recognize the unions and labor
organizations which are parties to the collective bargaining agreements set
forth in Schedule 3.17.1; (ii) employ all active employees of the Stations
represented by any such union or labor organization (collectively, "Represented
Employees"); (iii) adopt employee benefit plans, policies and arrangements
covering such Represented
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Employees substantially similar to the Benefit Plans of Sellers in effect as of
the date hereof and as required by such collective bargaining agreements; and
(iv) negotiate in good faith with the collective bargaining representatives of
the employees of Seller regarding the substitution of Buyer's employee benefit
plans, policies and arrangements for the Benefit Plans of Sellers.
(b) Upon consummation of the Closing hereunder, Sellers shall assign to
Buyer, and Buyer shall assume the collective bargaining agreements listed in
Schedule 3.17.1, including, without limitation, all obligations, if any, to
provide severance benefits in connection with the termination after the Closing
Date of any Represented Employee. Such assignment and assumption shall not
obligate Buyer to assume any Benefit Plans of Sellers. Except for any
Liabilities of Sellers with respect to unused sick leave or unused vacation
(which Buyer expressly assumes), Buyer shall not be responsible for any
Liabilities of Sellers under the collective bargaining agreement listed in
Schedule 3.17.1, which arose on or prior to the consummation of the Closing,
including, without limitation, any Liabilities for wages and any Benefit Plans
of Seller.
(c) The Seller agrees to cooperate with Buyer in arranging for such
meetings as Buyer may reasonably request with the collective bargaining
representatives of the employees of Seller to discuss Buyer's assumption of the
collective bargaining agreements listed in Schedule 3.17.1 and the
implementation of employee benefits plans, policies and arrangements of the
Buyer; provided, however, that any such meeting (i) shall be subject to the
prior written approval of Seller upon reasonable notice to Seller, and (ii)
shall not unreasonably disrupt the personnel or operations of the Seller or the
Station.
8.4.5. COBRA OBLIGATIONS.
Buyer shall satisfy and discharge any obligations of Sellers
to provide health care continuation coverage as required by the Consolidated
Omnibus Budget Reconciliation Act of 1985 and as described in Section 4908B of
the Code and Sections 601 through 608 of ERISA and as required by any
applicable state continuation of health coverage provisions (collectively,
"COBRA Obligations") to (a) any employee to whom Buyer offers employment
pursuant to Section 8.4.1 who does not accept such offer of employment, or (b)
any employee of the Stations terminated prior to the Closing Date to whom
Sellers have on-going COBRA Obligations. Sellers and Buyer shall reasonably
cooperate in good faith to comply with Sellers' COBRA Obligations with respect
to all such employees by having Buyer assume such obligations on Sellers'
behalf and offering health care continuation coverage under Buyer's group
health plans to all such employees. Buyer shall indemnify, defend and hold
harmless Sellers from and against, all obligations of Buyer set forth in this
Section 8.4.5.
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8.4.6. SELLER BENEFITS PLANS.
As between Buyer and Sellers, Sellers agree to be responsible
and liable for any medical, disability or other benefits owed under Sellers'
benefit plans. Except as otherwise specified in Section 8.4.5, Sellers will be
responsible for providing, at its cost, all medical, life and other insurance
coverage and benefits, and disability benefits to which any employee of Sellers
who was terminated from service with Sellers prior to the Closing Date or who
was disabled prior to the Closing Date is entitled under Sellers' benefit plans
or otherwise.
8.4.7. 401(K) PLANS.
Buyer agrees to permit those Transferred Employees, at each
such Transferred Employee's option, to transfer as a rollover to Buyer's 401(k)
Plan their respective pre-tax account balances under SBG's 401(k) Plan, provided
that such plan is a tax-qualified plan under Section 401(a) and 401(k) of the
Code and that the transfer as a rollover of any such pre-tax account balance
will not affect the tax qualified status of Buyer's 401(k) Plan. SBG agrees
that if any such Transferred Employee elects to transfer as a rollover its
pre-tax account balance to Buyer's 401(k) Plan, SBG will cause the trustees of
SBG's 401(k) Plan to transfer each such electing Transferred Employee's account
to the trustee of Buyer's 401(k) Plan.
8.4.8. EMPLOYMENT CONTRACTS.
Buyer acknowledges and agrees that Buyer's obligations
pursuant to this Section 8.4 are in addition to, and not in limitation of,
Buyer's obligation to assume the employment contracts set forth on Schedule
2.1.8.
8.5. ALLOCATION OF PURCHASE PRICE.
Sellers and Buyer each represent, warrant, covenant, and agree with
each other that the Purchase Price shall be allocated among the classes of
Assets for each Station, as agreed by the parties within thirty (30) days after
the date hereof. Sellers and Buyer agree, pursuant to Section 1060 of the Code
that the Purchase Price shall be allocated in accordance with this Section 8.5,
and that all Tax returns and reports shall be filed consistent with such
allocation. Notwithstanding any other provision of this Agreement, the
provisions of this Section 8.5 shall survive the Closing Date without
limitation.
If Sellers and Buyer are unable to agree on such allocation, within thirty
(30) days following execution of this Agreement, Sellers and Buyer agree to
retain Bond & Pecaro (the "Appraisal Firm") to update their 1996 appraisal of
the classes of Assets of each Station in accordance with the allocation for the
Stations set forth in Section 2.7 and to deliver a report to Sellers and Buyer
as soon as
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reasonably practicable (the "Appraisal Report"). Buyer shall pay the fees,
costs and expenses of the Appraisal Firm whether or not the transactions
contemplated hereby are consummated.
8.6. DISCLOSURE SCHEDULES.
Sellers and Buyer acknowledge and agree that Sellers shall have the
right from time to time after the date hereof to update or correct the Schedules
attached hereto to reflect (a) immaterial omissions from the Schedules, and (b)
changes permitted in accordance with the terms of Article 6. The inclusion of
any fact or item on a Schedule referenced by a particular section in this
Agreement shall, should the existence of the fact or item or its contents, be
relevant to any other section, be deemed to be disclosed with respect to such
other section whether or not an explicit cross-reference appears in the
Schedules if it is reasonably apparent on the face of the Schedule in which such
item is referenced that such item is relevant to such other section.
8.7. BULK SALES LAWS.
Buyer hereby waives compliance by Sellers, in connection with the
transactions contemplated hereby, with the provisions of any applicable bulk
transfer laws; provided, however, that Seller shall indemnify and hold harmless
Buyer from and against any Losses attributable to Sellers' non-compliance with
any applicable bulk transfer laws, without regard to the provisions of Article
12.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed with the
Closing are subject to the satisfaction (or waiver in writing by Buyer) at or
prior to the Closing of each of the following conditions:
9.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Sellers made in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (provided that any representation or warranty
contained herein that is qualified by a materiality standard shall not be
further qualified hereby), except as modified by the Schedules updated after the
date hereof (in accordance with Section 8.6) and except for representations and
warranties that speak as of a specific date or time other than the Closing Date
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(which need only be true and correct in all material respects as of such date or
time), and the covenants and agreements of Sellers required to be performed on
or before the Closing Date in accordance with the terms of this Agreement shall
have been performed in all material respects.
9.2. REQUIRED CONSENTS.
Sellers shall have obtained prior to the Closing Date all consents,
authorizations or approvals necessary to effect valid assignments to Buyer of
those Station Contracts listed on Schedule 9.2.
9.3. DELIVERY OF DOCUMENTS.
Sellers shall have delivered to Buyer all contracts, agreements,
instruments and documents required to be delivered by Sellers to Buyer pursuant
to Section 11.2.
9.4. FCC ORDER.
The FCC Order shall have become a Final Order with respect to each
of the Stations.
9.5. HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall have
expired or terminated.
9.6 LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any court
or Governmental Authority of competent jurisdiction shall be in effect that
restrains or prohibits the transactions contemplated by this Agreement.
9.7 WTOV PURCHASE AGREEMENT.
The consummation of the transactions contemplated by the WTOV Purchase
Agreement shall have occurred concurrently with the Closing hereunder.
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ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLERS' OBLIGATION TO CLOSE
The obligations of Sellers to sell, transfer, convey and deliver the
Assets and to proceed with the Closing are subject to the satisfaction (or
waiver in writing by Sellers) at or prior to the Closing of each of the
following conditions:
10.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Buyer made in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date (provided that any representation or warranty
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) except for representations and warranties that speak
as of a specific date or time other than the Closing Date (which need only be
true and correct in all material respects as of such date or time), and the
covenants and agreements of Buyer required to be performed on or before the
Closing Date in accordance with the terms of this Agreement shall have been
performed in all material respects.
10.2. DELIVERY BY BUYER.
Buyer shall have delivered to Sellers the Purchase Price, to the extent
required to be paid on the Closing Date pursuant to Section 2.5, and all
contracts, agreements, instruments and documents required to be delivered by
Buyer to Sellers pursuant to Section 11.3.
10.3. FCC ORDER.
The FCC Order shall have become a Final Order with respect to the
Stations.
10.4. HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall have
expired or terminated.
10.5. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any
court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
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10.6. WTOV PURCHASE AGREEMENT.
The consummation of the transactions contemplated by the WTOV
Purchase Agreement shall have occurred concurrently with the Closing hereunder.
ARTICLE 11.
THE CLOSING
11.1. CLOSING.
The Closing hereunder shall be deemed to take place as of 12:00 p.m.
(midnight) on the last day of the calendar month during which the FCC Order
becomes a Final Order unless there shall be an Extended Closing Date as
contemplated by Section 8.2 of this Agreement or Section 8.2 of the WTOV
Purchase Agreement; provided, however, notwithstanding the foregoing, in no
event shall the Closing hereunder occur prior to January 31, 1997 (the "Closing
Date"). The Closing shall be held at 10:00 A.M. local time on the Closing Date
at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W., Washington,
D.C. or at such other time and place as the parties may agree.
11.2. DELIVERY BY SELLER.
At or before the Closing, Sellers shall deliver to Buyer the
following:
11.2.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and other
instruments of transfer, dated as of the Closing Date and duly executed by
Sellers:
(a) the Indemnity Escrow Agreement;
(b) the Bill of Sale;
(c) the Assignment of FCC Licenses;
(d) the Assignment of Contracts and Leases;
(e) the Assumption Agreement;
(f) certificates of title with respect to the motor vehicles listed
on Schedule 2.1.10 or if any such motor vehicles are leased by Sellers,
an assignment of such lease;
(g) special or limited warranty deeds for all Real Property owned by
Sellers in the forms attached hereto as Exhibit G; and
(h) real and personal property transfer tax forms, including,
without limitation, those set forth in Exhibit H attached hereto.
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11.2.2. CONSENTS.
Copies of all consents Sellers have been able to obtain to
effect the assignment to Buyer of the Station Contracts listed on Schedule
3.4.1.
11.2.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the partners of Sellers,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement, and of
the other Sellers Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.2.4. OFFICERS' CERTIFICATES.
(a) A certificate of Sellers certifying the matters set forth in
Section 9.1; and
(b) a certificate of Sellers as to the incumbency of the
representatives of Sellers executing this Agreement or any of the other
Seller Documents on behalf of Sellers.
11.2.5. ORGANIZATIONAL DOCUMENTS.
Copies of the organizational documents of each Seller and
SBG certified by an executive officer of SBG as being correct and complete.
11.2.6. DEPOSIT
Sellers and the WTOV Seller shall have instructed the
Escrow Agent in writing to return the Deposit to Buyer and the WTOV Buyer.
11.3. DELIVERY BY BUYER.
At or before the Closing, Buyer shall deliver to Sellers the
following:
11.3.1. PURCHASE PRICE PAYMENT.
The Purchase Price in the amount and manner set forth in
Section 2.
11.3.2. AGREEMENTS AND INSTRUMENTS.
The following assumption agreement and other instruments of transfer,
dated as of the Closing Date and duly executed by Buyer:
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(a) the Indemnity Escrow Agreement;
(b) the Assumption Agreement; and
(c) real and personal property transfer tax forms, including,
without limitation, those set forth in Exhibit H attached hereto.
11.3.3. CERTIFIED RESOLUTIONS.
Copies of the resolutions of the directors of Buyer,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement and of the
other Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby.
11.3.4. OFFICERS' CERTIFICATE.
(a) A certificate of Buyer signed by an officer of Buyer certifying
the matters set forth in Section 10.1; and
(b) a certificate signed by the Secretary of Buyer as to the
incumbency of the officers of Buyer executing this Agreement or any of
the other Buyer Documents on behalf of Sellers.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
Unless otherwise set forth herein, all representations and warranties,
covenants and agreements of Sellers and Buyer contained in or made pursuant to
this Agreement or in any certificate furnished pursuant hereto shall survive
the Closing Date and shall remain in full force and effect for a period of
twelve (12) months after the Closing Date, except that (a) any representation,
warranty, covenant or agreement that is the subject of a claim which is
asserted by the party seeking indemnification hereunder in a reasonably
detailed writing delivered to the other party or parties, as the case may be,
prior to the expiration of such twelve-month period shall survive with respect
to such claim or dispute until the final resolution thereof, and (b) the
following covenants and agreements shall continue in full force and effect
until fully discharged: Sections 6.3 and 7.1 (which relate to confidentiality),
Sections 6.2.8 and 7.3 (which relate to access), Section 8.4 (which relates to
employee matters), and Article 15 (which relates to miscellaneous matters). No
claim for indemnification may be made pursuant to this Article 12 after the
survival period set forth in this Section 12.1.
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12.2. INDEMNIFICATION BY SELLERS.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Sellers and the WTOV Seller,
jointly and severally, agree to indemnify, defend and hold harmless Buyer, the
WTOV Buyer, and their respective officers, directors, employees, agents and
shareholders ("Buyer Indemnified Parties") from and against and in any respect
of any and all Losses, asserted against, resulting to, imposed upon or incurred
by any Buyer Indemnified Parties, directly or indirectly, by reason of or
resulting from: (a) any failure by Seller to pay, perform or discharge any
Liabilities of Seller not expressly assumed by Buyer pursuant hereto or pursuant
to any Buyer Document; (b) the business or operations of the Stations during the
period on or prior to the Closing Date (except to the extent Buyer has expressly
assumed the Liability for any such Losses pursuant hereto); (c) any
misrepresentation or breach of the representations and warranties of Sellers
contained in or made pursuant to this Agreement or any other Seller Document; or
(d) any breach by Sellers of any covenants of Sellers contained in or made
pursuant to this Agreement or any other Seller Document. Subject to the
limitations on indemnification set forth in Article 12 of the WTOV Purchase
Agreement, Sellers hereby agree for the benefit of the Buyer Indemnified Parties
to be jointly and severally liable with the WTOV Seller for any indemnification
obligations of the WTOV Seller set forth in Article 12 of the WTOV Purchase
Agreement.
12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Buyer and the WTOV Buyer, jointly
and severally hereby agrees to indemnify, defend and hold harmless Seller, the
WTOV Seller, and their respective officers, directors, employees, agents and
partners ("Seller Indemnified Parties") from, against and with respect of any
and all Losses, asserted against, resulting to, imposed upon or incurred by any
Seller Indemnified Parties, directly or indirectly, by reason of or resulting
from: (a) any failure by Buyer to pay, perform or discharge any Liabilities
expressly assumed by Buyer pursuant hereto or pursuant to any Buyer Document;
(b) the business or operations of the Stations during the period after the
Closing Date; (c) any misrepresentation or breach of the representations and
warranties of Buyer contained in or made pursuant to this Agreement or any other
Buyer Document; or (d) any breach by Buyer of any covenants of Buyer contained
in or made pursuant to this Agreement or any other Buyer Document. Subject to
the limitations on indemnification set forth in Article 12 of the WTOV Purchase
Agreement, Buyer hereby agrees for the benefit of the Seller Indemnified Parties
to be jointly and severally liable with the WTOV Buyer for any indemnification
obligations of the WTOV Buyer set forth in Article 12 of the WTOV Purchase
Agreement.
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12.4. LIMITATIONS ON INDEMNIFICATION
12.4.1. Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Losses include a party's incidental, consequential
or punitive damages, regardless of the theory of recovery. Each party hereto
agrees to use reasonable efforts to mitigate any Losses which form the basis
for any claim for indemnification hereunder.
12.4.2. Neither the Jupiter/Smith Sellers (taken as a whole) nor the
HMTF/Smith Buyers (taken as a whole) shall be liable to the other in respect of
any indemnification hereunder except to the extent that the aggregate Losses of
the party to be indemnified under this Agreement and under the Three-Station
Agreement (taken as a whole) exceeds Two Hundred Fifty Thousand Dollars
($250,000) (the "Basket Amount"), and then only to the extent of the excess
over the Basket Amount; provided, however, the Basket Amount and the
limitations set forth in Section 12.4.3 shall not be applicable to (a) any
Losses incurred by any Seller Indemnified Party in connection with Buyer's
failure to comply with the covenants, agreements and indemnities set forth in
Section 2.8.1 or Section 8.4, or (b) any amounts owed in connection with the
Final Net Working Capital Amount.
12.4.3. Notwithstanding any other provision of this Agreement to the
contrary (other than Section 12.4.2), the Buyer acknowledges and agrees as
follows: (a) the maximum aggregate liability of the Jupiter/Smith Sellers
(taken as a whole) pursuant to this Agreement and the WTOV Purchase Agreement
(taken as a whole) to the Buyer Indemnified Parties and any third parties for
any and all Losses shall not exceed the Indemnity Escrow Amount, regardless of
whether the Buyer Indemnified Parties seek indemnification pursuant to this
Article 12 or Article 12 of the WTOV Purchase Agreement, regardless of the form
of action, whether in contract or tort, including negligence, and regardless of
whether or not the Jupiter/Smith Sellers are notified of the possibility of
damages to the Buyer Indemnified Parties or any other third party, and (b) any
indemnification payments by Sellers pursuant to this Article 12 shall be solely
payable from the funds held by the Indemnity Escrow Agent pursuant to the
Indemnity Escrow Agreement; provided, however, nothing in this Section 12.4.3
shall be construed to constitute a waiver or limitation of any claims by Buyer
based on fraud.
12.4.4. Each party (a "recipient party") shall notify the other
party (the "representing party") reasonably promptly of any perceived breach by
the representing party of which the recipient party has knowledge of any
representations and warranties, covenants, and agreements and of any Losses
(including a brief description of the same) of the recipient party caused
thereby. In the event of any breach that is cured prior to the Closing Date in
accordance with the terms of this Agreement, the representing party shall have
no obligation under Section 12.2 or Section 12.3 or otherwise to indemnify the
recipient party with respect to such Losses.
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12.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Sellers and of Buyer hereunder
with respect to their respective indemnities pursuant to this Section 12,
resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "Indemnified Party")
must give the other party or parties, as the case may be (the "Indemnifying
Party"), notice of any such Losses promptly after the Indemnified Party receives
notice thereof; provided that the failure to give such notice shall not affect
the rights of the Indemnified Party hereunder except to the extent that the
Indemnifying Party shall have suffered actual damage by reason of such failure.
12.5.2. The Indemnifying Party shall have the right to undertake, by
counsel or other representatives of its own choosing (reasonably acceptable to
the Indemnified Party), the defense of such Losses at the Indemnifying Party's
risk and expense.
12.5.3. In the event that the Indemnifying Party shall elect not to
undertake such defense, or, within a reasonable time after notice from the
Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof (with counsel reasonably
acceptable to the Indemnified Party)). In such event, the Indemnifying Party
shall pay to the Indemnified Party, in addition to the other sums required to
be paid hereunder, the costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if there is a reasonable probability that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Losses or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such Losses in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying
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Party and its counsel or other representatives concerning such Losses and the
Indemnifying Party and the Indemnified Party and their respective counsel or
other representatives shall cooperate with respect to such Losses (d) in the
event that the Indemnifying Party undertakes defense of any Losses, the
Indemnifying Party shall have an obligation to keep the Indemnified Party
informed of the status of the defense of such Losses and furnish the
Indemnified Party with all documents, instruments and information that the
Indemnified party shall reasonably request in connection therewith, and (e) in
the event that both the Indemnified Party and the Indemnifying Party are
parties (directly or through interpleader) to any Losses giving rise to
indemnification hereunder and the Indemnified Party is advised by counsel that
there is or may be a conflict of interest in the representation of both the
Indemnified Party and the Indemnifying Party by one firm of counsel, the
Indemnified Party shall be entitled to assume, at the sole cost and expense of
the Indemnifying Party, the defense, compromise and settlement (subject to
clause (b) above) of such Loss with counsel (in addition to local counsel)
reasonably satisfactory to the Indemnifying Party.
12.5.5 In the event that an Indemnified Party has a good faith
basis for a claim for indemnification which does not involve a claim against it
by a third party (a "Direct Claim"), the Indemnified Party shall notify the
Indemnifying Party in writing of such Direct Claim with reasonable promptness,
specifying, to the extent known, the nature, circumstances and amount of such
Direct Claim (a "Direct Claim Notice"), including with particularity the
specific representation and warranty or covenant and agreement alleged to have
been breached. If the Indemnifying Party notifies the Indemnified Party that it
disputes an Indemnified Party's right of indemnification with respect to a
particular Direct Claim, the parties shall use their reasonable efforts to
negotiate a resolution of such dispute promptly. Except to the extent of the
limitations on indemnification set forth in this Article 12, nothing in this
Section 12.5.5 shall be deemed to prevent any Indemnified Party from initiating
litigation under this Agreement with respect to any Direct Claim disputed by the
Indemnifying Party for the purpose of establishing the Indemnified Party's right
to indemnification hereunder.
12.6. CURE OF BREACH
Notwithstanding any other provision of this Agreement to the
contrary, a breach by Sellers of any representations and warranties or a failure
to perform any covenant or agreement hereunder may be cured prior to the Closing
Date by Sellers (a) by reducing the Purchase Price in an amount equal to the
Losses to Buyer caused by such breach, (b) by making payment to a third party or
taking other action to discharge the Losses, (c) by placing an amount equal to
the Losses in an escrow account under an escrow arrangement reasonably
satisfactory to Sellers and Buyer, or (d) a combination of the foregoing. If
the foregoing actions fully cure the breach, Sellers shall have no obligation
under Section 12.2 or otherwise to
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indemnify Buyer with respect to the Losses caused by such breach; if such
actions partially cure the breach, Sellers shall continue to have an obligation
under Section 12.2 to indemnify Buyer with respect to the remaining portion of
the Losses caused by such breach.
ARTICLE 13.
TERMINATION
13.1. TERMINATION
This Agreement may be terminated at any time prior to the Closing
by:
13.1.1. the mutual consent of Sellers and Buyer;
13.1.2. either Buyer or Sellers, by written notice of termination
delivered to the other, if (a) the FCC Order for the Stations has not become a
Final Order and/or the Closing has not occurred within nine (9) months after
the date of this Agreement; provided, however, that the failure of the FCC
Order to become Final Order or the failure of the Closing to have occurred
within nine (9) months of the date of this Agreement shall not be attributable
to the breach of this Agreement by the party seeking termination pursuant to
this Section 13.1.2, and provided, further, that Buyer's right to terminate
this Agreement pursuant to this Section 13.1.2 shall be subject to the Sellers'
rights to extend the Closing Date pursuant to Section 8.2 and the rights of the
WTOV Seller to extend the Closing Date under the WTOV Purchase Agreement
pursuant to Section 8.2 thereof, or (b) the FCC designates the applications
contemplated by Section 5.1 for an evidentiary hearing.
13.1.3. either Buyer or Sellers in the event that any court or
Governmental Authority of competent jurisdiction shall issue a final,
non-appealable injunction prohibiting the transactions contemplated by this
Agreement; provided, however, that the issuance of such final, non-appealable
injunction shall not be attributable to the breach of this Agreement by the
party seeking termination pursuant to this Section 13.1.3.
13.1.4. either Buyer or Sellers in accordance with the terms and
conditions of Article 14.
13.1.5. Buyer, by written notice of termination delivered to
Sellers, in the event that the WTOV Buyer has terminated the WTOV Purchase
Agreement pursuant to the terms thereof; or
13.1.6. Sellers, by written notice of termination delivered to
Buyer, in the event that the WTOV Seller has terminated the WTOV Purchase
Agreement pursuant to the terms thereof.
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13.2. EFFECT OF TERMINATION
13.2.1 In the event this Agreement is terminated as provided in
Sections 13.1.1, 13.1.2 and 13.1.3, Buyer shall receive the immediate return of
the Deposit and this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of Buyer and
Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality), and
Section 15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance).
13.2.2 In the event this Agreement is terminated as provided in
Section 13.1.4, this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of Buyer and
Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality), and
Section 15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance), and (b) Article 14 (which relates to remedies
and return of the Deposit) shall survive such termination and the parties shall
have such remedies as are set forth in Article 14.
13.2.3 In the event this Agreement is terminated as provided in
Sections 13.1.5 or 13.1.6, this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder; provided, however, that (a) if the WTOV Agreement
was terminated by the WTOV Buyer or the WTOV Sellers pursuant to Sections
13.1.1, 13.1.2 or 13.1.3 thereof, Buyer shall receive the immediate return of
the Deposit and the obligations of Buyer and Sellers set forth in Sections 6.3
and 7.1 (which relate to confidentiality), and Section 15.3 (which relates to
payment of certain expenses), shall survive the termination of this Agreement
and the parties hereto shall have any and all remedies to enforce such
obligations provided at law or in equity or otherwise (including, without
limitation, specific performance), and (b) if the WTOV Agreement was terminated
by the WTOV Buyer or the WTOV Sellers pursuant to Sections 13.1.4 thereof, the
obligations of Buyer and Sellers set forth in Sections 6.3 and 7.1 (which relate
to confidentiality), and Section 15.3 (which relates to payment of certain
expenses), shall survive the termination of this Agreement and the parties
hereto shall have any and all remedies to enforce such obligations provided at
law or in equity or otherwise (including, without limitation, specific
performance), and (ii) Article 14 (which relates to remedies and return of the
Deposit) shall survive such termination and the parties shall have such remedies
as are set forth in Article 14.
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ARTICLE 14.
REMEDIES
14.1. DEFAULT BY BUYER.
If Buyer shall default in the performance of its obligations under
this Agreement, or if, as a result of Buyer's action or failure to act, the
conditions precedent to Sellers' obligation to close specified in Section 10 are
not satisfied, and for such reason or reasons this Agreement is not consummated,
and provided that Sellers shall not then be in default in the performance of
Sellers' obligations hereunder, Sellers shall be entitled, by written notice to
Buyer, to terminate this Agreement, and as Sellers' sole remedy under this
Agreement, to receive the Deposit as liquidated damages, and upon such payment
Buyer shall be discharged from all further liability under this Agreement,
provided, however, Buyer shall have a period of ten (10) business days after
receipt of Seller's written termination notice to cure any such default and if
Buyer cures such default within such ten (10) business day period, Seller shall
have no right to terminate this Agreement based on such default.
14.2. FINAL ORDER DELAY BY BUYER.
In the event that a Final Order is not obtained prior to the date
which is nine (9) months from the date of this Agreement and such failure is
primarily attributable to (a) Buyer's default under, or breach of, any of the
terms of this Agreement, including, without limitation, a breach of Buyer's
representations and warranties contained in Section 4.6 and Buyer's agreements
contained in Section 15.6, and/or (b) any of (i) Buyer's capitalization, (ii)
Buyer's ownership structure, (iii) Buyer's proposed or intended operation of any
of the Stations, or (iv) any other media interest of Buyer or any affiliate of
Buyer, Sellers shall be entitled, by written notice to Buyer, to terminate this
Agreement, and as Sellers' sole remedy under this Agreement, to receive the
Deposit as liquidated damages, and upon such payment Buyer shall be discharged
from all further liability under this Agreement; provided, however, Sellers
shall not have the right to terminate this Agreement pursuant to this Section
14.2 if the failure to obtain a Final Order is also attributable to Sellers'
default under, or breach of, any of the terms of this Agreement or to the
operation of the Stations by Sellers prior to the Closing.
14.3. DEFAULT BY SELLER.
If Sellers shall default in the performance of Sellers' obligations
under this Agreement, or if, as a result of Sellers' action or failure to act,
the conditions precedent to Buyer's obligation to close specified in Section 9
are not satisfied, and for such reason or reasons this Agreement is not
consummated, and provided that Buyer shall not then be in default in the
performance of Buyer's
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<PAGE> 56
obligations hereunder, Buyer shall be entitled, by written notice to Sellers,
to terminate this Agreement, to receive the immediate return of the Deposit,
and to pursue any other remedies Buyer has at law or in equity or otherwise,
provided, however, Sellers shall have a period of ten (10) business days after
receipt of Buyer's written termination notice to cure any such default and if
Sellers cure such default within such ten (10) business day period, Buyer shall
have no right to terminate this Agreement based on such default.
14.4. LIQUIDATED DAMAGES.
Sellers and Buyer have provided for the amount of the Deposit to be
liquidated damages as a remedy for Sellers after having considered carefully
the anticipated and actual harms and losses that would be incurred if Buyer
defaults and thus fails to perform its obligations to consummate the
transactions contemplated hereunder, the difficulty of ascertaining at this
time the actual amount of damages, special and general, that Sellers will
suffer in such event, and the inconvenience or nonfeasibility of otherwise
obtaining an adequate remedy in such event.
14.5. SPECIFIC PERFORMANCE.
Sellers hereby acknowledge that the Assets are unique, and that the
harm to Buyer resulting from Sellers failure to perform their obligations
hereunder cannot be adequately compensated by damages. Accordingly, Sellers
agree that Buyer shall have the right to have all obligations, undertakings,
agreements, covenants and other provisions of this Agreement specifically
performed by Sellers.
ARTICLE 15.
GENERAL PROVISIONS
15.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
Buyer agrees that it will, at any time, prior to, at or after the
Closing Date, take or cause to be taken such further actions, and execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments and obtain such consents, as may be reasonably
requested by Sellers in connection with the consummation of the purchase and
sale contemplated by this Agreement. Sellers agree that it will, at any time,
prior to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments and obtain such consents, as may be
reasonably requested by Buyer in connection with the consummation of the
purchase and sale contemplated by this Agreement, including, without limitation,
taking such further actions (at Buyer's sole cost and expense) to enforce
Sellers' rights, if any, under purchase agreements with previous owners of
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<PAGE> 57
the Stations to require such previous owners to execute, deliver and file such
further documents and instruments and obtain such consents as may be reasonably
requested by Buyer in connection with the consummation of the purchase and sale
contemplated by this Agreement.
15.2. BROKERS.
Sellers represent to Buyer that, except for the brokerage fees
payable to Sellers' Broker (which fees are solely the responsibility of
Sellers), Sellers have not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
Buyer represents to Sellers that, except for the fees payable to Buyer's Advisor
(which fees are the sole responsibility of Buyer), Buyer has not engaged, or
incurred any unpaid liability (for any brokerage fees, finders' fees,
commissions or otherwise) to, any broker, finder or agent in connection with the
transactions contemplated by this Agreement; and Sellers agree to indemnify
Buyer, and Buyer agrees to indemnify Sellers, against any claims asserted
against the other parties for any such fees or commissions by any person
purporting to act or to have acted for or on behalf of the indemnifying party.
Notwithstanding any other provision of this Agreement, this representation and
warranty shall survive the Closing without limitation and shall not be subject
to the Basket Amount contained in Section 12.4.2 or the limitations of Section
12.4.3.
15.3. EXPENSES AND TAXES.
Each party hereto shall pay its own expenses incurred in connection
with this Agreement and in the preparation for and consummation of the
transactions provided for herein. Notwithstanding the foregoing, (a) Buyer
shall pay all sales (including, without limitation, bulk sales), use,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes")
applicable to, imposed upon or arising out of the transactions contemplated
hereby whether now in effect or hereinafter adopted and regardless of which
party such Transfer Tax is imposed upon, (b) Sellers and Buyer shall each pay
one-half of any FCC filing fees incurred in connection with the assignment of
the FCC Licenses, and (c) Buyer shall pay any fees and expenses incurred in
connection with any HSR Filings.
15.4. NOTICES.
All notices, demands, requests, or other communications which may
be or are required to be given or made by any party to any other party pursuant
to this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by
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overnight air courier, or transmitted by telegram, telex, or facsimile
transmission addressed as follows:
If to Buyer:
HMTF Acquisition Corp.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy No.: (214) 740-7313
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attn: Glenn D. West, Esq.
Fax: (214) 746-7777
If to Sellers:
Smith Broadcasting Partners, L.P.
3839 4th Street North
Suite 420
St. Petersburg, FL 33703
Attn: David A. Fitz
Fax: (813) 821-8092
and to:
Jupiter/Smith TV Holdings, L.P.
30 Rockefeller Plaza
Suite 4525
New York, NY 10112
Attn: John Sprague
Fax: (212) 332-2828
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<PAGE> 59
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
8300 Greensboro Drive
Suite 1100
McLean, VA 22102
Attn: Richard T. Horan, Jr., Esq.
Fax: (703) 448-7650
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
15.5. WAIVER.
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other instrument or
document given in connection with or pursuant to this Agreement shall impair
any such right, power or privilege or be construed as a waiver of any default
or any acquiescence therein. No single or partial exercise of any such right,
power or privilege shall preclude the further exercise of such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against any party hereto unless made in writing and signed by
the party against whom enforcement of such waiver is sought and then only to
the extent expressly specified therein.
15.6. BENEFIT AND ASSIGNMENT.
(a) No party hereto shall assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
the other party hereto; provided, however, upon written notice to Sellers,
Buyer may assign all or any portion of Buyer's rights and obligations under
this Agreement to one or more Permitted Assignees, provided, that (i) prior to
or concurrently with such assignment, Buyer shall have represented, warranted
and certified to Sellers in writing that (A) there are no facts or proceedings
which would reasonably be expected to disqualify any such Permitted Assignee
under the Communications Act or under the rules and regulations of the FCC from
acquiring or operating any of the Stations or would cause the FCC not to
approve the
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<PAGE> 60
assignment of the FCC Licenses to any such Permitted Assignee, (B) Buyer has no
knowledge of any fact or circumstance relating to any such Permitted Assignee
or any of any such Permitted Assignee's affiliates that would reasonably be
expected to (1) cause the filing of any objection to the assignment of the FCC
Licenses to any such Permitted Assignee, or (2) lead to a delay in the
processing by the FCC of the applications for such assignment, and (C) no
waiver of an FCC rule or policy is necessary to be obtained for the grant of
the applications for the assignment of the FCC Licenses to any such Permitted
Assignee, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein, (ii) prior to or concurrently with such assignment,
each such Permitted Assignee shall assume in writing all of Buyer's obligations
to Sellers, and each such Permitted Assignee shall deliver to Sellers a
certificate representing and warranting to Sellers as to the matters set forth
in Article 4, (iii) notwithstanding such assumption, Buyer shall not be
released from any liabilities or obligations hereunder, (iv) Buyer and any such
Permitted Assignee shall be jointly and severally liable for the liabilities or
obligations of Buyer and any such Permitted Assignee hereunder (including,
without limitation, any obligation pursuant to Article 12 hereof), and (v) such
assignment shall not cause a delay in the receipt of the FCC Order or the Final
Order. Buyer may also assign, subject to compliance with the provisions of
this Section 15.6, Buyer's right to acquire the FCC Licenses from Sellers to a
wholly-owned subsidiary of Buyer
(b) From and after the Closing Date, without releasing Buyer from any of
Buyer's obligations hereunder, nothing herein shall prevent or limit Buyer from
making a collateral assignment of Buyer's rights under this Agreement to any
institutional lender that, directly or indirectly, provides funds to Buyer
without the consent of the Sellers. Sellers shall execute an acknowledgment of
such collateral assignments in such forms as Buyer or Buyer's institutional
lenders may reasonably request; provided, however, that unless written notice
is given to Sellers that any such collateral assignment has been foreclosed
upon (in compliance with the Communications Act and the rules and regulations
of the FCC), Sellers shall be entitled to deal exclusively with Buyer as to any
matters arising under this Agreement or any of the other agreements delivered
pursuant hereto.
(c) Any purported assignment contrary to the terms hereof shall be null,
void and of no force and effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No Person, other than the
parties hereto, is or shall be entitled to bring any action to enforce any
provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
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<PAGE> 61
15.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules and Exhibits hereto and the other
instruments and documents referred to herein or delivered pursuant hereto
including, without limitation, that certain side letter agreement dated as of
the date hereof between Buyer and Sellers with respect to preparation of
financial statements, contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior oral or written
agreements, commitments or understandings with respect to such matters. No
amendment, modification or discharge of this Agreement shall be valid or
binding unless set forth in writing and duly executed by the party or parties
against whom enforcement of the amendment, modification or discharge is sought.
15.8. SEVERABILITY.
If any part of any provision of this Agreement or any other contract,
agreement, document or writing given pursuant to or in connection with this
Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
15.9. HEADINGS.
The headings of the sections and subsections contained in this Agreement
are inserted for convenience only and do not form a part or affect the meaning,
construction or scope thereof.
15.10. GOVERNING LAW; JURISDICTION.
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed under
and in accordance with the laws of the state of New York, excluding the choice
of law rules thereof. The parties hereto hereby irrevocably consent to the
nonexclusive jurisdiction and venue of the courts of the State of New York and
of any Federal Court located in New York County, New York, in connection with
any action, suit or proceeding arising out of or relating to this Agreement.
The parties hereto hereby waive personal service of any process in connection
with any such action, suit or proceeding and agree that the service thereof may
be made by certified or registered mail addressed to or by personal delivery to
the other party, at such other party's address set forth pursuant to Section
15.4 hereof. In the alternative, in its discretion, any of the parties hereto
may effect service upon any other party in any other form or manner permitted
by law.
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<PAGE> 62
15.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none of which
need contain the signatures of all parties, each of which shall be deemed to be
an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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<PAGE> 63
IN WITNESS WHEREOF, each of the parties hereto has executed this Asset
Purchase Agreement, or has caused this Asset Purchase Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
SMITH TELEVISION OF MICHIGAN, L.P.
By:
Smith Broadcasting Partners, L.P., its
general partner
By:
Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF ROCHESTER, L.P.
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
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<PAGE> 64
SMITH TELEVISION OF MICHIGAN LICENSE, L.P.
By: Smith Television of Michigan, L.P.,
its general partner
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF ROCHESTER LICENSE, L.P.
By: Smith Television of Rochester, L.P.,
its general partner
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
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<PAGE> 65
SMITH TELEVISION OF SALINAS-MONTEREY
LICENSE, L.P.
By: Smith Television of Salinas-Monterey,
L.P., its general partner
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
STV ACQUISITION COMPANY
By: /s/ DANIEL S. DROSS
----------------------------------------
Name: Daniel S. Dross
--------------------------------------
Title: Vice President
-------------------------------------
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<PAGE> 1
EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
BY AND AMONG
SMITH TELEVISION-WTOV, L.P.,
AND
SMITH TELEVISION-WTOV LICENSE, L.P.,
AS SELLERS
AND
SMITH ACQUISITION COMPANY
AS BUYER
DATED AS OF NOVEMBER 4, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE 1. DEFINITIONS AND REFERENCES .................... 1
ARTICLE 2 SALE AND PURCHASE OF ASSETS; ESCROW DEPOSIT;
PURCHASE PRICE; AMOUNTS; ASSUMPTION OF LIABILITIES
2.1. Asset Sale and Purchase of Assets. ................ 1
2.1.1. FCC Licenses. .............................. 2
2.1.2. Real and Leased Property Interests. ........ 2
2.1.3. Tangible Personal Property. ................ 2
2.1.4. Intellectual Property. ..................... 3
2.1.5. Program Contracts. ......................... 3
2.1.6. Trade-out Agreements. ...................... 3
2.1.7. Broadcast Time Sales Agreement. ............ 3
2.1.8. Operating Contracts. ....................... 3
2.1.9. Prepaid Items. ............................. 4
2.1.10. Vehicles. ................................. 4
2.1.11. Files and Records. ........................ 4
2.1.12. Auxiliary Facilities. ..................... 4
2.1.13. Permits and Licenses. ..................... 4
2.1.14. Accounts Receivable. ...................... 4
2.1.15. Goodwill. ................................. 4
2.2. Excluded Assets. .................................. 4
2.2.1. Cash. ...................................... 5
2.2.2. Personal Property Disposed Of. ............. 5
2.2.3. Insurance. ................................. 5
2.2.4. Employee Plans and Assets. ................. 5
2.2.5. Right to Tax Refunds. ...................... 5
2.2.6. Certain Books and Records. ................. 5
2.2.7. Third-Party Claims. ........................ 6
2.2.8. Rights Under this Agreement. ............... 6
2.2.9. Interests in Licensees. .................... 6
2.2.10. Name. ..................................... 6
2.2.11. Excluded Contracts and Unrelated Assets. .. 6
2.3. Escrow Deposit. ................................... 6
2.4. Purchase Price. ................................... 7
2.5. Payment of Purchase Price. ........................ 7
2.6. Net Working Capital Amount. ....................... 7
2.7. Assumption of Liabilities. ........................ 9
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLER ...... 9
3.1. Organization and Standing. ........................ 9
3.2. Authorization. .................................... 10
3.3. Compliance with Laws. ............................. 10
3.4. Consents and Approvals; No Conflicts. ............. 10
3.5. Financial Statements; Undisclosed Liabilities. .... 11
</TABLE>
<PAGE> 3
TABLE OF CONTENTS (continued)
<TABLE>
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3.6. Absence of Certain Changes or Events. ............. 12
3.7. Absence of Litigation. ............................ 12
3.8. Assets. ........................................... 12
3.9. FCC Matters. ...................................... 13
3.10. Real Property. ................................... 13
3.11. Condition of Tangible Assets. .................... 14
3.12. Intellectual Property. ........................... 14
3.13. Reports and Records. ............................. 15
3.14. Station Contracts. ............................... 15
3.15. Taxes. ........................................... 15
3.16. Employee Benefit Plans. .......................... 16
3.17. Labor Relations. ................................. 17
3.18. Environmental Matters. ........................... 17
3.19. Transactions With Affiliates ..................... 18
3.20. Insurance. ....................................... 18
3.21. Interpretation of Certain Provisions. ............ 19
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER ....... 19
4.1. Organization and Standing. ........................ 19
4.2. Authorization. .................................... 19
4.3. Compliance with Laws. ............................. 20
4.4. Consents and Approvals; No Conflicts. ............. 20
4.5. Availability of Funds. ............................ 20
4.6. Qualification of Buyer. ........................... 20
4.7. No Outside Reliance. .............................. 21
4.8. Interpretation of Certain Provisions. ............. 21
ARTICLE 5. PRE-CLOSING FILINGS ........................... 21
5.1. Application for FCC Consent. ...................... 21
5.2. Hart-Scott-Rodino. ................................ 22
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLER ............ 22
6.1. Negative Covenants. ............................... 22
6.1.1. Dispositions; Mergers. ..................... 22
6.1.2. Accounting Principles and Practices. ....... 22
6.1.3. Trade-out Agreements. ...................... 22
6.1.4. Broadcast Time Sales Agreements. ........... 22
6.1.5. Network Affiliation Agreements and
Local Marketing Arrangements................ 23
6.1.6. Additional Agreements. ..................... 23
6.1.7. Breaches. .................................. 23
6.1.8. Employee Matters. .......................... 23
6.1.9. Actions Affecting FCC Licenses. ............ 23
6.1.10. Programming. .............................. 23
6.1.11. Affiliated Transactions. .................. 23
6.2. Affirmative Covenants. ............................ 24
6.2.1. Preserve Existence. ........................ 24
6.2.2. Normal Operations. ......................... 24
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS (continued)
<TABLE>
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6.2.3. Maintain FCC Licenses. .................... 24
6.2.4. Network Affiliation. ...................... 24
6.2.5. Station Contracts. ........................ 25
6.2.6. Taxes. .................................... 25
6.2.7. Partnership Action. ....................... 25
6.2.8. Access. ................................... 25
6.2.9. Insurance. ................................ 25
6.2.10. Financial Statements. .................... 26
6.3. Consents. ........................................ 26
6.4. Confidentiality. ................................. 26
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER ............ 27
7.1. Confidentiality. ................................. 27
7.2. Corporate Action. ................................ 28
7.3. Access. .......................................... 28
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER ................................... 28
8.1. Possession and Control. .......................... 28
8.2. Risk of Loss. .................................... 29
8.3. Public Announcements. ............................ 29
8.4. Employee Matters. ................................ 30
8.4.1. Transferred Employees. .................... 30
8.4.2 Vacation and Sick Leave. ................... 30
8.4.3 Severance Benefits. ........................ 31
8.4.4 Represented Employees. ..................... 31
8.4.5. COBRA Obligations. ........................ 32
8.4.6. Seller Benefits Plans. .................... 32
8.4.7. 401(k) Plans. ............................. 33
8.4.8. Employment Contracts. ..................... 33
8.5. Allocation of Purchase Price. .................... 33
8.6. Disclosure Schedules. ............................ 33
8.7. Bulk Sales Laws. ................................. 34
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE ................................... 34
9.1. Representations and Covenants. ................... 34
9.2. Required Consents. ............................... 34
9.3. Delivery of Documents. ........................... 35
9.4. FCC Order. ....................................... 35
9.5. Hart-Scott-Rodino. ............................... 35
9.6 Legal Proceedings. ................................ 35
9.7 Three-Station Agreement. .......................... 35
ARTICLE 10. CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE.................................... 35
10.1. Representations and Covenants. .................. 35
10.2. Delivery by Buyer. .............................. 36
10.3. FCC Order. ...................................... 36
</TABLE>
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TABLE OF CONTENTS (continued)
<TABLE>
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10.4. Hart-Scott-Rodino. .............................. 36
10.5. Legal Proceedings. .............................. 36
10.6. Three-Station Agreement. ........................ 36
ARTICLE 11. THE CLOSING ................................. 36
11.1. Closing. ........................................ 36
11.2. Delivery by Seller. ............................. 37
11.2.1. Agreements and Instruments ............... 37
11.2.2. Consents. ................................ 37
11.2.3. Certified Resolutions. ................... 37
11.2.4. Officers' Certificates. .................. 37
11.2.5. Organizational Documents. ................ 38
11.2.6. Deposit .................................. 38
11.3. Delivery by Buyer. .............................. 38
11.3.1. Purchase Price Payment. .................. 38
11.3.2. Agreements and Instruments. .............. 38
11.3.3. Certified Resolutions. ................... 38
11.3.4. Officers' Certificate. ................... 38
ARTICLE 12. SURVIVAL; INDEMNIFICATION ................... 39
12.1. Survival of Representations. .................... 39
12.2. Indemnification by Seller. ...................... 39
12.3. Indemnification by Buyer. ....................... 40
12.4. Limitations on Indemnification .................. 40
12.5. Conditions of Indemnification. .................. 41
12.6. Cure of Breach .................................. 43
ARTICLE 13. TERMINATION ................................. 43
13.1. Termination ..................................... 43
13.2. Effect of Termination ........................... 44
ARTICLE 14. REMEDIES .................................... 45
14.1. Default by Buyer. ............................... 45
14.2. Final Order Delay by Buyer. ..................... 46
14.3. Default by Seller. .............................. 46
14.4. Liquidated Damages. ............................. 46
14.5. Specific Performance. ........................... 47
ARTICLE 15. GENERAL PROVISIONS .......................... 47
15.1. Additional Actions, Documents and Information. .. 47
15.2. Brokers. ........................................ 47
15.3. Expenses and Taxes. ............................. 48
15.4. Notices. ........................................ 48
15.5. Waiver. ......................................... 50
15.6. Benefit and Assignment. ......................... 50
15.7. Entire Agreement; Amendment. .................... 52
15.8. Severability. ................................... 52
15.9. Headings. ....................................... 52
15.10. Governing Law; Jurisdiction. ................... 52
15.11. Signature in Counterparts. ..................... 53
</TABLE>
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<PAGE> 6
SCHEDULES
<TABLE>
<S> <C>
Schedule 2.1.1 FCC Licenses
Schedule 2.1.2 Real Property Interests
Schedule 2.1.3 Tangible Personal Property
Schedule 2.1.4 Intellectual Property
Schedule 2.1.5 Program Contracts
Schedule 2.1.6 Trade-out Agreements
Schedule 2.1.8 Operating Contracts
Schedule 2.1.9 Deposits; Prepaid Expenses
Schedule 2.1.10 Vehicles
Schedule 2.2.11 Excluded Contracts and Unrelated Assets
Schedule 2.6.2 Pro Forma Calculation of Net Working Capital Amount
Schedule 3.4.1 Consents
Schedule 3.6 Absence of Certain Changes or Events
Schedule 3.7 Litigation
Schedule 3.8 Encumbrances on Assets
Schedule 3.9 FCC Matters
Schedule 3.10 Encumbrances on Real Property and Leasehold Interests
Schedule 3.11 Condition of Tangible Assets
Schedule 3.12.1 Consents for Intellectual Property Transfer
Schedule 3.16 Employee Benefit Plans
Schedule 3.17.1 Collective Bargaining Agreements
Schedule 3.18 Environmental Matters
Schedule 3.19 Transactions with Affiliates
Schedule 3.20 Insurance
Schedule 6.1.8 Employee Matters
Schedule 9.2 Required Consents and Approvals
</TABLE>
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<PAGE> 7
EXHIBITS
<TABLE>
<S> <C>
EXHIBIT A Form of Deposit Escrow Agreement
EXHIBIT B Form of Indemnity Escrow Agreement
EXHIBIT D Form of Bill of Sale and Assignment of Assets
EXHIBIT D Form of Assignment of FCC Licenses
EXHIBIT E Form of Assignment of Contracts and Leases
EXHIBIT F Form of Assumption Agreement
EXHIBIT G Forms of Special or Limited Warranty Deeds
EXHIBIT H Form of Transfer Tax Documents
</TABLE>
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<PAGE> 8
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into
as of this 4th day of November, 1996 by and among SMITH TELEVISION-WTOV, L.P.,
a Delaware limited partnership ("Smith-WTOV"), SMITH TELEVISION-WTOV LICENSE,
L.P., a Delaware limited partnership ("WTOV Licensee", and together with
Smith-WTOV, the "Seller") and SMITH ACQUISITION COMPANY, a Delaware corporation
("Buyer").
WHEREAS, WTOV Licensee is the licensee of television broadcast
station WTOV-TV, Channel 9, Steubenville, Ohio ("WTOV") pursuant to certain
authorizations issued by the FCC and Smith-WTOV operates WTOV and owns or
leases certain assets used in connection with the operation of WTOV;
WHEREAS, Seller desires to sell, assign and transfer the FCC
authorizations for WTOV (the "Station"), and the assets and businesses of the
Station as described below, and Buyer desires to acquire the Station, the FCC
authorizations for the Station, and the assets and business of the Station as
described below, all on the terms described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Capitalized terms used herein without definition shall have the
respective meanings assigned thereto in Annex I attached hereto and
incorporated herein for all purposes of this Agreement (such definitions to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise specified, all references herein to "Articles" or "Sections"
are to Articles or Sections of this Agreement.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS; ESCROW DEPOSIT;
PURCHASE PRICE; AMOUNTS; ASSUMPTION OF LIABILITIES
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon
the representations, warranties and agreements contained herein, upon the
Closing,
<PAGE> 9
Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer
shall purchase, acquire, pay for and accept from Seller, all of Seller's right,
title and interest in, to and under all real, personal and mixed assets,
rights, benefits and privileges, both tangible and intangible, wheresoever
located, owned, leased or used by Seller in connection with the business and
operations of the Station (collectively, the "Assets"); but excluding the
Excluded Assets described in Section 2.2.
The Assets shall include, without limitation, all of Seller's
right, title and interest in, to and under the following:
2.1.1. FCC LICENSES.
All licenses, permits and other authorizations issued
by the FCC to WTOV Licensee for the operation of the Station (the "FCC
Licenses"), including without limitation those listed in Schedule 2.1.1, and
all applications therefor, together with any renewals, extensions or
modifications thereof and additions thereto.
2.1.2. REAL AND LEASED PROPERTY INTERESTS.
(a) All the real property owned by Seller including,
without limitation, all land, fee interests, easements and other interests of
every kind and description in real property, buildings, structures, fixtures,
appurtenances, towers and antennae, and other improvements thereon owned by
Seller ("Real Property"), all of which are listed or described in Schedule
2.1.2.
(b) All the real property leasehold interests of Seller
including, without limitation, leases and subleases of any land, easements and
other real property leasehold interests of every kind and description in real
property, buildings, structures, fixtures, appurtenances, towers and antennae,
and other improvements thereon leased by Seller in connection with the business
and operations of the Station ("Leased Property"), all of which are listed or
described in Schedule 2.1.2.
2.1.3. TANGIBLE PERSONAL PROPERTY.
All of the furniture, fixtures, furnishings, machinery,
computers, equipment, inventory, spare parts, supplies, office materials and
other tangible property of every kind and description maintained, owned, leased
or used by Seller in connection with the business and operations of the
Station, together with any replacements thereof and additions thereto made
before the Closing, and less any retirements or dispositions thereof made
before the Closing in the Ordinary Course of Business, including, without
limitation, those items which have a book value in excess of $10,000 and which
are set forth and identified in Schedule 2.1.3.
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<PAGE> 10
2.1.4. INTELLECTUAL PROPERTY.
All of the service marks, copyrights, franchises,
trademarks, trade names, jingles, slogans, logotypes and other intangible
assets maintained, owned or used by Seller in connection with the business and
operations of the Station (including any and all applications, registrations,
extensions and renewals relating thereto) (the "Intellectual Property"), and
all of the rights, benefits and privileges associated therewith including,
without limitation, those set forth and identified in Schedule 2.1.4 and the
right to use the call letters for the Station and the right to sue for past
infringement of Intellectual Property to the extent necessary to enforce
Buyer's rights to such Intellectual Property.
2.1.5. PROGRAM CONTRACTS.
The program licenses and contracts under which Seller
is authorized to broadcast programs on the Station, all of which are listed on
Schedule 2.1.5, including without limitation, (a) all program (cash and
non-cash) licenses and contracts, and (b) any other such program contracts that
are entered into between the date of this Agreement and the Closing Date in
accordance with the terms of this Agreement (collectively the "Program
Contracts").
2.1.6. TRADE-OUT AGREEMENTS.
All contracts and agreements (excluding Program
Contracts) pursuant to which any Seller has sold, traded or bartered commercial
air time on the Station in consideration for any property or services in lieu
of or in addition to cash, which are set forth and described in Schedule 2.1.6
(collectively, the "Trade-out Agreements").
2.1.7. BROADCAST TIME SALES AGREEMENT.
All contracts and agreements pursuant to which Seller
has sold commercial air time on the Station for cash (collectively the "Time
Sales Agreements").
2.1.8. OPERATING CONTRACTS.
The other contracts and agreements listed on Schedule
2.1.8 (including, without limitation, employment agreements and talent
contracts, collective bargaining agreements, network affiliation agreements and
national and local advertising representation agreements for the Station),
together with all contracts and agreements that will be entered into between
the date of this Agreement and the Closing Date in accordance with the terms of
this Agreement (collectively, the "Operating Contracts" and together with the
Program Contracts, and the Trade-out Agreements and the Time Sales Agreements,
the "Station Contracts").
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<PAGE> 11
2.1.9. PREPAID ITEMS.
All deposits and prepaid expenses of the Station,
including, without limitation, those set forth and described in Schedule 2.1.9.
2.1.10. VEHICLES.
All automotive equipment and motor vehicles maintained,
owned, leased or otherwise used by Seller in connection with the business and
operations of the Station, including, without limitation, those set forth and
described in Schedule 2.1.10.
2.1.11. FILES AND RECORDS.
All engineering, business and other books, papers,
logs, files and records pertaining to the business and operations of the
Station, but not the organizational documents and records or other partnership
records of Seller.
2.1.12. AUXILIARY FACILITIES.
All translators, earth stations, and other auxiliary
facilities, and all applications therefor owned, leased or otherwise used by
Seller in connection with the business and operations of the Station.
2.1.13. PERMITS AND LICENSES.
All permits, approvals, orders, authorizations,
consents, licenses, certificates, franchises, exemptions of, or filings or
registrations with, any court or Governmental Authority (other than the FCC) in
any jurisdiction, which have been issued or granted to or are owned or used by
Seller in connection with the business and operations of the Station and all
pending applications therefor.
2.1.14. ACCOUNTS RECEIVABLE.
All Accounts Receivable arising out of the business and
operations of the Station.
2.1.15. GOODWILL.
The business of the Station as a "going concern,"
customer relationships and goodwill.
2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement,
there shall be excluded from the Assets and retained by Seller, to the extent
in existence as of the Closing Date, the following assets (collectively, the
"Excluded Assets"):
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<PAGE> 12
2.2.1. CASH.
All cash and cash equivalents held by Seller, all
interest receivable in connection with any such cash, cash equivalents or short
term investments, bank balances and rights in and to bank accounts, marketable
and other securities of Seller.
2.2.2. PERSONAL PROPERTY DISPOSED OF.
All tangible personal property disposed of or consumed
in the Ordinary Course of Business as permitted by this Agreement.
2.2.3. INSURANCE.
All contracts of insurance and all insurance plans and
the assets thereof; provided, however, in the event of any loss or damage by
fire or other casualty or other cause occurring prior to the Closing Date,
insurance proceeds received by Seller with respect to such loss or damage shall
belong to and be paid over to the Buyer to the extent that such proceeds have
not been used to restore, replace or repair such damaged Assets, provided,
further, upon the receipt by Buyer of such insurance proceeds, Seller shall
have no further liability to Buyer to the extent of the insurance proceeds
received by Buyer for any such loss or damage (pursuant to the indemnification
provisions of this Agreement or otherwise).
2.2.4. EMPLOYEE PLANS AND ASSETS.
All Plans, Benefit Arrangements, Qualified Plans and
Welfare Plans and the assets thereof.
2.2.5. RIGHT TO TAX REFUNDS.
Any and all claims of Seller with respect to any Tax
refunds.
2.2.6. CERTAIN BOOKS AND RECORDS.
All (a) Seller's organizational documents and other
partnership records, and originals of account books of original entry, (b)
duplicated copies of any books, records, accounts, checks, payment records, Tax
records (including payroll, unemployment, real estate and other Tax records)
and other similar books, records and information of Seller relating to Seller's
operation of the business of the Station prior to the Closing, (c) all records
prepared by or on behalf of Seller in connection with the sale of the Station,
and (d) all records and documents relating to any Excluded Assets.
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<PAGE> 13
2.2.7. THIRD-PARTY CLAIMS.
All rights and claims of Seller whether mature,
contingent or otherwise, against third parties relating to the business and
operations of the Station during the period prior to the Closing, whether in
tort, contract, or otherwise, except for rights and claims relating to past
infringement of Intellectual Property to the extent necessary to enforce
Buyer's rights to such Intellectual Property.
2.2.8. RIGHTS UNDER THIS AGREEMENT.
All of Seller's rights under or pursuant to this
Agreement or any other rights in favor of Seller pursuant to the other
agreements contemplated hereby.
2.2.9. INTERESTS IN LICENSEES.
The general partnership interest of Smith-WTOV in WTOV
Licensee.
2.2.10. NAME.
All rights to the name "Smith Television," "Smith
Broadcasting" or "Jupiter/Smith" or any logo or variation thereof and the
goodwill associated therewith.
2.2.11. EXCLUDED CONTRACTS AND UNRELATED ASSETS.
The contracts, agreements and any other assets listed
on Schedule 2.2.11.
2.3. ESCROW DEPOSIT.
For and in partial consideration of the execution and delivery
of this Agreement, simultaneously with the execution and delivery of this
Agreement and the Three-Station Agreement, the Three-Station Buyer and the
Buyer are jointly depositing in escrow with the Deposit Escrow Agent an
original, irrevocable letter of credit (the "Letter of Credit") issued for the
joint benefit of Seller and the Three-Station Sellers by Chase Manhattan Bank,
N.A. for an amount equal to Seven Million Eight Hundred Fifty Thousand Dollars
($7,850,000), such Letter of Credit to be held as an earnest money deposit (the
"Deposit"), in accordance with the terms and conditions of the Deposit Escrow
Agreement.
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<PAGE> 14
2.4. PURCHASE PRICE.
For and in consideration of the conveyances and assignments described herein
and in addition to the assumption of Liabilities as set forth in Section 2.7,
Buyer agrees to pay to Seller, and Seller agree to accept from Buyer, an amount
equal to TWENTY-EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($28,500,000) (the
"Base Purchase Price"), plus or minus (as the case may be) the Net Working
Capital Amount as provided for in Section 2.6 (collectively, the "Purchase
Price"). The Purchase Price shall be payable as described in Section 2.5. The
Purchase Price shall be allocated among the Assets in accordance with Section
8.5.
2.5. PAYMENT OF PURCHASE PRICE.
The Purchase Price shall be payable to Seller at the Closing as
follows:
2.5.1. Buyer shall deliver an amount equal to Five Hundred
Thousand Dollars ($500,000) (the "WTOV Indemnity Escrow Amount") to the
Indemnity Escrow Agent by wire transfer of immediately available federal funds
to an account identified in writing by the Indemnity Escrow Agent. The WTOV
Indemnity Escrow Amount, together with the Three-Station Indemnity Escrow
Amount delivered pursuant to the Three-Station Agreement (collectively, the
"Indemnity Escrow Amount"), shall be held by the Indemnity Escrow Agent in
accordance with the terms and conditions of the Indemnity Escrow Agreement.
After the Closing Date, in the event that Buyer has any Losses pursuant to
Section 12 hereof, such Losses shall be paid from the Indemnity Escrow Amount.
On the date that is one year after the Closing Date, the Indemnity Escrow Agent
shall deliver to the Seller and the Three-Station Sellers any remaining
Indemnity Escrow Amount (to the extent not subject to any pending claims)
pursuant to the terms of the Indemnity Escrow Agreement.
2.5.2. Buyer shall deliver the balance of the Purchase Price
by wire transfer of immediately available federal funds to an account which
will be identified by Seller not less than two (2) days prior to the Closing
Date.
2.6. NET WORKING CAPITAL AMOUNT.
2.6.1. ESTIMATED NET WORKING CAPITAL AMOUNT. At least three
(3) days prior to the Closing Date, Seller shall deliver to Buyer in writing
and in reasonable detail a good faith estimate of the Net Working Capital (the
"Estimated Net Working Capital") as of the Closing Date. The Purchase Price
shall be (a) increased by the amount, if any, by which the Estimated Net
Working Capital exceeds zero dollars ($0), or (b) decreased by the amount, if
any, by which the Estimated Net Working Capital is less than zero dollars ($0)
(such increase or
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<PAGE> 15
decrease, as the case may be, is referred to herein as the "Estimated Net
Working Capital Amount").
2.6.2. FINAL NET WORKING CAPITAL AMOUNT. Within forty-five
(45) days after the Closing Date, Buyer shall deliver to Seller in writing and
in reasonable detail a good faith determination of the Net Working Capital as
of the Closing Date ("Final Net Working Capital Amount"). Seller shall assist
Buyer in making such determination and Buyer shall provide Seller with
reasonable access to the properties, books and records relating to the Station
for the purpose of determining the Final Net Working Capital Amount. Seller
shall have the right to review the computations and workpapers used in
connection with Buyer's calculation of the Final Net Working Capital Amount. If
Seller disagrees with the amount of the Final Net Working Capital Amount
determined by Buyer, Seller shall so notify Buyer in writing within twenty-five
(25) days after the date of receipt of Buyer's Final Net Working Capital
Amount, specifying in detail any point of disagreement; provided, however, if
Seller fails to notify Buyer in writing of Seller's disagreement within such
twenty-five (25) day period, Buyer's determination of the Final Net Working
Capital Amount shall be final, conclusive and binding on Seller and Buyer.
After the receipt of any notice of disagreement, Buyer and Seller shall
negotiate in good faith to resolve any disagreements regarding the Final Net
Working Capital Amount. If any such disagreement cannot be resolved by Seller
and Buyer within twenty-five (25) days after Buyer has received notice from
Seller of the existence of such disagreement, Buyer and Seller shall jointly
retain the accounting firm of Ernst & Young LLP or another nationally
recognized public accounting firm (the "Accounting Firm") to review the Buyer's
determination of the Final Net Working Capital Amount and to resolve as soon as
possible all points of disagreement raised by Seller. All determinations made
by the Accounting Firm with respect to the Final Net Working Capital Amount
shall be final, conclusive and binding on Buyer and Seller. The fees and
expenses of the Accounting Firm incurred in connection with any such
determination shall be shared one-half by Buyer and one-half by Seller.
Subject to the ultimate resolution of any disagreement
with respect to the calculation of the Final Net Working Capital Amount, if the
Final Net Working Capital Amount is such that Buyer's payment of the Estimated
Net Working Capital Amount is an underpayment to Seller for the actual Net
Working Capital, then Buyer shall pay Seller in cash an amount equal to such
underpayment within two (2) business days following the final determination of
the Final Net Working Capital Amount. Subject to the ultimate resolution of
any disagreement with respect to the calculation of the Final Net Working
Capital Amount, if the Final Net Working Capital Amount is such that Buyer's
payment of the Estimated Net Working Capital Amount is an overpayment to Seller
for the actual Net Working Capital, then Seller shall pay Buyer in cash an
amount equal to such overpayment within two (2) business days following the
determination of the Final Net Working Capital Amount. Any amounts paid
pursuant to this
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<PAGE> 16
Section 2.6.2 shall be by wire transfer of immediately available funds for
credit to the recipient at a bank account identified by such recipient in
writing.
Buyer and Seller agree that prior to the date of the final
determination of the Final Net Working Capital Amount pursuant to this Section
2.6.2 (by the Accounting Firm or otherwise), neither party will destroy any
records pertaining to, or necessary for, the final determination of the Final
Net Working Capital Amount.
Schedule 2.6.2 contains a pro forma calculation of the Net
Working Capital Amount for the Jupiter/Smith Stations based on financial
statements referred to in Section 3.5.1 hereof as if the Closing occurred as of
September 30, 1996. Schedule 2.6.2 is attached hereto solely for the purpose of
demonstrating by example the manner in which the Net Working Capital Amount for
the Jupiter/Smith Stations shall be calculated as of the Closing Date.
2.7. ASSUMPTION OF LIABILITIES.
2.7.1. At the Closing, the Buyer shall assume, and shall agree
to pay, perform and discharge and shall agree to indemnify and hold Seller
harmless from (a) all Liabilities arising after and relating to the period
after the Closing Date under the Station Contracts and the FCC Licenses, (b)
all Liabilities arising out of events occurring after the Closing Date related
to the businesses or operations of the Station or Buyer's ownership of the
Assets, (c) all Liabilities for which Buyer receives an adjustment to the Base
Purchase Price in connection with the calculation of the Final Net Working
Capital Amount to the extent of the amount of such adjustment as reflected in
the Final Net Working Capital Amount, and (d) all Liabilities of Seller to
employees of the Station to be assumed by Buyer in accordance with Section 8.4
hereof.
2.7.2. Except for the Liabilities expressly assumed by Buyer
as set forth in Section 2.7.1 hereof, Buyer assumes no other Liabilities of any
kind or description.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller represents and warrants to Buyer as follows:
3.1. ORGANIZATION AND STANDING.
Each of Smith-WTOV and WTOV Licensee is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of
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<PAGE> 17
Delaware and is duly qualified to do business as a foreign limited partnership
and is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Each of Smith-WTOV and WTOV Licensee has the full partnership power and
authority to own, lease and otherwise to hold and operate the Assets, to carry
on the business of the Station as now conducted, and to enter into and perform
the terms of this Agreement, the other Seller Documents and the transactions
contemplated hereby and thereby.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and
of the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary action of the partners of Seller and by any other necessary limited
partnership actions of Seller (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This
Agreement and the Deposit Escrow Agreement constitute, and upon execution and
delivery each other Seller Document will constitute, valid and binding
agreements and obligations of Seller, enforceable against Seller in accordance
with their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
3.3. COMPLIANCE WITH LAWS.
Seller is in compliance in all material respects with all Laws
applicable to Seller, to the Assets, to the Station and to its respective
businesses and operations. Seller has obtained and holds all permits, licenses
and approvals (none of which has been modified or rescinded and all of which
are in full force and effect) from all Governmental Authorities necessary in
order to conduct the operations of the Station as presently conducted, except
for such permits, licenses and approvals for which the failure to obtain would
not, individually or in the aggregate, have a Material Adverse Effect.
3.4. CONSENTS AND APPROVALS; NO CONFLICTS.
3.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person in connection with any material Station Contract,
except that certain of the Station Contracts may be assigned only with the
consent of third parties, as specified in Schedule 3.4.1.
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<PAGE> 18
3.4.2 The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Seller, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority where the failure to make such
filing or obtain such consent will have a Material Adverse Effect, except as
follows: (a) filings required under Hart-Scott-Rodino, (b) consents to the
assignment of the FCC Licenses to Buyer by the FCC, and (c) filings, if any,
with respect to real estate transfer taxes.
3.4.3. Assuming all consents, approvals, authorizations and
other actions described in Section 3.4.1 and Section 3.4.2 have been obtained
and all filings and notifications described in Section 3.4.1 and Section 3.4.2
have been made, the execution, delivery and performance of this Agreement and
the other Seller Documents by Seller do not and will not (a) conflict with or
violate any Law applicable to Seller, the Assets or the Station or by which any
of the Assets or the Station is subject or affected, (b) conflict with or
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under any contract or
agreement to which Seller is a party or by which Seller is bound or to which
any of the Assets or the Station is subject or affected, (c) result in the
creation of any Encumbrance upon the Assets, or (d) conflict with or violate
the organizational documents of Seller; except where any such conflict,
violation or breach would not, individually or in the aggregate, have a
Material Adverse Effect.
3.5. FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
3.5.1. Seller has provided to Buyer unaudited balance sheets
of the Jupiter/Smith Stations as of September 30, 1996 and the unaudited
statements of income and cash flow for the nine month period ended September
30, 1996. The financial statements referred to in this Section 3.5.1 (a)
present fairly in all material respects the financial condition of the
Jupiter/Smith Stations as of the respective dates and the results of operations
and cash flows for the respective periods indicated, and (b) have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except that the financial statements referred to in this
Section 3.5.1 (x) do not contain all footnotes required under generally
accepted accounting principles and (y) are subject to (i) normal year-end audit
adjustments and (ii) adjustments in connection with the resolution of
outstanding working capital matters with previous owners of the Jupiter/Smith
Stations, none of which, individually or in the aggregate, is material).
3.5.2. There exist no Liabilities of the Station relating to,
or arising out of, the business or operations of the Station, contingent or
absolute, matured or unmatured, known or unknown, except (a) as reflected on
the unaudited balance sheets as of September 30, 1996 (the "Current Balance
Sheet
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<PAGE> 19
Date") referred to in Section 3.5.1 and (b) for Liabilities that were incurred
after the Current Balance Sheet Date in the Ordinary Course of Business.
3.6. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as set forth and described in Schedule 3.6, since the
Current Balance Sheet Date, there has been no Material Adverse Effect (or event
that reasonably could be expected to have a Material Adverse Effect). Since
the Current Balance Sheet Date, Seller has conducted the business of the
Station in the Ordinary Course of Business, and Seller has not (a) incurred
loss of, or injury to, any of the Assets as the result of any fire, explosion,
flood, windstorm, earthquake, labor trouble, riot, accident, act of God or
public enemy or armed forces, or other casualty, except for such losses or
injuries which have been cured in accordance with Section 8.2; (b) incurred, or
become subject to, any Liability, except current Liabilities incurred in the
Ordinary Course of Business; (c) discharged or satisfied any Encumbrance or
paid any Liability other than current Liabilities shown in the balance sheets
furnished pursuant to Section 3.5, current Liabilities incurred since the
Current Balance Sheet Date in the Ordinary Course of Business, and Liabilities
(including, without limitation, partial and complete prepayments) arising under
any credit or loan agreement between Seller and its lenders; (d) mortgaged,
pledged or subjected to any Encumbrance any of its Assets other than
Encumbrances in connection with Liabilities arising under any credit or loan
agreement between Seller and its lenders; (e) sold, exchanged, transferred or
otherwise disposed of any of its Assets, or canceled any debts or claims; (f)
written down the value of any Assets or written off as uncollectible any
Accounts Receivable, except write-downs and write-offs in the Ordinary Course
of Business; (g) entered into any transactions other than in the Ordinary
Course of Business; (h) made any material change in any method of accounting or
accounting practice; or (i) made any agreement to do any of the foregoing.
3.7. ABSENCE OF LITIGATION.
Except as set forth on Schedule 3.7 as of the date hereof,
there is no action, suit, investigation, claim, arbitration or litigation
pending or, to Seller's knowledge, threatened against Seller, the Assets, or
the Station by or before any Governmental Authority that, individually or in
the aggregate, would be reasonably likely to (a) have a Material Adverse
Effect, or (b) challenge or seek to prevent, enjoin, alter or materially delay
the transaction contemplated hereby.
3.8. ASSETS.
Except for the Excluded Assets, the Assets include all of the
assets or property used in the business of the Station as presently operated.
Except for leased or licensed Assets, Seller is the owner of, and has good
title to, the Assets
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<PAGE> 20
free and clear of any Encumbrances, except for and subject only to (a) the
Permitted Encumbrances, and (b) those Encumbrances listed in Schedule 3.8 which
shall be discharged and removed on or prior to the Closing Date. At the
Closing, Buyer shall acquire good title to, and all right, title and interest
in and to the Assets, free and clear of all Encumbrances, except for the
Permitted Encumbrances.
3.9. FCC MATTERS.
WTOV Licensee holds the FCC Licenses listed on Schedule 2.1.1.
The FCC Licenses constitute all of the licenses, permits and authorizations
from the FCC that are required for the business and operations of the Station.
The FCC Licenses are valid and in full force and effect through the dates set
forth on Schedule 2.1.1, unimpaired by any condition which would reasonably be
likely to have, individually or in the aggregate, a Material Adverse Effect.
The Station has been operated by Seller in all material respects in accordance
with the terms of the FCC Licenses. Except as set forth on Schedule 3.9, no
application, action or proceeding is pending for the renewal or modification of
any of the FCC Licenses, and, except for actions or proceedings affecting
television broadcast stations generally, no application, complaint, action or
proceeding is pending or, to Seller's knowledge, threatened that may result in
the (a) the revocation, modification, non-renewal or suspension of any of the
FCC Licenses, (b) the issuance of a cease-and-desist order, or (c) the
imposition of any administrative or judicial sanction with respect to the
Station. Seller has no knowledge of any facts, conditions or events relating
to Seller or the Station including, without limitation, Seller's compliance
with the Children's Television Act, that would reasonably be expected to cause
the FCC to deny the assignment of the FCC Licenses as provided for in this
Agreement. Seller has filed with the FCC all reports, forms and statements
required by the FCC to be filed by Seller relating to the Station, including,
without limitation, applications for renewal of authority required by
applicable Laws.
3.10. REAL PROPERTY.
3.10.1. Seller has good and marketable title to the Real
Property listed in Schedule 2.1.2, free and clear of all Encumbrances, except
for (a) those items listed in Schedule 3.10, and (b) Permitted Encumbrances.
3.10.2. Seller has a valid leasehold interest in all Leased
Property listed as leased by Seller in Schedule 2.1.2. Schedule 2.1.2 lists
all leases and subleases pursuant to which any of the Leased Property is leased
by Seller. Seller is the owner and holder of all the Leased Property purported
to be granted by such leases and subleases. Each such lease and sublease is in
full force and effect and constitutes a legal, valid and binding obligation of,
and is legally enforceable against Seller and to the knowledge of Seller, each
other party thereto and grants the leasehold interest it purports to grant.
Seller has complied with all of the material provisions of such leases and
subleases and is not in default thereunder in
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any material respect, and to Seller's knowledge, there has not occurred any
event which (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default.
3.10.3 The Real Property and the Leased Property listed in
Schedule 2.1.2 constitute all of the real property owned, leased or used by
Seller in the business and operations of the Station.
3.10.4. All buildings, structures, fixtures and other
improvements on the Real Property are in operating condition and adequate
repair (ordinary wear and tear excepted) for the purposes to which they are
currently devoted.
3.10.5. To the knowledge of Seller, no portion of the Real
Property or any building, structure, fixture or improvement thereon is the
subject of, or affected by, any condemnation, eminent domain or inverse
condemnation proceeding currently instituted or pending.
3.10.6. Seller has delivered to Buyer copies of title policies
and surveys prepared in connection with Seller's acquisition of the Real
Property.
3.11. CONDITION OF TANGIBLE ASSETS.
Except as set forth on Schedule 3.11, all tangible Assets
presently in use are in operating condition and adequate repair (ordinary wear
and tear excepted) for the purposes to which they are currently devoted.
3.12. INTELLECTUAL PROPERTY.
Schedule 2.1.4 contains a true, correct and complete listing of
all Intellectual Property owned or licensed by or registered in the name of
Seller which is used in the business and operations of the Station, all of
which is transferable to Buyer by the sole act and deed of Seller; and except
as set forth in Schedule 3.12.1 no consent on the part of any other person is
necessary to validate the transfer to Buyer of such Intellectual Property.
Seller pays no royalty to anyone with respect to the Intellectual Property.
Seller owns or possesses all rights to use all such Intellectual Property
material to the conduct of the business of the Station. Seller does not have
any knowledge and Seller has not received any notice to the effect that any
service rendered by Seller relating to the business of the Station may infringe
on any Intellectual Property right or other legally protectable right of
another. Seller has the right to the use of the call letters "WTOV-TV"
pursuant to the rules and regulations of the FCC.
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3.13. REPORTS AND RECORDS.
All material returns, reports and statements relating to the
Station required to be filed by Seller with the FCC or any other Governmental
Authority have been filed and when filed were correct and complete in all
material respects. All such reports, returns and statements shall continue to
be filed on a current basis until the Closing Date, and will be correct and
complete in all material respects when filed. All documents required by the
FCC's rules to be placed in the Station's public files by Seller have been
placed and are being held in such files. All logs and business records of
every type and nature relating to the business and operations of the Station
have been maintained in all material respects in accordance with the rules and
regulations of the FCC.
3.14. STATION CONTRACTS.
The Station Contracts set forth in Schedules 2.1.5, 2.1.6 and
2.1.8 are all of the contracts and agreements relating to the Assets, to the
Station or to the business and operations thereof, other than (a) Time Sales
Agreements; (b) contracts and agreements which are terminable on no more than
sixty (60) days notice without the payment of a premium or penalty; and (c)
contracts and agreements which do not require payments of more than $10,000 per
contract per year or $150,000 per year in the aggregate. Complete and correct
copies of all such Station Contracts have been made available to Buyer and (a)
each such Station Contract is in full force and effect; (b) Seller is not in
breach or default of the terms of any Station Contract in any material respect;
(c) none of the material rights of Seller under any such Station Contract will
be subject to termination or modification, nor will a default occur, as a
result of the consummation of the transactions contemplated hereby, except to
the extent that failure to obtain the prior consent to assignment thereof (to
the extent set forth on Schedule 3.4.1) of any party thereto shall or could be
interpreted to constitute a termination or modification of or a default under
any such Station Contract, and (d) to the knowledge of Seller, no other party
to any such Station Contract is in material breach or default of the terms
thereunder.
3.15. TAXES.
3.15.1. Seller has (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will have prior to the
Closing Date) duly filed all Seller Tax Returns required to be filed by Seller
on or before the Closing Date with respect to all applicable Taxes. In the
case of any Seller Tax Returns which receive an extension for their date of
filing, such Seller Tax Returns will be considered due on, and not considered
required to be filed before, the extended due date. To the Seller's knowledge,
all of Seller Tax Returns are (or, in the case of returns becoming due after
the date hereof and on or before the Closing Date, will be) true and complete
in all material respects. Seller: (a) has paid all
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Taxes due to any Governmental Authority in connection with any of Seller Tax
Returns; or (b) has established (or, in the case of amounts becoming due after
the date hereof, prior to the Closing Date will have established) adequate
reserves (in conformity with generally accepted accounting principles
consistently applied) for the payment of such Taxes.
3.15.2. There is no action, suit, proceeding, audit,
investigation or claim pending or, to the knowledge of Seller, threatened in
respect of any Taxes associated with, or which would become a lien against, the
Assets or operations of the Station for which Seller may become liable, nor has
any deficiency or claim for any such Taxes been proposed, asserted or, to the
knowledge of Seller, threatened. There is no Station Contract, waiver or
consent providing for an extension of time with respect to the assessment or
collection of any Taxes associated with, or which would become a lien against,
the Assets or operations of the Station against Seller, and no power of
attorney granted by Seller with respect to any related tax matters is currently
in force.
3.16. EMPLOYEE BENEFIT PLANS.
3.16.1. Schedule 3.16 lists all Plans and Benefit Arrangements
maintained by or contributed to by Smith Broadcasting Group, Inc. ("SBG") for
the benefit of the employees of the Station (collectively, the "Benefit
Plans"). Each Benefit Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by applicable Law, including,
without limitation, ERISA and the Code.
3.16.2. Schedule 3.16 sets forth a list of all Qualified Plans.
All Qualified Plans and any related trust agreements or annuity agreements (or
any other funding document) have been maintained in compliance with ERISA and
the Code (including, without limitation, the requirements for Tax qualification
described in Section 401 thereof). The trusts established under such Plans are
exempt from federal income taxes under Section 501(a) of the Code.
3.16.3. Schedule 3.16 lists all funded Welfare Plans that
provide benefits to current or former employees of Seller or its beneficiaries.
The funding under each Welfare Plan does not exceed and has not exceeded the
limitations under Sections 419A(b) and 419A(c) of the Code. Neither SBG nor
Seller is subject to taxation on the income of any Welfare Plan's welfare
benefit fund (as such term is defined in Section 419(e) of the Code) under
Section 419A(g) of the Code.
3.16.4. Except as required by applicable Law, neither SBG nor
Seller has any post-retirement medical, life insurance or other benefits
promised, provided or otherwise due now or in the future to current, former or
retired employees of Seller.
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3.16.5. Except as set forth in Schedule 3.16, SBG has (a) filed
or caused to be filed all returns and reports on the Plans that it is required
to file and (b) paid or made adequate provision for all fees, interest,
penalties, assessments or deficiencies that have become due pursuant to those
returns or reports or pursuant to any assessment or adjustment that has been
made relating to those returns or reports. All other fees, interest, penalties
and assessments that are payable by or for SBG and/or Seller have been timely
reported, fully paid and discharged. There are no unpaid fees, penalties,
interest or assessments due from SBG and/or Seller or from any other person
that are or could become an Encumbrance on any Asset or could otherwise
adversely affect the businesses or Assets. SBG has collected or withheld all
amounts that are required to be collected or withheld by it to discharge its
obligations, and all of those amounts have been paid to the appropriate
Governmental Authority or set aside in appropriate accounts for future payment
when due. SBG has furnished to Buyer true and complete copies of all documents
setting forth the terms and funding of each Plan (including, without
limitation, copies of each severance benefit arrangement and vacation pay
plan).
3.17. LABOR RELATIONS.
3.17.1. Except as set forth in Schedule 3.17.1, there are no
strikes, work stoppages, grievance proceedings, union organization efforts, or
other controversies pending or threatened between Seller and any union or
collective bargaining unit representing such employees. Seller is in
compliance in all material respects with all Laws relating to the employment or
the workplace, including, without limitation, provisions relating to wages,
hours, collective bargaining, safety and health, work authorization, equal
employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and right to
know and social security contributions. Except as set forth in Schedule 3.17.1
hereto, there are no collective bargaining agreements relating to the Station
or the business and operations thereof and Seller has not agreed to recognize
any union or other collective bargaining unit, nor has any union or collective
bargaining unit been certified as representing any of Seller's employees.
3.17.2. Seller has provided to Buyer a true and complete list
dated as of August 1, 1996 of all employees of Seller who perform significant
services at the Station.
3.18. ENVIRONMENTAL MATTERS.
3.18.1 Schedule 3.18 sets forth all environmental reports and
assessments prepared for and/or delivered to Seller in connection with Seller's
acquisition and operation of the Real Property.
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<PAGE> 25
3.18.2. To the knowledge of Seller, the information set forth
in Schedule 3.18 is true, correct and complete in all material respects. Since
Seller's acquisition of the Station, Seller has operated the Station, the Real
Property and all improvements thereon in material compliance with all
Environmental Laws.
3.18.3 Except as set forth in Schedule 3.18, there are no
pending or, to the knowledge of Seller, threatened actions, suits, claims, or
other legal proceedings based on (and Seller has not received any notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental
Authority arising out of or attributable to): (a) the current or past presence
at any part of the Real Property of Hazardous Materials; (b) the current or
past release or threatened release into the environment from the Real Property
(including, without limitation, into any storm drain, sewer, septic system or
publicly owned treatment works) of any Hazardous Materials; (c) the off-site
disposal of Hazardous Materials originating on or from the Real Property or the
businesses or Assets of Seller; (d) any facility operations or procedures of
Seller which do not conform to requirements of the Environmental Laws; or (e)
any violation of Environmental Laws at any part of the Real Property arising
from Seller's activities involving Hazardous Materials. To the knowledge of
Seller, Seller has been duly issued all permits, licenses, certificates and
approvals required under any Environmental Law, except for such permits the
failure to obtain, will not have, individually or in the aggregate, a Material
Adverse Effect.
3.18.4 Based on the information set forth in Schedule 3.18, the
Real Property contains no underground storage tanks, or underground piping
associated with such tanks, used currently or in the past for Hazardous
Materials.
3.19. TRANSACTIONS WITH AFFILIATES
Except as set forth in Schedule 3.19 attached hereto, Seller is
not now, and since January 1, 1996, has not been, a party, directly or
indirectly, to any contract, lease, arrangement or transaction which is
material to the business or operations of the Station, whether for the
purchase, lease or sale of property, for the rendition of services or
otherwise, with any affiliate of Seller, or any officer, director, employee,
proprietor, partner or shareholder of Seller. The terms and conditions of the
transactions involving Seller and any affiliate of Seller which are identified
on Schedule 3.19 are described briefly therein.
3.20. INSURANCE.
Schedule 3.20 contains a list and brief summary of all policies
of title, property, fire, casualty, liability, life, workmen's compensation,
libel and slander, and other forms of insurance of any kind relating to the
Assets or the business and operations of the Station and held by Seller. All
such policies: (a) are in full force and effect; (b) are sufficient for
compliance in all material respects by
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Seller with all requirements of Law and of all material agreements to which
Seller is a party; and (c) are valid, outstanding, and enforceable policies.
3.21. INTERPRETATION OF CERTAIN PROVISIONS.
Seller has not relied and is not relying on the specification
of any dollar amount in any representation or warranty made in this Agreement
or any Schedule hereto to indicate that such amounts, or higher or lower
amounts, are or are not material, and agrees not to assert in any dispute or
controversy between the parties hereto that specification of such amounts
indicates or is evidence as to whether or not any obligation, item or matter is
or is not material for purposes of this Agreement and the transactions
contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents, warrants and covenants to Seller as follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and by the Closing Date
will be duly qualified to do business as a foreign corporation where such
qualification is necessary unless the failure to be so qualified would not
materially and adversely affect Buyer's ability to consummate the transactions
contemplated by this Agreement. Buyer has the full corporate power and
corporate authority to enter into and perform the terms of this Agreement and
the other Buyer Documents and to carry out the transactions contemplated hereby
and thereby.
4.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and
of the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary actions of Buyer (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This
Agreement and the Deposit Escrow Agreement constitute, and upon execution and
delivery each such other Buyer Document will constitute, a valid and binding
agreement and obligation of Buyer, enforceable against Buyer in accordance with
its respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and by the
application of general principles of equity.
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4.3. COMPLIANCE WITH LAWS.
As of the Closing Date, Buyer shall have obtained and shall
hold all material permits, licenses and approvals (none of which will have been
modified or rescinded and all of which shall be in full force and effect) from
all Governmental Authorities necessary in order to conduct the operations of
the Station as presently conducted and to own, use and maintain the Assets.
4.4. CONSENTS AND APPROVALS; NO CONFLICTS.
4.4.1. The execution and delivery of this Agreement, and the
performance of the transactions contemplated herein by Buyer, will not require
any consent, approval, authorization or other action by, or filing with or
notification to, any Person or Governmental Authority where the failure to make
such filing or obtain such consent will have a material adverse effect on
Buyer's ability to consummate the transactions contemplated by this Agreement,
except as follows: (a) filings required under Hart-Scott-Rodino, (b) approvals
of the assignment of the FCC Licenses to Buyer by the FCC, and (c) based upon
Seller's representations set forth in Section 3.4.1, certain of the Station
Contracts may be assigned only with the consent of third parties, as specified
in Schedule 3.4.1.
4.4.2. Assuming all consents, approvals, authorizations and
other actions described in Section 4.4.1 have been obtained and all filings and
notifications described in Section 4.4.1 have been made, the execution,
delivery and performance of this Agreement and the other Buyer Documents by
Buyer do not and will not (a) conflict with or violate any Law applicable to
Buyer, (b) conflict with or result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default) of
any contract or agreement to which Buyer is a party or by which Buyer is bound,
or (c) conflict with or violate the organizational documents of Buyer.
4.5. AVAILABILITY OF FUNDS.
Buyer will have available on the Closing Date sufficient funds
to enable it to consummate the transactions contemplated hereby.
4.6. QUALIFICATION OF BUYER.
Buyer is, and pending Closing will be legally, technically,
financially and otherwise qualified under the Communications Act and all rules,
regulations and policies of the FCC to acquire and operate the Station. There
are no facts or proceedings which would reasonably be expected to disqualify
Buyer under the Communications Act or otherwise from acquiring or operating the
Station or would cause the FCC not to approve the assignment of the FCC
Licenses to Buyer. Buyer
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has no knowledge of any fact or circumstance relating to Buyer or any of
Buyer's affiliates that would reasonably be expected to (a) cause the filing of
any objection to the assignment of the FCC Licenses to Buyer, or (b) lead to a
delay in the processing by the FCC of the applications for such assignment. No
waiver of any FCC rule or policy is necessary to be obtained for the grant of
the applications for the assignment of the FCC Licenses to Buyer, nor will
processing pursuant to any exception or rule of general applicability be
requested or required in connection with the consummation of the transactions
herein. As of the Closing Date, Robert N. Smith, SBG or another Person
controlled by Robert N. Smith will own all the voting stock or other voting
interests of Buyer.
4.7. NO OUTSIDE RELIANCE.
Buyer has not relied and is not relying on any statement,
representation or warranty by Seller not made in this Agreement, any Schedule
hereto or any certificate to be delivered by Seller to Buyer at the Closing
pursuant to this Agreement. Buyer is not relying on any projections or other
predictions contained or referred to in the Schedules or other materials that
have been or may hereafter be provided to Buyer or any of its Affiliates,
agents or representatives, and Seller make no representations or warranties
with respect to any such projections or other predictions.
4.8. INTERPRETATION OF CERTAIN PROVISIONS.
Buyer has not relied and is not relying on the specification of
any dollar amount in any representation or warranty made in this Agreement or
any Schedule hereto to indicate that such amounts, or higher or lower amounts,
are or are not material, and agrees not to assert in any dispute or controversy
between the parties hereto that specification of such amounts indicates or is
evidence as to whether or not any obligation, item or matter is or is not
material for purposes of this Agreement and the transactions contemplated
hereby.
ARTICLE 5.
PRE-CLOSING FILINGS
5.1. APPLICATION FOR FCC CONSENT.
As promptly as practicable and no later than November 15, 1996,
Seller and Buyer shall jointly file a Form 316 application with the FCC
requesting the consent of the FCC to the assignment of the FCC Licenses for the
Stations from Seller to Buyer. Seller and Buyer will diligently take, or fully
cooperate in the taking of, all necessary and proper steps, and provide any
additional information reasonably requested in order to obtain promptly the
requested consents and
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approvals of the application by the FCC; provided, however, that none of the
parties hereto shall have any obligation to participate in any evidentiary
hearing.
5.2. HART-SCOTT-RODINO.
As promptly as practicable and no later than November 22, 1996,
Seller and Buyer shall complete any filing that may be required pursuant to
Hart-Scott-Rodino (each an "HSR Filing"), or shall mutually agree that no such
filing is required. Seller and Buyer shall diligently take, or fully cooperate
in the taking of, all necessary and proper steps, and provide any additional
information reasonably requested in order to comply with, the requirements of
Hart-Scott-Rodino.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLER
Each Seller covenants and agrees with Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Closing, Seller will not, without the
prior consent of Buyer, do or agree to do any of the following:
6.1.1. DISPOSITIONS; MERGERS.
Sell, assign, lease or otherwise transfer or dispose of
any of the Assets other than in the Ordinary Course of Business; or merge or
consolidate with or into any other entity or enter into any contracts or
agreements relating thereto.
6.1.2. ACCOUNTING PRINCIPLES AND PRACTICES.
Change or modify any of Seller's accounting principles
or practices or any method of applying such principles or practices.
6.1.3. TRADE-OUT AGREEMENTS.
Enter into any Trade-out Agreement except in the
Ordinary Course of Business.
6.1.4. BROADCAST TIME SALES AGREEMENTS.
Enter into any Time Sales Agreement except in the
Ordinary Course of Business.
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6.1.5. NETWORK AFFILIATION AGREEMENTS AND LOCAL MARKETING
ARRANGEMENTS.
Acquire or enter into any network affiliation
agreements, local marketing arrangements, joint operating agreements, time
brokerage agreements or other similar contracts.
6.1.6. ADDITIONAL AGREEMENTS.
Acquire or enter into any new Station Contracts not
referred to in Sections 6.1.3, 6.1.4 or 6.1.5 above, or renew, extend, amend,
alter, modify or otherwise change any existing Station Contract, except for
Station Contracts obligating Seller to make payments of less than $50,000 per
contract per year and $250,000 per year in the aggregate (collectively,
"Additional Agreements").
6.1.7. BREACHES.
Do or omit to do any act which will cause a material
breach of any Station Contract.
6.1.8. EMPLOYEE MATTERS.
Except as set forth on Schedule 6.1.8, enter into or
become subject to any employment, labor, union, or professional service
contract not terminable at will, or any bonus, pension, insurance, profit
sharing, incentive, deferred compensation, severance pay, retirement,
hospitalization, employee benefit, or other similar plan; or increase the
compensation payable or to become payable to any employee, or pay or arrange to
pay any bonus payment to any employee, except in the Ordinary Course of
Business.
6.1.9. ACTIONS AFFECTING FCC LICENSES.
Take any action which may jeopardize the validity or
enforceability of or rights under the FCC Licenses.
6.1.10. PROGRAMMING.
Program or broadcast any Program Contract or syndicated
program, except in the Ordinary Course of Business.
6.1.11. AFFILIATED TRANSACTIONS.
Except for the transactions described in Schedule 3.19,
enter any transaction with any affiliate of Seller, including, without
limitation, any renewal, extension, modification or other change in, any
existing contract or agreement to which an affiliate of Seller is a party or
any other transaction
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involving an affiliate of Seller which will have continued effectiveness after
the Closing Date.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Closing Date, each Seller will:
6.2.1. PRESERVE EXISTENCE.
Preserve its partnership existence and business
organization intact, maintain its existing franchises and licenses, use
commercially reasonable efforts to preserve for the Buyer the relationships of
the Station with suppliers, customers, employees and others with whom the
Station has business relationships, and keep all Assets substantially in their
present condition, ordinary wear and tear excepted.
6.2.2. NORMAL OPERATIONS.
Subject to the terms and conditions of this Agreement
(including, without limitation, Section 6.1), (a) carry on the businesses and
activities of the Station, including without limitation, the sale of
advertising time, entering into other contracts and agreements, or purchasing
and scheduling of programming, in the Ordinary Course of Business; (b) pay or
otherwise satisfy all obligations (cash and barter) of the Station in the
Ordinary Course of Business; (c) maintain its books of account, records, and
files in substantially the same manner as heretofore; (d) maintain its Assets
in customary repair, maintenance and condition, except to the extent of normal
wear and tear, and repair or replace, consistently with the Ordinary Course of
Business, any Asset that may be damaged or destroyed, and (e) continue to
collect and write-off Accounts Receivables in the Ordinary Course of Business.
6.2.3. MAINTAIN FCC LICENSES.
Maintain the validity of the FCC Licenses, and comply
in all material respects with all requirements of the FCC Licenses and the
rules and regulations of the FCC and all other applicable Laws.
6.2.4. NETWORK AFFILIATION.
Use its reasonable efforts to maintain in full force
and effect Seller's present network affiliation agreements for the Station (and
any and all modifications and renewals thereof).
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<PAGE> 32
6.2.5. STATION CONTRACTS.
Pay and perform its obligations in the Ordinary Course
of Business under the Station Contracts and under any Additional Agreements
that shall be entered into between the date hereof and the Closing pursuant to
Section 6.1.6, in accordance with the respective terms and conditions of such
Station Contracts.
6.2.6. TAXES.
Pay or discharge all Taxes when due and payable in the
Ordinary Course of Business.
6.2.7. PARTNERSHIP ACTION.
Take all partnership action (including, without
limitation, all partner action) under the Laws of any state having jurisdiction
over Seller necessary to effectuate the transactions contemplated by this
Agreement and by the other Seller Documents.
6.2.8. ACCESS.
Cause to be afforded to representatives of Buyer
reasonable access during normal business hours to offices, properties, assets,
books and records, contracts and reports of the Station, as Buyer shall from
time to time reasonably request; provided, however, that such investigation
shall only be upon reasonable notice and shall not unreasonably disrupt the
personnel or operations of Seller or the Station. All requests for access to
the offices, properties, assets, books and records, contracts and reports of
the Station shall be made to such representatives as Seller shall designate in
writing, who shall be solely responsible for coordinating all such requests and
all access permitted hereunder. Buyer acknowledges and agrees that neither
Buyer nor its representatives shall contact any of the employees, customers,
suppliers, partners, or other associates or affiliates of Seller or the
Stations, in connection with the transactions contemplated hereby, whether in
person or by telephone, mail or other means of communication, without the
specific prior written authorization of such representatives of Seller.
6.2.9. INSURANCE.
Maintain in full force and effect all of its existing
casualty, liability, and other insurance through the day following the Closing
Date in amounts not less than those in effect on the date hereof.
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6.2.10. FINANCIAL STATEMENTS.
Provide Buyer with unaudited monthly statements of
assets and liabilities of Seller relating to the business and operations of the
Station, and statements of revenues and expenses reflecting the results of
business and operations of the Station for October, 1996 and for each month
thereafter, within forty-five (45) days after the end of each such month.
6.3. CONSENTS.
Prior to, on and after the Closing, Seller shall take all
reasonable action required to obtain all consents, approvals and agreements of
any third parties necessary to authorize, approve or permit the consummation of
the transactions contemplated by this Agreement, including, without limitation,
any consent of the parties to the Station Contracts designated as necessary in
Schedule 3.4.1 in order to consummate the transactions contemplated hereby
(collectively, the "Restricted Contracts"). Notwithstanding anything to the
contrary set forth in this Agreement or otherwise, to the extent that the
consent or approval of any third party is required under any Restricted
Contract, Seller shall only be required to use reasonable efforts (not
involving the payment by Seller of any money to any party to any such
Restricted Contract) to obtain such consents and approvals.
6.4. CONFIDENTIALITY.
Seller shall, at all times, maintain strict confidentiality
with respect to all documents and information furnished to Seller by or on
behalf of Buyer. Nothing shall be deemed to be confidential information that:
(a) is known to Seller at the time of its disclosure to Seller; (b) becomes
publicly known or available other than through disclosure by Seller; (c) is
received by Seller from a third party not actually known by Seller to be bound
by a confidentiality agreement with or obligation to Buyer; or (d) is
independently developed by Seller. Notwithstanding the foregoing provisions of
this Section 6.3, Seller may disclose such confidential information (x) to the
extent required or deemed advisable to comply with applicable Laws; (y) to its
officers, directors, employees, representatives, financial advisors, attorneys,
accountants, and agents with respect to the transactions contemplated hereby
(so long as such parties agree to maintain the confidentiality of such
information, subject to clauses (x) and (z) of this sentence); and (z) to any
Governmental Authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, Seller will return to Buyer all
documents and other material prepared or furnished by Buyer relating to the
transactions contemplated hereunder, whether obtained before or after the
execution of this Agreement. In the event that Seller is requested or required
(including without limitation by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar legal
process) to disclose any confidential information, Seller will promptly notify
Buyer
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of such request or requirements so that Buyer may, as it may elect, either seek
an appropriate protective order or waive Seller's compliance with the
provisions of this Section 6.3. In the event that such protection or other
remedy is not obtained or that the Buyer waives compliance, Seller agree to
furnish only that portion of the confidential information which Seller is
advised by counsel is legally required and to exercise Seller's reasonable
efforts to obtain assurance that confidential treatment will be accorded such
confidential information.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Sellers as follows:
7.1. CONFIDENTIALITY.
Buyer shall, at all times prior to the Closing, maintain strict
confidentiality with respect to all documents and information furnished to
Buyer by or on behalf of Seller. Nothing shall be deemed to be confidential
information that: (a) is known to Buyer at the time of its disclosure to
Buyer; (b) becomes publicly known or available other than through disclosure by
Buyer; (c) is received by Buyer from a third party not actually known by Buyer
to be bound by a confidentiality agreement with or obligation to Seller; or (d)
is independently developed by Buyer. Notwithstanding the foregoing provisions
of this Section 7.1, Buyer may disclose such confidential information (x) to
the extent required or deemed advisable to comply with applicable Laws; (y) to
its officers, directors, partners, employees, representatives, financial
advisors, attorneys, accountants, agents, underwriters, lenders, investors and
any other potential sources of financing with respect to the transactions
contemplated hereby (so long as such parties agree to maintain the
confidentiality of such information, subject to clauses (x) and (z) of this
sentence); and (z) to any Governmental Authority in connection with the
transactions contemplated hereby or the financing thereof. In the event this
Agreement is terminated, Buyer will return to Seller all documents and other
material prepared or furnished by Seller relating to the transactions
contemplated by this Agreement, whether obtained before or after the execution
of this Agreement. In the event that Buyer is requested or required (including
without limitation by oral question, interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar legal process) to
disclose any confidential information, Buyer will promptly notify Seller of
such request or requirements so that Seller may, as it may elect, either seek
an appropriate protective order or waive Buyer's compliance with the provisions
of this Section 7.1. In the event that such protection or other remedy is not
obtained or that the Seller waives compliance, Buyer agrees to furnish only
that portion of the confidential information which Buyer is advised by counsel
is legally required and to exercise Buyer's reasonable efforts to obtain
assurance that confidential treatment will be accorded such confidential
information.
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7.2. CORPORATE ACTION.
Prior to the Closing, Buyer shall take all corporate action
(including, without limitation, all shareholder action) under the Laws of any
state having jurisdiction over Buyer necessary to effectuate the transactions
contemplated by this Agreement and the other Buyer Documents.
7.3. ACCESS.
For a period of seven (7) years from and after the Closing
Date, Buyer shall cause to be afforded to representatives of Seller reasonable
access during normal business hours to the offices, books and records,
contracts and reports of the Station which relate to the operations of the
Station during the period during which the Station was owned by Seller, as
Seller shall from time to time reasonably request for Seller's reasonable
business purposes; provided, however, that such investigation shall only be
upon reasonable notice and shall not disrupt the personnel or operations of
Buyer or the Station. All requests for access to the offices, books and
records, contracts and reports of the Station shall be made to such
representatives as Buyer shall designate in writing, who shall be solely
responsible for coordinating all such requests and all access permitted
hereunder. For a period of seven (7) years from and after the Closing Date,
Buyer shall not dispose of any books and records, contracts and reports of the
Station which relate to the operations of the Station during the period during
which the Station was owned by Seller without consulting with Seller prior to
disposal thereof and taking any reasonable action requested by Seller with
respect to retention and transfer to Seller thereof.
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1. POSSESSION AND CONTROL.
Between the date hereof and the Closing Date, Buyer shall not
directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Station, and such
operation, including complete control and supervision of all programming, shall
be the sole responsibility of Seller. On and after the Closing Date, Seller
shall have no control over, or right to intervene, supervise, direct or
participate in, the business and operations of the Station.
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8.2. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause
to the Assets until the Closing Date shall be upon Seller. In the event of any
such loss or damage prior to the Closing Date which causes a Material Adverse
Effect, Seller shall have the right to restore, replace or repair the damaged
Assets to their previous condition at Seller's sole cost and expense. In the
event that as of the Closing Date, any such loss or damage shall not have been
restored, replaced, or repaired and Seller desires to restore, replace or
repair such damaged Assets, Seller shall have the right to defer the Closing
Date, by written notice to Buyer, until such date (the "Extended Closing Date")
which is the later to occur of (a) the date which is nine (9) months after the
date of this Agreement, or (b) the date which is sixty (60) days after the date
on which such loss or damage occurred. In the event that any such loss or
damage shall not be restored, replaced, or repaired as of the Extended Closing
Date, Buyer shall, at its option, either:
(a) proceed with the Closing and receive at Closing, the
insurance proceeds or an assignment of the right to receive such insurance
proceeds, as applicable, to which Seller otherwise would be entitled, whereupon
Seller shall have no further liability to Buyer for such loss or damage
(pursuant to the indemnification provisions of this Agreement or otherwise); or
(b) terminate this Agreement by written notice to Seller and
receive the immediate return of the Deposit, whereupon no party to this
Agreement shall have any liability to any other party to this Agreement, and
this Agreement in its entirety shall be deemed null, void and of no further
force and effect, except for the provisions set forth in Section 13.2 (which
shall survive such termination).
Buyer and Seller acknowledge and agree that nothing in this
Section 8.2 shall be deemed to waive any requirement that the representations
and warranties be restated as of Closing as provided for in Section 9.1 of this
Agreement.
8.3. PUBLIC ANNOUNCEMENTS.
Between the date hereof and the Closing Date, Seller and Buyer
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the transactions
contemplated herein and shall not issue any such press release or make any such
public statement without the prior written consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may,
without the prior written consent of the other party, issue such press release
or make such public statement as may be required by Law or any listing
agreement with a national securities exchange to which Seller or Buyer is a
party if it has used all
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reasonable efforts to consult with the other party and to obtain such party's
consent but has been unable to do so in a timely manner.
8.4. EMPLOYEE MATTERS.
8.4.1. TRANSFERRED EMPLOYEES.
(a) Upon consummation of the Closing hereunder, Buyer
shall offer employment to each of the employees of the Station, who are
actively employed as of the Closing Date by the Seller, at a comparable salary,
position and place of employment as held by each such employee immediately
prior to the Closing Date, and Buyer shall adopt employee benefit plans,
policies and arrangements covering such employees substantially similar to the
Benefit Plans of Seller in effect as of the date hereof. Buyer shall also
offer employment to each employee of the Station who is temporarily absent from
active employment on the Closing Date upon termination of such temporary
absence provided such employee is able to perform the essential functions of
the position such employee held prior to such absence and any such employee
shall be treated as a "Transferred Employee" (as defined herein) from and after
the Closing Date.
(b) To the extent such employees accept employment with
Buyer (collectively, "Transferred Employees"), such Transferred Employees will
be included in Buyer's employee benefit plans and will be subject to Buyer's
employment policies, as generally applicable to Buyer's employees who are
similarly situated. Buyer agrees that Transferred Employees shall be credited
under all of Buyer's applicable employee benefit plans covering such employees
with their service at any of the Jupiter/Smith Stations for purposes of
determining any period of eligibility to participate or to vest in benefits to
the same extent such service was counted under the Benefit Plans of Seller.
Buyer agrees that during the ninety (90) day period immediately following the
Closing Date Buyer shall not (i) terminate any Transferred Employee except for
termination for good cause, or (ii) adversely change the terms of any
Transferred Employee's employment; provided, however, thereafter, subject to
applicable laws, Buyer shall have the right, at any time thereafter, to dismiss
any or all Transferred Employees at any time thereafter, with or without cause,
and to change the terms and conditions of their employment (including
compensation and employee benefit plans, policies or arrangements, provided to
them).
8.4.2 VACATION AND SICK LEAVE.
In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 8.4.1, Buyer shall
assume, without duplication of benefits, the obligations and liabilities of
Seller to Transferred Employees as of the Closing Date for unused and unpaid
vacation and sick leave, but only to the extent reflected in the employee
records of Sellers. Except as
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otherwise required by applicable law, Buyer shall provide, without duplication
of benefits, all Transferred Employees with vacation time or sick leave, as the
case may be, rather than cash in lieu thereof, for such unused and unpaid
vacation and sick leave in accordance with Buyer's policies. Buyer shall be
liable for, and shall indemnify, defend and hold harmless Sellers from and
against, all Liabilities of Sellers to Transferred Employees with respect to
unused sick leave and unused vacation leave.
8.4.3 SEVERANCE BENEFITS.
In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 8.4.1, with respect
to each Transferred Employee, Buyer shall establish a severance benefit plan
similar to the severance plan of Seller set forth on Schedule 3.16.1.
Transferred Employees shall be credited under Buyer's severance benefit plan
with their service at any of the Jupiter/Smith Stations for purposes of
determining the amount of severance benefits to which they may be entitled
under such plan; provided, however, that any service at any of the
Jupiter/Smith Stations for which severance had previously been paid shall be
disregarded. Buyer shall be liable for, and shall indemnify, defend and hold
harmless Sellers from and against any and all claims by Transferred Employees
after the Closing Date for severance benefits to the extent not provided by
Buyer's severance benefits plans adopted pursuant to Buyer's obligation set
forth in Section 8.4.1 to provide employee benefit plans substantially similar
to the severance benefits plan of Sellers set forth on Schedule 3.16.1.
8.4.4 REPRESENTED EMPLOYEES.
(a) In furtherance of and not in limitation of the
obligations and liabilities of Buyer set forth in Section 8.4.1, upon
consummation of the Closing hereunder, Buyer shall: (i) recognize the unions
and labor organizations which are parties to the collective bargaining
agreements set forth in Schedule 3.17.1; (ii) employ all active employees of
the Stations represented by any such union or labor organization (collectively,
"Represented Employees"); (iii) adopt employee benefit plans, policies and
arrangements covering such Represented Employees substantially similar to the
Benefit Plans of Sellers in effect as of the date hereof and as required by
such collective bargaining agreements; and (iv) negotiate in good faith with
the collective bargaining representatives of the employees of Seller regarding
the substitution of Buyer's employee benefit plans, policies and arrangements
for the Benefit Plans of Sellers.
(b) Upon consummation of the Closing hereunder, Sellers
shall assign to Buyer, and Buyer shall assume the collective bargaining
agreements listed in Schedule 3.17.1. including, without limitation, all
obligations, if any, to provide severance benefits in connection with the
termination after the Closing Date of any Represented Employee. Such
assignment and assumption shall not
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obligate Buyer to assume any Benefit Plans of Sellers. Except for any
Liabilities of Sellers with respect to unused sick leave or unused vacation
(which Buyer expressly assumes), Buyer shall not be responsible for any
Liabilities of Sellers under the collective bargaining agreement listed in
Schedule 3.17.1, which arose on or prior to the consummation of the Closing,
including, without limitation, any Liabilities for wages and any Benefit Plans
of Seller.
(c) The Seller agrees to cooperate with Buyer in
arranging for such meetings as Buyer may reasonably request with the collective
bargaining representatives of the employees of Seller to discuss Buyer's
assumption of the collective bargaining agreements listed in Schedule 3.17.1
and the implementation of employee benefits plans, policies and arrangements of
the Buyer; provided, however, that any such meeting (i) shall be subject to the
prior written approval of Seller upon reasonable notice to Seller, and (ii)
shall not unreasonably disrupt the personnel or operations of the Seller or the
Station.
8.4.5. COBRA OBLIGATIONS.
Buyer shall satisfy and discharge any obligations of
Seller to provide health care continuation coverage as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 and as described in
Section 4908B of the Code and Sections 601 through 608 of ERISA and as required
by any applicable state continuation of health coverage provisions
(collectively, "COBRA Obligations") to (a) any employee to whom Buyer offers
employment pursuant to Section 8.4.1 who does not accept such offer of
employment, or (b) any employee of the Station terminated prior to the Closing
Date to whom Sellers have on-going COBRA Obligations. Sellers and Buyer shall
reasonably cooperate in good faith to comply with Seller's COBRA Obligations
with respect to all such employees by having Buyer assume such obligations on
Seller's behalf and offering health care continuation coverage under Buyer's
group health plans to all such employees. Buyer shall indemnify, defend and
hold harmless Seller from and against, all obligations of Buyer set forth in
this Section 8.4.5.
8.4.6. SELLER BENEFITS PLANS.
As between Buyer and Seller, Seller agrees to be
responsible and liable for any medical, disability or other benefits owed under
Seller's benefit plans. Except as otherwise specified in Section 8.4.5,
Sellers will be responsible for providing, at its cost, all medical, life and
other insurance coverage and benefits, and disability benefits to which any
employee of Sellers who was terminated from service with Seller prior to the
Closing Date or who was disabled prior to the Closing Date is entitled under
Seller's benefit plans or otherwise.
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8.4.7. 401(K) PLANS.
Buyer agrees to permit those Transferred Employees, at
each such Transferred Employee's option, to transfer as a rollover to Buyer's
401(k) Plan their respective pre-tax account balances under SBG's 401(k) Plan,
provided that such plan is a tax-qualified plan under Section 401(a) and 401(k)
of the Code and that the transfer as a rollover of any such pre-tax account
balance will not affect the tax qualified status of Buyer's 401(k) Plan. SBG
agrees that if any such Transferred Employee elects to transfer as a rollover
its pre-tax account balance to Buyer's 401(k) Plan, SBG will cause the trustees
of SBG's 401(k) Plan to transfer each such electing Transferred Employee's
account to the trustee of Buyer's 401(k) Plan.
8.4.8. EMPLOYMENT CONTRACTS.
Buyer acknowledges and agrees that Buyer's obligations
pursuant to this Section 8.4 are in addition to, and not in limitation of,
Buyer's obligation to assume the employment contracts set forth on Schedule
2.1.8.
8.5. ALLOCATION OF PURCHASE PRICE.
Seller and Buyer each represent, warrant, covenant, and agree
with each other that the Purchase Price shall be allocated among the classes of
Assets for the Station, as agreed by the parties within thirty (30) days after
the date hereof. Seller and Buyer agree, pursuant to Section 1060 of the Code
that the Purchase Price shall be allocated in accordance with this Section 8.5,
and that all Tax returns and reports shall be filed consistent with such
allocation. Notwithstanding any other provision of this Agreement, the
provisions of this Section 8.5 shall survive the Closing Date without
limitation.
If Seller and Buyer are unable to agree on such allocation,
within thirty (30) days following execution of this Agreement, Seller and Buyer
agree to retain Bond & Pecaro (the "Appraisal Firm") to update their 1996
appraisal of the classes of Assets of the Station in accordance with the
allocation for the Station set forth in Section 2.7 and to deliver a report to
Seller and Buyer as soon as reasonably practicable (the "Appraisal Report").
Buyer shall pay the fees, costs and expenses of the Appraisal Firm whether or
not the transactions contemplated hereby are consummated.
8.6. DISCLOSURE SCHEDULES.
Seller and Buyer acknowledge and agree that Seller shall have
the right from time to time after the date hereof to update or correct the
Schedules attached hereto to reflect (a) immaterial omissions from the
Schedules, and (b) changes permitted in accordance with the terms of Article 6.
The inclusion of
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any fact or item on a Schedule referenced by a particular section in this
Agreement shall, should the existence of the fact or item or its contents, be
relevant to any other section, be deemed to be disclosed with respect to such
other section whether or not an explicit cross-reference appears in the
Schedules if it is reasonably apparent on the face of the Schedule in which
such item is referenced that such item is relevant to such other section.
8.7. BULK SALES LAWS.
Buyer hereby waives compliance by Seller, in connection with
the transactions contemplated hereby, with the provisions of any applicable
bulk transfer laws; provided, however, that Seller shall indemnify and hold
harmless Buyer from and against any Losses attributable to Seller's
non-compliance with any applicable bulk transfer laws, without regard to the
provisions of Article 12.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed
with the Closing are subject to the satisfaction (or waiver in writing by
Buyer) at or prior to the Closing of each of the following conditions:
9.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Seller made in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (provided that any representation
or warranty contained herein that is qualified by a materiality standard shall
not be further qualified hereby), except as modified by the Schedules updated
after the date hereof (in accordance with Section 8.6) and except for
representations and warranties that speak as of a specific date or time other
than the Closing Date (which need only be true and correct in all material
respects as of such date or time), and the covenants and agreements of Seller
required to be performed on or before the Closing Date in accordance with the
terms of this Agreement shall have been performed in all material respects.
9.2. REQUIRED CONSENTS.
Seller shall have obtained prior to the Closing Date all
consents, authorizations or approvals necessary to effect valid assignments to
Buyer of those Station Contracts listed on Schedule 9.2.
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9.3. DELIVERY OF DOCUMENTS.
Seller shall have delivered to Buyer all contracts, agreements,
instruments and documents required to be delivered by Seller to Buyer pursuant
to Section 11.2.
9.4. FCC ORDER.
The FCC Order shall have become a Final Order with respect to
the Station.
9.5. HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
9.6 LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any
court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
9.7 THREE-STATION AGREEMENT.
The consummation of the transactions contemplated by the
Three-Station Agreement shall have occurred concurrently with the Closing
hereunder.
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and deliver
the Assets and to proceed with the Closing are subject to the satisfaction (or
waiver in writing by Seller) at or prior to the Closing of each of the
following conditions:
10.1. REPRESENTATIONS AND COVENANTS.
The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (provided that any representation
or warranty contained herein that is qualified by a materiality standard shall
not be further qualified hereby) except for representations and warranties that
speak as of
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a specific date or time other than the Closing Date (which need only be true
and correct in all material respects as of such date or time), and the
covenants and agreements of Buyer required to be performed on or before the
Closing Date in accordance with the terms of this Agreement shall have been
performed in all material respects.
10.2. DELIVERY BY BUYER.
Buyer shall have delivered to Seller the Purchase Price, to the
extent required to be paid on the Closing Date pursuant to Section 2.5, and all
contracts, agreements, instruments and documents required to be delivered by
Buyer to Sellers pursuant to Section 11.3.
10.3. FCC ORDER.
The FCC Order shall have become a Final Order with respect to
the Station.
10.4. HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
10.5. LEGAL PROCEEDINGS.
No injunction, restraining order or decree of any nature of any
court or Governmental Authority of competent jurisdiction shall be in effect
that restrains or prohibits the transactions contemplated by this Agreement.
10.6. THREE-STATION AGREEMENT.
The consummation of the transactions contemplated by the
Three-Station Agreement shall have occurred concurrently with the Closing
hereunder.
ARTICLE 11.
THE CLOSING
11.1. CLOSING.
The Closing hereunder shall be deemed to take place as of 12:00
p.m. (midnight) on the last day of the calendar month during which the FCC
Order becomes a Final Order unless there shall be an Extended Closing Date as
contemplated by Section 8.2 of this Agreement or Section 8.2 of the
Three-Station
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Purchase Agreement; provided, however, notwithstanding the foregoing, in no
event shall the Closing hereunder occur prior to January 31, 1997 (the "Closing
Date"). The Closing shall be held at 10:00 A.M. local time on the Closing Date
at the offices of Hogan & Hartson L.L.P., 555 13th Street, N.W., Washington,
D.C. or at such other time and place as the parties may agree.
11.2. DELIVERY BY SELLER.
At or before the Closing, Seller shall deliver to Buyer the
following:
11.2.1. AGREEMENTS AND INSTRUMENTS
The following bills of sale, assignments and other instruments
of transfer, dated as of the Closing Date and duly executed by Seller:
(a) the Indemnity Escrow Agreement;
(b) the Bill of Sale;
(c) the Assignment of FCC Licenses;
(d) the Assignment of Contracts and Leases;
(e) the Assumption Agreement;
(f) certificates of title with respect to the motor vehicles
listed on Schedule 2.1.10 or if any such motor vehicles are leased by
Seller; an assignment of such lease;
(g) special or limited warranty deeds for all Real Property
owned by Seller in the forms attached hereto as Exhibit G; and
(h) real and personal property transfer tax forms, including,
without limitation, those set forth in Exhibit H attached hereto.
11.2.2. CONSENTS.
Copies of all consents Seller has been able to obtain
to effect the assignment to Buyer of the Station Contracts listed on Schedule
3.4.1.
11.2.3. CERTIFIED RESOLUTIONS.
A copy of the approval of the partners of Seller,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement, and of
the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.2.4. OFFICERS' CERTIFICATES.
(a) A certificate of Seller certifying the matters set
forth in Section 9.1; and
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(b) a certificate of Seller as to the incumbency of the
representatives of Seller executing this Agreement or any of the other Seller
Documents on behalf of Seller.
11.2.5. ORGANIZATIONAL DOCUMENTS.
Copies of the organizational documents of Seller and
SBG certified by an executive officer of SBG as being correct and complete.
11.2.6. DEPOSIT
Seller and the Three-Station Sellers shall have
instructed the Deposit Escrow Agent in writing to return the Deposit to Buyer
and the Three-Station Buyer.
11.3. DELIVERY BY BUYER.
At or before the Closing, Buyer shall deliver to Seller the
following:
11.3.1. PURCHASE PRICE PAYMENT.
The Purchase Price in the amount and manner set forth
in Section 2.
11.3.2. AGREEMENTS AND INSTRUMENTS.
The following assumption agreement and other
instruments of transfer, dated as of the Closing Date and duly executed by
Buyer: (a) the Indemnity Escrow Agreement;
(b) the Assumption Agreement; and
(c) real and personal property transfer tax forms,
including, without limitation, those set forth in Exhibit H
attached hereto.
11.3.3. CERTIFIED RESOLUTIONS.
Copies of the resolutions of the directors of Buyer,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement and of
the other Buyer Documents, and the consummation of the transactions
contemplated hereby and thereby.
11.3.4. OFFICERS' CERTIFICATE.
(a) A certificate of Buyer signed by an officer of
Buyer certifying the matters set forth in Section 10.1; and
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(b) a certificate signed by the Secretary of Buyer as
to the incumbency of the officers of Buyer executing this Agreement or any of
the other Buyer Documents on behalf of Sellers.
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
Unless otherwise set forth herein, all representations and
warranties, covenants and agreements of Seller and Buyer contained in or made
pursuant to this Agreement or in any certificate furnished pursuant hereto
shall survive the Closing Date and shall remain in full force and effect for a
period of twelve (12) months after the Closing Date, except that (a) any
representation, warranty, covenant or agreement that is the subject of a claim
which is asserted by the party seeking indemnification hereunder in a
reasonably detailed writing delivered to the other party or parties, as the
case may be, prior to the expiration of such twelve-month period shall survive
with respect to such claim or dispute until the final resolution thereof, and
(b) the following covenants and agreements shall continue in full force and
effect until fully discharged: Sections 6.3 and 7.1 (which relate to
confidentiality), Sections 6.2.8 and 7.3 (which relate to access), Section 8.4
(which relates to employee matters), and Article 15 (which relates to
miscellaneous matters). No claim for indemnification may be made pursuant to
this Article 12 after the survival period set forth in this Section 12.1.
12.2. INDEMNIFICATION BY SELLER.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Seller and the Three-Station
Sellers, jointly and severally, agree to indemnify, defend and hold harmless
Buyer, the Three-Station Buyer, and their respective officers, directors,
employees, agents and shareholders ("Buyer Indemnified Parties") from and
against and in any respect of any and all Losses, asserted against, resulting
to, imposed upon or incurred by any Buyer Indemnified Parties, directly or
indirectly, by reason of or resulting from: (a) any failure by Seller to pay,
perform or discharge any Liabilities of Seller not expressly assumed by Buyer
pursuant hereto or pursuant to any Buyer Document; (b) the business or
operations of the Station during the period on or prior to the Closing Date
(except to the extent Buyer has expressly assumed the Liability for any such
Losses pursuant hereto); (c) any misrepresentation or breach of the
representations and warranties of Seller contained in or made pursuant to this
Agreement or any other Seller Document; or (d) any breach by Seller of any
covenants of Seller contained in or made pursuant to this Agreement or any
other Seller Document. Subject to the limitations on indemnification set forth
in Article 12 of the Three-Station Agreement, Seller hereby agrees for the
benefit of the Buyer
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Indemnified Parties to be jointly and severally liable with the Three-Station
Sellers for any indemnification obligations of the Three-Station Sellers set
forth in Article 12 of the Three-Station Agreement.
12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of Section 12.4 and
Section 12.5, from and after the Closing Date, Buyer and the Three-Station
Buyer, jointly and severally hereby agree to indemnify, defend and hold
harmless Seller, the Three-Station Sellers and their respective officers,
directors, employees, agents and partners ("Seller Indemnified Parties") from,
against and with respect of any and all Losses, asserted against, resulting to,
imposed upon or incurred by any Seller Indemnified Parties, directly or
indirectly, by reason of or resulting from: (a) any failure by Buyer to pay,
perform or discharge any Liabilities expressly assumed by Buyer pursuant hereto
or pursuant to any Buyer Document; (b) the business or operations of the
Station during the period after the Closing Date; (c) any misrepresentation or
breach of the representations and warranties of Buyer contained in or made
pursuant to this Agreement or any other Buyer Document; or (d) any breach by
Buyer of any covenants of Buyer contained in or made pursuant to this Agreement
or any other Buyer Document. Subject to the limitations on indemnification set
forth in Article 12 of the Three-Station Agreement, Buyer hereby agrees for the
benefit of the Seller Indemnified Parties to be jointly and severally liable
with the Three-Station Buyer for any indemnification obligations of the
Three-Station Buyer set forth in Article 12 of the Three-Station Agreement.
12.4. LIMITATIONS ON INDEMNIFICATION
12.4.1. Notwithstanding any other provision of this Agreement
to the contrary, in no event shall Losses include a party's incidental,
consequential or punitive damages, regardless of the theory of recovery. Each
party hereto agrees to use reasonable efforts to mitigate any Losses which form
the basis for any claim for indemnification hereunder.
12.4.2. Neither the Jupiter/Smith Sellers (taken as a whole)
nor the HMTF/Smith Buyers (taken as a whole) shall be liable to the other in
respect of any indemnification hereunder except to the extent that the
aggregate Losses of the party to be indemnified under this Agreement and under
the Three-Station Agreement (taken as a whole) exceeds Two Hundred Fifty
Thousand Dollars ($250,000) (the "Basket Amount"), and then only to the extent
of the excess over the Basket Amount; provided, however, the Basket Amount and
the limitations set forth in Section 12.4.3 shall not be applicable to (a) any
Losses incurred by any Seller Indemnified Party in connection with Buyer's
failure to comply with the covenants, agreements and indemnities set forth in
Section 2.7.1 or Section 8.4, or (b) any amounts owed in connection with the
Final Net Working Capital Amount.
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12.4.3. Notwithstanding any other provision of this Agreement
to the contrary (other than Section 12.4.2), the Buyer acknowledges and agrees
as follows: (a) the maximum aggregate liability of the Jupiter/Smith Sellers
(taken as a whole) pursuant to this Agreement and the Three-Station Agreement
(taken as a whole) to the Buyer Indemnified Parties and any third parties for
any and all Losses shall not exceed the Indemnity Escrow Amount, regardless of
whether the Buyer Indemnified Parties seek indemnification pursuant to this
Article 12 or Article 12 of the Three-Station Agreement, regardless of the form
of action, whether in contract or tort, including negligence, and regardless of
whether or not the Jupiter/Smith Sellers are notified of the possibility of
damages to the Buyer Indemnified Parties or any other third party, and (b) any
indemnification payments by the Jupiter/Smith Sellers pursuant to this Article
12 shall be solely payable from the funds held by the Indemnity Escrow Agent
pursuant to the Indemnity Escrow Agreement; provided, however, nothing in this
Section 12.4.3 shall be construed to constitute a waiver or limitation of any
claims by Buyer based on fraud.
12.4.4. Each party (a "recipient party") shall notify the other
party (the "representing party") reasonably promptly of any perceived breach by
the representing party of which the recipient party has knowledge of any
representations and warranties, covenants, and agreements and of any Losses
(including a brief description of the same) of the recipient party caused
thereby. In the event of any breach that is cured prior to the Closing Date in
accordance with the terms of this Agreement, the representing party shall have
no obligation under Section 12.2 or Section 12.3 or otherwise to indemnify the
recipient party with respect to such Losses.
12.5. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Seller and of Buyer
hereunder with respect to their respective indemnities pursuant to this Section
12, resulting from any Losses, shall be subject to the following terms and
conditions:
12.5.1. The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice of any such Losses promptly after the Indemnified
Party receives notice thereof; provided that the failure to give such notice
shall not affect the rights of the Indemnified Party hereunder except to the
extent that the Indemnifying Party shall have suffered actual damage by reason
of such failure.
12.5.2. The Indemnifying Party shall have the right to
undertake, by counsel or other representatives of its own choosing (reasonably
acceptable to the Indemnified Party), the defense of such Losses at the
Indemnifying Party's risk and expense.
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12.5.3. In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Losses at any time prior to
settlement, compromise or final determination thereof (with counsel reasonably
acceptable to the Indemnified Party)). In such event, the Indemnifying Party
shall pay to the Indemnified Party, in addition to the other sums required to
be paid hereunder, the costs and expenses incurred by the Indemnified Party in
connection with such defense, compromise or settlement as and when such costs
and expenses are so incurred.
12.5.4. Anything in this Section 12.5 to the contrary
notwithstanding, (a) if there is a reasonable probability that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise
or settlement of the Losses, (b) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Losses or consent
to entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of
a release from all liability in respect of such Losses in form and substance
satisfactory to the Indemnified Party, and (c) in the event that the
Indemnifying Party undertakes defense of any Losses, the Indemnified Party, by
counsel or other representative of its own choosing and at its sole cost and
expense, shall have the right to consult with the Indemnifying Party and its
counsel or other representatives concerning such Losses and the Indemnifying
Party and the Indemnified Party and their respective counsel or other
representatives shall cooperate with respect to such Losses (d) in the event
that the Indemnifying Party undertakes defense of any Losses, the Indemnifying
Party shall have an obligation to keep the Indemnified Party informed of the
status of the defense of such Losses and furnish the Indemnified Party with all
documents, instruments and information that the Indemnified party shall
reasonably request in connection therewith, and (e) in the event that both the
Indemnified Party and the Indemnifying Party are parties (directly or through
interpleader) to any Losses giving rise to indemnification hereunder and the
Indemnified Party is advised by counsel that there is or may be a conflict of
interest in the representation of both the Indemnified Party and the
Indemnifying Party by one firm of counsel, the Indemnified Party shall be
entitled to assume, at the sole cost and expense of the Indemnifying Party, the
defense, compromise and settlement (subject to clause (b) above) of such Loss
with counsel (in addition to local counsel) reasonably satisfactory to the
Indemnifying Party.
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12.5.5 In the event that an Indemnified Party has a good faith
basis for a claim for indemnification which does not involve a claim against it
by a third party (a "Direct Claim"), the Indemnified Party shall notify the
Indemnifying Party in writing of such Direct Claim with reasonable promptness,
specifying, to the extent known, the nature, circumstances and amount of such
Direct Claim (a "Direct Claim Notice"), including with particularity the
specific representation and warranty or covenant and agreement alleged to have
been breached. If the Indemnifying Party notifies the Indemnified Party that
it disputes an Indemnified Party's right of indemnification with respect to a
particular Direct Claim, the parties shall use their reasonable efforts to
negotiate a resolution of such dispute promptly. Except to the extent of the
limitations on indemnification set forth in this Article 12, nothing in this
Section 12.5.5 shall be deemed to prevent any Indemnified Party from initiating
litigation under this Agreement with respect to any Direct Claim disputed by
the Indemnifying Party for the purpose of establishing the Indemnified Party's
right to indemnification hereunder.
12.6. CURE OF BREACH
Notwithstanding any other provision of this Agreement to the
contrary, a breach by Seller of any representations and warranties or a failure
to perform any covenant or agreement hereunder may be cured prior to the
Closing Date by Sellers (a) by reducing the Purchase Price in an amount equal
to the Losses to Buyer caused by such breach, (b) by making payment to a third
party or taking other action to discharge the Losses, (c) by placing an amount
equal to the Losses in an escrow account under an escrow arrangement reasonably
satisfactory to Seller and Buyer, or (d) a combination of the foregoing. If
the foregoing actions fully cure the breach, Seller shall have no obligation
under Section 12.2 or otherwise to indemnify Buyer with respect to the Losses
caused by such breach; if such actions partially cure the breach, Seller shall
continue to have an obligation under Section 12.2 to indemnify Buyer with
respect to the remaining portion of the Losses caused by such breach.
ARTICLE 13.
TERMINATION
13.1. TERMINATION
This Agreement may be terminated at any time prior to the
Closing by:
13.1.1. the mutual consent of Seller and Buyer;
13.1.2. either Buyer or Seller, by written notice of
termination delivered to the other, if (a) the FCC Order for the Station has
not become a Final
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Order and/or the Closing has not occurred within nine (9) months after the date
of this Agreement; provided, however, that the failure of the FCC Order to
become a Final Order or the failure of the Closing to have occurred within nine
(9) months of the date of this Agreement shall not be attributable to the
breach of this Agreement by the party seeking termination pursuant to this
Section 13.1.2; provided, further, that Buyer's right to terminate this
Agreement pursuant to this Section 13.1.2 shall be subject to the Seller's
rights to extend the Closing Date pursuant to Section 8.2 and the rights of the
Three-Station Sellers to extend the Closing Date under the Three-Station
Agreement pursuant to Section 8.2 thereof, or (b) the FCC designates the
applications contemplated by Section 5.1 for an evidentiary hearing;
13.1.3. either Buyer or Seller in the event that any court or
Governmental Authority of competent jurisdiction shall issue a final,
non-appealable injunction prohibiting the transactions contemplated by this
Agreement; provided, however, that the issuance of such final, non-appealable
injunction shall not be attributable to the breach of this Agreement by the
party seeking termination pursuant to this Section 13.1.3;
13.1.4. either Buyer or Seller in accordance with the terms and
conditions of Article 14;
13.1.5 Buyer, by written notice of termination delivered to
Seller, in the event that the Three-Station Buyer has terminated the
Three-Station Agreement pursuant to the terms thereof; or
13.1.6 Seller, by written notice of termination delivered to
Buyer, in the event that the Three-Station Seller has terminated the
Three-Station Agreement pursuant to the terms thereof.
13.2. EFFECT OF TERMINATION
13.2.1 In the event this Agreement is terminated as provided in
Sections 13.1.1, 13.1.2 or 13.1.3, Buyer shall receive the immediate return of
the Deposit and this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations hereunder; provided, however, that the obligations of Buyer and
Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
and Section 15.3 (which relates to payment of certain expenses), shall survive
such termination and the parties hereto shall have any and all remedies to
enforce such obligations provided at law or in equity or otherwise (including,
without limitation, specific performance).
13.2.2 In the event this Agreement is terminated as provided
in Sections 13.1.4, this Agreement shall be deemed null, void and of no further
force or effect, and the parties hereto shall be released from all future
obligations
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hereunder; provided, however, that the obligations of Buyer and Sellers set
forth in (a) Sections 6.3 and 7.1 (which relate to confidentiality), and
Section 15.3 (which relates to payment of certain expenses), shall survive such
termination and the parties hereto shall have any and all remedies to enforce
such obligations provided at law or in equity or otherwise (including, without
limitation, specific performance), and (b) Article 14 (which relates to
remedies and return of the Deposit) shall survive such termination and the
parties shall have such remedies as are set forth in Article 14.
13.2.3 In the event this Agreement is terminated as provided in
Sections 13.1.5 or 13.1.6, this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder; provided, however, that (a) if the Three-Station
Agreement was terminated by the Three-Station Buyer or the Three-Station
Sellers pursuant to Sections 13.1.1, 13.1.2 or 13.1.3 thereof, Buyer shall
receive the immediate return of the Deposit and the obligations of Buyer and
Sellers set forth in Sections 6.3 and 7.1 (which relate to confidentiality),
and Section 15.3 (which relates to payment of certain expenses), shall survive
the termination of this Agreement and the parties hereto shall have any and all
remedies to enforce such obligations provided at law or in equity or otherwise
(including, without limitation, specific performance), and (b) if the
Three-Station Agreement was terminated by the Three-Station Buyer or the
Three-Station Sellers pursuant to Sections 13.1.4 thereof, the obligations of
Buyer and Sellers set forth in (i) Sections 6.3 and 7.1 (which relate to
confidentiality), and Section 15.3 (which relates to payment of certain
expenses), shall survive the termination of this Agreement and the parties
hereto shall have any and all remedies to enforce such obligations provided at
law or in equity or otherwise (including, without limitation, specific
performance), and (ii) Article 14 (which relates to remedies and return of the
Deposit) shall survive such termination and the parties shall have such
remedies as are set forth in Article 14.
ARTICLE 14.
REMEDIES
14.1. DEFAULT BY BUYER.
If Buyer shall default in the performance of Buyer's
obligations under this Agreement, or if, as a result of Buyer's action or
failure to act, the conditions precedent to Seller's obligation to close
specified in Section 10 are not satisfied, and for such reason or reasons this
Agreement is not consummated, and provided that Seller shall not then be in
default in the performance of Seller's obligations hereunder, Seller shall be
entitled, by written notice to Buyer, to terminate this Agreement, and as
Seller's sole remedy under this Agreement, to receive the Deposit as liquidated
damages, and upon such payment Buyer shall be discharged from all further
liability under this Agreement, provided, however,
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Buyer shall have a period of ten (10) business days after receipt of Seller's
written termination notice to cure any such default and if Buyer cures such
default within such ten (10) business day period, Seller shall have no right to
terminate this Agreement based on such default.
14.2. FINAL ORDER DELAY BY BUYER.
In the event that a Final Order is not obtained prior to the
date which is nine (9) months from the date of this Agreement and such failure
is primarily attributable to (a) Buyer's default under, or breach of, any of
the terms of this Agreement, including, without limitation, a breach of Buyer's
representations and warranties contained in Section 4.6 and Buyer's agreements
contained in Section 15.6, and/or (b) any of (i) Buyer's capitalization, (ii)
Buyer's ownership structure, (iii) Buyer's proposed or intended operation of
the Station, or (iv) any other media interest of Buyer or any affiliate of
Buyer, Seller shall be entitled, by written notice to Buyer, to terminate this
Agreement, and as Seller's sole remedy under this Agreement, to receive the
Deposit as liquidated damages, and upon such payment Buyer shall be discharged
from all further liability under this Agreement; provided, however, Seller
shall not have the right to terminate this Agreement pursuant to this Section
14.2 if the failure to obtain a Final Order is also attributable to Seller's
default under, or breach of, any of the terms of this Agreement or to the
operation of the Station by Sellers prior to the Closing.
14.3. DEFAULT BY SELLER.
If Seller shall default in the performance of Seller's
obligations under this Agreement, or if, as a result of Seller's action or
failure to act, the conditions precedent to Buyer's obligation to close
specified in Section 9 are not satisfied, and for such reason or reasons this
Agreement is not consummated, and provided that Buyer shall not then be in
default in the performance of Buyer's obligations hereunder, Buyer shall be
entitled, by written notice to Sellers, to terminate this Agreement, to receive
the immediate return of the Deposit, and to pursue any other remedies Buyer has
at law or in equity or otherwise, provided, however, Seller shall have a period
of ten (10) business days after receipt of Buyer's written termination notice
to cure any such default and if Seller cures such default within such ten (10)
business day period, Buyer shall have no right to terminate this Agreement
based on such default.
14.4. LIQUIDATED DAMAGES.
Seller and Buyer have provided for the amount of the Deposit to
be liquidated damages as a remedy for Seller after having considered carefully
the anticipated and actual harms and losses that would be incurred if Buyer
defaults and thus fails to perform its obligations to consummate the
transactions
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contemplated hereunder, the difficulty of ascertaining at this time the actual
amount of damages, special and general, that Seller will suffer in such event,
and the inconvenience or nonfeasibility of otherwise obtaining an adequate
remedy in such event.
14.5. SPECIFIC PERFORMANCE.
Seller hereby acknowledges that the Assets are unique, and that
the harm to Buyer resulting from the failure of Seller to perform its
obligations hereunder cannot be adequately compensated by damages.
Accordingly, Seller agrees that Buyer shall have the right to have all
obligations, undertakings, agreements, covenants and other provisions of this
Agreement specifically performed by Seller.
ARTICLE 15.
GENERAL PROVISIONS
15.1. ADDITIONAL ACTIONS, DOCUMENTS AND INFORMATION.
Buyer agrees that it will, at any time, prior to, at or after
the Closing Date, take or cause to be taken such further actions, and execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments and obtain such consents, as may be reasonably
requested by Seller in connection with the consummation of the purchase and
sale contemplated by this Agreement. Seller agrees that it will, at any time,
prior to, at or after the Closing Date, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments and obtain such consents, as may
be reasonably requested by Buyer in connection with the consummation of the
purchase and sale contemplated by this Agreement, including, without
limitation, taking such further actions (at Buyer's sole cost and expense) to
enforce Seller's rights, if any, under purchase agreements with previous owners
of the Station to require such previous owners to execute, deliver and file
such further documents and instruments and obtain such consents as may be
reasonably requested by Buyer in connection with the consummation of the
purchase and sale contemplated by this Agreement.
15.2. BROKERS.
Seller represents to Buyer that, except for the brokerage fees
payable to Sellers' Broker (which fees are solely the responsibility of
Seller), Seller have not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
Buyer represents to Seller that, except for the fees payable to Buyer's Advisor
(which fees are the sole responsibility
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of Buyer), Buyer has not engaged, or incurred any unpaid liability (for any
brokerage fees, finders' fees, commissions or otherwise) to, any broker, finder
or agent in connection with the transactions contemplated by this Agreement;
and Seller agree to indemnify Buyer, and Buyer agrees to indemnify Seller,
against any claims asserted against the other parties for any such fees or
commissions by any person purporting to act or to have acted for or on behalf
of the indemnifying party. Notwithstanding any other provision of this
Agreement, this representation and warranty shall survive the Closing without
limitation and shall not be subject to the Basket Amount contained in Section
12.4.2 or the limitations of Section 12.4.3.
15.3. EXPENSES AND TAXES.
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein. Notwithstanding the foregoing, (a) Buyer
shall pay all sales (including, without limitation, bulk sales), use,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar Taxes and fees ("Transfer Taxes")
applicable to, imposed upon or arising out of the transactions contemplated
hereby whether now in effect or hereinafter adopted and regardless of which
party such Transfer Tax is imposed upon, (b) Seller and Buyer shall each pay
one-half of any FCC filing fees incurred in connection with the assignment of
the FCC Licenses, and (c) Buyer shall pay any fees and expenses incurred in
connection with any HSR Filings.
15.4. NOTICES.
All notices, demands, requests, or other communications which
may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by
telegram, telex, or facsimile transmission addressed as follows:
If to Buyer:
Smith Acquisition Company
c/o Smith Broadcasting Partners, L.P.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy: (813) 821-8092
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and to
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: (214) 740-7313
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attention: Glenn D. West, Esq.
Telecopy: (214) 746-7777
If to Seller:
Smith Broadcasting Partners, L.P.
3839 4th Street North
Suite 420
St. Petersburg, FL 33703
Attention: David A. Fitz
Telecopy: (813) 821-8092
and to:
Jupiter/Smith TV Holdings, L.P.
30 Rockefeller Plaza
Suite 4525
New York, NY 10112
Attention: John Sprague
Telecopy: (212) 332-2828
with a copy (which shall not constitute notice) to:
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Hogan & Hartson L.L.P.
8300 Greensboro Drive
Suite 1100
McLean, VA 22102
Attention: Richard T. Horan, Jr., Esq.
Telecopy: (703) 448-7650
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not exclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation.
15.5. WAIVER.
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed as a
waiver of any default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise of such right, power or privilege, or the exercise of any other right,
power or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such waiver
is sought and then only to the extent expressly specified therein.
15.6. BENEFIT AND ASSIGNMENT.
(a) No party hereto shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, without the prior written
consent of the other party hereto; provided, however, upon written notice to
Seller, Buyer may assign all or any portion of Buyer's rights and obligations
under this Agreement to one or more Permitted Assignees, provided, that (i)
prior to or concurrently with such assignment, Buyer shall have represented,
warranted and certified to Sellers in writing that (A) there are no facts or
proceedings which would reasonably be expected to disqualify any such Permitted
Assignee under the Communications Act or under the rules and regulations of the
FCC from acquiring or operating the Station or would cause the FCC not to
approve the assignment of the FCC Licenses to any such Permitted Assignee, (B)
Buyer has no knowledge of any fact or circumstance relating to any such
Permitted Assignee or any of any such Permitted
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Assignee's affiliates that would reasonably be expected to (1) cause the filing
of any objection to the assignment of the FCC Licenses to any such Permitted
Assignee, or (2) lead to a delay in the processing by the FCC of the
applications for such assignment, and (C) no waiver of an FCC rule or policy is
necessary to be obtained for the grant of the applications for the assignment
of the FCC Licenses to any such Permitted Assignee, nor will processing
pursuant to any exception or rule of general applicability be requested or
required in connection with the consummation of the transactions herein, (ii)
prior to or concurrently with such assignment, each such Permitted Assignee
shall assume in writing all of Buyer's obligations to Seller, and each such
Permitted Assignee shall deliver to Seller a certificate representing and
warranting to Sellers as to the matters set forth in Article 4, (iii)
notwithstanding such assumption, Buyer shall not be released from any
liabilities or obligations hereunder, (iv) Buyer and any such Permitted
Assignee shall be jointly and severally liable for the liabilities or
obligations of Buyer and any such Permitted Assignee hereunder (including,
without limitation, any obligation pursuant to Article 12 hereof), and (v) such
assignment shall not cause a delay in the receipt of the FCC Order or the Final
Order. Buyer may also assign, subject to compliance with the provisions of
this Section 15.6, Buyer's right to acquire the FCC Licenses from Sellers to a
wholly-owned subsidiary of Buyer
(b) From and after the Closing Date, without releasing
Buyer from any of Buyer's obligations hereunder, nothing herein shall prevent
or limit Buyer from making a collateral assignment of Buyer's rights under this
Agreement to any institutional lender that, directly or indirectly, provides
funds to Buyer without the consent of the Seller. Seller shall execute an
acknowledgment of such collateral assignments in such forms as Buyer or Buyer's
institutional lenders may reasonably request; provided, however, that unless
written notice is given to Seller that any such collateral assignment has been
foreclosed upon (in compliance with the Communications Act and the rules and
regulations of the FCC), Seller shall be entitled to deal exclusively with
Buyer as to any matters arising under this Agreement or any of the other
agreements delivered pursuant hereto.
(c) Any purported assignment contrary to the terms
hereof shall be null, void and of no force and effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns as permitted hereunder. No Person, other
than the parties hereto, is or shall be entitled to bring any action to enforce
any provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns as permitted hereunder.
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15.7. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules and Exhibits hereto and
the other instruments and documents referred to herein or delivered pursuant
hereto including, without limitation, that certain side letter agreement dated
as of the date hereof between Buyer and Seller with respect to preparation of
financial statements, contains the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior oral or written
agreements, commitments or understandings with respect to such matters. No
amendment, modification or discharge of this Agreement shall be valid or
binding unless set forth in writing and duly executed by the party or parties
against whom enforcement of the amendment, modification or discharge is sought.
15.8. SEVERABILITY.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection
with this Agreement shall be invalid or unenforceable under applicable law,
such part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts of such
provisions or the remaining provisions of said contract, agreement, document or
writing.
15.9. HEADINGS.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect
the meaning, construction or scope thereof.
15.10. GOVERNING LAW; JURISDICTION.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the state of New York,
excluding the choice of law rules thereof. The parties hereto hereby
irrevocably consent to the nonexclusive jurisdiction and venue of the courts of
the State of New York and of any Federal Court located in New York County, New
York, in connection with any action, suit or proceeding arising out of or
relating to this Agreement. The parties hereto hereby waive personal service of
any process in connection with any such action, suit or proceeding and agree
that the service thereof may be made by certified or registered mail addressed
to or by personal delivery to the other party, at such other party's address
set forth pursuant to Section 15.4 hereof. In the alternative, in its
discretion, any of the parties hereto may effect service upon any other party
in any other form or manner permitted by law.
- 52 -
<PAGE> 60
15.11. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none
of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and
the same instrument. It shall not be necessary in making proof of this
Agreement to produce or account for more than the number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
- 53 -
<PAGE> 61
IN WITNESS WHEREOF, each of the parties hereto has executed this Asset
Purchase Agreement, or has caused this Asset Purchase Agreement to be duly
executed and delivered in its name on its behalf, all as of the day and year
first above written.
SMITH TELEVISION-WTOV, L.P.
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION-WTOV LICENSE, L.P.
By: Smith Television-WTOV, L.P., its
general partner
By: Smith Broadcasting Partners, L.P., its
general partner
By: Smith Broadcasting Group, Inc., its
general partner
By: /s/ DAVID A. FITZ
----------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH ACQUISITION COMPANY
By: /s/ ROBERT N. SMITH
----------------------------------------
Name: Robert N. Smith
--------------------------------------
Title: President
-------------------------------------
- 54 -
<PAGE> 62
ANNEX I
DEFINITIONS
"ACCOUNTING FIRM" shall have the meaning specified in Section 2.6.
"ACCOUNTS RECEIVABLE" means all cash accounts receivable with respect to
the Stations as of the end of the broadcast day on the Closing Date.
"ADDITIONAL AGREEMENTS" shall have the meaning set forth in Section
6.1.6.
"APPRAISAL FIRM" shall have the meaning set forth in Section 8.5.
"APPRAISAL REPORT" shall have the meaning set forth in Section 8.5.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSUMED LIABILITIES" shall have the meaning specified in Section 2.7.1.
"ASSIGNMENT OF CONTRACTS AND LEASES" means that certain Assignment of
Contracts and Leases, dated as of the Closing Date and executed by Sellers,
substantially in the form attached hereto as Exhibit E.
"ASSIGNMENT OF FCC LICENSES" means that certain Assignment of FCC
Licenses, dated as of the Closing Date and executed by Sellers, substantially
in the form attached hereto as Exhibit D.
"ASSUMPTION AGREEMENT" means that certain Assumption Agreement, dated
the Closing Date and executed by Buyer and Sellers, substantially in the form
attached hereto as Exhibit F.
"BASE PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"BASKET AMOUNT" shall have the meaning set forth in Section 12.4.
"BENEFIT ARRANGEMENT" means a benefit program or practice providing for
bonuses, incentive compensation, vacation pay, severance pay, insurance,
restricted stock, stock options, employee discounts, company cars, tuition
reimbursement or any other perquisite or benefit (including, without
limitation, any fringe benefit under Section 132 of the Code) to employees,
officers or independent contractors that is not a Plan.
"BENEFIT PLANS" shall have the meaning specified in Section 3.16.1.
<PAGE> 63
"BILL OF SALE" means that certain Bill of Sale and Assignment of Assets,
dated as of the Closing Date and executed by Sellers, substantially in the form
attached hereto as Exhibit C.
"BUYER'S ADVISOR" means an affiliate of Hicks, Muse, Tate & Furst
Incorporated who has advised Buyer with respect to this Agreement.
"BUYER DOCUMENTS" shall mean, collectively, this Agreement, the Deposit
Escrow Agreement, the Indemnity Escrow Agreement and the Assumption Agreement.
"BUYER INDEMNIFIED PARTIES" shall have the meaning specified in Section
12.2.
"CLOSING" means the closing of the purchase, assignment and sale of the
Assets contemplated hereunder.
"CLOSING DATE" shall have the meaning specified in Section 11.1.
"COBRA OBLIGATIONS" shall have the meaning specified in Section 8.4.5.
"CODE" means the Internal Revenue Code of 1986, as amended, and all Laws
promulgated pursuant thereto or in connection therewith.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended.
"CURRENT BALANCE SHEET DATE" shall have the meaning specified in Section
3.5.2.
"DEPOSIT" shall have the meaning specified in Section 2.3.
"DEPOSIT ESCROW AGENT" means Citibank, N.A.
"DEPOSIT ESCROW AGREEMENT" means that certain Escrow Agreement dated as
of the date hereof by and among Buyer, the Three-Station Buyer, Seller, the
Three-Station Sellers and the Deposit Escrow Agent, in the form of Exhibit A
attached hereto.
"ENCUMBRANCES" mean any mortgages, pledges, liens, security interests,
defects in title, easements, encumbrances, and any other matters affecting
title.
"ENVIRONMENTAL LAWS" means any federal, state, local, or foreign law
(including common law), statute, code, ordinance, rule, regulation, or other
requirement relating to the environment, natural resources, public, or employee
ANNEX I-2
<PAGE> 64
health and safety, and Hazardous Materials generation, production, use,
storage, treatment, transportation or disposal, and includes, but is not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, ("CERCLA") as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), 42 U.S.C. Section 9601 et seq.; the
Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601 et
seq.; the Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"),
42 U.S.C. Section 7401 et seq.; the Toxic Substances Control, 15 U.S.C.
Section 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act,
7 U.S.C. Section 2701 et seq., and the Occupational Safety and Health Act, 29
U.S.C. Section 651 et seq., as such laws have been amended or supplemented,
and the regulations promulgated pursuant thereto, and all analogous state or
local statues.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto or in connection therewith.
"EXCLUDED ASSETS" shall have the meaning specified in Section 2.2.
"EXTENDED CLOSING DATE" shall have the meaning specified in Section 8.2.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" shall have the meaning specified in Section 2.1.1.
"FCC ORDER" means an unconditional order or orders (except for standard
conditions imposed by the FCC on all assignments of licenses) of the FCC, or of
the Chief, Mass Media Bureau of the FCC, acting under delegated authority,
consenting to the assignment to Buyer of the FCC Licenses for the Stations.
"FINAL ORDER" means an FCC Order as to which the time for filing a
request for administrative or judicial review, or for instituting
administrative review sua sponte, shall have expired without any such filing
having been made or notice of such review having been issued; or, in the event
of such filing or review sua sponte, as to which such filing or review shall
have been disposed of favorably to the grant and the time for seeking further
relief with respect thereto shall have expired without any request for such
further relief having been filed.
"GOVERNMENTAL AUTHORITY" means any agency, board, bureau, court,
commission, department, instrumentality or administration of the United States
government, any state government or any local or other governmental body in a
state, territory or possession of the United States or the District of
Columbia.
ANNEX I-3
<PAGE> 65
"HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"HMTF/SMITH BUYERS" means, collectively, Buyer and the Three-Station
Buyer.
"HSR FILING" shall have the meaning specified in Section 5.2.
"HAZARDOUS MATERIALS" means any wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances defined
as "hazardous wastes," "hazardous substances," "hazardous materials,"
"extremely hazardous waste," "toxic substances," "radioactive materials," or
other similar designations in, or otherwise subject to regulation under, any
Environmental Laws.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the respective
meanings specified in Section 12.5.1.
"INDEMNITY ESCROW AGENT" shall mean George Mason Bank, N.A.
"INDEMNITY ESCROW AGREEMENT" means that certain Escrow Agreement dated
as of the Closing Date by and among Buyer, the Three-Station Buyer, Seller, the
Three-Station Sellers and the Indemnity Escrow Agent, in the form of Exhibit B
attached hereto.
"INDEMNITY ESCROW AMOUNT" shall have the meaning specified in Section
2.5.2.
"INTELLECTUAL PROPERTY" shall have the meaning specified in Section
2.1.4.
"JUPITER/SMITH SELLERS" means, collectively, the Seller and the other
limited partnerships which own and operate the the Jupiter/Smith Stations.
"JUPITER/SMITH STATIONS" means WTOV and all other television broadcast
stations for which Smith Broadcasting Partners, L.P. is the general partner and
Jupiter/ Smith TV Holdings, L.P. is a direct or indirect investor.
"LAWS" means any federal, state or local law, statute, code, ordinance,
regulation, order, writ, injunction, judgment or decree applicable to the
specified Person and to the businesses and assets thereof.
"LEASED PROPERTY" shall have the meaning set forth in Section 2.1.2.
"LIABILITIES" shall mean, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person,
ANNEX I-4
<PAGE> 66
whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
generally accepted accounting principles to be reflected, in such Person's
balance sheets or other books and records.
"LOSSES" means any and all demands, claims, complaints, actions or
causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages, liabilities, obligations (including those arising
out of any action, such as any settlement or compromise thereof or judgment or
award therein) and any costs and expenses, including, without limitation,
reasonable attorneys' fees and disbursements.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, assets or financial condition of the Jupiter/Smith
Stations taken as a whole, except for any material adverse affect resulting
from (a) general economic conditions applicable to the television broadcast
industry, or (b) general conditions in the markets in which the Jupiter/Smith
Stations operate.
"NET WORKING CAPITAL" shall mean as of the end of the broadcast day on
the Closing Date (a) the sum of (i) the amount equal to ninety-five percent
(95%) of the aggregate dollar value of the Accounts Receivable, plus (ii) the
balances of all other current assets of the Station (including all deposits and
prepaid expenses) as of such date exclusive of any cash, any other Excluded
Assets and any assets related to Program Contracts (other than deposits paid in
respect of Program Contracts under which the programs licensed are not
available for exhibition prior to Closing); less (b) the sum of the balances of
the current liabilities of the Station as of such date exclusive of (i) any
liabilities related to any Excluded Assets, (ii) the current portion of long
term debt, (iii) accrued interest and other liabilities not being assumed by
Buyer, (iv) any liabilities for accrued vacation and accrued sick leave, and
(v) any liabilities related to Program Contracts.
"NET WORKING CAPITAL AMOUNT" shall mean, where applicable, either the
Estimated Net Working Capital Amount or the Final Net Working Capital Amount.
"OPERATING CONTRACTS" shall have the meaning specified in Section 2.1.8.
"ORDINARY COURSE OF BUSINESS" means, with respect to Seller, the
ordinary course of business consistent with past practices of Seller; any
actions taken pursuant to the requirements of law or contracts existing on the
date hereof shall be deemed to be action in the Ordinary Course of Business.
"PENSION PLAN" means an "employee pension benefit plan" as such term is
defined in Section 3(2) of ERISA.
ANNEX I-5
<PAGE> 67
"PERMITTED ASSIGNEE" means any Person that, directly or indirectly, is
in control of, is controlled by or is under common control with Buyer and/or
Robert N. Smith.
"PERMITTED ENCUMBRANCES" means (a) Encumbrances arising in connection
with equipment or maintenance financing or leasing, (b) Encumbrances on Real
Property that do not interfere with the use of the Real Property in the
operations or business of the Station, (c) Encumbrances for Taxes not yet due
and payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
Seller's books in accordance with generally accepted accounting principles, (d)
Encumbrances which do not secure indebtedness of Seller and that, individually
or in the aggregate, do not and would not materially detract from the value of
any of the Assets or materially interfere with the use thereof as currently
used, or (e) those matters identified as permitted encumbrances on Schedule 3.8
or Schedule 3.10.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, other
form of business or legal entity or Governmental Authority.
"PLAN" means any plan, program or arrangement, whether or not written,
that is or was an "employee benefit plan" as such term is defined in Section
3(3) of ERISA and (a) which was or is established or maintained by Seller; (b)
to which Seller contributed or was obligated to contribute or to fund or
provide benefits; or (c) which provides or promises benefits to any person who
performs or who has performed services for Seller and because of those services
is or has been (i) a participant therein or (ii) entitled to benefits
thereunder.
"PROGRAM CONTRACTS" shall have the meaning specified in Section 2.1.5.
"PURCHASE PRICE" shall have the meaning specified in Section 2.4.
"QUALIFIED PLAN" means a Pension Plan that satisfies, or is intended by
Seller to satisfy, the requirements for tax qualification described in Section
401 of the Code.
"REAL PROPERTY" shall have the meaning set forth in Section 2.1.2.
"REPRESENTED EMPLOYEES" shall have the meaning set forth in Section
8.4.4.
"RESTRICTED CONTRACTS" shall have the meaning specified in Section
6.2.11.
"SBG" shall have the meaning set forth in Section 3.16.1.
ANNEX I-6
<PAGE> 68
"SCHEDULES" shall mean the disclosure schedules delivered by Seller to
Buyer in connection herewith.
"SELLER DOCUMENTS" shall mean, collectively, this Agreement, the
Deposit Escrow Agreement, the Indemnity Escrow Agreement, the Assignment of
Contracts and Leases, the Bill of Sale, the Assignment of FCC Licenses, and the
Assumption Agreement.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
12.3.
"SELLER TAX RETURNS" means all federal, state, local, foreign and other
applicable Tax returns, declarations of estimated Tax reports required to be
filed by any of Seller (without regard to extensions of time permitted by law
or otherwise).
"SELLER'S BROKER" means Salomon Brothers Inc.
"SMITH-WTOV" means Smith Television-WTOV, L.P., a Delaware limited
partnership.
"STATION CONTRACTS" shall have the meaning specified in Section 2.1.8.
"TAXES" means all federal, state and local taxes (including, without
limitation, income, profit, franchise, sales, use, real property, personal
property, ad valorem, excise, employment, social security and wage withholding
taxes) and installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholdings, or other
similar charges of every kind, character or description imposed by any
Governmental Authorities.
"THREE-STATION AGREEMENT" means that certain Asset Purchase Agreement
dated as of the date hereof by and among the Three-Station Sellers and the
Three-Station Buyer pursuant to which the Three-Station Sellers have agreed to
sell, and the Three-Station Buyer has agreed to purchase, the Three-Stations.
"THREE-STATION BUYER" means STV Acquisition Company, a Delaware
corporation.
"THREE-STATION INDEMNITY ESCROW AMOUNT" means the indemnity escrow
amount of One Million Five Hundred Thousand Dollars ($1,500,000) delivered by
the Three-Station Buyer to the Indemnity Escrow Agent pursuant to the
Three-Station Agreement.
"THREE-STATIONS" means, collectively, the Jupiter/Smith Stations other
than WTOV.
ANNEX I-7
<PAGE> 69
"THREE-STATION SELLERS" means, collectively, the Jupiter/Smith Sellers
other than the Seller.
"TIME SALES AGREEMENTS" shall have the meaning specified in Section
2.1.7.
"TRADE-OUT AGREEMENTS" shall have the meaning specified in Section
2.1.6.
"TRANSFER TAXES" shall have the meaning specified in Section 15.3.
"TRANSFERRED EMPLOYEE" shall have the meaning specified in Section
8.4.1.
"WELFARE PLAN" means an "employee welfare benefit plan" as such term is
defined in Section 3(1) of ERISA.
"WTOV" means television broadcast station WTOV-TV, Channel 9,
Steubenville, Ohio.
"WTOV INDEMNITY ESCROW AMOUNT" shall have the meaning specified in
Section 2.5.2.
"WTOV LICENSEE" means Smith Television-WTOV License, L.P., a Delaware
limited partnership.
ANNEX I-8
<PAGE> 1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
among
STC BROADCASTING, INC.
WJAC ACQUISITION CORP.
and
WJAC, INCORPORATED
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
SECTION 1
<S> <C> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------
SECTION 2
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------
2.1 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------------------
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------
2.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------------------
SECTION 3
CONVERSION OF SHARES; PAYMENT
OF MERGER CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . 3
-----------------------
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------------
3.2 Computation of Aggregate Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------------------------------------
3.3 Determination of Certain Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------------
3.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------
3.5 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----------------
3.6 FCC Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . 8
---------------------------------------------
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------------------
4.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------
4.4 Authority; No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------------
4.5 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------
4.6 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------
4.8 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------
4.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------
4.11 Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------
4.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------
4.13 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
4.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
4.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------
4.16 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------
4.17 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------
4.18 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------
4.19 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------
4.20 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------------
4.21 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB . . . . . . . . . . . . . . . 21
---------------------------------------------------
5.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------------
5.2 Execution and Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
---------------------------------
5.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
5.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------
5.5 Availability of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------------------
5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------
5.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------
5.8 FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---
SECTION 6
ADDITIONAL PROVISIONS REGARDING
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 23
------------------------------
6.1 Limitation; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--------------------
6.2 Right to Update Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------------------------
6.3 Knowledge of Purchaser, Sub or the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------------------------------
6.4 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------
SECTION 7
MATTERS RELATING TO JOHNSTOWN CHIEFS, INC. . . . . . . . . . . . . . . . . . 24
------------------------------------------
7.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------
7.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------
SECTION 8
ADDITIONAL COVENANTS AND UNDERTAKINGS . . . . . . . . . . . . . . . . . . 25
-------------------------------------
8.1 Further Assurances and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------------------
8.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------------------
8.3 Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------
8.4 H-S-R Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------
8.5 FCC Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------
8.6 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------
8.7 Employees and Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-------------------------------
8.8 Control of Station. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------------
8.9 Retention of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------------------
8.10 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------
8.11 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------
8.12 Retransmission Consent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------------------
SECTION 9
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------
9.1 Indemnification of Purchaser and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------------------------------
9.2 Indemnification by Purchaser and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
------------------------------------
9.3 Limitations and Other Provisions Regarding Indemnification Obligations . . . . . . . . . . . . . . . 31
----------------------------------------------------------------------
9.4 Notice of Claim; Defense of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------------------
</TABLE>
- ii -
<PAGE> 4
SECTION 10
<TABLE>
<S> <C> <C>
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE . . . . . . . . . . . . . 33
-----------------------------------------------------------
10.1 Conditions Precedent to the Obligation of Purchaser and Sub . . . . . . . . . . . . . . . . . . . . 33
-----------------------------------------------------------
10.2 Conditions Precedent to the Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . 34
-----------------------------------------------------
SECTION 11
DELIVERIES AT THE CLOSING . . . . . . . . . . . . . . . . . . . . . 35
-------------------------
11.1 Deliveries by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-------------------------
11.2 Deliveries by Purchaser and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
-------------------------------
SECTION 12
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--------
SECTION 13
TERMINATION; LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . 38
-------------------------------
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------
13.2 Liquidated Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
------------------
13.3 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--------------------
SECTION 14
NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-------
SECTION 15
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------
15.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
--------
15.2 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------------
15.3 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------------------
15.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------
15.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-------------
15.6 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------
15.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------------
15.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------
15.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
------------
15.10 Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-------------
15.11 Exclusive Dealings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
------------------
15.12 Appointment of Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------------------
</TABLE>
- iii -
<PAGE> 5
ANNEX 1 - DEFINITIONS
<TABLE>
<CAPTION>
EXHIBITS
<S> <C> <C>
A - Major Shareholders' Voting Agreement
B - Deposit Escrow Agreement
C - Indemnification Escrow Agreement
D - Form of Proxy
E-1 - Form of Opinion - K&L
E-2 - Form of Opinion - Wilkinson, Barker, Knauer & Quinn
F - Form of Assignment of FCC Licenses
G - Form of Opinion H&H
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C> <C>
3.2 - Calculation Statements
4.2 - Capitalization
4.3 - Subsidiaries
4.4 - Conflicts
4.5 - List of Real Property; Permitted Exceptions
4.6 - Existing Liens and Security Interests
4.7 - Changes Since December 31, 1996
4.8 - FCC
4.8(b) - Cable Systems
4.9 - Exceptions to Intellectual Property
4.10 - Employee Benefits
4.11 - Employee Relations
4.12 - Insurance
4.13 - Material Contracts
4.14 - Compliance with Law
4.15 - Litigation
4.17 - Consents
4.18 - Environmental
4.19 - Taxes
4.20 - Affiliate Transactions
5.3 - Conflicts
5.4 - Consents
5.8 - FCC
7.2 - Consents Relating to Johnstown Chiefs
10.1(d) Consents
</TABLE>
- iv -
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as
of this 9th day of May, 1997, is entered into by and among STC Broadcasting,
Inc., a Delaware corporation ("Purchaser"), WJAC Acquisition Corp., a
Pennsylvania corporation and a wholly-owned subsidiary of Purchaser ("Sub"),
and WJAC, Incorporated, a Pennsylvania corporation (the "Company"). The
Company and Sub are the only parties to the merger hereby contemplated and are
sometimes referred to herein as the "Constituent Corporations," and the Company
is sometimes referred to herein as the "Continuing Corporation."
WITNESSETH:
WHEREAS, the Company holds the licenses and authorizations
granted by the Federal Communications Commission (the "FCC") pursuant to which
WJAC-TV in Johnstown, PA (the "Station") is permitted to operate (the "FCC
Licenses"); and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have approved this Agreement (and the transactions contemplated
hereby) and deem it advisable and in the best interests of their respective
corporations and shareholders that Sub merge with and into the Company on the
terms and conditions herein set forth, whereby the Company will become a
wholly-owned subsidiary of Purchaser (the "Merger"); and
WHEREAS, concurrently with the execution of this Agreement,
and as a condition and inducement to Purchaser's and Sub's willingness to enter
into this Agreement, certain shareholders of the Company (the "Major
Shareholders") have executed a shareholders' voting agreement substantially in
the form of Exhibit A hereto (the "Major Shareholders' Voting Agreement").
NOW, THEREFORE, for the purpose of consummating the above
transaction and in consideration of the promises and mutual covenants herein
contained, the parties hereby agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement, capitalized terms shall have the
meanings specified in the text hereof or on Annex 1 hereto (which is
incorporated herein by reference), which meanings shall be applicable to both
the singular and plural forms of the terms defined.
<PAGE> 7
SECTION 2
THE MERGER
2.1 Effective Time of the Merger. Subject to the provisions of this
Agreement and the relevant provisions of the Pennsylvania Business Corporation
Law (the "BCL"), Articles of Merger (the "Articles") reflecting the terms and
conditions of this Agreement shall be duly executed and acknowledged by each of
the Constituent Corporations and thereafter delivered to the Department of
State of the Commonwealth of Pennsylvania for filing, as provided in the BCL,
on the Closing Date. The Merger shall become effective upon the filing of the
Articles with the Department of State of the Commonwealth of Pennsylvania or at
such time thereafter as is provided in the Articles (the "Effective Time").
2.2 Closing. The closing of the Merger (the "Closing") will take
place at the offices of Kirkpatrick & Lockhart LLP, 1500 Oliver Building,
Pittsburgh, PA 15222 at 10:00 a.m., prevailing time, on such date (the "Closing
Date") as is specified by Purchaser, which date shall not be more than 30 days
after a Final Order by the FCC approving the transfer of control of the
Company; provided however, that such date shall not occur later than December
31, 1997. In addition, the Closing shall be subject to satisfaction or waiver
of all the conditions to the Merger set forth in Section 10, subject to the
rights of termination and abandonment hereinafter set forth.
2.3 Effects of the Merger.
(a) At the Effective Time (i) the separate existence of
Sub shall cease and Sub shall be merged with and into the Company, (ii) the
Articles of Incorporation of the Sub, as amended by the Articles of Merger,
shall be the Articles of Incorporation of the Continuing Corporation, (iii) the
Bylaws of the Sub as in effect immediately prior to the Effective Time shall be
the Bylaws of the Continuing Corporation, and (iv) the directors and officers
of Sub at the Effective Time shall be the directors and officers of the
Continuing Corporation, and hold office as provided in the Bylaws of the
Continuing Corporation.
(b) At and after the Effective Time, the Continuing
Corporation shall possess all the rights, privileges, powers and franchises of
a public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent Corporations,
all as set forth in greater detail in Section 1929 of the BCL.
2
<PAGE> 8
SECTION 3
CONVERSION OF SHARES; PAYMENT
OF MERGER CONSIDERATION
3.1 Conversion of Shares. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
capital stock of Sub or the Company:
(a) All issued and outstanding shares of Stock of the Company
shall be canceled and extinguished and each share (other than
Dissenting Shares and shares of Stock held in the Company's treasury)
shall be converted into the right to receive the Merger Consideration.
Until surrendered, the certificates representing shares of the
Company's Stock (other than Dissenting Shares and shares of Stock held
in the Company's treasury) shall represent for all purposes only the
right to receive the Merger Consideration. At and after the Effective
Time, the holders of such certificates shall cease to have any rights
as shareholders of the Company, except such rights, if any, as they
may have pursuant to the BCL. Each share of Company Stock which is
held in the treasury of the Company immediately prior to the Effective
Time shall be canceled and retired and cease to exist and no
consideration shall be issued in exchange therefor.
(b) Each issued and outstanding share of the capital stock of
Sub shall be converted into and become one validly issued, fully paid
and non-assessable share of Common Stock, par value $.01 per share, of
the Continuing Corporation. Until surrender, each certificate
representing shares of Sub Common Stock shall, following the Merger,
represent for all purposes a like number of shares of Common Stock of
the Continuing Corporation as the number of shares of Common Stock of
Sub formerly represented by such certificate.
3.2 Computation of Aggregate Merger Consideration.
(a) The aggregate consideration payable to all shareholders
of the Company pursuant to the Merger (the "Aggregate Merger Consideration")
shall be equal to the sum of (i) $36,000,000 and (ii) the Excluded Assets, plus
or minus the Net Current Asset Adjustment, each as defined below.
(b) The Excluded Assets are (i) the Chiefs Stock or, if the
Chiefs Stock has been disposed of prior to the Closing, all proceeds received
therefor not previously distributed and which are set aside in a separate
account pursuant to Section 7.1 hereof, net of any related tax effects, and,
(ii) the Company's Cash on Hand on the Closing Date, net of any related tax
effects.
(c) The Net Current Asset Adjustment is the amount by which
the Company's net current assets on the Closing Date differ
3
<PAGE> 9
from $1,400,000. Any items taken into account in determining the amount of
Excluded Assets will not be taken into account in determining the Net Current
Asset Adjustment. In addition, no amounts related to programming contracts
will be included in the computation of the Net Current Asset Adjustment. If
the Net Current Assets Adjustment is positive, the Aggregate Merger
Consideration will be increased by such amount and vice versa. Schedule 3.2(d)
contains a pro forma calculation of the Net Current Asset Adjustment and the
Aggregate Merger Consideration for the Company based on financial statements
referred to in Section 4.7 hereof as if the Closing occurred as of March 31,
1997. Schedule 3.2(d) is attached hereto solely for the purpose of
demonstrating by example the manner in which the Net Current Asset Adjustment
and the Aggregate Merger Consideration for the Company shall be calculated as
of the Closing Date.
(d) At least ten Business Days prior to the Closing, the
Company shall provide Purchaser with a good faith estimate, certified by the
Chief Financial Officer of the Company, of the amount of any Net Current Asset
Adjustment as of the Closing Date. Prior to the Closing Date, Purchaser shall
provide the Company with any objections to such estimated statement. After
considering such objections in good faith, the Company shall make such
revisions to the estimated statement as are mutually acceptable to the Company
and Purchaser and shall deliver a revised estimated statement to Purchaser not
less than two (2) Business Days prior to the Closing Date. Such revised
estimated statement shall be used for purposes of determining the Aggregate
Merger Consideration to be paid at Closing; provided, however, that the
Indemnification Escrow shall be increased by the amount of any Purchaser
objections not reflected in the revised estimated statement. Purchaser shall
have immediate right of access to any such increased amount to the extent of
any overpayment by the Purchaser of the Estimated Net Current Asset Adjustment,
as finally determined pursuant to Section 3.3. The amount of any Net Current
Asset Adjustment reflected on such revised estimated statement is referred to
herein as the "Estimated Net Current Asset Adjustment."
3.3 Determination of Certain Items.
(a) Promptly after the Closing, the Company (in consultation
with, and with such assistance as the Company shall reasonably request of, the
Shareholders' Agent) shall prepare a draft final statement of the Net Current
Asset Adjustment as of the Closing Date (the "Preliminary Closing Statement").
The Preliminary Closing Statement shall be prepared in accordance with GAAP.
The Company shall engage the Auditors to examine the Preliminary Closing
Statement in accordance with generally accepted auditing standards and, based
upon such examination, shall make such adjustments (if any) to the Preliminary
Closing
4
<PAGE> 10
Statement as shall in the Auditors' judgment be required to cause the
Preliminary Closing Statement to reflect fairly those items required to be
included therein in accordance with GAAP. After such adjustments, if any, the
Preliminary Closing Statement shall be deemed to be the "Final Closing
Statement."
(b) As soon as practicable following the Closing, but in no
event later than 90 days after the Closing Date, the Final Closing Statement
shall be delivered to the Shareholders' Agent. At the same time, the Company
shall deliver to the Shareholders' Agent a statement, based on the Final
Closing Statement, of the final Aggregate Merger Consideration. The
Shareholders' Agent and his representatives shall be provided complete access
to all work papers and other information provided to the Auditors. The Final
Closing Statement, when delivered to the Shareholders' Agent, and the Company's
determination of the Aggregate Merger Consideration shall be deemed conclusive
and binding on the parties unless the Shareholders' Agent notifies the Company,
within 10 business days after receipt of the Final Closing Statement and such
other items of his disagreement therewith (which notice shall state with
reasonable specificity the reasons for any disagreement and the amounts in
dispute).
(c) If any disagreement regarding the Final Closing Statement
cannot be resolved within 30 days following the receipt of the Final Closing
Statement by negotiation, the items in dispute shall be submitted to one of the
"Big 6" firms of independent auditors acceptable to both the Company and the
Shareholders' Agent (or, in the absence of such agreement, the auditing firm of
Coopers & Lybrand LLP), and the determination by such independent auditing firm
shall be binding and conclusive upon the parties. The Company, on the one
hand, and the Shareholders' Agent, on the other hand, shall each pay one-half
of the cost of the fees and expenses of such independent auditing firm;
provided, however, that if the aggregate net amount of the adjustments
determined by such independent auditing firm is equal to or less than 10% of
the aggregate net disputed amount, then the Shareholders' Agent shall pay all
of the cost of the fees and expenses of such independent auditing firm and if
the aggregate net amount of the adjustments is more than 90% of the aggregate
disputed amount, then the Company shall pay all of such costs.
(d) If the final Aggregate Merger Consideration is larger
than the estimated Aggregate Merger Consideration, then the Aggregate Merger
Consideration shall be increased dollar-for-dollar by the amount of such
excess. If the final Aggregate Merger Consideration is smaller than the
estimated Aggregate Merger Consideration, then the Aggregate Merger
Consideration shall be reduced dollar-for-dollar by the amount of such
deficiency (the amount of any such excess or deficiency being the "Adjusted
Amount"). Within five business days after the determination of the final
Aggregate Merger Consideration, the
5
<PAGE> 11
Company shall, if the Adjusted Amount is positive, deliver the Adjusted Amount
to the Disbursing Agent by wire transfer of federal funds, together with
interest on such amount from the Closing Date until paid at a rate equal to 6%
per annum. If the Adjusted Amount is negative, the Company shall be entitled
to withdraw the Adjusted Amount (plus 6% interest) from the Indemnification
Escrow.
3.4 Payment.
(a) Simultaneously with the execution and delivery of
this Agreement, Purchaser is depositing in escrow with the Escrow Agent an
original, irrevocable letter of credit (the "Letter of Credit") issued for the
benefit of the Company and the Escrow Agent by The Chase Manhattan Bank for an
amount equal to $4,000,000 (the "Deposit"), such Letter of Credit to be held by
the Escrow Agent pursuant to the Deposit Escrow Agreement in the form of
Exhibit B hereto (the "Deposit Escrow Agreement"). At the Closing, Purchaser,
Sub, the Company and the Shareholders' Agent shall cause the Letter of Credit
to be returned to Purchaser.
(b) At least five Business Days prior to the Closing
Date, the Company shall designate a bank account at the Disbursing Agent to
receive the Aggregate Merger Consideration (less the amount of the
Indemnification Escrow). Purchaser shall, on behalf of Sub, on the Closing
Date, pay the Aggregate Merger Consideration (less the amount of the
Indemnification Escrow) by wire transfer to the account designated by the
Company and such Aggregate Merger Consideration shall thereafter be disbursed
to the Shareholders' Agent and the shareholders of the Company by the
Disbursing Agent. Purchaser shall have no liability or obligation with respect
to disbursement of the Aggregate Merger Consideration other than making such
payment to the Disbursing Agent and Purchaser shall have no liability related
to any failure by the Disbursing Agent or Shareholders' Agent to distribute any
amounts to the shareholders of the Company.
(c) On the Closing Date, Purchaser shall take the sum of
$1,000,000 (and such additional amounts as may be necessary pursuant to
Sections 3.2(d) and 3.5(b) hereof) (the "Indemnification Escrow") from the
Aggregate Merger Consideration and deposit the Indemnification Escrow with the
Indemnification Escrow Agent to be held pursuant to the Indemnification Escrow
Agreement in the form of Exhibit C hereto (the "Indemnification Escrow
Agreement"). The Disbursing Agent shall also take the sum of $1,000,000 (the
"Shareholders' Expense Fund") and pay it to the Shareholders' Agent to be used
and applied as set forth in Section 15.12 hereof.
6
<PAGE> 12
(d) At the Closing, Purchaser, the Company and the
Shareholders' Agent shall enter into a Disbursing Agent Agreement with the
Disbursing Agent, in a form satisfactory to the Company and Purchaser, for the
purpose of effecting the payments to the shareholders of the Company
contemplated hereby. Such agreement shall provide, among other things, that as
soon as practicable after the Effective Time, the Disbursing Agent shall mail
or otherwise cause to be delivered to each record holder of certificates
representing shares of the Company's Stock who has not already delivered a
transmittal form and related stock certificates to the Disbursing Agent, a
notice and transmittal form (which shall specify that delivery shall be
effective, and risk of loss and title to such certificates shall pass, only
upon proper delivery of such certificates to the Disbursing Agent in accordance
with the terms of delivery specified in such transmittal form and shall be in
such form and have such other provisions as the Company may reasonably specify)
for use in effecting the surrender of such holder's stock certificates for
payment therefor. Upon surrender to the Disbursing Agent of stock certificates
together with such letter of transmittal duly executed, the holder of such
certificate(s) shall be entitled to receive in exchange therefor cash in an
amount equal to the product of the number of shares of Stock previously
represented by such certificate and the Merger Consideration less such
shareholder's pro rata portion of the Indemnification Escrow and the
Shareholders' Expense Fund, and such certificate shall forthwith be canceled.
Any Merger Consideration deposited with the Disbursing Agent for payment to
former shareholders of the Company pursuant to this Agreement which remains
unclaimed after the expiration of six months after the Effective Time shall be
delivered to the Continuing Corporation by the Disbursing Agent (together with
any interest earned thereon) and thereafter the Disbursing Agent shall not be
liable to any person claiming the same and former shareholders of the Company
shall be entitled to look only to the Company (subject to abandoned property,
escheat and other similar laws) for payment of the Merger Consideration upon
due surrender of their stock certificates. No interest will be paid or accrued
on the cash payable upon the surrender of stock certificates from the former
Company shareholders, except as otherwise provided in this Agreement. If
payment for any share of Company Stock is to be made to a person other than one
in whose name such certificate surrendered for payment is registered or issued,
it shall be a condition to such payment that such certificate be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
accompanied by evidence that any applicable stock transfer taxes have been paid
or provided for.
(e) All payments made in respect of shares of Stock of
the Company which are made in accordance with the terms of this Section shall
be deemed to have been made in full satisfaction of all rights pertaining to
such shares of Stock.
7
<PAGE> 13
3.5 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, no share of Stock which is issued and outstanding immediately prior
to the Effective Time and which is held by a shareholder who has properly
exercised and perfected dissenters' rights under Sections 1571-1580 of the BCL
(the "Dissenting Shares") shall be converted into or be exchangeable for the
right to receive the Merger Consideration, but the holder thereof shall be
entitled to receive such consideration as shall be determined pursuant to
Sections 1571-1580 of the BCL with respect to such share; provided, however,
that if any such holder shall have failed to perfect or shall have effectively
withdrawn or otherwise lost his or her rights to appraisal under the BCL, such
holder's Dissenting Shares shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive the Merger Consideration
in accordance with Section 3.1 and such shares shall no longer be Dissenting
Shares.
(b) The Company shall give Purchaser prompt notice of any
written notice of intention to demand, demands for appraisal or payment of the
fair value of any shares of Company Stock, withdrawals of such notices of
intention to demand or such demands and any other instruments delivered
pursuant to Sections 1571-1580 of the BCL. In the event that any such notices
of intention to demand or such demand shall have been made and not withdrawn by
the Closing, then the Indemnification Escrow shall be increased by (i) an
amount reasonably necessary to pay for the costs of such appraisals and (ii)
150% of the amount of the Merger Consideration to which the Person making such
notices of intention to demand or such demand would have been entitled had such
demand not been made. Purchaser shall have the right of immediate access to
these funds and any funds available under the Indemnification Escrow Agreement,
without objection, to satisfy any and all obligations to any dissenting
shareholders and all related costs and expenses.
3.6 FCC Licenses. At Closing, if contemplated by the FCC
Application, the Company shall transfer to a wholly-owned subsidiary of
Purchaser designated by Purchaser, all right, title and interest in the FCC
Licenses, free and clear of all Encumbrances.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser and
Sub as follows:
4.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and subsisting under
8
<PAGE> 14
the laws of the Commonwealth of Pennsylvania, and has full corporate power and
authority to carry on its business as it is now being conducted. The Company
is qualified as a foreign corporation and is in good standing under the laws of
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect.
4.2 Capitalization. The authorized capital stock of the Company
consists of 37,750 shares of Common Stock, no par value per share (the
"Stock"), of which 30,436 shares are issued and outstanding. All the
outstanding shares of Stock have been validly issued and are fully paid and
nonassessable, free and clear of all Encumbrances. Except as described on
Schedule 4.2, (i) no shares of capital stock of the Company are held in
treasury, (ii) there are no other issued or outstanding equity securities of
the Company and (iii) there are no other options, warrants, subscription
rights, other rights, proxies, puts, calls, demands, plans, commitments,
agreements, understandings or arrangements of any kind (collectively,
"Securities Rights") relating to the Stock or securities convertible into or
exchangeable for any Stock or Securities Rights. Set forth on Schedule 4.2
hereto is a complete and accurate list of the record owners of all of the
Company's outstanding securities (including the amounts owned by each such
Person). Each Person is the sole and exclusive record owner of the shares of
issued and outstanding Stock set forth opposite such Person's name on Schedule
4.2 hereto, free and clear of any Encumbrances.
4.3 Subsidiaries. All of the outstanding shares of capital stock
of each of the Company's Subsidiaries are duly authorized, validly issued,
fully paid and nonassessable and are owned by the Company free and clear of all
Encumbrances. Schedule 4.3 discloses with respect to each Subsidiary (a) its
name, (b) the jurisdiction of its organization, and (c) the respective number
of its authorized and outstanding shares or other equity interests and the
owner thereof. There are no existing options, warrants, calls, commitments or
agreements obligating any Subsidiary to issue shares of capital stock of any
Subsidiary to any person. Except for the capital stock of the Company's
Subsidiaries and except as set forth on Schedule 4.3, neither the Company nor
its Subsidiaries directly or indirectly owns any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or
entity. Except as set forth on a Schedule hereto that references a Subsidiary,
all of the representations set forth in this Section 4 are true and correct
with respect to each Subsidiary (other than the Chiefs, as to which no
representations are made) as well as the Company.
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<PAGE> 15
4.4 Authority; No Conflicts.
(a) The Company has all requisite corporate power and
authority to own, lease and otherwise to hold and operate its assets, to carry
on the business of the Station as now conducted, and to enter into this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject only to the approval of
this Agreement and the Merger by the Company's shareholders. The execution and
delivery of the Major Shareholders' Voting Agreement and the consummation of
the transactions contemplated thereby have been duly authorized by all
necessary action on the part of the Major Shareholders. The Major
Shareholders' Voting Agreement constitutes the valid and binding obligation of
the Major Shareholders enforceable in accordance with its terms and will not
conflict with or result in any violation or breach of any provision of the
Articles of the Incorporation or Bylaws of the Company or any provision of the
BCL. Upon the performance of the obligations of the Major Shareholders as set
forth in the Major Shareholders' Voting Agreement, this Agreement and the
Merger shall be approved by the Company's shareholders. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Purchaser and Sub, constitutes the
valid and binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors rights generally and (ii) the availability of injunctive
relief and other equitable remedies.
(b) Except as described on Schedule 4.4, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any
violation or breach of any provision of the Articles of Incorporation or Bylaws
of the Company, or (ii) result in any violation or breach of, or constitute a
default under the terms, conditions or provisions of any agreement, indenture,
mortgage or instrument to which the Company is a party or to which its property
is subject, or (iii) subject to obtaining the approval of the Company's
shareholders of the Merger and compliance with the requirements described in
Section 4.17 below, conflict with or violate any judgment, order, decree,
statute or law applicable to the Company or any of its Subsidiaries or any of
its or their properties or assets, or (iv) result in the acceleration of any
indebtedness or in the creation of any Encumbrance upon any of the assets of
the Company or any of its Subsidiaries, except, in the case of (ii) and (iii)
for any such conflicts, violations, defaults, terminations,
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<PAGE> 16
cancellations or accelerations which would not have a Material Adverse Effect.
(c) Except as contemplated by this Agreement, no consent,
approval, order or authorization of, or registration, declaration or filing
with any Governmental Authority is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
4.5 Real Property. All interests of the Company in and to any
Real Property are listed on Schedule 4.5 hereto, and true and complete copies
of all leases and subleases related thereto have heretofore been delivered to
Purchaser. The Company has good and marketable title to each parcel of Real
Property listed on Schedule 4.5 that is identified thereon as being owned by
the Company, free and clear of all Encumbrances, except as set forth on
Schedule 4.5. The Company is not in material default and has not received
written notice of default under any lease or sublease of Real Property that has
not been cured or withdrawn and, to the Company's knowledge, each other party
to any such lease or sublease is not in material default of the terms thereof
and the Company has not sent any written notice of default under any such lease
or sublease. The Real Property listed in Schedule 4.5 constitutes all of the
real property necessary for the business and operations of the Station. All
buildings, structures, fixtures and other improvements on the Real Property are
in adequate repair for the purposes to which they are currently devoted. To
the Company's knowledge, no portion of the Real Property or any building,
structure, fixture or improvement thereon is the subject of, or affected by,
any condemnation, eminent domain or inverse condemnation proceeding currently
instituted or pending. The Company has delivered to Buyer complete copies of
title policies, deeds, leases and surveys for any in the Company's possession
for any of the Real Property.
4.6 Personal Property. Except (a) as set forth on Schedule 4.6
hereto, and (b) for taxes not yet due and payable, the Company has good title
to all of its items of tangible personal property and assets, free and clear of
all Encumbrances. Taken as a whole, the tangible personal property of the
Company is in good operating condition and repair and is suitable and adequate
for its present use by the Company. The assets of the Company, whether owned
or leased, consist of all of the assets required for the present operation of
the Station.
4.7 Financial Statements. The Company has provided to Purchaser
copies of the Financial Statements and the Interim Financial Statements. The
Financial Statements have been prepared in accordance with GAAP consistently
applied with prior periods, and are in accordance with the books and records of
the Company. The Financial Statements present fairly and accurately,
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<PAGE> 17
in all material respects, the financial position of the Company as at and for
the periods indicated therein. The Interim Financial Statements were and will
be prepared in accordance with GAAP, but have not been and will not be audited
and are subject to year end audit adjustments. Except as set forth on Schedule
4.7 hereto, the Business has been conducted in the ordinary course since
December 31, 1996, and the Company has not suffered an adverse change in its
business or financial condition since December 31, 1996, that would have a
Material Adverse Effect. The Company has operated its business consistent with
past practice and has not delayed payment of payables or accelerated collection
of receivables in anticipation of the Merger. Without limiting the generality
of the foregoing sentence, since December 31, 1996, except as set forth in
Schedule 4.7, there has not been:
(a) Any strike, walkout, union organizing activities,
slow-downs or lock-outs or labor trouble;
(b) Any declaration, setting aside or payment of a
dividend or other distribution (whether in cash, stock, property or any
combination thereof) in respect of the Stock or any direct or indirect
issuance, sale, redemption, purchase or other acquisition or disposition of, or
creation of any Securities Rights with respect to, any Stock or any rights to
purchase Stock or securities convertible into or exchangeable for Stock;
(c) Any material increase in the salaries or other
compensation payable or to become payable to, or any advance or loan to, any
employee, or any increase in, or any material addition to, other benefits
(including any Plan) to which any employee may be entitled, or any payments to
or in respect of any Plan or any change in any Plan, except in each case
payments in the ordinary course of business and consistent with past practice
or in accordance with existing collective bargaining or employment agreements;
(d) Any making or authorization of any single capital
expenditure in excess of $50,000, or acquisition (by merger, consolidation or
acquisition of stock or assets) of any corporation, partnership or other
business organization or division thereof, or investment either by purchase of
stock or securities, contributions of capital, any loan or advance of funds to
any Person or, except in the ordinary course of business, purchase of any
property or assets;
(e) Any sale, transfer or other disposition of any assets
of the Company in excess of $50,000 except sales of assets in the ordinary
course of business consistent with past practice;
(f) Any payment, discharge or satisfaction of any
liability or obligation (whether accrued, absolute, contingent or
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<PAGE> 18
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business and consistent with past practice, of liabilities shown on
the December 31, 1996 balance sheet or liabilities incurred in the ordinary
course of business and consistent with past practice since such date;
(g) Any "write-offs" as uncollectible of any accounts
receivable in excess of $25,000 or any "write-downs" of the value of any assets
other than in immaterial amounts or in the ordinary course of business
consistent with past practice;
(h) Any change in any method of accounting or keeping of
its books of account or accounting practices; or
(i) Any creation, incurrence, assumption or guarantee of
any obligations or liabilities, except for liabilities for trade or business
obligations incurred in the ordinary course of business and consistent with
past practice.
4.8 FCC. (a) The Station is operated in material compliance with
the terms of the FCC Licenses, the Communications Act of 1934, as amended, and
applicable rules, regulations and policies of the FCC ("FCC Rules and
Regulations"). The FCC Licenses are listed on Schedule 4.8 and are valid and
in full force and effect. The FCC Licenses constitute the only licenses,
permits or authorizations from the FCC that are necessary or required and/or
used in the business and operations of the Station in accordance with
applicable law. Except as set forth on Schedule 4.8, no application, action or
proceeding is pending for the renewal or modification of the FCC Licenses and,
to the Company's knowledge, there is not now before the FCC any investigation
or complaint against the Company or relating to the Station, the unfavorable
resolution of which would impair the qualifications of the Company to hold the
FCC Licenses. Except as set forth on Schedule 4.8, there is no proceeding
pending before the FCC, and there is no outstanding notice of violation from
the FCC, with respect to the Station other than proceedings generally affecting
the television broadcasting industry. No order or notice of violation has been
issued by any governmental entity which permits revocation, adverse
modification or termination of the FCC Licenses. All documents required by 47
C.F.R. Section 73.3526 to be kept in the Station's public inspection files are
in such file, other than documents the absence of which either individually or
in the aggregate would be immaterial to the conduct of the operations of the
Company as presently conducted, or the Station or the ability of the Company to
renew the FCC Licenses, and such file will be maintained in proper order and
complete up to and through the Closing Date, except for any such immaterial
documents.
(b) Schedule 4.8(b) sets forth all of the cable systems
(the "Cable Systems") on which the Company (i) has
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<PAGE> 19
elected "must-carry" status for the Station pursuant to the Cable Television
Consumer Protection and Competition Act of 1992 (the "Cable Act"), or (ii) has
given retransmission notice for the three year period commencing January 1,
1997. The signal of the Station currently is carried on each of the Cable
Systems. The Cable Systems include all of the cable systems on which the
Station has the right to elect "must-carry" status pursuant to the Cable Act,
the Communications Act and the FCC Rules and Regulations. None of the Cable
Systems has expressed or indicated to the Company any intention or plan to
discontinue carriage of the signal of the Station.
4.9 Intellectual Property. The Company has delivered or made
available to Purchaser a complete list of all Intellectual Property on the date
hereof. Except as otherwise disclosed on Schedule 4.9 hereto, the Company's
owns such Intellectual Property free and clear of any royalty, lien,
encumbrance or charge. Except as set forth on Schedule 4.9 during the two year
period immediately preceding the date of this Agreement, the Company has not
received any written notice or written claim that any such Intellectual
Property is not valid or enforceable, or of any infringement upon or conflict
with any patent, trademark, service mark, copyright or trade name of any third
party by the Company. Except as set forth on Schedule 4.9, during the two year
period immediately preceding the date of this Agreement, the Company has not
given any notice of infringement to any third party with respect to any of the
Intellectual Property.
4.10 Employee Benefit Plans. (a) Schedule 4.10 hereto contains a
list of every Plan or Other Arrangement contributed to or maintained by the
Company for the benefit of any employee of the Company. The Company has
delivered or made available to Purchaser complete copies of (i) the Plans and
related trust documents; (ii) the most recent financial statements and
actuarial valuations, if applicable; (iii) for the two most recent plan years,
all annual reports (Form 5500 series) on each Plan that have been filed with
any governmental agency; (iv) the current summary plan description and
subsequent summaries of material modifications for each Title I Plan; (v) all
DOL opinions on any Plan and all correspondence relating to the request for and
receipt of each opinion; (vi) all correspondence with the Pension Benefit
Guaranty Corporation on any Plan; (vii) all IRS rulings, opinions or technical
advice relating to any Plan and all correspondence relating to the request for
and receipt of each ruling, opinion or technical advice; and (viii) all
Agreements with service providers or fiduciaries for providing services on
behalf of any Plan. For each Other Arrangement, the Company has furnished to
Purchaser complete copies of each policy, agreement or other document setting
forth or explaining the terms of the Other Arrangement, all related trust
agreements or other funding documents (including, without limitation, insurance
contracts, certificates of deposit, money
14
<PAGE> 20
market accounts, etc.), all employee communications, all correspondence or
other submissions with any governmental agency, and all Agreements with service
providers or fiduciaries for providing services on behalf of any Other
Arrangement.
(b) No Plan is a Multiemployer Plan.
(c) No Plan is an ESOP.
(d) The Company and the Subsidiaries have made all contributions and
other payments required by and due under the terms of each Plan and Other
Arrangement and have taken no action (including, without limitation, actions
required by Law) relating to any Plan or Other Arrangement that will increase
Purchaser's, the Company's or any Subsidiary's obligation under any Plan or
Other Arrangement.
(e) Schedule 4.10 sets forth a list of all Qualified Plans. All
Qualified Plans and any related trust agreements or annuity agreements (or any
other funding Documents) comply and have complied with ERISA, the Code
(including, without limitation, the requirements for Tax qualification
described in Section 401 thereof), and all other Laws. The trusts established
under such Plans are exempt from federal income taxes under Section 501(a) of
the Code. The Company and the Subsidiaries have received determination letters
issued by the IRS with respect to each Qualified Plan, and the Company has
furnished to Purchaser true and complete copies of all such determination
letters and all correspondence relating to the applications therefor. All
statements made by or on behalf of the Company or any Subsidiary to the IRS in
connection with applications for determinations with respect to each Qualified
Plan were true and complete when made and continue to be true and complete
unless supplanted by subsequent statements. Nothing has occurred since the
date of the most recent applicable determination letter that would adversely
affect the tax-qualified status of any Qualified Plan.
(f) There are no material legal or administrative proceedings pending
against any of the Plans affecting employees of the Company (other than routine
claims for benefits). Except as set forth on Schedule 4.10, to the Company's
knowledge, the Plans subject to ERISA comply in all material respects with
applicable requirements prescribed by ERISA and the Code. The Company and the
Subsidiaries have complied with all applicable provisions of the Code, ERISA,
the National Labor Relations Act, Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Fair Labor Standards Act, the
Securities Act, the Securities Exchange Act of 1934, and all other Laws
pertaining to the Plans, Other Arrangements and other employee or employment
related benefits, and all premiums and assessments relating to all Plans or
Other Arrangements. The Company and the Subsidiaries have no liability for any
delinquent contributions
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<PAGE> 21
within the meaning of Section 515 of ERISA (including, without limitation,
related attorneys' fees, costs, liquidated damages and interest) or for any
arrearages of wages. The Company and the Subsidiaries have no pending unfair
labor practice charges, contract grievances under any collective bargaining
agreement, other administrative charges, claims, grievances or lawsuits before
any court, governmental agency, regulatory body, or arbiter arising under any
Law governing any Plan, and there exist no facts that could give rise to such a
claim.
(g) No Plan or Other Arrangement, individually or collectively,
provides for any payments by Company or any Subsidiary to any employee or
independent contractors that is not deductible under Section 162(a)(1) or 404
of the Code or that is an "excess parachute payment" pursuant to Section 280G
of the Code.
(h) No Plan has experienced a "reportable event" (as such term is
defined in Section 4043(b) of ERISA) that is not subject to an administrative
or statutory waiver from the reporting requirement.
(i) No Plan is a "qualified foreign plan" (as such term is defined in
Section 404A(e) of the Code), and no Plan is subject to the Laws of any
jurisdiction other than the United States of America or one of its political
subdivisions.
(j) No Plan is a funded Welfare Plan that provides benefits to current
or former Company or Subsidiary employees or their beneficiaries.
(k) Schedule 4.10 (i) identifies all post-retirement medical, life
insurance or other benefits promised, provided or otherwise due now or in the
future to current, former or retired employees of Company or any Subsidiary,
(ii) identifies the method of funding (including, without limitation, any
individual accounting) for all such benefits, (iii) discloses the funded status
of the Plans providing or promising such benefits and (iv) sets forth the
method of accounting for such benefits to any key employees (as defined in
Section 416(i) of the Code) of Company or any Subsidiary.
(l) All Welfare Plans and the related trusts that are subject to
Section 4980B(f) of the Code and Sections 601 through 607 of ERISA comply with
and have been administered in compliance with the health care continuation
coverage requirements for tax-favored status under Section 4980B(f) of the Code
(formerly Section 162(k) of the Code), Sections 601 through 607 of ERISA, and
all proposed or final Treasury regulations under Section 162 of the Code
explaining those requirements.
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<PAGE> 22
(m) The Company and the Subsidiaries have (i) filed or caused to be
filed all returns and reports on the Plans that they are required to file and
(ii) paid or made adequate provision for all fees, interest, penalties,
assessments or deficiencies that have become due pursuant to those returns or
reports or pursuant to any assessment or adjustment that has been made relating
to those returns or reports. All other fees, interest, penalties and
assessments that are payable by or for the Company or any Subsidiary have been
timely reported, fully paid and discharged. There are no unpaid fees,
penalties, interest or assessments due from Company or any Subsidiary, or from
any other person that are or could become a lien on any Asset of the Company or
any Subsidiary or could otherwise adversely affect the businesses or Assets of
Company or any Subsidiary. The Company and the Subsidiaries have collected or
withheld all amounts that are required to be collected or withheld by them to
discharge their obligations, and all of those amounts have been paid to the
appropriate governmental agencies or set aside in appropriate accounts for
future payment when due.
4.11 Employee Relations. Except as set forth on Schedule 4.11
hereto, the employees of the Company are not covered by any collective
bargaining agreement. No strike, work stoppage, slowdown or labor dispute
involving any employees of the Company has occurred during the past three years
or, to Company's knowledge, is threatened. The Company has complied and is in
compliance in all material respects with all laws related to the employment or
the workplace, including, without limitation, provisions related to wages,
hours, collective bargaining, safety and health, work authorization, equal
employment opportunity, immigration and the withholding of income taxes,
unemployment compensation, worker's compensation, employee privacy and the
right to know and social security contributions. The consummation of the
transactions contemplated hereby will not cause the Company or any of its
Subsidiaries to incur or suffer any liability relating to, or obligation to
pay, severance, termination or other payments to any person or entity. Except
as set forth in Schedule 4.11 hereto, no employee of the Company or any of its
Subsidiaries has any contractual right to continued employment by the Company
or any of its Subsidiaries following consummation of the transactions
contemplated by this Agreement.
4.12 Insurance. Schedule 4.12 hereto contains a list of all
insurance policies concerning the Business and/or any of the assets of the
Company or any of the Subsidiaries. All such policies (a) are in full force
and effect and no notice of cancellation or termination has been received; and
(b) are sufficient for compliance in all material respects by the Company with
all requirements of the law and of all agreements to which the Company is a
party.
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4.13 Material Contracts. (a) Schedule 4.13 hereto contains a list
of all the Material Contracts, and true copies of such agreements have been
furnished to Purchaser or have been made available to Purchaser. There exists
no default or event which, with notice or lapse of time, or both, would
constitute a default by the Company, or, to the Company's knowledge, any other
party to any such Material Contract, except where such default would not have a
Material Adverse Effect. The Company has not received written notice that any
party to any Material Contract intends to cancel or terminate any such
agreement or to exercise or not to exercise any option to renew thereunder.
(b) For each Material Contract set forth on Schedule 4.13
which is a program or film contract or license pursuant to which the Company is
authorized to broadcast programs on the Station (each, a "Program Contract"),
Schedule 4.13 sets forth the following information as of February 28, 1997: (i)
the identity, title and syndicator of the programming, (ii) the expiration date
of each Program Contract, (iii) the number of telecasts thereof originally
licensed and the cost thereof, and (iv) the number of telecasts on the Station
remaining available to the Company. For each of these Program Contracts, there
are no time period and/or cash or non-cash promotional commitments. The
Program Contracts have been scheduled and broadcast in the ordinary course of
business consistent with the Station's past practices and customary practices
in the television broadcast industry.
4.14 Compliance with Laws. Except as set forth on Schedule 4.14,
the Company is in compliance with all applicable Federal, state and local laws,
rules and regulations, except where the failure to so comply would not have a
Material Adverse Effect.
4.15 Litigation. Except as set forth on Schedule 4.15 hereto,
there is no suit, claim, action, proceeding or arbitration pending or, to
Company's knowledge, threatened against the Company or involving the Station.
There is no outstanding citation, order, judgment, writ, injunction, or decree
of any court, government, or governmental or administrative agency against or
affecting the Business or assets of the Company or the Company.
4.16 No Brokers. Neither the Company nor anyone acting on its
behalf has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the sale of the
Company and the transactions contemplated by this Agreement, other than the
Company's engagement of Stonewood Capital Management, Inc. as exclusive agent
for the Company to attempt to arrange the sale or merger of the Company.
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4.17 Consents. Except (a) for immaterial filings, consents,
approvals and authorizations, (b) as set forth on Schedule 4.17 hereto, (c) for
filings pursuant to the H-S-R Act, or (d) the application requesting the
approval and consent of the FCC to the transactions contemplated by this
Agreement (the "FCC Application"), no filing, consent, approval or
authorization of any governmental authority or of any third party on the part
of the Company is required in connection with the execution and delivery of
this Agreement or the consummation of any of the transactions contemplated
hereby.
4.18 Environmental. Except as set forth on Schedule 4.18 hereto:
(a) All of the operations of the Company at or from any
Real Property comply in all material respects with applicable Environmental
Laws. The Company has not engaged in or permitted any operations or activities
upon any of the Real Property for the purpose of or involving the treatment,
storage, use, generation, release, discharge, emission, or disposal of any
Hazardous Substances at the Real Property, except in substantial compliance
with applicable Environmental Laws.
(b) None of the Real Property is listed or, to Company's
knowledge, proposed for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., or any similar inventory, register
or identification of sites requiring investigation or remediation maintained by
any state or other governmental authority. The Company has not, during the
five years immediately preceding the date hereof, received any written notice
from any governmental entity or third party of any actual or threatened
Environmental Liabilities with respect to the Real Property or the conduct of
the Business.
(c) To Company's knowledge, there are no conditions
existing at the Real Property that require, or which with the giving of notice
or the passage of time or both would likely require remedial or corrective
action, removal or closure pursuant to the Environmental Laws.
(d) The Company has all the material permits,
authorizations, licenses, consents and approvals necessary for the current
conduct of the Business and for the operations on, in or at the Real Property
which are required under applicable Environmental Laws and is in substantial
compliance with the terms and conditions of all such permits, authorizations,
licenses, consents and approvals.
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(e) The Real Property contains no underground storage
tanks, or underground piping associated with such tanks, used currently or in
the past for Hazardous Substances.
(f) The Company has furnished to Purchaser accurate and
complete copies of all written information in its possession pertaining to the
environmental history of the Real Property and the operations of the Company
and its Subsidiaries, including without limitation, all environmental
assessments.
4.19 Tax Matters. Except as set forth on Schedule 4.19 hereto:
(a) All Returns with respect to any Tax required to be
filed by, or with respect to, the Company have been filed when due in timely
fashion. All Taxes payable by the Company during the periods covered by such
Returns have been paid when due in timely fashion. The Company has made
available to Purchaser, for the last three taxable years, copies of all income
and franchise Tax Returns filed by, or with respect to, the Company. The
Company has also made available to Purchaser the copies of all examination
reports and statements of deficiencies assessed with respect to the Company for
the last three taxable years.
(b) No Tax audit or other proceeding has been conducted
during the past seven years or is currently being conducted with respect to the
Company and the Company has not received notification from any Tax Authority
that it intends to commence a Tax audit or other proceeding with respect to any
Return.
(c) There are no agreements for the extension of the time
for assessment of any Taxes relating to the Company.
(d) There are no Encumbrances on the assets of the
Company for any Tax currently due and owing.
(e) There is not, and will not be as of the Closing, any
agreement or consent made under Section 341(f) of the Code affecting the
Company.
(f) Company has not made, nor will it become obligated to
make, as a result of any event connected with the transaction contemplated by
this Agreement, any "excess parachute payment" as defined in Section 280G of
the Code (without regard to subsection (b)(4) thereof).
4.20 Transactions with Affiliates. Except as set forth in Schedule
4.20 attached hereto, the Company is not now, and since January 1, 1996, has
not been, a party, directly or indirectly, to any contract, lease, arrangement
or transaction which is material to the Business, whether for the purchase,
lease or sale
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of property, for the rendition of services or otherwise, with any officer,
director, employee, proprietor, partner or shareholder of the Company or any
Affiliate of the Company or any of the foregoing. The terms and conditions of
the transactions identified on Schedule 4.20 are described briefly therein.
4.21 No Undisclosed Liabilities. Except to the extent, if any,
otherwise disclosed in the Schedules hereto, the Company has no material
liability of any kind whatsoever, whether absolute, accrued or contingent,
except for (a) liabilities of the type described in the Interim Balance Sheet
or the notes to the Company's audited balance sheet as of December 31, 1996 and
(b) liabilities taken into account in the calculation of the Aggregate Merger
Consideration.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB
Purchaser and Sub hereby jointly and severally represent and warrant
to the Company as follows:
5.1 Organization and Good Standing. Each of Purchaser and Sub is
a corporation duly organized, validly existing, and subsisting under the laws
of the state of its incorporation. Each of Purchaser and Sub has full
corporate power and authority to carry on its business as it is now being
conducted.
5.2 Execution and Effect of Agreement. Each of Purchaser and Sub
has full corporate power and authority to enter into this Agreement. The
consummation of the transactions contemplated hereby has been duly authorized
by all necessary corporate action on the part of Purchaser and Sub. This
Agreement has been duly executed and delivered by Purchaser and Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of Purchaser and Sub,
enforceable against Purchaser and Sub in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the rights of creditors generally and to the exercise of judicial
discretion in accordance with general principles of equity (whether applied by
a court of law or equity).
5.3 No Conflicts. Except as set forth in Schedule 5.3 hereto and
subject to obtaining the consents and approvals, and making the filings
described in Section 5.4 hereof, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
violate any of the provisions of the charter or by-laws of Purchaser and Sub,
(b) to Purchaser's or Sub's Knowledge, violate any provision of applicable law,
rule or regulation which violation would have a
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material adverse effect on the business or financial condition of Purchaser or
Sub or prevent or materially interfere with Purchaser's or Sub's ability to
perform hereunder or (c) conflict with or result in a breach of, or give rise
to a right of termination of, or accelerate the performance required by the
terms of any judgment, court order or consent decree, or any agreement,
indenture, mortgage or instrument to which either Purchaser or Sub is a party
or to which their respective properties are subject, or constitute a default
thereunder, except where such conflict, breach, right of termination,
acceleration or default would not have a material adverse effect on the
business or financial condition of Purchaser or Sub or prevent or materially
interfere with Purchaser's or Sub's ability to perform hereunder.
5.4 Consents. Except (i) as set forth on Schedule 5.4 hereto,
(ii) for filings pursuant to the H-S-R Act, or (iii) the FCC Applications, no
filing, consent, approval or authorization of any governmental authority or of
any third party on the part of Purchaser or Sub is required in connection with
the execution and delivery of this Agreement by Purchaser or Sub or the
consummation of any of the transactions contemplated hereby.
5.5 Availability of Funds. Purchaser and Sub will have available
on the Closing Date sufficient funds to enable them to consummate the
transactions contemplated by this Agreement, including the payment of the
Merger Consideration. At the Company's request, Purchaser and Sub shall
provide the Company with evidence reasonably satisfactory to the Company of the
availability of such funds.
5.6 Litigation. There is no suit, claim, action, proceeding or
arbitration pending or, to Purchaser's or Sub's Knowledge, threatened against
Purchaser or Sub which seeks to enjoin or obtain damages in respect of the
transactions contemplated hereby.
5.7 No Brokers. Neither Purchaser nor Sub nor anyone acting on
their behalf has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders' fees in connection with the
purchase of the Company and the transactions contemplated by this Agreement.
5.8 FCC. Except as set forth on Schedule 5.8, Purchaser and Sub
are each qualified to acquire control of the FCC Licenses as contemplated by
this Agreement under the Communications Act of 1934, as amended, and the FCC
Rules and Regulations, without any requirement to obtain any waiver thereof.
Except as set forth on Schedule 5.8, to Purchaser's knowledge, there is no
state of affairs relating directly or indirectly to Purchaser or Sub or their
plans for the Company or the Station that could reasonably
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be expected to result in a refusal by the FCC to approve the transactions
contemplated hereby or to delay such approval.
SECTION 6
ADDITIONAL PROVISIONS REGARDING
REPRESENTATIONS AND WARRANTIES
6.1 Limitation; Survival. Except as specifically set forth herein
or in any Schedule, Exhibit or other document delivered pursuant hereto, no
party has made any representation or warranty with respect to the transactions
to be consummated hereunder. The representations and warranties herein and the
obligations of the parties shall survive the Closing for a period of eighteen
months, provided, however, that any claims that have been made before such date
shall survive until the final resolution thereof.
6.2 Right to Update Schedules. The Company shall have the right
and obligation, without being deemed to be in breach of its representations and
warranties set forth in this Agreement, to supplement or amend the Schedules to
this Agreement with respect to any actions by the Company after the date
hereof, which occur in the ordinary course of the Business (consistent with
past practices), but no such amendment shall be deemed to amend Section 8.3
without Purchaser's consent.
6.3 Knowledge of Purchaser, Sub or the Company. If any party
hereto (a "Knowing Party") has actual knowledge upon its execution and delivery
of this Agreement or at Closing that any other party hereto (an "Other Party")
is or will be in breach of any representation or warranty made or to be made in
this Agreement by such Other Party, then such Knowing Party shall not have any
right or remedy (including indemnification pursuant to Section 9 below) with
respect to such breach, and the Other Party will not be deemed to be in breach
of such representation or warranty. For purposes of this Section, Purchaser or
Sub will be a Knowing Party only if Robert Smith or David Fitz has actual
acknowledge of a matter. The Company will be a Knowing Party only if Richard
Mayer has actual knowledge of a matter.
6.4 Schedules and Exhibits. Any fact or item disclosed in any
Schedule or Exhibit hereto shall be deemed to have been disclosed in all other
Schedules or Exhibits requiring such disclosure and for purposes of all other
representations and warranties made herein, if it appears reasonably apparent
on the face of the Schedule where such item is referenced that it is relevant
to such other Schedules.
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SECTION 7
MATTERS RELATING TO JOHNSTOWN CHIEFS, INC.
7.1 General. The Company owns all of the Chiefs Stock. It is the
intent of the parties hereto that the Chiefs Stock is to be owned by the
present shareholders of the Company following the Closing and not by the
Continuing Corporation. Accordingly, at or prior to the Closing Date, and as
an integral part of the Merger, either the Chiefs Stock or, if the Chiefs Stock
is no longer owned by the Company, the proceeds received by the Company for the
Chiefs Stock, shall be distributed to the shareholders of the Company. All
proceeds received by the Company for the Chiefs Stock shall be set aside in a
separate account until distributed to the shareholders of the Company.
7.2 Consents.
(a) The sale or other distribution of the Chiefs Stock is
subject to receipt of the consents set forth on Schedule 7.2 hereof. In the
event such consents are not received by the Closing Date, the Continuing
Corporation shall continue to own the Chiefs Stock, the Continuing Corporation
shall grant a proxy in the form of Exhibit D hereto to the Shareholders' Agent
to vote the Chiefs Stock, and the officers and directors of Chiefs shall
continue to be the officers and directors in office on the Closing Date. The
Continuing Corporation shall, at the sole cost and expense of the former
Company shareholders (to be paid by the Shareholders' Agent), cooperate with
the Shareholders' Agent to obtain the required consents and shall deliver the
Chiefs Stock to the Disbursing Agent for distribution to the former
shareholders of the Company as soon as the Continuing Corporation shall receive
written notice from the Shareholders' Agent that such distribution is
permitted. The Chiefs shall deal with the Continuing Corporation on an arm's
length basis in all matters and shall reimburse the Continuing Corporation for
all costs and expenses, if any, as the Continuing Corporation may reasonably
incur in connection with its continued ownership of Chiefs.
(b) In the event the Chiefs Stock cannot be distributed
to the shareholders of the Company on or before October 30, 1997, then the
Continuing Corporation may, but shall have no obligation (except as provided in
Section 7.2[a]) to, take such actions as it deems necessary to dispose of the
Chiefs Stock in such manner as it may determine is most expeditious. Any net
proceeds received by the Continuing Corporation in connection with that
disposition (less any Taxes, costs, expenses or Losses incurred or reasonably
expected to be incurred by the Continuing Corporation related to or arising
from the Continuing Corporation's ownership, distribution or disposition of the
Chiefs Stock, and any Taxes, costs, expenses or Losses related to or arising
from the business or operations of the Chiefs) shall
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be distributed to the Disbursing Agent for distribution to the former
shareholders of the Company as part of the Merger Consideration.
SECTION 8
ADDITIONAL COVENANTS AND UNDERTAKINGS
8.1 Further Assurances and Assistance. Purchaser, Sub and the
Company agree that each will execute and deliver to the others any and all
documents, in addition to those expressly provided for herein, that may be
necessary, appropriate or reasonably requested to implement the provisions of
this Agreement, whether before, at or after the Closing. The parties agree to
cooperate with each other to any extent reasonably required in order to
accomplish fully the transactions herein contemplated.
8.2 Access to Information. The Company, from and after the date of
this Agreement and until the Closing Date, shall give Purchaser, Sub and their
respective employees and representatives full and complete access upon
reasonable notice during normal business hours, to all officers, employees,
offices, properties, agreements, records and affairs of the Company or
otherwise relating to the Business, will provide Purchasers with all regularly
prepared financial statements of the Company, and will provide copies of such
information concerning the Company and the Business as Purchaser and Sub may
reasonably request (including, without limitation, information used in
connection with the preparation of the Statement of Estimated Net Current Asset
Adjustment pursuant to Section 3.2(d)); provided, however, that the foregoing
shall not permit Purchaser, Sub or any agent thereof to (i) disrupt the
Business or (ii) contact any employee of the Company without providing
reasonable prior notice to the Company and allowing a representative of the
Company to be present. Purchaser and Sub may perform such environmental
inspections and assessments as Purchaser and Sub reasonably deem necessary.
8.3 Conduct of Business Prior to Closing. Except as contemplated
by this Agreement, from and after the date hereof the Company shall conduct
such Business in the ordinary course and consistent with past practices.
Except as contemplated by this Agreement or as consented to by Purchaser (and
any such consent to a matter that would not impact the Company following the
Closing shall not unreasonably be withheld) in writing, from and after the date
hereof the Company shall act as follows:
(a) The Company will not adopt any material change in any
method of accounting or accounting practice, except as contemplated or required
by GAAP;
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(b) The Company will not amend its charter or by-laws;
(c) Except for dispositions in the ordinary course of
business consistent with past practice, the Company will not sell, mortgage,
pledge or otherwise dispose of any assets or properties owned or used in the
operation of the Station;
(d) The Company will not merge or consolidate with, or
agree to merge or consolidate with, or purchase or agree to purchase all or
substantially all of the assets of, or otherwise acquire, any other business
entity;
(e) The Company will use reasonable commercial efforts to
maintain its goodwill, business relationships, licenses and franchises;
(f) In the event the Closing does not occur prior to the
expiration of the existing labor agreement, the Company will negotiate in good
faith, and in consultation with Purchaser, an extension of its labor union
contract for the period of time prior to the Closing, but the Company will not
enter into any new labor union agreement or further renew its existing
contract. Prior to Closing, the Company will permit the Purchaser to engage in
good faith, pre-acquisition negotiations with the incumbent labor union for a
new labor agreement which would become effective on or after the Closing and
contain such wages, hours and other terms and conditions of employment as may
be mutually acceptable to the union and the Purchaser.
(g) The Company will not authorize for issuance, issue or
sell any additional shares of its capital stock or any securities or
obligations convertible into shares of its capital stock or issue or grant any
option, warrant or other right to purchase any shares of its capital stock;
(h) The Company will not incur, or agree to incur, any
debt for borrowed money;
(i) The Company will keep all of its assets in their
present working order and repair (reasonable wear and tear excepted);
(j) The Company will maintain its current levels of
insurance coverage;
(k) The Company will promptly deliver to Purchaser
monthly sales pacing reports and monthly, quarterly and annual financial
statements as customarily prepared for the Station;
(l) The Company will not enter into new contracts or
modify existing contracts having an individual value of more than $25,000 in
cash or services or an aggregate value in excess of $200,000;
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(m) The Company will not enter into any transactions with
related parties or affiliates, other than arm's length agreements consistent
with past practice;
(n) The Company will not change any Plan or Other
Arrangement except as may be required by law;
(o) The Company will not enter into any employment
agreements;
(p) The Company will not change or modify any
compensation, benefits or businesses for any employee of the Company, except to
the extent consistent with the normal compensation practices of the Company;
(q) The Company will use its best efforts to comply in
all material respects with all applicable laws;
(r) The Company will not enter into any (i) agreement
under which it will obtain any management rights with respect to any
television station or under which any third party obtains any such rights with
respect to the Station, or (ii) any local marketing arrangement, joint
operating agreement, joint sales agreement or other similar contract;
(s) The Company will not, and will not permit its
shareholders to, pledge or otherwise encumber in any manner the Stock in any
manner that could impact the transactions contemplated hereby or Purchaser's
ownership of the Company following the Closing.
8.4 H-S-R Act. Each of Purchaser and Sub and the Company shall,
within ten days of the date hereof, file duly completed and executed Pre-Merger
Notification and Report Forms as required under the H-S-R Act and shall
otherwise use their respective best efforts (without requiring any of
Purchaser, Sub or the Company to incur material costs or expenses) to comply
promptly with any requests made by the Federal Trade Commission or the
Department of Justice pursuant to the H-S-R Act or the regulations promulgated
thereunder. All filing fees and other payments in connection with the H-S-R
Act shall be paid by Purchaser.
8.5 FCC Application.
(a) Each of Purchaser and Sub and the Company shall,
within ten days of the date hereof, file with the FCC the FCC Application;
provided that the parties shall cooperate with each other in the preparation of
the FCC Application and shall in good faith and with due diligence take all
reasonable steps necessary
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to expedite the processing of the FCC Application and to secure such consents
or approvals as expeditiously as practicable. If the Closing shall not have
occurred for any reason within the initial effective periods of the granting of
FCC approval of the FCC Application, and no party shall have terminated this
Agreement under Section 13, the parties shall jointly request and use their
respective best efforts to obtain one or more extensions of the effective
periods of such grants. No party shall knowingly take, or fail to take, any
action the intent or reasonably anticipated consequence of which would be to
cause the FCC not to grant approval of the FCC Application.
(b) The Company shall publish the notices required by the
FCC Rules and Regulations relative to the filing of the FCC Application.
Copies of all applications, documents and papers filed after the date hereof
and prior to the Closing, or filed after the Closing with respect to the
transactions under this Agreement, by Purchaser or the Company with the FCC
shall be mailed to the other simultaneously with the filing of the same with
the FCC. Each party shall bear its own costs and expenses (including the fees
and disbursements of its counsel) in connection with the preparation of the
portion of the application to be prepared by it and in connection with the
processing of that application. All filing and grant fees, if any, paid to the
FCC, shall be borne 50% by Purchaser and 50% by the Company. None of the
information contained in any filing made by Purchaser and Sub or the Company
with the FCC with respect to the transactions contemplated by this Agreement
shall contain any untrue statement of a material fact.
8.6 Books and Records. Following the Closing, Purchaser and the
Company shall permit the Shareholders' Agent (a) to have reasonable access to
the books and records of the Company relating to the period prior to the
Closing or after the Closing to the extent related to transactions or events
occurring prior to the Closing, and (b) to have reasonable access to employees
of the Company, Purchaser and Sub to obtain information relating to such
matters. The Company shall maintain such books and records for a period of
seven years following the Closing.
8.7 Employees and Employee Benefits. Notwithstanding the
provisions of Section 8.3 hereof, the parties agree that the Company may defer
funding its Plans to the extent that, following any further funding, such Plans
would be overfunded.
8.8 Control of Station. From the date hereof until the Closing
Date, subject to the express provisions of this Agreement, neither Purchaser
nor Sub shall directly or indirectly control, supervise or direct the operation
of the Station.
8.9 Retention of Employees. Purchaser agrees during the first
year following the Closing, the Company will not layoff or
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terminate, for the primary purpose of saving operating expenses, more than four
full-time employees of the Company with five or more years of employment with
the Station. For this purpose, an employee who is laid off or terminated for
cause or due to performance considered unsatisfactory in the sole judgment of
the Company following the Closing will not be treated as having been laid off
or terminated for the primary purpose of saving operating expenses. This
Section 8.9 shall operate exclusively for the benefit of the parties to this
Agreement and not to the benefit of any other person or entity, including
without limitation, any employee or former employee of the Company or any of
its Subsidiaries.
8.10 Shareholder Approval. The Company shall, in accordance with
applicable law and the Articles of Incorporation and Bylaws, duly call, give
notice of, convene and hold a meeting of the holder of shares of Company Stock,
or obtain a written consent in lieu thereof, as soon as possible after the date
hereof for the purpose of voting upon (or passing upon in writing) this
Agreement and the Merger.
8.11 Consents and Approvals. The Company shall use its reasonable
efforts to obtain the third party consents and approvals identified in Schedule
10.1(d) hereto.
8.12 Retransmission Consent Agreements. The Company shall advise
and keep Purchaser fully informed of the terms and conditions of any new
retransmission consent agreements and provide Purchaser with copies of such
information with respect to such agreements as Purchaser may reasonably
request.
SECTION 9
INDEMNIFICATION
9.1 Indemnification of Purchaser and Sub. Subject to Section 9.3
hereof, Purchaser, Sub (and, following the Closing, the Company) and their
respective officers, directors, affiliates and representatives shall be
indemnified and held harmless by the shareholders of the Company from and
against the following:
(a) any and all Losses, however incurred, which arise out of
or result from:
(i) any breach by the Company of any representation or
warranty of the Company as set forth in Section 4 of this
Agreement or any instrument or certificate delivered by the
Company at Closing; or
(ii) the failure by the Company to perform any covenant of the
Company contained herein.
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(b) all amounts payable to holders of Dissenting Shares in
excess of the Merger Consideration they would have received had they not
exercised their appraisal rights and all costs (including legal fees and
expenses) incurred by the Company as a result of any exercise of appraisal
rights;
(c) all Taxes, costs, expenses, and other Losses, if any,
incurred by the Continuing Corporation as a result of the sale or other
disposition of the Chiefs Stock, of the continued ownership of the Chiefs Stock
by the Company following the Closing pursuant to Section 7.2 and any other
Losses arising out of the business or operations of the Chiefs (collectively,
the "Chiefs Matters"), but only to the extent such items are not already taken
into account in determining the Net Current Asset Adjustment;
(d) any and all Losses related to or arising out of any
claims made by James M. Edwards, Sr., including, without limitation, any claims
made under his former employment arrangements with the Company other than
payments to which Mr. Edwards is entitled under the Edwards Agreements as a
retired employee of the Company (collectively, the "Edwards Matters"); and
(e) any and all Losses related to or arising out of any
remediation efforts associated with the three hundred gallon underground
storage tank disclosed as item number 2 on Schedule 4.18 hereto, including
without limitation, any and all removal and other environmental clean-up costs
associated therewith (collectively, the "UST Matters").
9.2 Indemnification by Purchaser and Sub. Subject to Section 9.3
hereof, Purchaser and Sub shall indemnify and hold the shareholders of the
Company harmless from and against any and all Loss, however incurred, which
arises out of or results from:
(a) any breach by Purchaser or Sub of any representation
or warranty of Purchaser and Sub set forth in Section 5 of this Agreement;
(b) the material failure by Purchaser or Sub to perform
any covenant of Purchaser and Sub contained herein; or
(c) any liability or obligation of or claim against the
Company (whether absolute, accrued, contingent or otherwise) arising out of,
relating to or resulting from the Business or the operations of the Station
during the period after the Closing Date
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9.3 Limitations and Other Provisions Regarding Indemnification
Obligations.
(a) Notwithstanding the provisions of Section 9.1 hereof,
Purchaser, Sub and Company shall not be entitled to receive indemnification
payments with respect to any Losses under Section 9.1(a) hereof except if and
to the extent that (i) the aggregate amount of Losses incurred by Purchaser and
its Affiliates to which it or they would otherwise be entitled to
indemnification under Section 9.1 hereof, exceeds $100,000 and then only to the
extent of such excess; provided, however, that the limitation contained in this
Section 9.3(a)(i) shall not apply to (A) any adjustments to the calculation of
the Aggregate Merger Consideration hereunder, (B) the Chiefs Matters, and (C)
the Edwards Matters, and (D) the UST Matters, and (ii) with respect to Tax
Liabilities only, such Tax Liability exceeds the Tax Reserve.
(b) No party otherwise required to indemnify any other
party with respect to any Tax Liability shall have any obligation to indemnify
such other party until there has been a Final Determination with respect to any
such Taxes, at which time indemnification shall be promptly made.
(c) In case any event shall occur which would otherwise
entitle Purchaser or the Company to assert a claim for indemnification
hereunder, no Loss shall be deemed to have been sustained by Purchaser or Sub
to the extent of (i) any tax savings realized or realizable by Purchaser or
its Affiliates from a deduction from taxable income or a credit against taxes
owed to which Purchaser or its Affiliates is entitled solely by reason of the
occurrence of such Loss, or (ii) any proceeds received or otherwise recovered
by Purchaser or the Company from any third party, including but not limited to
any insurance carrier.
(d) In addition to the other limitations set forth in
this Section 9, the Company's shareholders liability for indemnification
obligations in Section 9.1 hereof shall not exceed the amount of the
Indemnification Escrow, and Purchaser's, Sub's and the Company's right to
indemnification shall be limited to the monies contained in the Indemnification
Escrow.
(e) No claim for indemnification for a Loss shall be made
after expiration of the applicable period set forth in Section 6.1 hereof.
(f) Nothing in this Agreement shall, or shall be deemed
to, relieve Purchaser or the Company of any common law or other duty to
mitigate any Loss incurred by it. In no event shall Purchaser, Sub or the
Company be entitled to recover any indirect, special, incidental or
consequential loss or damages.
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(g) Absent actual fraud or as expressly provided in
Section 13.2, from and after the Closing Date, indemnification pursuant to this
Section 9 shall be the sole and exclusive remedy of each party hereto with
respect to any Loss as to which the provisions of Sections 9.1 or 9.2 hereof,
as the case may be, are applicable.
(h) Any payments made by either party hereto pursuant to
this Section 9 shall be treated as an adjustment to the Aggregate Merger
Consideration.
(i) Notwithstanding the provisions of this Section 9.3,
none of the limitations on indemnifications set forth herein shall be
applicable to any Chiefs Matters.
9.4 Notice of Claim; Defense of Action.
(a) An indemnified party shall promptly give the
indemnifying part(ies) notice of any matter which an indemnified party has
determined has given or could give rise to a right of indemnification under
this Agreement, stating the nature and, if known, the amount of the Loss, and
method of computation thereof, all with reasonable particularity and containing
a reference to the provisions of this Agreement in respect of which such right
to indemnification is claimed or arises; provided that the failure of any party
to give notice promptly as required in this Section 9.4 shall not relieve any
indemnifying party of its indemnification obligations except to the extent that
such failure materially prejudices the rights of such indemnifying party. The
indemnified party shall give continuing notice promptly thereafter of all
developments coming to the indemnified party's attention materially affecting
any matter relating to any indemnification claims.
(b) The obligations and liabilities of an indemnifying
party under this Section 9 with respect to Losses arising from claims of any
third party that are subject to the indemnification provided for in this
Section 9, shall be governed by and contingent upon the following additional
terms and conditions: With respect to third party claims, promptly after
receipt by an indemnified party of notice of the commencement of any action or
the presentation or other assertion of any claim which could result in any
indemnification claim pursuant to Section 9.1 or 9.2 hereof, such indemnified
party shall give prompt notice thereof to the indemnifying part(ies) and the
indemnifying part(ies) shall be entitled to participate therein or, to the
extent that it shall wish, assume the defense thereof with its own counsel. If
the indemnifying part(ies) elects to assume the defense of any such action or
claim, the indemnifying part(ies) shall not be liable to the indemnified party
for any fees of other counsel or any other expenses, in each case incurred by
such indemnified party in connection with the defense thereof,
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unless representation of both parties by the same counsel would be prohibited
under the applicable Code of Professional Responsibility. The indemnifying
part(ies) shall be authorized, with consent of the indemnified party being
required, to settle or compromise any such action or claim, provided that such
settlement or compromise includes an unconditional release of the indemnified
party from all liability arising out of such action or claim. Whether or not
an indemnifying part(ies) elects to assume the defense of any action or claim,
the indemnifying part(ies) shall not be liable for any compromise or settlement
of any such action or claim effected without its consent, such consent not to
be unreasonably withheld. The parties agree to cooperate to the fullest extent
possible in connection with any claim for which indemnification is or may be
sought under this Agreement, including, without limitation, making available
all witnesses, pertinent records, materials and information in its possession
or under its control relating thereto as is reasonably requested by the other
party.
(c) For purposes of this Section 9.4, any notice to be
given following the Closing to the Company and any decisions to be made by the
Company (as the indemnifying party) shall be made by the Shareholders' Agent.
SECTION 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARTIES TO CLOSE
10.1 Conditions Precedent to the Obligation of Purchaser and Sub.
The obligation of Purchaser and Sub to consummate the Closing is subject to the
fulfillment or waiver, on or prior to the Closing Date, of each of the
following conditions precedent:
(a) The Company shall have complied in all material
respects with its agreements and covenants contained herein to be performed at
or prior to the Closing, and the representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as
of the Closing Date with the same effect as though made on and as of the
Closing Date (provided that any representation or warranty contained herein
that is qualified by a materiality standard shall not be further qualified
hereby), except that representations and warranties that were made as of a
specified date shall continue on the Closing Date to have been true as of the
specified date, and Purchaser and Sub shall have received an officer's
certificate of the Company, dated as of the Closing Date, certifying as to the
fulfillment of the condition set forth in this Section 10.1(a) ("Company's
Bring-Down Certificate").
(b) No statute, rule or regulation, or order of any court
or administrative agency shall be in effect which restrains
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or prohibits Purchaser or Sub from consummating the transactions contemplated
hereby or materially interfering with Purchaser's ability to own the Company or
the Company's ability to own its assets and/or the Company's or Purchaser's
ability to operate the Station;
(c) All applicable waiting periods under the H-S-R Act
shall have expired or been terminated.
(d) All consents identified on Schedule 10.1(d) shall
have been received.
(e) The FCC shall have issued the FCC Order and such FCC
Order shall be a Final Order. All conditions contained in the Final Order
required to be satisfied on or prior to the Closing Date shall have been duly
satisfied and performed. Notwithstanding the foregoing, if the consent of the
FCC is conditional or qualified in any manner materially adverse to the
ownership of Purchaser and Sub, Purchaser and Sub may, nevertheless, in
Purchaser's sole discretion, require the consummation of the transactions
contemplated by this Agreement, but shall not be required to do so.
(f) The Company shall have delivered to Purchaser and Sub
at the Closing each document required by Section 11.1 hereof.
(g) This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Stock.
(h) No Material Adverse Change shall have occurred.
(i) All liens, claims, pledges, mortgages, security
interests and encumbrances covering or affecting any of the assets of the
Company or Stock shall have been released and terminated as of the Closing
Date.
(j) There shall have been no casualty at the Company that
prevents the Station from broadcasting in the normal manner if such
broadcasting cannot reasonably be commenced within 30 days and by the Closing
Date.
(k) All liabilities or obligations then due or payable by
the Company under any of its programming contracts shall have been paid as of
the Closing Date.
10.2 Conditions Precedent to the Obligation of the Company. The
obligation of the Company to consummate the Closing is subject to the
fulfillment or waiver, on or prior to the Closing Date, of each of the
following conditions precedent:
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(a) Each of Purchaser and Sub shall have complied in all
material respects with its agreements and covenants contained herein to be
performed at or prior to the Closing, and the representations and warranties of
Purchaser and Sub contained herein shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though made on
and as of the Closing Date (provided that any representation or warranty
contained herein that is qualified by a materiality standard shall not be
further qualified hereby), except that representations and warranties that were
made as of a specified date shall continue on the Closing Date to have been
true as of the specified date, and the Company shall have received officers
certificates of Purchaser and Sub, dated as of the Closing Date, certifying as
to the fulfillment of the condition set forth in this Section 10.2(a)
("Purchaser's Bring-Down Certificate").
(b) No statute, rule, or regulation or order of any court
or administrative agency shall be in effect which restrains or prohibits the
Company from consummating the transactions contemplated hereby.
(c) All applicable waiting periods under the H-S-R Act
shall have expired or been terminated.
(d) The FCC shall have issued the FCC Order. All
material FCC conditions contained in the FCC Order required to be satisfied on
or prior to the Closing Date shall have been duly satisfied and performed;
(e) This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Stock.
(f) Sub and Purchaser shall have delivered to the Company
the Merger Consideration and each document required by Section 11.2 hereof.
SECTION 11
DELIVERIES AT THE CLOSING
11.1 Deliveries by the Company. The Company will deliver or cause
to be delivered at the Closing to Purchaser and Sub:
(a) Company's Bring-Down Certificate;
(b) a legal opinion of Kirkpatrick & Lockhart LLP,
counsel to Company, substantially in the form attached as Exhibit E-1 hereto;
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<PAGE> 41
(c) a legal opinion of Wilkinson, Barker, Knauer & Quinn,
FCC counsel to Company, substantially in the form attached as Exhibit E-2
hereto;
(d) the original corporate minute books, stock registry
and seal of the Company (to the extent available);
(e) all material consents, authorizations and approvals
of any private party which are required to be obtained in order to consummate
the transactions contemplated by this Agreement shall have been duly obtained
and shall be in full force and effect;
(f) the following documents: (i) a copy of the Company's
articles of incorporation, including all amendments thereto, certified as of a
date not more than 30 days prior to the Closing Date by the Commonwealth of
Pennsylvania, (ii) a subsistence certificate for the Company certified as of a
date not more than 30 days prior to the Closing Date by the Commonwealth of
Pennsylvania, (iii) a certificate as to the tax lien status of the Company as
of a date not more than 30 days prior to the Closing Date from the Commonwealth
of Pennsylvania, and (iv) a copy of the bylaws of the Company, certified by the
secretary of the Company as being true and correct and in effect as of the
Closing Date;
(g) a written resignation from office from each officer
and director of the Company effective as of the Closing Date, provided,
however, that no such resignation shall impact any such person's existing
employment agreement or other employment arrangements with the Company;
(h) the Indemnification Escrow Agreement;
(i) the Articles;
(j) the Disbursing Agent Agreement;
(k) Wire transfer instructions for the funds to be
transferred hereunder; and
(l) such documents as Purchaser shall reasonably request
in connection with the transfer of the FCC Licenses to a wholly-owned
subsidiary of Purchaser pursuant to Section 3.6 hereof, including without
limitation, the Assignment of FCC Licenses in the form of Exhibit F attached
hereto.
11.2 Deliveries by Purchaser and Sub. Purchaser will deliver or
cause to be delivered at the Closing to the Company, the Disbursing Agent, the
Shareholders' Agent or the Indemnification Escrow Agent, as the case may be:
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<PAGE> 42
(a) Purchaser's Bring-Down Certificate;
(b) a legal opinion of Hogan & Hartson LLP, counsel to
Purchaser and Sub, substantially in the form attached as Exhibit G hereto;
(c) all material consents, authorizations and approvals
of any private party which are required to be obtained by Purchaser in order
for Purchaser to consummate the transactions contemplated by this Agreement
shall have been duly obtained and shall be in full force and effect;
(d) the following documents for each of Purchaser and
Sub: (i) a copy of the articles of incorporation, including all amendments
thereto, certified as of a date not more than 30 days prior to the Closing Date
by the state of its incorporation (ii) a subsistence certificate certified as
of a date not more than 30 days prior to the Closing Date by the Commonwealth
of Pennsylvania, and (iii) a copy of the bylaws certified by the secretary as
being true and correct and in effect as of the Closing Date; and
(e) the Merger Consideration as required pursuant to
Section 3.2 hereof.
SECTION 12
EXPENSES
Each party will pay its own fees, expenses, and disbursements and
those of its counsel in connection with the subject matter of this Agreement
(including the negotiations with respect hereto and the preparation of any
documents) and all other costs and expenses incurred by it in the performance
and compliance with all conditions and obligations to be performed by it
pursuant to this Agreement or as contemplated hereby; provided, however, that
to the extent not paid out of Cash on Hand the Company shall cause all such
fees, expenses and disbursements of the Company and its shareholders
(including, without limitation, any fees or expenses of, or payments to,
Stonewood Capital Management, Inc. and any legal and accounting fees and
expenses), to be paid by the Shareholders' Agent out of the Shareholders'
Expense Fund, and the Company shall have no liability to its shareholders for
such amounts.
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<PAGE> 43
SECTION 13
TERMINATION; LIQUIDATED DAMAGES
13.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to Closing:
(i) by mutual written consent of Purchaser and the Company; (ii) by any party
to this Agreement, upon written notice to the other parties, at any time after
December 31, 1997; (iii) upon a material breach by Purchaser or the Company,
which breach is not cured in all material respects within 30 days of receipt of
notice by the breaching party from the non-breaching party; or (iv) by
Purchaser, by written notice of termination delivered to the Company, if the
FCC issues an order in connection with the FCC Application with conditions
(other than those generally applicable to transferees of television stations)
which are materially adverse to Purchaser or which materially diminish the
operating rights with respect to the Company's assets and the Station below
those presently possessed by the Company (except any such conditions expressly
accepted by Purchaser in writing). Upon such termination, all further
obligations of the parties hereto (except as set forth in Section 13.2) shall
become null and void and no party shall have any liability to any other party,
unless the basis for such termination was the failure by such party to fulfill
its covenants and agreements set forth herein. Notwithstanding anything to the
contrary herein, the provisions of the Confidentiality Letter dated as of July
9, 1996 between Smith Broadcasting Group, Inc. and Stonewood Capital
Management, Inc. and relating to the Company (the "Confidentiality Agreement"),
shall remain in effect and shall be binding on all parties hereto as if they
were parties thereto either until the Closing, if it occurs, or for the stated
term thereof, if there is no Closing.
13.2 Liquidated Damages.
(a) Notwithstanding anything to the contrary contained in
this Agreement (except subsection (b) below), if this Agreement is terminated
as set forth in Section 13.1(ii) or by the Company pursuant to Section
13.1(iii), the Shareholders' Agent shall receive upon demand, as liquidated
damages, the Deposit by drawing on the Letter of Credit in accordance with the
terms of the Deposit Escrow Agreement and the Letter of Credit, the nature of
this transaction being such as will not permit any exact determination of the
damage that may be suffered by the shareholders of the Company under such
circumstances.
(b) Subsection (a) shall not apply if the Closing does not
occur because of a failure to meet one or more of the conditions set forth in
Section 10.1 (except if such failure is a result of a breach hereof by
Purchaser or Sub), provided, however, that the condition to deliver documents
set forth in
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<PAGE> 44
Section 10.1(f) is required to be satisfied only if the conditions set forth in
Section 10.2 shall have been satisfied. In the event that this Agreement is
terminated and subsection (a) shall not be applicable, the Letter of Credit
shall be returned to Purchaser upon demand.
(c) Purchaser acknowledges that it has agreed to post the
Deposit and to risk its loss in order to induce the Company and its
shareholders to agree to the exclusive dealing provisions of Section 15.11
hereof. Purchaser further acknowledges that, if the closing does not occur for
any reason other than one that would permit Purchaser to receive a return of
the Letter of Credit, the Company and its shareholders may well incur
substantial damages, the amount of which will be difficult to quantify. Thus
the amount of the Deposit is a reasonable estimate of such damages and the
parties agree that it will act as liquidated damages and is not a penalty.
13.3 Specific Performance. In addition to any other remedies which
Purchaser may have hereunder or at law or at equity or otherwise, the Company
hereby agrees that Purchaser shall have the right to have all obligations,
undertakings, agreements and other provisions of this Agreement specifically
performed by the Company and that Purchaser shall have the right to obtain an
order or decree of such specific performance in any of the courts of the United
States or of any state or other political subdivision thereof.
SECTION 14
NOTICES
All notices, requests, consents, payments, demands, and other
communications required or contemplated under this Agreement shall be in
writing and (a) personally delivered or sent via telecopy (receipt confirmed),
or (b) sent by Federal Express or other reputable overnight delivery service
(for next Business Day delivery), shipping prepaid, as follows:
If to Purchaser or Sub to:
STC Broadcasting, Inc.
c/o David Fitz
3839 4th Street North
Suite 420
St. Petersburg, FL 33703
Fax: 813-821-8092
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<PAGE> 45
With a copy to:
Eric C. Neuman
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, TX 75201
Fax: 214-740-7355
and to:
William S. Reyner, Jr., Esquire
Hogan & Hartson LLP
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004-1109
Fax: 202-637-5910
If to the Company to:
WJAC Incorporated
c/o Mr. Richard Mayer
The Tribune Building
Johnstown, PA 15901
Fax: 814-539-9808
with a copy to:
John C. Rodney, Esquire
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Fax: 412-355-6501
and
Stonewood Capital Management, Inc.
Three Gateway Center, 13 East
Pittsburgh, PA 15222
Attention: George R. Knapp
Fax: 412-391-0500
and
Kenneth Satten, Esquire
Wilkinson, Barker, Knauer & Quinn
1735 New York Avenue, N.W.
Washington, DC 20006
Fax: 202-783-5851
or to such other Persons or addresses as any Person may request by notice given
as aforesaid. Notices shall be deemed given and received at the time of
personal delivery or completed telecopying, or, if sent by Federal Express or
such other overnight delivery service one Business Day after such sending.
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<PAGE> 46
SECTION 15
MISCELLANEOUS
15.1 Headings. The headings contained in this Agreement (including
but not limited to the titles of the Schedules and Exhibits hereto) have been
inserted for the convenience of reference only, and neither such headings nor
the placement of any term hereof under any particular heading shall in any way
restrict or modify any of the terms or provisions hereof. Terms used in the
singular shall be read in the plural, and vice versa, and terms used in the
masculine gender shall be read in the feminine or neuter gender when the
context so requires.
15.2 Schedules and Exhibits. All Schedules and Exhibits attached
to this Agreement constitute an integral part of this Agreement as if fully
rewritten herein.
15.3 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
15.4 Entire Agreement. This Agreement, the Related Agreements and
the documents to be delivered hereunder and thereunder constitute the entire
understanding and agreement between the parties hereto concerning the subject
matter hereof. All negotiations and writings between the parties hereto are
merged into this Agreement, and there are no representations, warranties,
covenants, understandings, or agreements, oral or otherwise, in relation
thereto between the parties other than those incorporated herein or to be
delivered hereunder.
15.5 Governing Law. This Agreement is to be delivered in and
should be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania without giving effect to conflict of laws
principles.
15.6 Modification. This Agreement cannot be modified or amended
except in writing signed by each of the parties hereto. Following approval by
the shareholders of the Company, this Agreement may be amended by action of the
Boards of Directors of each of the parties hereto to the extent permitted by
Section 1922(b) of the BCL.
15.7 Successors and Assigns. Neither this Agreement nor any of the
rights and obligations hereunder shall be assigned, delegated, sold,
transferred, sublicensed, or otherwise disposed
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<PAGE> 47
of by operation of law or otherwise, without the prior written consent of each
of the other parties hereto; provided, however, that Purchaser and Sub shall
have the right, without the prior consent of (but following notice to) the
Company, to assign their rights and obligations under this Agreement to any
Affiliate of Robert N. Smith or to any Affiliate of Smith Broadcasting Group,
Inc. In the event of such permitted assignment or other transfer, all of the
rights, obligations, liabilities, and other terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
and against, the respective successors and assigns of the parties hereto,
whether so expressed or not. In addition, Purchaser shall have the right to
have the FCC Licenses assigned as contemplated by Section 3.6 hereof.
15.8 Waiver. Any waiver of any provision hereof (or in any related
document or instrument) shall not be effective unless made expressly and in a
writing executed in the name of the party sought to be charged. The failure of
any party to insist, in any one or more instances, on performance of any of the
terms or conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant, or condition, but the obligations of the parties with
respect hereto shall continue in full force and effect.
15.9 Severability. The provisions of this Agreement shall be
deemed severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make
the provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party,
for any reason, and if such provision cannot be changed consistent with the
intent of the parties hereto to make it fully legal, valid, binding and
enforceable, then such provisions shall be stricken from this Agreement, and
the remaining provisions of this Agreement shall not in any way be affected or
impaired, but shall remain in full force and effect.
15.10 Announcements. From the date of this Agreement, all further
public announcements relating to this Agreement or the transactions
contemplated hereby will be made only as agreed upon jointly by the parties
hereto, except that nothing herein shall prevent the Company, Purchaser or Sub
from making any disclosure in connection with the transactions contemplated by
this Agreement if required by applicable law, provided that prior notice of
such disclosure is given to the other party hereto.
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<PAGE> 48
15.11 Exclusive Dealings. The parties agree that from the date
hereof until the earlier of the Closing Date or the termination of this
Agreement, (a) Purchaser and Sub shall have the sole and exclusive right to
negotiate with the Company for any proposed merger, consolidation, sale or
acquisition of the Company, the assets and/or Stock, each, a "Business
Combination" and (b) neither the Company nor any officers, directors, employees
or shareholders shall solicit, favorably response to indications of interest
from, or enter into negotiations with, any other party for any possible
Business Combination.
15.12 Appointment of Agent. The Company hereby irrevocably appoints
Richard H. Mayer (herein called the "Shareholders' Agent") as the agent and
attorney-in-fact, for the shareholders of the Company to take any action
required or permitted to be taken by such shareholders under the terms of this
Agreement, including, without limiting the generality of the foregoing, the
giving and receipt of any notices to be delivered or received by or on behalf
of any or all of the shareholders, the payment of expenses relating to the
transactions contemplated by this Agreement out of the Shareholders' Expense
Fund, the representation of the shareholders in indemnification proceedings
hereunder, and the right to waive, modify or amend any of the terms of this
Agreement in any respect, whether or not material. Each shareholder will be
bound by any and all actions taken by the Shareholders' Agent on his or her
behalf. The distribution of the Aggregate Merger Consideration to the
shareholders shall be subject to their joint obligation to indemnify the
Shareholders' Agent from and against and in respect of any and all liabilities,
damages, claims, costs and expenses, including, but not limited to, attorneys'
fees arising out of or due to any action as the Shareholders' Agent and any and
all actions, proceedings, demands, assessments or judgments, costs and expenses
incidental thereto, except to the extent that the same result from bad faith or
gross negligence on the part of the Shareholders' Agent. Purchaser and the
Company shall be entitled to rely exclusively upon any communications given by
the Shareholders' Agent on behalf of any shareholder, and shall not be liable
for any action taken or not taken in reliance upon the Shareholders' Agent.
Purchaser and the Company shall be entitled to disregard any notices or
communications given or made by Shareholders unless given or made through the
Shareholders' Agent. In the event of the death, disability or resignation of
the Shareholders' Agent, the trustees of the Anderson Walters Trust, the
majority shareholder of the Company, shall be entitled to select a successor
Shareholders' Agent.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first written above.
WJAC, INCORPORATED
By: /s/RICHARD H. MAYER
--------------------------------
Title: President
-----------------------------
STC BROADCASTING, INC.
By: /s/ ROBERT N. SMITH
-------------------------------
Title: President
SUB:
WJAC ACQUISITION CORP.
By: /s/ ROBERT N. SMITH
-------------------------------
Title: President
The Chiefs hereby execute this Agreement solely for the purposes of
acknowledging and agreeing to be bound by the terms and conditions of Section 7
of this Agreement.
JOHNSTOWN CHIEFS, INC.
By: /s/DENNIS VICKROY
-------------------------------
Name: Dennis Vickroy
-----------------------------
Title: Secretary
----------------------------
<PAGE> 50
ANNEX 1
DEFINITIONS
As used in the attached Agreement and Plan of Merger, the following
terms shall have the corresponding meaning set forth below:
(1) "Affiliate" of, or a Person "Affiliated" with, a
specified Person, means a Person who directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Person specified.
(2) "Aggregate Merger Consideration" has the meaning set
forth in Section 3.2 of the Agreement.
(3) "Agreement" has the meaning set forth in the preamble
to the attached Agreement and Plan of Merger.
(4) "Articles" has the meaning set forth in Section 2.1
of the Agreement.
(5) "Auditors" means Arthur Andersen LLP.
(6) "BCL" has the meaning set forth in Section 2.1 of the
Agreement.
(7) "Business" means the ownership and operation of the
Station.
(8) "Business Day" means any day on which banks in New
York City are open for business.
(9) "Cash on Hand" means the amount of cash held on the
Closing Date by the Companies in bank accounts, money market funds, plus the
amount of all marketable securities and other investment accounts. Any
securities in such accounts shall be valued at their fair market value on the
Closing Date.
(10) "CERCLA" has the meaning set forth in Section 4.18 of
the Agreement.
(11) "Chiefs" means Johnstown Chiefs, Inc.
(12) "Chiefs Stock" means the capital stock of the Chiefs,
all of which is owned by the Company.
(13) "Closing" has the meaning set forth in Section 2.2 of
the Agreement.
(14) "Closing Date" has the meaning set forth in Section
B2.2 of the Agreement.
<PAGE> 51
(15) "Code" means the Internal Revenue Code of 1986, as
the same may be amended from time to time.
(16) "Companies" means the Company and each of its
Subsidiaries.
(17) "Company" has the meaning set forth in the preamble
to the Agreement.
(18) "Company's Bring-Down Certificate" has the meaning
set forth in Section 10.1(a) of this Agreement.
(19) "Confidentiality Agreement" has the meaning set forth
in Section 13 of the Agreement.
(20) "Defined Benefit Plan" means a Plan that is or was a
"defined benefit plan" as such term is defined in Section 3(35) of ERISA.
(21) "Deposit" has the meaning set forth in Section 3.4(a)
of the Agreement.
(22) "Deposit Escrow Agreement" has the meaning set forth
in Section 3.4(a) of the Agreement.
(23) "Disbursing Agent" means Mellon Bank, N.A.
(24) "Disbursing Agent Agreement" means the agreement
described in Section 3.4(d).
(25) "Dissenting Shares" has the meaning set forth in
Section 3.5(a) of this Agreement.
(26) "DOL" means the Department of Labor or its
successors.
(27) "Edwards Agreements" means the Separation Agreement
dated as of April 7, 1997 between the Company and James M. Edwards, Sr. and the
mutual release related thereto.
(28) "Effective Time" has the meaning set forth in Section
2.1 of the Agreement.
(29) "Encumbrances" mean any mortgages, pledges, liens,
claims, security interests, agreements, restrictions, defects in title,
easements, encumbrances or charges.
(30) "Environment" means any surface or subsurface
physical medium or natural resource, including, air, land, soil (surface or
subsurface), surface waters, ground waters, wetlands, stream and river
sediments, rock and biota.
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<PAGE> 52
(31) "Environmental Laws" means any federal, state, or
local law, legislation, rule, regulation, ordinance or code of the United
States or any subdivision thereof relating to the injury to, or the pollution
or protection of, human health and safety or the Environment.
(32) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
(33) "Escrow Agent" means Mellon Bank. N.A.
(34) "ESOP" means an "employee stock ownership plan" as
defined in Section 4975(e)(7) of the Code.
(35) "Excluded Assets" has the meaning set forth in
Section 3.2 of the Agreement.
(36) "FCC" has the meaning set forth in the recitals to
the Agreement.
(37) "FCC Application" has the meaning set forth in
Section 4.17 of the Agreement.
(38) "FCC Licenses" has the meaning set forth in the
recitals to the Agreement.
(39) "FCC Order" means an order or orders of the FCC, or
the Mass Media Bureau of the FCC, acting under delegated authority, consenting
to the change of control of the Company, as proposed in the FCC Application,
without conditions which are adverse to the Company or Purchaser or which in
any way diminish the operating rights with respect to the assets of the Company
and the Station, except any such conditions expressly accepted by Purchaser in
writing.
(40) "FCC Rules and Regulations" has the meaning set forth
in Section 4.8 of the Agreement.
(41) "Final Determination" means, with respect to any
United States federal Tax liability (i) a final, unappealable decision by a
court of competent jurisdiction; (ii) the expiration of the statute of
limitations for claiming a refund or, if a refund claim has been timely filed,
the expiration of the time for instituting suit in respect of such refund
claim; (iii) the execution by or on behalf of the taxpayer and the Internal
Revenue Service of a closing agreement under Section 7121 of the Code; or (iv)
any other final and irrevocable determination of such Tax liability, including,
without limitation, execution of Form 870-AD (or its successor). In the
context of foreign, state or local Taxes, "Final Determination" shall mean any
event with similar final effect; provided,
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<PAGE> 53
however, that if the meaning of this term shall be unclear under foreign, state
or local law, it shall mean any final, unappealable and irrevocable
determination of such Tax liability.
(42) "Final Order" means an FCC Order that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect to
which no timely request for stay, petition for reconsideration or appeal or sua
sponte action of the FCC with comparable effect is pending and as to which the
time for filing any such request, petition or appeal or for the taking of any
such sua sponte action by the FCC has expired.
(43) "Financial Statements" means the audited consolidated
balance sheets and the audited consolidated income statement and statement of
changes in financial condition of the Company as of December 31, 1995 and
December 31, 1996 and for the years then ended.
(44) "Hazardous Substances" means petroleum, petroleum
products, petroleum-derived substances, radioactive materials, hazardous
wastes, polychlorinated biphenyls, lead based paint, urea formaldehyde,
asbestos or any materials containing asbestos, and any materials or substances
regulated or defined as or included in the definition of "hazardous
substances," "hazardous materials," "hazardous constituents," "toxic
substances," "pollutants," "pollutants," "contaminants" or any similar
denomination intended to classify substances by reason of toxicity,
carcinogenicity, ignitability, corrosivity or reactivity under any
Environmental Laws.
(45) "Governmental Authority" means any federal, state,
local or foreign government, including any department, agency, bureau or
instrumentality thereof.
(46) "H-S-R Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
(47) "Indemnification Escrow" has the meaning set forth in
Section 3.4(c) of the Agreement.
(48) "Indemnification Escrow Agent" means Mellon Bank,
N.A.
(49) "Indemnification Escrow Agreement" has the meaning
set forth in Section 3.4(c) of the Agreement.
(50) "Intellectual Property" means the patents, patent
applications, trademark registrations and applications therefor, service mark
registrations and applications therefor, copyright registrations and
applications therefore and trade names that are (i) owned by any of the
Companies and (ii) material to the continued operation of the Business.
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<PAGE> 54
(51) "Interim Balance Sheet" means the Company's October
31, 1996 balance sheet included in the Interim Financial Statements.
(52) "Interim Financial Statements" means the Company's
income statement for the three month period ending March 31, 1997 and its
balance sheet as of such date, neither of which includes items relating to the
Chiefs, and a monthly income statement and balance sheet of the Company as of
the end of each month during the period from January 1, 1997 through and
including the Closing Date.
(53) "IRS" means the Internal Revenue Service.
(54) "Knowing Party" has the meaning set forth in Section
6.3 of the Agreement.
(55) "Loss" means any demands, claims, complaints,
actions, or causes of action, suits, proceedings, investigations, arbitrations,
assessments, losses, damages (including diminution in value), liabilities,
obligations (including those arising out of any action, such as any settlement
or compromise thereof or judgment or award therein) and any costs and expenses
(including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements).
(56) "Material Adverse Change" shall mean there shall have
been a material adverse change in the business, operations, assets or
liabilities or condition (financial or otherwise) of the Companies since
December 31, 1996. For purposes of this definition, changes resulting from any
one or more of the following: (x) general economic conditions applicable to the
television broadcast industry or the Station's market area and/or (y) the
performance of the NBC Television Network, shall not be taken into account.
(57) "Major Shareholders" means the Anderson H. Walters
Trust and Richard H. Mayer.
(58) "Material Adverse Effect" shall mean a material
adverse effect on the business, assets or financial condition of the Company
taken as a whole.
(59) "Material Contracts" means all agreements to which
the Company or any Subsidiary is a party or by or to which it or its assets or
properties are bound, except: (i) agreements for the cash sale of advertising
time with a term of less than six months, (ii) agreements cancelable by the
Company on no more than 30 days' notice without penalty, or (iii) agreements
which do not require payments of more than $10,000.
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<PAGE> 55
(60) "Merger" has the meaning set forth in the recitals to
the Agreement.
(61) "Merger Consideration" means the portion of the
Aggregate Merger Consideration which each share of Company Stock shall be
entitled to receive pursuant to the Merger. Such amount shall be determined by
dividing the Aggregate Merger Consideration by the total number of shares of
Company Stock outstanding as of the Effective Time (other than any Dissenting
Shares and shares of Stock held in the Company's treasury).
(62) "Multiemployer Plan" means a "multiemployer plan" as
such term is defined in Section 3(37) of ERISA.
(63) "Net Current Asset Adjustment" has the meaning set
forth in Section 3.2 of the Agreement.
(64) "Other Arrangement" means a benefit program or
practice providing for bonuses, incentive compensation, vacation pay, severance
pay, insurance, restricted stock, stock options, employee discounts, company
cars, tuition reimbursement or any other perquisite or benefit (including,
without limitation, any fringe benefit under Section 132 of the Code) to
employees, officers or independent contractors that is not a Plan.
(65) "Other Party" has the meaning set forth in Section
6.3 of the Agreement.
(66) "Person" means a natural person, a governmental
entity, agency or representative (at any level of government), a corporation,
partnership, joint venture or other entity or association, as the context
requires.
(67) "Plan" means any plan, program or arrangement,
whether or not written, that is or was an "employee benefit plan" as such term
is defined in Section 3(3) of ERISA and (a) which was or is established or
maintained by Company or any Subsidiary; (b) to which Company or any Subsidiary
contributed or was obligated to contribute or to fund or provide benefits; or
(c) which provides or promises benefits to any person who performs or who has
performed services for Company or any Subsidiary and because of those services
is or has been (i) a participant therein or (ii) entitled to benefits
thereunder.
(68) "Purchaser" has the meaning set forth in the preamble
to the Agreement.
(69) "Purchaser's Bring-Down Certificate" has the meaning
set forth in Section 10.2(a) of the Agreement.
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<PAGE> 56
(70) "Qualified Plan" means a Pension Plan that satisfies,
or is intended by Company to satisfy, the requirements for tax qualification
described in Section 401 of the Code.
(71) "Real Property" means any real property owned or
leased by the Company or any Subsidiary and any other interests in real
property, buildings and improvements owned, leased or occupied or used in the
business and operations of the Station.
(72) "Related Agreement" means any document delivered at
the Closing and any contract which is to be entered into at the Closing or
otherwise pursuant to this Agreement, including, without limitation the
Indemnification Escrow Agreement.
(73) "Returns" means all returns, reports, estimates,
information returns and statements (including any related or supporting
information) filed or to be filed with any Tax Authority in connection with the
determination, assessment, collection or administration of any Taxes.
(74) "Securities Rights" has the meaning set forth in
Section 4.2.
(75) "Shareholders' Agent" has the meaning set forth in
Section 15.12.
(76) "Shareholders' Expense Fund" has the meaning set
forth in Section 3.4(c).
(77) "Station" has the meaning set forth in the recitals
to the Agreement.
(78) "Stock" has the meaning set forth in Section 4.2 of
the Agreement.
(79) "Sub" has the meaning set forth in the preamble to
the Agreement.
(80) "Subsidiary", as it relates to any Person, means a
corporation of which such person or entity owns, directly or indirectly, more
than 50% of the common stock.
(81) "Tax" or "Taxes" means all taxes, including, but not
limited to, income (whether net or gross), excise, property, sales, transfer,
gains, gross receipts, occupation, privilege, payroll, wage, unemployment,
workers' compensation, social security, occupation, use, value added,
franchise, license, severance, stamp, premium, windfall profits, environmental
(including taxes under Code Sec. 59A), capital stock, withholding, disability,
registration, alternative or add-on minimum, estimated or other tax of any kind
whatsoever (whether disputed or not) imposed by any Tax Authority, including
any
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related charges, fees, interest, penalties, additions to tax or other
assessments.
(82) "Tax Authority" means any federal, national,
foreign, state, municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body or other
authority exercising any taxing or tax regulatory authority.
(83) "Tax Liability" means any liability for a Tax.
(84) "Tax Reserve" means the amount of current taxes
reflected as a liability on the Final Closing Statement.
(85) "Welfare Plan" means an "employee welfare benefit
plan" as such term is defined in Section 3(1) of ERISA.
8
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
STV ACQUISITION COMPANY
FEBRUARY 25, 1997
The undersigned being the Vice President of STV Acquisition Company, a
Delaware corporation (the "Corporation"), hereby certifies the following:
1. (a) The name of the Corporation is STV Acquisition
Company.
(b) The date of filing of the original Certificate of
Incorporation of the Corporation (the "Certificate of Incorporation") was
November 1, 1996.
2. This Amended and Restated Certificate of Incorporation amends
and restates the Certificate of Incorporation by (i) amending the name of the
corporation, (ii) increasing the total number of shares of capital stock that
the Corporation shall have authority to issue and (iii) ensuring that control
and management of the Corporation remains with citizens of the United States or
corporations formed under the laws of the United States or any of the states of
the United States, as required by the Communications Act of 1934 as the same
may be amended from time to time.
3. The Corporation does hereby certify that the Corporation has
not received payment for any of its stock and that this Amended and Restated
Certificate of Incorporation has been duly adopted by the written consent of
the board of directors of the Corporation (the "Board of Directors") in
accordance with the provisions of Sections 241 and 245 of the General
Corporation Law of the State of Delaware ("DGCL").
4. The Certificate of Incorporation, as amended and restated
hereby, shall upon its filing with the Secretary of State of the State of
Delaware, read in its entirety as follows:
FIRST: The name of the Corporation is STC Broadcasting, Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of the registered agent of
the Corporation at such address is The Corporation Trust Company.
<PAGE> 2
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts and activity for which corporations may be
organized under the DGCL. The Corporation will have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,001,000 shares of capital stock, classified
as (i) 1,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock"), and (ii) 1,000 shares of common stock, par value $.01 per
share ("Common Stock").
The designations and the powers, preferences, rights,
qualifications, limitations, and restrictions of the Preferred Stock and Common
Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time
in one or more classes or series, the shares of each class or series to have
such designations and powers, preferences, and rights, and qualifications,
limitations, and restrictions thereof, as are stated and expressed herein and
in the resolution or resolutions providing for the issue of such class or
series adopted by the Board of Directors as hereafter prescribed.
(b) Authority is hereby expressly granted to and vested
in the Board of Directors to authorize the issuance of the Preferred Stock from
time to time in one or more classes or series, and with respect to each class
or series of the Preferred Stock, to fix and state by the resolution or
resolutions from time to time adopted providing for the issuance thereof the
following:
(i) whether or not the class or series is to have
voting rights, full, special, or limited, or is to be without voting rights,
and whether or not such class or series is to be entitled to vote as a separate
class either alone or together with the holders of one or more other classes or
series of stock;
(ii) the number of shares to constitute the class
or series and the designations thereof;
(iii) the preferences, and relative, participating,
optional, or other special rights, if any, and the qualifications, limitations,
or restrictions thereof, if any, with respect to any class or series;
2
<PAGE> 3
(iv) whether or not the shares of any class or
series shall be redeemable at the option of the Corporation or the holders
thereof or upon the happening of any specified event, and, if redeemable, the
redemption price or prices (which may be payable in the form of cash, notes,
securities, or other property), and the time or times at which, and the terms
and conditions upon which, such shares shall be redeemable and the manner of
redemption;
(v) whether or not the shares of a class or
series shall be subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for retirement, and, if
such retirement or sinking fund or funds are to be established, the annual
amount thereof, and the terms and provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are
payable in cash, stock of the Corporation, or other property, the conditions
upon which and the times when such dividends are payable, the preference to or
the relation to the payment of dividends payable on any other class or classes
or series of stock, whether or not such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which such dividends
shall accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any class or series thereof shall be entitled to
receive upon the voluntary or involuntary dissolution of, or upon any
distribution of the assets of, the Corporation;
(viii) whether or not the shares of any class or
series, at the option of the Corporation or the holder thereof or upon the
happening of any specified event, shall be convertible into or exchangeable
for, the shares of any other class or classes or of any other series of the
same or any other class or classes of stock, securities, or other property of
the Corporation and the conversion price or prices or ratio or ratios or the
rate or rates at which such exchange may be made, with such adjustments, if
any, as shall be stated and expressed or provided for in such resolution or
resolutions; and
(ix) such other special rights and protective
provisions with respect to any class or series as may to the Board of Directors
seem advisable.
(c) The shares of each class or series of the Preferred
Stock may vary from the shares of any other class or series thereof in any or
all of the foregoing respects. The Board of Directors may increase the number
of shares of the Preferred Stock designated for any existing class or series by
a resolution adding to such class or series authorized and
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<PAGE> 4
unissued shares of the Preferred Stock not designated for any other class or
series. The Board of Directors may decrease the number of shares of the
Preferred Stock designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares of the
Preferred Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued, and undesignated shares of the
Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) Bach share of Common Stock of the Corporation shall
have identical rights and privileges in every respect. The holders of shares
of Common Stock shall be entitled to vote upon all matters submitted to a vote
of the stockholders of the Corporation and shall be entitled to one vote for
each share of Common Stock held.
(b) Subject to the prior rights and preferences, if any,
applicable to shares of the Preferred Stock or any series thereof, the holders
of shares of the Common Stock shall be entitled to receive such dividends
(payable in cash, stock, or otherwise) as may be declared thereon by the Board
of Directors at any time and from time to time out of any funds of the
Corporation legally available therefor.
(c) In the event of any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, after distribution
in full of the preferential amounts, if any, to be distributed to the holders
of shares of the Preferred Stock or any series thereof, the holders of shares
of the Common Stock shall be entitled to receive all of the remaining assets of
the Corporation available for distribution to its stockholders, ratably in
proportion to the number of shares of the Common Stock held by them. A
liquidation, dissolution, or winding-up of the Corporation, as such terms are
used in this Paragraph (c), shall not be deemed to be occasioned by or to
include any consolidation or merger of the Corporation with or into any other
corporation or corporations or other entity or a sale, lease, exchange, or
conveyance of all or a part of the assets of the Corporation.
3. General.
(a) Subject to the foregoing provisions of this
Certificate of Incorporation, the Corporation may issue shares of its Preferred
Stock and Common Stock from time to time for such consideration (not less than
the par value thereof) as may be fixed by the Board of Directors, which is
expressly authorized to fix the same in its absolute and uncontrolled
discretion subject to the foregoing conditions. Shares so issued for which the
consideration shall have been paid or delivered to the Corporation shall be
deemed fully paid stock and
4
<PAGE> 5
shall not be liable to any further call or assessment thereon, and the holders
of such shares shall not be liable for any further payments in respect of such
shares.
(b) The Corporation shall have authority to create and
issue rights and options entitling their holders to purchase shares of the
Corporation's capital stock of any class or series or other securities of the
Corporation, and such rights and options shall be evidenced by instrument(s)
approved by the Board of Directors. The Board of Directors shall be empowered
to set the exercise price, duration, times for exercise, and other terms of
such options or rights; provided, however, that the consideration to be
received for any shares of capital stock subject thereto shall not be less than
the par value thereof.
FIFTH: The following provisions are included for the purpose of
ensuring that control and management of the Corporation remains with citizens
of the United States or corporations formed under the laws of the United States
or any of the states of the United States, as required by the Communications
Act of 1934 as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a
citizen of a country other than the United States, (ii) any entity organized
under the laws of a government other than the government of the United States
or any state, territory, or possession of the United States, (iii) a government
other than the government of the United States or of any state, territory, or
possession of the United States, or (iv) a representative of, or an individual
or entity controlled by, any of the foregoing (individually, an "Alien";
collectively, "Aliens") any shares of capital stock of the Corporation if such
issuance would result in the total amount of such capital stock held by Aliens
exceeding 25% of the total equity of or total voting power in the Corporation
held by Aliens exceeding such 25% limit. The Corporation shall cause
subsidiaries under its control that hold Federal Communications Commission
("FCC") licenses or authorizations to comply with the alien ownership
restrictions, of the Communications Act of 1934 and the rules and regulations
promulgated thereunder, as the same may be amended from time to time, and, to
the extent required under such restrictions, shall prohibit the ownership or
voting by Aliens of more than 20% of the capital stock of such subsidiaries.
(b) No Alien or Aliens, individually or collectively,
directly or indirectly, shall be entitled to own or to vote or direct or
control the vote of more than 25% of (i) the total amount of capital stock of
the Corporation outstanding at any time and from time to time, or (ii) the
total voting power of all shares of capital stock of the Corporation
outstanding and entitled to vote at any time and from time to time, and
issuances and
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<PAGE> 6
transfers of capital stock of the Corporation in violation of this Section (b)
shall be prohibited.
(c) The Board of Directors shall have all powers necessary to
implement the provisions of this ARTICLE FIFTH and to ensure compliance with
the alien ownership restrictions of the Communications Act of 1934 and of the
rules and regulations promulgated thereunder, as the same may be amended from
time to time.
(d) All shares of the Corporation's capital stock that the
Board of Directors determines to be owned beneficially by an Alien or an entity
directly or indirectly owned by Aliens in whole or in part shall always be
subject to redemption by the Corporation by action of the Board of Directors to
the extent necessary, in the judgement of the Board of Directors, to comply
with the alien ownership restrictions of the Communications Act of 1934 and the
FCC rules and regulations.
SIXTH: The number of directors constituting the initial Board of
Directors is one, and the name and mailing address of the person who is to
serve as director until the first annual meeting of stockholders or until his
successor is elected and qualified are as follows:
Lawrence D. Stuart, Jr. 200 Crescent Court
Suite 1600
Dallas, Texas 75201
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend, and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board of Directors or committee which authorizes the contract or
transaction, or solely because his, her, or their votes are counted for such
purpose, if: (i) the material facts as to his or her relationship or interest
and
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<PAGE> 7
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the DGCL, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Tenth is in effect.
Any repeal or amendment of this Article Tenth shall be prospective only and
shall not limit the rights of any such director or officer or the obligations
of the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior
to any such repeal or amendment to this Article Tenth. Such right shall
include the right to be paid by the Corporation expenses incurred in
investigating or defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the DGCL, as the same exists
or may hereafter be amended. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim, and if successful in whole or in part, the claimant
shall also be entitled to be paid the expenses of prosecuting such claim. It
shall be a defense to any such action that such indemnification or advancement
of costs of defense are not permitted under the DGCL, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that
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<PAGE> 8
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the Corporation
(including its Board of Directors or any committee thereof, independent legal
counsel, or stockholders) that such indemnification or advancement is not
permissible shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death
of any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his or her heirs, executors,
administrators, and personal representatives. The rights conferred above shall
not be exclusive of any other right which any person may have or hereafter
acquire under any statute, by-law, resolution of stockholders or directors,
agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such
an action, suit, or proceeding.
ELEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. Any
repeal or amendment of this Article Eleventh by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or
amendment. In addition to the circumstances in which a director of the
Corporation is not personally liable as set forth in the foregoing provisions
of this Article Eleventh, a director shall not be liable to the Corporation or
its stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the DGCL.
TWELFTH: The Corporation expressly elects not to be governed
by Section 203 of the DGCL.
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<PAGE> 9
IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by its Vice President as of
the date first written above.
By: /s/ LAWRENCE D. STUART, JR.
---------------------------------
Lawrence D. Stuart, Jr.
Vice President
9
<PAGE> 1
EXHIBIT 3.2
STC BROADCASTING, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
14% REDEEMABLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
________________________________________________________________________________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
________________________________________________________________________________
STC Broadcasting, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated February 27, 1997, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance
of 14% Redeemable Preferred Stock, par value $0.01 per share, with a
liquidation preference of $100.00 per share, consisting initially of
300,000 shares, having the designations, preferences, relative,
participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set
forth in the Certificate of Incorporation and in this Resolution as
follows:
(a) Designation. There is hereby created out of the
authorized and unissued shares of Preferred Stock of the Corporation a class of
Preferred Stock designated as "14% Redeemable Preferred Stock". The number of
shares constituting such class shall be 600,000. The initial
<PAGE> 2
liquidation preference of the Redeemable Preferred Stock shall be $100.00 per
share.
(b) Rank. The Redeemable Preferred Stock shall, with
respect to dividends and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank senior to all classes of common stock of
the Corporation, and each other class of Capital Stock or series of Preferred
Stock hereafter created which does not expressly provide that it ranks senior
to or on a parity with, the Redeemable Preferred Stock as to dividends and
distributions upon the liquidation, winding-up and dissolution of the
Corporation ("Junior Stock"). The Redeemable Preferred Stock shall, with
respect to dividends and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank on a parity with any class of Capital
Stock or series of Preferred Stock hereafter created which expressly provides
that it ranks on a parity with the Redeemable Preferred Stock as to dividends
and distributions upon the liquidation, winding-up and dissolution of the
Corporation ("Parity Stock"), provided that any such Parity Stock that was not
approved by the Holders in accordance with paragraph (f)(ii)(A) hereof shall be
deemed to be Junior Stock and not Parity Stock. The Redeemable Preferred Stock
shall, with respect to dividends and distributions upon the liquidation,
winding-up and dissolution of the Corporation, rank junior to each class of
Capital Stock or series of Preferred Stock hereafter created which has been
approved by the Holders in accordance with paragraph (f)(ii)(B) and which
expressly provides that it ranks senior to the Redeemable Preferred Stock as to
dividends or distributions upon the liquidation, winding-up and dissolution of
the Corporation ("Senior Stock").
(c) Dividends.
(i) Beginning on the Issue Date, the Holders of the
outstanding shares of Redeemable Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, distributions in the form of cash
dividends on each share of Redeemable Preferred Stock, at a rate per
annum equal to 14% of the liquidation preference per share of the
Redeemable Preferred Stock, payable quarterly. No interest shall be
payable in respect of any dividends which may be in arrears. All
dividends shall be cumulative, whether or not earned or declared, from
the date of issuance of the Redeemable
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<PAGE> 3
Preferred Stock and shall be payable quarterly in arrears on each
Dividend Payment Date, commencing on the first Dividend Payment Date
after the Issue Date, provided that if any dividend payable on any
Dividend Payment Date on or before February 28, 2002 is not declared
and paid in full in cash on such Dividend Payment Date, the amount
payable as dividends on such Dividend Payment Date that is not paid in
cash on such Dividend Payment Date shall be paid in additional whole
shares of Redeemable Preferred Stock (calculated by dividing (x) the
amount of the cash dividend payable to each holder of record of the
Redeemable Preferred Stock on the basis of all shares held of record
by such holder, whether evidenced by one or more certificates, by (y)
$100.00, with amounts in respect of any partial shares to be paid in
cash by the Corporation) on such Dividend Payment Date and shall be
deemed paid in full and shall not accumulate. Each dividend shall be
payable to Holders of record as they appear on the stock books of the
Corporation on the Dividend Record Date immediately preceding the
related Dividend Payment Date. Dividends shall cease to accumulate in
respect of the Redeemable Preferred Stock on the Exchange Date or on
the date of their earlier redemption unless the Corporation shall have
failed to issue the appropriate aggregate principal amount of Exchange
Debentures in respect of the Redeemable Preferred Stock on such
Exchange Date or shall have failed to pay the relevant redemption
price on the date fixed for redemption.
(ii) All dividends paid with respect to shares of the
Redeemable Preferred Stock pursuant to paragraph (c)(i) shall be paid
pro rata to the Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under
any circumstances be construed or deemed to require the Board of
Directors to declare, or the Corporation to pay or set apart for
payment, any dividends on shares of the Redeemable Preferred Stock at
any time.
(iv) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption
pursuant to paragraph (e)(i) may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to
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<PAGE> 4
the payment thereof, as may be fixed by the Board of Directors of the
Corporation.
(v) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any
Parity Stock for any period unless full cumulative dividends have been
or contemporaneously are declared and paid in full, or declared and,
if payable in cash, a sum in cash set apart sufficient for such
payment, on the Redeemable Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of such full dividends
on such Parity Stock. If any dividends are not so paid, all dividends
declared upon shares of the Redeemable Preferred Stock and any other
Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on the Redeemable Preferred Stock and
such Parity Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the Redeemable Preferred Stock and
such Parity Stock bear to each other.
(vi) (A) Holders of shares of the Redeemable Preferred
Stock shall be entitled to receive the dividends provided for in
paragraph (c)(i) hereof in preference to and in priority over any
dividends upon any of the Junior Stock.
(B) So long as any share of the Redeemable Preferred
Stock is outstanding, the Corporation shall not declare, pay or set
apart for payment any dividend on any of the Junior Stock or make any
payment on account of, or set apart for payment money for a sinking or
other similar fund for, the purchase, redemption or other retirement
of, any of the Junior Stock or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Stock whether in
cash, obligations or shares of the Corporation or other property
(other than dividends in Junior Stock to the holders of Junior Stock),
and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of
the Junior Stock or any such warrants, rights, calls or options unless
full cumulative dividends determined in accordance herewith on the
Redeemable Preferred Stock have been paid in full.
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(C) So long as any share of the Redeemable Preferred
Stock is outstanding, the Corporation shall not make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
of the Parity Stock or any warrants, rights, calls or options
exercisable for or convertible into any of the Parity Stock, and shall
not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Parity
Stock or any such warrants, rights, calls or options unless full
cumulative dividends determined in accordance herewith on the
Redeemable Preferred Stock have been paid in full.
(vii) Dividends payable on the Redeemable Preferred Stock
for any period less than a year shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed in the period for which payable.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the Holders of shares of Redeemable Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount
in cash equal to the liquidation preference for each share
outstanding, plus, without duplication, an amount in cash equal to
accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding up (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date
to the date fixed for liquidation, dissolution or winding up) before
any payment shall be made or any assets distributed to the holders of
any of the Junior Stock including, without limitation, common stock of
the Corporation. Except as provided in the preceding sentence,
Holders of Redeemable Preferred Stock shall not be entitled to any
distribution in the event of any liquidation, dissolution or winding
up of the affairs of the Corporation. If the assets of the
Corporation are not sufficient to pay in full the liquidation payments
payable to the Holders of outstanding shares of the Redeemable
Preferred Stock and all Parity Stock, then the holders of all such
shares shall share equally
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<PAGE> 6
and ratably in such distribution of assets in proportion to the full
liquidation preference, including, without duplication, all accrued
and unpaid dividends to which each is entitled.
(ii) For the purposes of this paragraph (d), neither the
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger
of the Corporation with or into one or more entities shall be deemed
to be a liquidation, dissolution or winding up of the affairs of the
Corporation.
(e) Redemption.
(i) Optional Redemption. (A) The Corporation may, at
the option of the Board of Directors, redeem at any time on or after
February 28, 2002, subject to contractual and other restrictions with
respect thereto and from any source of funds legally available
therefor, in whole or in part, in the manner provided in paragraph
(e)(iii) hereof, any or all of the shares of the Redeemable Preferred
Stock, at the redemption prices therefor (expressed as a percentage of
the liquidation preference) set forth below plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends per
share (including an amount in cash equal to a prorated dividend for
the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Optional Redemption
Price") if redeemed during the 12-month period beginning February 28
of each of the years set forth below:
<TABLE>
<S> <C>
2002 ....................... 106.20%
2003 ....................... 104.64%
2004 ....................... 103.08%
2005 ....................... 101.52%
2006 and thereafter ........ 100.00%
</TABLE>
; provided that no redemption pursuant to this paragraph (e)(i)(A)
shall be authorized or made unless prior thereto full accrued and
unpaid dividends are declared and paid in full, or declared and a sum
in cash set apart sufficient for such payment, on the
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<PAGE> 7
Redeemable Preferred Stock for all Dividend Periods terminating on or
prior to the Redemption Date.
(B) In addition to the foregoing paragraph (e)(i)(A),
prior to February 28, 2001, the Corporation may, at the option of the
Board of Directors, use the net cash proceeds of one or more Public
Equity Offerings or Major Asset Sales to redeem (a "Cash Proceeds
Redemption") up to 25% of the shares of Redeemable Preferred Stock
then outstanding at a redemption price of 114% of the liquidation
preference thereof if redeemed during the 12-month period beginning on
February 28, 1997, 112.44% of the liquidation preference thereof if
redeemed during the 12-month period beginning on February 28, 1998,
110.88% of the liquidation preference thereof if redeemed during the
12-month period beginning on February 28, 1999, 109.32% of the
liquidation preference thereof if redeemed during the 12-month period
beginning on February 28, 1999, and 107.76% of the liquidation
preference thereof if redeemed during the 12-month period beginning on
February 28, 2000, plus, in each case, an amount in cash equal to all
accumulated and unpaid dividends to the redemption date (including an
amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date) (the "Cash Proceeds Redemption Price"); provided,
however, that after any such redemption at least $22.5 million
liquidation preference of Redeemable Preferred Stock would remain
outstanding immediately after giving effect to such redemption. Any
such redemption pursuant to this paragraph (e)(i)(B) must occur on or
prior to the date that is one year after the receipt by the
Corporation of the proceeds of a Public Equity Offering or a Major
Asset Sale.
(C) In addition to the foregoing paragraphs (e)(i)(A) and
(e)(i)(B), prior to February 28, 2002, upon the occurrence of a Change
of Control, the Corporation may, at its option, redeem in whole, but
not in part, the outstanding Redeemable Preferred Stock (a "Change of
Control Redemption") at a redemption price equal to (i) if redeemed on
or prior to February 28, 1999, 114% of the principal amount thereof,
plus accrued and unpaid dividends to the Redemption Date (including an
amount in cash equal to a prorated dividend for the period from the
Dividend
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<PAGE> 8
Payment Date immediately prior to the Redemption Date to the
Redemption Date), or (ii) if redeemed after February 28, 1999 but on
or prior to February 28, 2002, 100% of the liquidation preference
thereof plus the Applicable Premium (the "Change of Control Redemption
Price"). In order to effect a Change of Control Redemption, the
Corporation must send a notice to each Holder within 30 days following
the date the Change of Control occurred, stating that the Corporation
is effecting a Change of Control Redemption in lieu of a Change of
Control Offer.
(D) In the event of a redemption pursuant to paragraph
(e)(i)(A) or (e)(i)(B) hereof of only a portion of the then
outstanding shares of the Redeemable Preferred Stock, the Corporation
shall effect such redemption pro rata according to the number of
shares held by each Holder of the Redeemable Preferred Stock, except
that the Corporation may redeem such shares held by Holders of fewer
than 100 shares (or shares held by Holders who would hold less than
100 shares as a result of such redemption), as may be determined by
the Corporation.
(ii) Mandatory Redemption. On February 28, 2008, the
Corporation shall redeem, to the extent of funds legally available
therefor, in the manner provided in paragraph (e)(iii) hereof, all of
the shares of the Redeemable Preferred Stock then outstanding at a
redemption price equal to 100% of the then effective liquidation
preference per share, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends per share (including an
amount equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the
Redemption Date) (the "Mandatory Redemption Price").
(iii) Procedures for Redemption. (A) At least thirty (30)
days and not more than sixty (60) days prior to the date fixed for any
redemption of the Redeemable Preferred Stock, written notice (the
"Redemption Notice") shall be given by first class mail, postage
prepaid, to each Holder of record on the record date fixed for such
redemption of the Redeemable Preferred Stock at such Holder's address
as the same appears on the stock books of the Corporation, provided
that no failure to give such notice nor any deficiency
8
<PAGE> 9
therein shall affect the validity of the procedure for the redemption
of any shares of Redeemable Preferred Stock to be redeemed except as
to the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to
paragraph (e)(i)(A), (e)(i)(B), (e)(i)(C) or (e)(ii) hereof;
(2) the Optional Redemption Price, the Cash
Proceeds Redemption Price, the Change of Control Redemption
Price or the Mandatory Redemption Price, as the case may be;
(3) whether all or less than all the outstanding
shares of the Redeemable Preferred Stock redeemable are to be
redeemed and the total number of shares of the Redeemable
Preferred Stock being redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the
Corporation, at the place or places where certificates for
shares of Redeemable Preferred Stock are to be surrendered for
redemption, in the manner and at the price designated, his
certificate or certificates representing the shares of
Redeemable Preferred Stock to be redeemed: and
(6) that dividends on the shares of the
Redeemable Preferred Stock to be redeemed shall cease to
accumulate on such Redemption Date unless the Corporation
defaults in the payment of the Optional Redemption Price, the
Cash Proceeds Redemption Price, the Change of Control
Redemption Price or the Mandatory Redemption Price, as the
case may be.
(B) Each Holder of Redeemable Preferred stock shall
surrender the certificate or certificates representing such shares of
Redeemable Preferred Stock to the Corporation, duly endorsed (or
otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated
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<PAGE> 10
in the Redemption Notice, and on the Redemption Date the full Optional
Redemption Price, Cash Proceeds Redemption Price, Change of Control
Redemption Price or Mandatory Redemption Price, as the case may be,
for such shares shall be payable in cash to the Person whose name
appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the
event that less than all of the shares represented by any such
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(C) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the applicable
redemption price, dividends on the Redeemable Preferred Stock called
for redemption shall cease to accumulate on the Redemption Date, and
all rights of the Holders of redeemed shares shall terminate with
respect thereto on the Redemption Date, other than the right to
receive the Optional Redemption Price, the Cash Proceeds Redemption
Price, the Change of Control Redemption Price or the Mandatory
Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as
provided in paragraph (e)(iii)(A) above and the funds necessary for
redemption (including an amount in respect of all dividends that will
accrue to the Redemption Date) shall have been irrevocably deposited
in trust for the equal and ratable benefit for the Holders of the
shares to be redeemed, then, at the close of business on the day on
which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Optional
Redemption Price, the Cash Proceeds Redemption Price, the Change of
Control Redemption Price or the Mandatory Redemption Price, as the
case may be, without interest.
(f) Voting Rights. (i) The Holders of Redeemable
Preferred Stock, except as otherwise required under Delaware law or as set
forth in paragraphs (ii), (iii) and (iv) below, shall not be entitled or
permitted to vote on any matter required or permitted to be voted upon by the
stockholders of the Corporation.
(ii) (A) So long as any shares of the Redeemable
Preferred Stock are outstanding, the Corporation shall
10
<PAGE> 11
not authorize any class of Parity Stock without the affirmative vote
or consent of Holders of at least a majority of the then outstanding
shares of Redeemable Preferred Stock, voting or consenting, as the
case may be, as one class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting;
provided, however, that no such vote or consent shall be necessary in
connection with the authorization of the Exchange Preferred Stock, if
any, with an aggregate number of authorized shares not to exceed the
aggregate authorized number of shares of Redeemable Preferred Stock;
provided, further, however, the Corporation may authorize up to
$10,000,000 initial liquidation preference of other Parity Stock (plus
Parity Stock payable as dividends thereon in lieu of cash dividends)
without the vote or consent described in the foregoing sentence.
(B) So long as any shares of the Redeemable Preferred
Stock are outstanding, the Corporation shall not authorize any class
of Senior Stock without the affirmative vote or consent of Holders of
at least a majority of the outstanding shares of Redeemable Preferred
Stock, voting or consenting, as the case may be, as one class, given
in person or by proxy, either in writing or by resolution adopted at
an annual or special meeting.
(C) So long as any shares of the Redeemable Preferred
Stock are outstanding, the Corporation shall not amend this
Certificate of Designation so as to affect adversely the specified
rights, preferences, privileges or voting rights of the shares of
Redeemable Preferred Stock or to authorize the issuance of any
additional shares of Redeemable Preferred Stock without the
affirmative vote or consent of Holders of at least a majority of the
issued and outstanding shares of Redeemable Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(D) Prior to the exchange of Redeemable Preferred Stock
for Exchange Debentures, the Corporation shall not amend or modify the
Indenture for the Exchange Debentures in the form as executed on the
Issue Date (the "Indenture") (except as expressly provided therein in
respect of amendments without the consent of Holders
11
<PAGE> 12
of Exchange Debentures) without the affirmative vote or consent of
Holders of at least a majority of the shares of Redeemable Preferred
Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(E) Except as set forth in paragraphs (f)(ii)(A),
(f)(ii)(B) and (f)(ii)(C) above, (x) the creation, authorization or
issuance of any shares of any Junior Stock, Parity Stock or Senior
Stock, including the designation thereof within the existing class of
Redeemable Preferred Stock or (y) the increase or decrease in the
amount of authorized Capital Stock of any class, including Preferred
Stock, shall not require the consent of Holders of Redeemable
Preferred Stock and shall not be deemed to affect adversely the
rights, preferences, privileges or voting rights of Holders of
Redeemable Preferred Stock.
(iii) Without the affirmative vote or consent of Holders of
a majority of the issued and outstanding shares of Redeemable
Preferred Stock, voting or consenting, as the case may be, as one
class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting, the Corporation shall not, in
a single transaction or series of related transactions, consolidate or
merge with or into, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets to, any
Person or adopt a plan of liquidation unless: (i) either (1) the
Corporation is the surviving or continuing Person or (2) the Person
(if other than the Corporation) formed by such consolidation or into
which the Corporation is merged or the Person which acquires by
conveyance, transfer or lease the properties and assets of the
Corporation substantially as an entirety or in the case of a plan of
liquidation, the Person to which assets of the Corporation have been
transferred, shall be a corporation, partnership or trust organized
and existing under the laws of the United States or any State thereof
or the District of Columbia; (ii) the Redeemable Preferred Stock shall
be converted into or exchanged for and shall become shares of such
successor, transferee or resulting Person, having in respect of such
successor, transferee or resulting Person the same powers, preferences
and relative participating, optional or other special
12
<PAGE> 13
rights and the qualifications, limitations or restrictions thereon,
that the Redeemable Preferred Stock had immediately prior to such
transaction; (iii) immediately after giving effect to such transaction
and the use of the proceeds therefrom (on a pro forma basis),
including giving effect to any Indebtedness incurred or anticipated to
be incurred in connection with such transaction, the Corporation (in
the case of clause (1) of the foregoing clause (i)) or such Person (in
the case of clause (2) of the foregoing clause (i)) shall be able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under paragraph (l)(i) hereof; (iv) immediately after
giving effect to such transactions, no Voting Rights Triggering Event
shall have occurred or be continuing; and (v) the Corporation has
delivered to the transfer agent for the Redeemable Preferred Stock
prior to the consummation of the proposed transaction an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with this Certificate of
Designation and that all conditions precedent in this Certificate of
Designation relating to such transaction have been satisfied. Upon
completion of any such transactions, the Person (if other than the
Corporation) formed by such consolidation or into which the
Corporation is merged, or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Corporation
substantially as an entirety, or in the case of a plan of liquidation
the Person to which the assets of the Corporation have been
transferred, shall thereupon be the "Corporation" for all purposes of
this Certificate of Designation.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the properties or
assets of one or more Subsidiaries of the Corporation, the Capital
Stock of which constitutes all or substantially all of the properties
and assets of the Corporation shall be deemed to be the transfer of
all or substantially all of the properties and assets of the
Corporation.
(iv) If (w) after February 28, 2002 cash dividends on the
Redeemable Preferred Stock are in arrears and unpaid for six or more
Dividend Periods (whether or not consecutive) (a "Dividend Default");
or (x) the
13
<PAGE> 14
Corporation fails to redeem all of the then outstanding shares of
Redeemable Preferred Stock on February 28, 2008 or otherwise fails to
discharge any redemption obligation with respect to the Redeemable
Preferred Stock or fails to make an offer to purchase all of the
outstanding shares of Redeemable Preferred Stock following a Change of
Control if such offer to purchase is required by paragraph (h) hereof
(a "Redemption Default"); or (y) the Corporation breaches or violates
one of the provisions set forth in any of paragraphs (l)(i), (l)(ii)
or (l)(iii) hereof and the breach or violation continues for a period
of 30 days or more (a "Restriction Default); or (z) the Corporation
fails to pay at the final stated maturity (giving effect to any
extensions thereof) the principal amount of any Indebtedness of the
Corporation or any Subsidiary of the Corporation, or the final stated
maturity of any such Indebtedness is accelerated (a "Payment
Default"), if the aggregate principal amount of such Indebtedness,
together with the aggregate principal amount of any other such
Indebtedness in default for failure to pay principal at the final
stated maturity (giving effect to any extensions thereof) or which has
been accelerated, aggregates $5,000,000 or more at one time, in each
case, after a 10-day period during which such default shall not have
been cured or such acceleration rescinded, then the number of
directors constituting the Board of Directors shall be adjusted by the
number, if any, necessary to permit the Holders of the Redeemable
Preferred Stock, together with the holders of any Parity Stock then
having the right to elect directors, voting as one class, to elect the
lesser of two directors or 25% of the members of the Board of
Directors. Holders of a majority of the issued and outstanding shares
of Redeemable Preferred Stock, together with the holders of any Parity
Stock then having the right to elect directors, voting as one class,
shall have the exclusive right to elect the lesser of two directors or
25% of the members of the Board of Directors at a meeting therefor
called upon occurrence of such Dividend Default, Redemption Default,
Restriction Default or Payment Default, as the case may be, and at
every subsequent meeting at which the terms of office of the directors
so elected expire (other than as described in (f)(iv)(B) below). Each
such event described in clauses (w), (x), (y) and (z) is a "Voting
Rights Triggering Event." The voting rights provided herein shall be
the exclusive remedy at
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<PAGE> 15
law or in equity of the holders of the Redeemable Preferred Stock for
any Dividend Default, Redemption Default, Payment Default or
Restriction Default.
(A) The right of the Holders of Redeemable Preferred
Stock to elect members of the Board of Directors as set forth in
subparagraph (f)(iv)(A) above shall continue until such time as (x) in
the event such right arises due to a Dividend Default, all accumulated
dividends that are in arrears on the Redeemable Preferred Stock are
paid in full in cash; and (y) in all other cases, the failure, breach
or default giving rise to such Voting Rights Triggering Event is
remedied or waived by the holders of at least a majority of the shares
of Redeemable Preferred Stock then outstanding and entitled to vote
thereon, at which time (I) the special right of the Holders of
Redeemable Preferred Stock so to vote for the election of directors
and (II) the term of office of the directors elected by the Holders of
the Redeemable Preferred Stock shall terminate (unless such directors
were elected by the Holders of the Redeemable Preferred Stock and by
the holders of any Parity Stock, and as to such Parity Stock the event
giving rise to the right to elect directors has not been cured,
remedied or waived as provided in the instrument governing such Parity
Stock) and the directors elected by the holders of Common Stock shall
constitute the entire Board of Directors. At any time after voting
power to elect directors shall have become vested and be continuing in
the Holders of Redeemable Preferred Stock pursuant to paragraph
(f)(iv) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Redeemable Preferred Stock, a
proper officer of the Corporation may, and upon the written request of
the Holders of record of at least twenty-five percent (25%) of the
shares of Redeemable Preferred Stock (and, if applicable, Parity
Stock) then outstanding addressed to the secretary of the Corporation
shall, call a special meeting of the Holders of Redeemable Preferred
Stock (and, if applicable, Parity Stock), for the purpose of electing
the directors which such Holders are entitled to elect. If such
meeting shall not be called by a proper officer of the Corporation
within twenty (20) days after personal service of said written request
upon the secretary of the Corporation, or within twenty (20) days
after mailing the same within the United States by certified mail,
addressed to the secretary of
15
<PAGE> 16
the Corporation at its principal executive offices, then the Holders
of record of at least twenty-five percent (25%) of the outstanding
shares of Redeemable Preferred Stock (and, if applicable, Parity
Stock) may designate in writing one of their number to call such
meeting at the expense of the Corporation, and such meeting may be
called by the Person so designated upon the notice required for the
annual meetings of stockholders of the Corporation and shall be held
at the place for holding the annual meetings of stockholders. Any
Holder of Redeemable Preferred Stock so designated shall have, and the
Corporation shall provide, access to the lists of stockholders to be
called pursuant to the provisions hereof.
(B) At any meeting held for the purpose of electing
directors at which the Holders of Redeemable Preferred Stock shall
have the right to elect directors as aforesaid, the presence in person
or by proxy of the Holders of at least a majority of the outstanding
shares of Redeemable Preferred Stock shall be required to constitute a
quorum of such Redeemable Preferred Stock.
(C) Any vacancy occurring in the office of a director
elected by the Holders of Redeemable Preferred Stock may be filled by
the remaining directors elected by the Holders of Redeemable Preferred
Stock unless and until such vacancy shall be filled by the Holders of
Redeemable Preferred Stock.
(v) In any case in which the Holders of Redeemable
Preferred Stock shall he entitled to vote pursuant to this paragraph
(f) or pursuant to Delaware law, each Holder of Redeemable Preferred
Stock entitled to vote with respect to such matter shall be entitled
to one vote for each share of Redeemable Preferred Stock held.
(g) Exchange.
(i) Requirements. The outstanding shares of Redeemable
Preferred Stock are exchangeable as a whole but not in part, at the
option of the Corporation and subject to the terms and conditions of
the Credit Agreement and the Indenture, at any time on any Dividend
Payment Date for the Corporation's 14% Subordinated Exchange
Debentures due 2008 (the
16
<PAGE> 17
"Exchange Debentures") to be substantially in the form of Exhibit A to
the form of Indenture, a copy of which is on file with the secretary
of the Corporation, provided that any such exchange may only be made
if on or prior to the date of such exchange (i) the Corporation has
paid all accumulated dividends on the Redeemable Preferred Stock
(including the dividends payable on the date of exchange) and there
shall be no contractual impediment to such exchange; (ii) there shall
be legally available funds sufficient therefor; and (iii) immediately
after giving effect to such exchange, no Default or Event of Default
(as defined in the Indenture) would exist under the Indenture and no
default or event of default would exist under the Credit Agreement or
the Indenture. The exchange rate shall be $1.00 principal amount of
Exchange Debentures for each $1.00 of liquidation preference of
Redeemable Preferred Stock, including, to the extent necessary,
Exchange Debentures in principal amounts less than $1,000, provided
that the Corporation shall have the right, at its option, to pay cash
in an amount equal to the principal amount of that portion of any
Exchange Debenture that is not an integral multiple of $1,000 instead
of delivering an Exchange Debenture in a denomination of less than
$1,000.
(ii) Procedure for Exchange. (A) At least thirty (30)
days and not more than sixty (60) days prior to the date fixed for
exchange, written notice (the "Exchange Notice") shall be given by
first-class mail, postage prepaid, to each Holder of record on the
record date fixed for such exchange of the Redeemable Preferred Stock
at such Holder's address as the same appears on the stock books of the
Corporation, provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the
exchange of any shares of Redeemable Preferred Stock to be exchanged
except as to the Holder or Holders to whom the Corporation has failed
to give said notice or except as to the Holder or Holders whose notice
was defective. The Exchange Notice shall state:
(1) the date fixed for exchange;
(2) that the Holder is to surrender to the
Corporation, at the place or places where certificates for
shares of Redeemable Preferred Stock are to be surrendered for
exchange, in the
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<PAGE> 18
manner designated, his certificate or certificates
representing the shares of Redeemable Preferred Stock to be
exchanged;
(3) that dividends on the shares of Redeemable
Preferred Stock to be exchanged shall cease to accrue on such
Exchange Date whether or not certificates for shares of
Redeemable Preferred Stock are surrendered for exchange on
such Exchange Date unless the corporation shall default in the
delivery of Exchange Debentures; and
(4) that interest on the Exchange Debentures
shall accrue from the Exchange Date whether or not
certificates for shares of Redeemable Preferred Stock are
surrendered for exchange on such Exchange Date.
(B) On or before the Exchange Date, each Holder of
Redeemable Preferred Stock shall surrender the certificate or
certificates representing such shares of Redeemable Preferred Stock,
in the manner and at the place designated in the Exchange Notice. The
Corporation shall cause the Exchange Debentures to be executed on the
Exchange Date and, upon surrender in accordance with the Exchange
Notice of the certificates for any shares of Redeemable Preferred
Stock so exchanged, duly endorsed (or otherwise in proper form for
transfer, as determined by the Corporation), such shares shall be
exchanged by the Corporation into Exchange Debentures. The
Corporation shall pay interest on the Exchange Debentures at the rate
and on the dates specified therein from the Exchange Date.
(C) If notice has been mailed as aforesaid, and if before
the Exchange Date specified in such notice (x) the Indenture shall
have been duly executed and delivered by the Corporation and the
trustee thereunder and (y) all Exchange Debentures necessary for such
exchange shall have been duly executed by the Corporation and
delivered to the trustee under the Indenture with irrevocable
instructions to authenticate the Exchange Debentures necessary for
such exchange, then the rights of the Holders of Redeemable Preferred
Stock so exchanged as stockholders of the Corporation shall cease
(except the right to receive Exchange Debentures, an amount in cash
equal to the amount of
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<PAGE> 19
accrued and unpaid dividends to the Exchange Date and, if the
Corporation so elects, cash in lieu of any Exchange Debenture not an
integral multiple of $1,000), and the Person or Persons entitled to
receive the Exchange Debentures issuable upon exchange shall be
treated for all purposes as the registered Holder or Holders of such
Exchange Debentures as of the Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the
foregoing provisions of this paragraph (g), the Corporation shall not
be entitled to exchange the Redeemable Preferred Stock for Exchange
Debentures if such exchange, or any term or provision of the Indenture
or the Exchange Debentures, or the performance of the Corporation's
obligations under the Indenture or the Exchange Debentures, shall
materially violate or conflict with any applicable law or agreement or
instrument then binding on the Corporation or if, at the time of such
exchange, the Corporation is insolvent or if it would be rendered
insolvent by such exchange.
(h) Change of Control.
(i) In the event of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Corporation shall
notify the Holders of the Redeemable Preferred Stock in writing of
such occurrence and shall make an offer to purchase (the "Change of
Control Offer"), on a Business Day (the "Change of Control Payment
Date") not later than 60 days following the Change of Control Date,
all then outstanding shares of Redeemable Preferred Stock at a
purchase price of 101% of the liquidation preference thereof plus,
without duplication, an amount in cash equal to all accumulated and
unpaid dividends per share (including an amount in cash equal to a
prorated dividend for the period from the Dividend Payment Date
immediately prior to the Change of Control Payment Date to the Change
of Control Payment Date).
(ii) Within 30 days following the Change of Control Date,
the Corporation shall send, by first class mail, postage prepaid, a
notice to each Holder of Redeemable Preferred Stock, which notice
shall govern the terms of the Change of Control Offer. The notice to
the Holders shall contain all instructions and
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materials necessary to enable such Holders to tender Redeemable
Preferred Stock pursuant to the Change of Control Offer. Such notice
shall state:
1. that a Change of Control has occurred, that
the Change of Control Offer is being made pursuant to this
paragraph (h) and that all Redeemable Preferred Stock validly
tendered and not withdrawn will be accepted for payment;
2. the purchase price (including the amount of
accrued dividends, if any) and the purchase date (which shall
be no earlier than 30 days nor later than 45 days from the
date such notice is mailed, other than as may be required by
law) (the "Change of Control Payment Date");
3. that any shares of Redeemable Preferred Stock
not tendered will continue to accrue dividends;
4. that, unless the Corporation defaults in
making payment therefor, any share of Redeemable Preferred
Stock accepted for payment pursuant to the Change of Control
Offer shall cease to accrue dividends after the Change of
Control Payment Date;
5. that Holders electing to have any shares of
Redeemable Preferred Stock purchased pursuant to a Change of
Control Offer will be required to surrender the certificate or
certificates representing such shares, properly endorsed for
transfer together with such customary documents as the
Corporation and the transfer agent may reasonably require, in
the manner and at the place specified in the notice prior to
the close of business on the Business Day prior to the Change
of Control Payment Date;
6. that Holders will be entitled to withdraw
their election if the Corporation receives, not later than
five Business Days prior to the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the number of shares of
Redeemable Preferred Stock the Holder delivered for purchase
and a statement that such Holder is
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withdrawing his election to have such shares of Redeemable
Preferred Stock purchased;
7. that Holders whose shares of Redeemable
Preferred Stock are purchased only in part will be issued a
new certificate representing the unpurchased shares of
Redeemable Preferred Stock; and
8. the circumstances and relevant facts
regarding such Change of Control.
(iii) The Corporation will comply with any securities laws
and regulations, to the extent such laws and regulations are
applicable to the repurchase of the Redeemable Preferred Stock in
connection with a Change of Control.
(iv) On the Change of Control Payment Date, the
Corporation shall (A) accept for payment the shares of Redeemable
Preferred Stock validly tendered pursuant to the Change of Control
Offer, (B) pay to the Holders of shares so accepted the purchase price
therefor and (C) cancel and retire cash surrendered certificate.
Unless the Corporation defaults in the payment for the shares of
Redeemable Preferred Stock tendered pursuant to the Change of Control
Offer, dividends will cease to accrue with respect to the shares of
Redeemable Preferred Stock tendered and all rights of Holders of such
tendered shares will terminate, except for the right to receive
payment therefor on the change of Control Payment Date.
(v) If the purchase of the Redeemable Preferred Stock
would violate or constitute a default under the Credit Agreement or
other Indebtedness of the Corporation or any certificate of
designation for Senior Stock of the Corporation, then, notwithstanding
anything to the contrary contained above, prior to complying with the
foregoing provisions, but in any event within 30 days following the
Change of Control Date, the Corporation shall either repay all such
Indebtedness or Senior Stock and terminate all commitments outstanding
under the Credit Agreement or obtain the requisite consents, if any,
under the Credit Agreement or such Indebtedness or Senior Stock
required to permit the repurchase of Redeemable Preferred Stock
required by this paragraph (h). Until the requirements
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of the immediately preceding sentence are satisfied, the Corporation
shall not make, and shall not be obligated to make, any Change of
Control Offer; provided that the Corporation's failure to comply with
the provisions of this paragraph (h)(v) shall constitute a Voting
Rights Triggering Event.
(vi) Clauses (i) - (v) of this paragraph (h)
notwithstanding, the Corporation shall not be required to make a
Change of Control Offer if, instead, the Corporation elects to effect
a Change of Control Redemption pursuant to the provisions of and in
compliance with paragraph (e)(i)(C) hereof.
(i) Conversion or Exchange. The Holders of shares of
Redeemable Preferred Stock shall not have any rights hereunder to convert such
shares into or exchange such shares for shares of any other class or classes or
of any other series of any class or classes of Capital Stock of the
Corporation.
(j) Reissuance of Redeemable Preferred Stock. Shares of
Redeemable Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized and unissued shares of Preferred stock undesignated as to series and
may be redesignated and reissued as part of any series of Preferred Stock,
provided that any issuance of such shares as Redeemable Preferred Stock must be
in compliance with the terms hereof.
(k) Business Day. If any payment, redemption or exchange
shall be required by the terms hereof to be made on a day that is not a
Business Day, such payment, redemption or exchange shall be made on the
immediately succeeding Business Day.
(l) Certain Additional Provisions.
(i) Limitation on Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock. The Corporation shall
not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness (other than
Permitted Indebtedness) and
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the Corporation and its Subsidiaries shall not issue any Disqualified
Capital Stock; provided, however, that the Corporation and its
Subsidiaries may incur Indebtedness or issue shares of Disqualified
Capital Stock if, in either case, the Corporation's Leverage Ratio at
the time of incurrence of such Indebtedness or the issuance of such
Disqualified Capital Stock, as the case may be, after giving pro forma
effect to such incurrence or issuance as of such date and to the use
of proceeds therefrom is less than 7.0 to 1.
(ii) Limitation on Restricted Payments.
(A) Neither the Corporation nor any of its
Subsidiaries shall, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment
and immediately after giving effect thereto:
(1) any Voting Rights Triggering Event
shall have occurred and be continuing; or
(2) the Corporation is not able to incur
$1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with paragraph
(l)(i) above; or
(3) the aggregate amount of Restricted
Payments made subsequent to the Issue Date (the
amount expended for such purposes, if other than in
cash, being the fair market value of such property as
determined by the Board of Directors of the
Corporation in good faith) exceeds the sum of (a) (x)
100% of the aggregate Consolidated EBITDA of the
Corporation (or, in the event such Consolidated
EBITDA shall be a deficit, minus 100% of such
deficit) accrued subsequent to the Issue Date to the
most recent date for which financial information is
available to the Corporation, taken as one accounting
period, less (y) 1.4 times Consolidated Interest
Expense for the same period, plus (b) 100% of the
aggregate net proceeds, including the fair market
value of property other than cash as determined by
the Board of Directors in good faith, received by the
Corporation from any Person (other than a
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Subsidiary of the Corporation) from the issuance and
sale on or subsequent to the Issue Date of Qualified
Capital Stock of the Corporation (excluding (i) any
net proceeds from issuances and sales financed
directly or indirectly using funds borrowed from the
Corporation or any Subsidiary of the Corporation,
until and to the extent such borrowing is repaid, but
including the proceeds from the issuance and sale of
any securities convertible into or exchangeable for
Qualified Capital Stock to the extent such securities
are so converted or exchanged and including any
additional proceeds received by the Corporation upon
such conversion or exchange, and (ii) any net
proceeds received from issuances and sales that are
used to consummate a transaction described in clauses
(2) and (3) of paragraph (b) below), plus (c) without
duplication of any amount included in clause (iii)(b)
above, 100% of the aggregate net proceeds, including
the fair market value of property other than cash
(valued as provided in clause (iii)(b) above),
received by the Corporation as a capital contribution
on or after the Issue Date, plus (d) the amount equal
to the net reduction in Investments (other than
Permitted Investments) made by the Corporation or any
of its Subsidiaries in any Person resulting from (i)
repurchases or redemptions of such Investments by
such Person, proceeds realized upon the sale of such
Investment to an unaffiliated purchaser and
repayments of loans or advances or other transfers of
assets by such Person to the Corporation or any
Subsidiary of the Corporation or (ii) the
redesignation of Unrestricted Subsidiaries as
Subsidiaries (valued in each case as provided in the
definition of "Investment") not to exceed, in the
case of any Subsidiary, the amount of Investments
previously made by the Corporation or any Subsidiary
in such Unrestricted Subsidiary, which amount was
included in the calculation of Restricted Payments;
provided, however, that no amount shall be included
under this clause (d) to
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the extent it is already included in Consolidated
EBITDA, plus (e) the aggregate net cash proceeds
received by a Person in consideration for the
issuance of such Person's Capital Stock (other than
Disqualified Capital Stock) that are held by such
Person at the time such Person is merged with and
into the Corporation in accordance with paragraph
(l)(iii) subsequent to the Issue Date; provided,
however, that concurrently with or immediately
following such merger the Corporation uses an amount
equal to such net cash proceeds to redeem or
repurchase the Corporation's Capital Stock, plus (f)
$2,500,000.
(B) Notwithstanding the foregoing, these
provisions will not prohibit: (1) the payment of any dividend
or the making of any distribution within 60 days after the
date of its declaration if such dividend or distribution would
have been permitted on the date of declaration; (2) the
purchase, redemption or other acquisition of any Capital Stock
of the Corporation or any warrants, options or other rights to
acquire shares of any class of such Capital Stock either (x)
solely in exchange for shares of Qualified Capital Stock or
other rights to acquire Qualified Capital Stock or (y) through
the application of the net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the
Corporation) of shares of Qualified Capital Stock or warrants,
options or other rights to acquire Qualified Capital Stock or
(z) in the case of Disqualified Capital Stock, solely in
exchange for, or through the application of the net proceeds
of a substantially concurrent sale for cash (other than to a
Subsidiary of the Corporation) of, Disqualified Capital Stock
that has a redemption date no earlier than, and requires the
payment of current dividends or distributions in cash no
earlier than, in each case, the Disqualified Capital Stock
being purchased, redeemed or otherwise acquired or retired; or
to create Holding to repurchase (3) payments by the
Corporation to repurchase, or to enable Holding to repurchase,
Capital Stock or other securities from employees of the
Corporation or Holding in an aggregate amount not to exceed
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$2,000,000; (4) payments to enable Holding to redeem or
repurchase stock purchase or similar rights in an aggregate
amount not to exceed $500,000; (5) payments, not to exceed
$100,000 in the aggregate, to enable the Corporation or
Holding to make cash payments to holders of its Capital Stock
in lieu of the issuance of fractional shares of its Capital
Stock; (6) payments made pursuant to any merger, consolidation
or sale of assets effected in accordance with paragraph
(l)(iii); provided, however, that no such payment may be made
pursuant to this clause (6) unless, after giving effect to
such transaction (and the incurrence of any Indebtedness in
connection therewith and the use of the proceeds thereof), the
Corporation would be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance
with paragraph (l)(i) above such that after incurring that
$1.00 of Additional Indebtedness, the Leverage Ratio would be
less than 6.0 to 1; and (7) payments to enable Holdings or the
Corporation to pay dividends on their common stock after the
first Public Equity Offering in an annual amount not to exceed
6.0% of the gross proceeds (before deducting underwriting
discounts and commissions and other fees and expenses of the
offering) received from shares of common stock sold for the
account of the issuer thereof (and not for the account of any
stockholder) in such initial Public Equity Offering (but only
to the extent such proceeds shall have been contributed as
capital to the Corporation by Holdings, if Holdings shall have
made such Public Equity Offering); provided, however, that in
the case of clauses (3), (4), (5), (6) and (7, no Voting
Rights Triggering Event shall have occurred or be continuing
at the time of such payment or as a result thereof. In
determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, amounts expended pursuant to
clauses (1), (3), (4), (5), (6) and (7) shall be included in
such calculation.
(iii) Reports. So long as any of the Redeemable Preferred
Stock is outstanding, the Corporation shall provide to the Holders of
the Redeemable Preferred Stock, within 15 days after it files the same
with the
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Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission by rule or regulation prescribes) that the
Corporation files with the Commission pursuant to Sections 13 or 15(d)
of the Exchange Act. In the event that the Corporation is not
required to file such reports with the Commission pursuant to the
Exchange Act, the Corporation shall nevertheless deliver to the
Holders of the Redeemable Preferred Stock its consolidated financial
statements, comparable to those which would have been required to
appear in annual or quarterly reports, to be delivered to the Holders
of the Redeemable Preferred Stock within the time period prescribed
above.
(m) Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (with terms
defined in the singular having comparable meanings when used in the plural and
vice versa), unless the context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a
Subsidiary of the Corporation or at the time it merges or consolidates
with the Corporation or any of its Subsidiaries or assumed in
connection with the acquisition of assets from such Person and not
incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of the Corporation
or such acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Corporation. The term "control"
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Applicable Premium" means, with respect to any share of
Redeemable Preferred Stock at any Redemption Date for a Change of
Control Redemption, the greater of (i) 1.0% of the liquidation
preference thereof and (ii) the excess of (A) the present value at
such time of (1)
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the redemption price of the Preferred Stock at February 28, 2002 plus
(2) all quarterly payments of dividends through February 28, 2002
computed using a discount rate equal to the Treasury Rate plus 150
basis points over (B) the liquidation preference of such Redeemable
Preferred Stock.
"Asset Acquisition" means (i) an Investment by the Corporation
or any Subsidiary of the Corporation in any other Person pursuant to
which such Person shall become a Subsidiary of the Corporation or
shall be consolidated or merged with the Corporation or any Subsidiary
of the Corporation or (ii) the acquisition by the Corporation or any
Subsidiary of the Corporation of assets of any Person comprising a
division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into
in the ordinary course of business), assignment or other transfer for
value by the Corporation or any of its Subsidiaries (including any
Sale and Leaseback Transaction or any pledge of assets or stock by the
Corporation or any of its Subsidiaries) to any Person other than the
Corporation or a Wholly Owned Subsidiary of the Corporation of (i) any
Capital Stock of any Subsidiary of the Corporation or (ii) any other
property or assets of the Corporation or any Subsidiary of the
Corporation.
"Board of Directors" shall have the meaning ascribed to it in
the first paragraph of this Resolution.
"Business Day" means any day except a Saturday, a Sunday, or
any day on which banking institutions in New York, New York are
required or authorized by law or other governmental action to be
closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock of such Person and
(ii) with respect to any Person that is not a corporation. any and all
partnership or other equity interests of such Person.
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"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease
to which such Person is a party that is required to be classified and
accounted for as a capital lease obligation under GAAP, and for
purposes of this definition, the amount of such obligation at any date
shall be the capitalized amount of such obligation at such date,
determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within
one year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof
and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Moody's Investors Service, Inc.; (iv)
certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in
clauses (i) through (v) above.
"Cash Proceeds Redemption" shall have the meaning ascribed to
it in paragraph (e) hereof.
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"Cash Proceeds Redemption Price" shall have the meaning
ascribed to it in paragraph (e) hereof.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation to any Person or
group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group") (whether or not otherwise in compliance with the
provisions of this Certificate of Designation), other than to Hicks
Muse or any of its Affiliates, officers and directors or Robert N.
Smith or any of his Affiliates (the "Permitted Holders"); or (ii) a
majority of the Board of Directors of the Corporation or Holding shall
consist of Persons who are not Continuing Directors; or (iii) the
acquisition by any Person or Group (other than the Permitted Holders
or any direct or indirect Subsidiary of any Permitted Holder,
including without limitation Holding) of the power, directly or
indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of
the Corporation.
"Change of Control Date" shall have the meaning ascribed to it
in paragraph (h) hereof.
"Change of Control Payment Date" shall have the meaning
ascribed to it in paragraph (h) hereof.
"Change of Control Offer" shall have the meaning ascribed to
it in paragraph (h) hereof.
"Change of Control Redemption" shall have the meaning ascribed
to it in paragraph (e) hereof.
"Change of Control Redemption Price" shall have the meaning
described to it in paragraph (e) hereof.
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered
into by the Corporation or any of its Subsidiaries designed to protect
the Corporation or any of its Subsidiaries against fluctuations in the
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price of commodities actually used in the ordinary course of business
of the Corporation and its Subsidiaries.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net
Income and (ii) to the extent Consolidated Net Income has been reduced
thereby, (A) all income taxes of such Person and its Subsidiaries paid
or accrued in accordance with GAAP for such period (other than income
taxes attributable to extraordinary or nonrecurring gains or losses),
(B) Consolidated Interest Expense and (C) Consolidated Non-Cash
Charges, all as determined on a consolidated basis for such Person and
its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication, the sum of (i) the
interest expense of such Person and its Subsidiaries for such period
as determined on a consolidated basis in accordance with GAAP,
including, without limitation, (a) any amortization of debt discount,
(b) the net cost under Interest Swap Obligations (including any
amortization of discounts), (c) the interest portion of any deferred
payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities, and (e) all accrued interest and (ii)
the interest component of Capitalized Lease Obligations paid or
accrued by such Person and its Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries
for such period on a consolidated basis, determined in accordance with
GAAP; provided that there shall be excluded therefrom, without
duplication, (a) gains and losses from Asset Sales (without regard to
the $500,000 limitation set forth in the definition thereof), or
abandonments or reserves relating thereto and the related tax effects,
(b) items classified as extraordinary or nonrecurring gains and
losses, and the related tax effects according to GAAP, (c) the net
income (or loss) of any Person acquired in a pooling of interests
transaction accrued
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prior to the date it becomes a Subsidiary of such first referred to
Person or is merged or consolidated with it or any of its
Subsidiaries, (d) the net income of any Subsidiary to the extent that
the declaration of dividends or similar distributions by that
Subsidiary of that income is restricted by contract, operation of law
or otherwise, (e) the net income of any Person, other than a
Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Subsidiary
by such Person and (y) the net income of such Person (but in no event
less than zero), and the net loss of such Person shall be included
only to the extent of the aggregate Investment of the first referred
to Person or a consolidated Subsidiary of such Person and (f) any
non-cash expenses attributable to grants or exercises of employee
stock options.
"Consolidated Non-Cash Charges" means, with respect to any
Person for any period, the aggregate depreciation, amortization and
other non-cash expenses of such Person and its Subsidiaries (excluding
any such charges constituting an extraordinary or nonrecurring item)
reducing Consolidated Net Income of such Person and its Subsidiaries
for such period, determined on a consolidated basis in accordance with
GAAP.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of the
Corporation or Holding on the Issue Date, (ii) was nominated for
election or elected to the Board of Directors of the Corporation or
Holding with the affirmative vote of a majority of the Continuing
Directors who were members of such Board of Directors at the time of
such nomination or election, or (iii) is a representative of a
Permitted Holder.
"Corporation" shall have the meaning ascribed to it in the
recitals hereof, subject to the provisions of paragraph (f)(iii)
hereof.
"Credit Agreement" means the Credit Agreement, dated on or
about the Issue Date among STC Broadcasting, Inc., the lenders from
time to time party thereto, NationsBank of Texas, N.A., as
documentation agent, and The Chase Manhattan Bank, as administrative
agent, together with the related documents thereto (including, without
limitation, any guarantee
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agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including by way of adding additional
borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group
of lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Corporation or any of its Subsidiaries against
fluctuations in currency values.
"Disqualified Capital Stock" means any Capital Stock which, by
its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of
any event, matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (except, in each
case, upon the occurrence of a Change of Control), in whole or in
part, on or prior to February 28, 2008.
"Dividend Payment Date" means February 28, May 31, August 31
and November 30, of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"Dividend Record Date" means February 15, May 15, August 15
and November 15 of each year.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Date" means a date on which shares of Redeemable
Preferred Stock are exchanged by the Corporation for Exchange
Debentures.
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"Exchange Debentures" shall have the meaning ascribed to it in
paragraph (g) hereof.
"Exchange Notice" shall have the meaning ascribed to it in
paragraph (g) hereof.
"Exchange Preferred Stock" means a class of preferred stock of
the Corporation substantially identical to the Redeemable Preferred
Stock; provided the issuance and sale of such preferred stock shall
have been registered on an appropriate registration statement filed
and declared effective pursuant to the Securities Act.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of the Issue Date.
"Holder" means a holder of shares of Redeemable Preferred
Stock as reflected in the security register of the Corporation.
"Holding" means Sunrise Television Corp., a Delaware
corporation, and its successors.
"Indebtedness" means with respect to any Person, without
duplication, any liability of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments,
(iii) constituting Capitalized Lease Obligations, (iv) incurred or
assumed as the deferred purchase price of property, or pursuant to
conditional sale obligations and title retention agreements (but
excluding trade accounts payable arising in the ordinary course of
business), (v) for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (vi) for
Indebtedness of others guaranteed by such Person, (vii) for Interest
Swap Obligations, Commodity Agreements and Currency Agreements and
(viii) for Indebtedness of any other Person of the type referred to in
clauses (i) through (vii) which is secured by any Lien on any property
or asset of such first referred to Person, the amount of such
Indebtedness being deemed to be the lesser of the value of such
property or asset or the amount of the Indebtedness so secured. The
amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional
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obligations described above, as such amount would be reflected on a
balance sheet prepared in accordance with GAAP, and the maximum
liability at such date of such Person for any contingent obligations
described above.
"Initial Dividend Period" means the dividend period commencing
on the Issue Date and ending on the first Dividend Payment Date to
occur thereafter.
"Interest Swap Obligations" means the obligations of any
Person under any interest rate protection agreement, interest rate
future, interest rate option, interest rate swap, interest rate cap or
other interest rate hedge or arrangement.
"Investment" means (i) any transfer or delivery of cash, stock
or other property of value in exchange for Indebtedness, stock or
other security or ownership interest in any Person by way of loan,
advance, capital contribution, guarantee or otherwise and (ii) an
investment deemed to have been made by the Corporation at the time any
entity which was a Subsidiary of the Corporation ceases to be such a
Subsidiary in an amount equal to the value of the loans and advances
made, and any remaining ownership interest in, such entity immediately
following such entity ceasing to be a Subsidiary of the Corporation.
The amount of any non-cash Investment shall be the fair market value
of such Investment, as determined conclusively in good faith by
management of the Corporation unless the fair market value of such
Investment exceeds $1,000,000, in which case the fair market value
shall be determined conclusively in good faith by the Board of
Directors of the Corporation at the time such Investment is made.
"Issue Date" means the date of original issuance of the
Exchangeable Preferred Stock.
"Junior Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Leverage Ratio" shall mean the ratio of (i) the aggregate
outstanding amount of Indebtedness of the Company and its Subsidiaries
as of the date of calculation on a consolidated basis in accordance
with GAAP to (ii) the Consolidated EBITDA of the Corporation for the
four full fiscal quarters (the "Four Quarter
35
<PAGE> 36
Period") ending on or prior to the date of determination.
For purposes of this definition, the aggregate outstanding
principal amount of Indebtedness of the Person and its Subsidiaries
for which such calculation is made shall be determined on a pro forma
basis as if the Indebtedness giving rise to the need to perform such
calculation had been incurred and the proceeds therefrom had been
applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the
Four Quarter Period. In addition to the foregoing, for purposes of
this definition, "Consolidated EBITDA" shall be calculated on a pro
forma basis after giving effect to (i) the incurrence of the
Indebtedness of such Person and its Subsidiaries (and the application
of the proceeds therefrom) giving rise to the need to make such
calculation and any incurrence (and the application of the proceeds
therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital
facilities, at any time subsequent to the beginning of the Four
Quarter Period and on or prior to the date of determination, as if
such incurrence (and the application of the proceeds thereof), or the
repayment, as the case may be, occurred on the first day of the Four
Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its
Subsidiaries (including any Person that becomes a Subsidiary as a
result of such Asset Acquisition) incurring, assuming or otherwise
becoming liable for Indebtedness) at any time on or subsequent to the
first day of the Four Quarter Period and on or prior to the date of
determination, as if such Asset Sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Indebtedness and
also including any Consolidated EBITDA associated with such Asset
Acquisition) occurred on the first day of the Four Quarter Period and
(iii) cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other
insurance coverage and policies, standardization of sales
representation commissions and other contract rates, and reductions in
taxes other
36
<PAGE> 37
than income taxes (collectively, "Cost Savings Measures"), which cost
savings the Company reasonably believes in good faith would have been
achieved during the Four Quarter Period as a result of such Asset
Acquisitions (regardless of whether such cost savings could then be
reflected in pro forma financial statements under GAAP, Regulation S-X
promulgated by the Commission or any other regulation or policy of the
Commission), provided that both (A) such cost savings and Cost Savings
Measures were identified and such cost savings were quantified in an
officer's certificate prepared at the time of the consummation of the
Asset Acquisition and (B) with respect to each Asset Acquisition
completed prior to the 90th day preceding such date of determination,
actions were commenced or initiated by the Company within 90 days of
such Asset Acquisition to effect the Cost Savings Measures identified
in such officer's certificate (regardless, however, of whether the
corresponding cost savings were ultimately achieved). Furthermore, in
calculating "Consolidated Interest Expense" for purposes of the
calculation of "Consolidated EBITDA," (i) interest on Indebtedness
determined on a fluctuating basis as of the date of determination
(including Indebtedness actually incurred on the date of the
transaction giving rise to the need to calculate the Leverage Ratio)
and which will continue to be so determined thereafter shall be deemed
to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i) above, interest determined
on a fluctuating basis, to the extent such interest is covered by
Interest Swap Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such
agreements.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof and any agreement to give any security interest).
"Major Asset Sale" means an Asset Sale or a series of related
Asset Sales involving assets with a fair market value in excess of
$25,000,000.
"Mandatory Redemption Price" shall have the meaning ascribed
to it in paragraph (e) hereof.
37
<PAGE> 38
"Optional Redemption Price" shall have the meaning ascribed to
it in paragraph (e) hereof.
"Parity Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Permitted Indebtedness" means, without duplication, (i)
Indebtedness outstanding on the Issue Date; (ii) Indebtedness of the
Corporation incurred pursuant to the Credit Agreement in an aggregate
principal amount at any time outstanding not to exceed the sum of the
aggregate commitments pursuant to the Credit Agreement as in effect on
the Issue Date; (iii) Interest Swap Obligations; provided that such
Interest Swap Obligations are entered into to protect the Corporation
from fluctuations in interest rates of its Indebtedness; (iv)
additional Indebtedness of the Corporation or any of its Subsidiaries
not to exceed $10,000,000 in principal amount outstanding at any time
(which amount may, but need not, be incurred under the Credit
Agreement); (v) Refinancing Indebtedness; (vi) Indebtedness owed by
the Corporation to any Wholly Owned Subsidiary of the Corporation or
by any Subsidiary of the Corporation to the Corporation or any Wholly
Owned Subsidiary of the Corporation; and (vii) guarantees by
Subsidiaries of any Indebtedness permitted to be incurred pursuant to
the Certificate of Designation; (viii) Indebtedness in respect of
performance bonds, bankers' acceptances and surety or appeal bonds
provided by the Company or any of its Subsidiaries to their customers
in the ordinary course of their business; (ix) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from guarantees or letters of credit,
surety bonds or performance bonds securing any connection with the
disposition of any business assets or Subsidiaries of the Company
(other than guarantees of Indebtedness or other obligations incurred
by any Person acquiring all or any portion of such business assets or
Subsidiaries of the Company for the purpose of financing such
acquisition) in a principal amount not to exceed the gross proceeds
actually received by the Company or any of its Subsidiaries in
connection with such disposition; provided, however, that the
principal amount of any Indebtedness incurred pursuant to this clause
(ix), when taken together with all Indebtedness incurred pursuant to
this clause (ix) and then
38
<PAGE> 39
outstanding, shall not exceed $7,500,000; and (x) Indebtedness
represented by Capitalized Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of
construction or improvement of property used in a related business or
incurred to refinance any such purchase price or cost of construction
or improvement of property used in a related business or incurred to
refinance any such purchase price or cost of construction or
improvement, in each case incurred no later than 365 days after the
date of such acquisition or the date of completion of such
construction or improvement; provided, however, that the principal
amount of any Indebtedness incurred pursuant to this clause (x) shall
not exceed $3,000,000 at any time outstanding.
"Permitted Investments" means (i) Investments by the
Corporation or any Subsidiary to acquire the stock or assets of any
Person (or Acquired Indebtedness acquired in connection with a
transaction in which such Person becomes a Subsidiary of the
Corporation) engaged in the broadcast business or businesses
reasonably related thereto; provided that if any such Investment or
series of related Investments involves an Investment by the
Corporation in excess of $5,000,000, the Corporation is able, at the
time of such investment and immediately after giving effect thereto,
to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with paragraph (l)(i) hereof,
(ii) Investments received by the Corporation or its Subsidiaries as
consideration for a sale of assets, (iii) Investments by the
Corporation or any Wholly Owned Subsidiary of the Corporation in any
Wholly Owned Subsidiary of the Corporation (whether existing on the
Issue Date or created thereafter) or any Person that after such
Investments, and as a result thereof, becomes a Wholly Owned
Subsidiary of the Corporation and Investments in the Corporation by
any Wholly Owned Subsidiary of the Corporation, (iv) cash and Cash
Equivalents, (v) Investments in securities of trade creditors,
wholesalers or customers received pursuant to any plan of
reorganization or similar arrangement and (vi) loans or advances to
employees of the Company or any Subsidiary thereof for purposes of
purchasing the Company's Capital Stock and other loans and advances to
39
<PAGE> 40
employees made in the ordinary course of business consistent with past
practices of the Company or such Subsidiary and (vii) additional
Investments in an aggregate amount not to exceed $1,000,000 at any
time outstanding.
"Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of
such Person with respect to dividends or redemptions or upon
liquidation.
"pro forma" means, unless otherwise provided herein, with
respect to any calculation made or required to be made pursuant
hereto, a calculation in accordance with Article 11 of Regulation S-X
under the Securities Act.
"Public Equity Offering" means an underwritten public offering
of Capital Stock (other than Disqualified Capital Stock) of the
Corporation or Holding (to the extent, in the case of Holding, that
the net cash proceeds thereof are contributed to the common or
non-redeemable preferred equity capital of the Corporation) pursuant
to an effective registration statement filed with the Commission in
accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Quarterly Dividend Period" shall mean the quarterly period
commencing on each February 28, May 31, August 31 and November 30 and
ending on each Dividend Payment Date, respectively.
"Redeemable Preferred Stock" shall have the meaning ascribed
to it in paragraph (a) hereof.
"Redemption Date", with respect to any shares of Redeemable
Preferred Stock, means the date on which such shares of Redeemable
Preferred Stock are redeemed by the Corporation.
40
<PAGE> 41
"Redemption Notice" shall have the meaning ascribed to it in
paragraph (e) hereof.
"Refinancing Indebtedness" means any refinancing by the
Corporation of Indebtedness of the Corporation or any of its
Subsidiaries incurred in accordance with paragraph (l)(i) hereof
(other than pursuant to clause (ii) or (iv) of the definition of
Permitted Indebtedness) that does not (i) result in an increase in the
aggregate principal amount of Indebtedness (such principal amount to
include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing
Indebtedness) of such Person or (ii) create Indebtedness with (A) a
Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness
being refinanced.
"Restricted Payment" means (i) the declaration or payment of
any dividend or the making of any other distribution (other than
dividends or distributions payable in Qualified Capital Stock or in
options, rights or warrants to acquire Qualified Capital Stock) on
shares of the Corporation's Junior Stock, (ii) the purchase,
redemption, retirement or other acquisition for value of any Junior
Stock, or any warrants, rights or options to acquire shares of Junior
Stock, other than through the exchange of such Junior Stock or any
warrants, rights or options to acquire shares of any class of such
Junior Stock for Qualified Capital Stock or warrants, rights or
options to acquire Qualified Capital Stock, or (iii) the making of any
Investment (other than a Permitted Investment).
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to the Corporation or a Subsidiary of any
property, whether owned by the Corporation or any Subsidiary at the
Issue Date or later acquired, which has been or is to be sold or
transferred by the Corporation or such Subsidiary to such Person or to
any other Person from whom funds have been or are to be advanced by
such Person on the security of such property.
41
<PAGE> 42
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Subsidiary," with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, by such Person or (ii) any other Person of which at least
a majority of the voting interest under ordinary circumstances is at
the time, directly or indirectly, owned by such Person.
Notwithstanding anything in this Certificate of Designation to the
contrary, all references to the Corporation and its consolidated
Subsidiaries or to financial information prepared on a consolidated
basis in accordance with GAAP shall be deemed to include the
Corporation and its Subsidiaries as to which financial statements are
prepared on a combined basis in accordance with GAAP and to financial
information prepared on such a combined basis. Notwithstanding
anything herein to the contrary, an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at
least two Business Days prior to the Redemption Date for the Change of
Control Redemption (or, if such Statistical Release is no longer
published, any publicly available source or similar market data)) most
nearly equal to the period from the Change of Control Redemption Date
to February 28, 2002; provided, however, that if the period from the
Change of Control Redemption Date to February 28, 2002 is not equal to
the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury securities
for which such yields are given except that if the period from the
Change of Control
42
<PAGE> 43
Redemption Date to February 28, 2002 is less than one year, the weekly
average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Unrestricted Subsidiary" means a Subsidiary of the
Corporation created after the Issue Date and so designated by a
resolution adopted by the Board of Directors of the Corporation,
provided that (a) neither the Corporation nor any of its other
Subsidiaries (other than Unrestricted Subsidiaries) (1) provides any
credit support for any Indebtedness of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or
(2) is directly or indirectly liable for any Indebtedness of such
Subsidiary and (b) at the time of designation of such Subsidiary, such
Subsidiary has no property or assets (other than de minimis assets
resulting from the initial capitalization of such Subsidiary). The
Board of Directors may designate any Unrestricted Subsidiary to be a
Subsidiary; provided, however, that immediately after giving effect to
such designation (x) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
paragraph (l)(i) and (y) no Voting Rights Triggering Event shall have
occurred or be continuing. Any designation pursuant to this
definition by the Board of Directors of the Company shall be evidenced
by a resolution of the Board of Directors giving effect to such
designation.
"Voting Rights Triggering Event" shall have the meaning
ascribed to it in paragraph (f)(iv) hereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a)
the then outstanding aggregate principal amount of such Indebtedness
into (b) the total of the product obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial
maturity or other required payment of principal, including payment at
final maturity, in respect thereof, by (ii) the number of years
(calculated to the nearest one-twelfth) which will elapse between such
date and the making of such payment.
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<PAGE> 44
"Wholly Owned Subsidiary" of any Person means any Subsidiary
of such Person of which all the outstanding voting securities (other
than directors' qualifying shares) which normally have the right to
vote in the election of directors are owned by such Person or any
Wholly-Owned Subsidiary of such Person.
IN WITNESS WHEREOF, said STC Broadcasting, Inc., has caused this
Certificate to be signed by the undersigned, its Vice President, this 27th day
of February, 1997.
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------------
Name: Frederick W. Brazelton
-----------------------------------------
Title: Vice President and Assistant Secretary
----------------------------------------
44
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF 14% REDEEMABLE PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
OF
STC BROADCASTING, INC.
STC Broadcasting, Inc. (the "Corporation"), a corporation duly organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), DOES HEREBY CERTIFY THAT:
FIRST: The name of the Corporation is STC Broadcasting, Inc.
SECOND: Paragraphs (e) (i) (B) and (e) (i) (C) of the Certificate
of Designation of the Powers, Preferences and Relative, Participating, Optional
and Other Special Rights of 14% Redeemable Preferred Stock and Qualifications,
Limitations and Restrictions Thereof of the Corporation (the "Certificate of
Designation") be, and they hereby are, amended and restated to read in their
entirety as follows:
(B) In addition to the foregoing paragraph (e)(i)(A),
prior to February 28, 2001, the Corporation may, at the option of the
Board of Directors, use the net cash proceeds of one or more Public
Equity Offerings or Major Asset Sales to redeem (a "Cash Proceeds
Redemption") up to 25% of the shares of Redeemable Preferred Stock then
outstanding at a redemption price of 114% of the liquidation preference
thereof if redeemed during the 12-month period beginning on February 28,
1997, 112.44% of the liquidation preference thereof if redeemed during
the 12-month period beginning on February 28, 1998, 110.88% of the
liquidation preference thereof if redeemed during the 12-month period
beginning on February 28, 1999, and 109.32% of the liquidation
preference thereof if redeemed during the 12-month period beginning on
February 28, 2000, plus, in each case, an amount in cash equal to all
accumulated and unpaid dividends to the redemption date (including an
amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date) (the "Cash Proceeds Redemption Price"); provided,
however, that after any such redemption at least $22.5 million
liquidation preference of Redeemable
<PAGE> 2
Preferred Stock would remain outstanding immediately after giving effect
to such redemption. Any such redemption pursuant to this paragraph
(e)(i)(B) must occur on or prior to the date that is one year after the
receipt by the Corporation of the proceeds of a Public Equity Offering
or a Major Asset Sale.
(C) In addition to the foregoing paragraphs (e)(i)(A)
and (e)(i)(B), prior to February 28, 2002, upon the occurrence of a
Change of Control, the Corporation may, at its option, redeem in whole,
but not in part, the outstanding Redeemable Preferred Stock (a "Change
of Control Redemption") at a redemption price equal to (i) if redeemed
on or prior to February 28, 1999, 114% of the principal amount thereof,
plus accrued and unpaid dividends to the Redemption Date (including an
amount in cash equal to a prorated dividend for the period from the
Dividend Payment Date immediately prior to the Redemption Date to the
Redemption Date), or (ii) if redeemed after February 28, 1999 but on or
prior to February 28, 2002, 100% of the liquidation preference thereof
plus the Applicable Premium, plus accrued and unpaid dividends to the
Redemption Date (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior
to the Redemption Date to the Redemption Date) (the "Change of Control
Redemption Price"). In order to effect a Change of Control Redemption,
the Corporation must send a notice to each Holder within 30 days
following the date the Change of Control occurred, stating that the
Corporation is effecting a Change of Control Redemption in lieu of a
Change of Control Offer.
THIRD: Paragraph (l) (ii) (3) of the Certificate of Designation be, and
it hereby is, amended and restated to read in its entirety as follows:
(3) the aggregate amount of Restricted Payments made
subsequent to the Issue Date (the amount expended for such purposes, if
other than in cash, being the fair market value of such property as
determined by the Board of Directors of the Corporation in good faith)
exceeds the sum of (a) (x) 100% of the aggregate Consolidated EBITDA of
the Corporation (or, in the event such Consolidated EBITDA shall be a
deficit, minus 100% of such deficit) accrued subsequent to the Issue
Date to the most recent date for which financial information is
available to the Corporation, taken as one accounting period, less (y)
1.4 times Consolidated Interest Expense for the same period, plus (b)
100% of the aggregate net proceeds, including the fair market value of
property other than cash as determined by the Board of Directors in good
faith, received subsequent to February 28, 1997 by the Corporation from
any Person
2
<PAGE> 3
(other than a Subsidiary of the Corporation) from the issuance and sale
subsequent to February 28, 1997 of Qualified Capital Stock of the
Corporation (excluding (i) any net proceeds from issuances and sales
financed directly or indirectly using funds borrowed from the
Corporation or any Subsidiary of the Corporation, until and to the
extent such borrowing is repaid, but including the proceeds from the
issuance and sale of any securities convertible into or exchangeable for
Qualified Capital Stock to the extent such securities are so converted
or exchanged and including any additional proceeds received by the
Corporation upon such conversion or exchange, and (ii) any net proceeds
received from issuances and sales that are used to consummate a
transaction described in clauses (2) and (3) of paragraph (b) below),
plus (c) without duplication of any amount included in clause (iii)(b)
above, 100% of the aggregate net proceeds, including the fair market
value of property other than cash (valued as provided in clause (iii)(b)
above), received by the Corporation as a capital contribution subsequent
to February 28, 1997, plus (d) the amount equal to the net reduction in
Investments (other than Permitted Investments) made by the Corporation
or any of its Subsidiaries in any Person resulting from (i) repurchases
or redemptions of such Investments by such Person, proceeds realized
upon the sale of such Investment to an unaffiliated purchaser and
repayments of loans or advances or other transfers of assets by such
Person to the Corporation or any Subsidiary of the Corporation or (ii)
the redesignation of Unrestricted Subsidiaries as Subsidiaries (valued
in each case as provided in the definition of "Investment") not to
exceed, in the case of any Subsidiary, the amount of Investments
previously made by the Corporation or any Subsidiary in such
Unrestricted Subsidiary, which amount was included in the calculation of
Restricted Payments; provided, however, that no amount shall be included
under this clause (d) to the extent it is already included in
Consolidated EBITDA, plus (e) the aggregate net cash proceeds received
by a Person in consideration for the issuance of such Person's Capital
Stock (other than Disqualified Capital Stock) that are held by such
Person at the time such Person is merged with and into the Corporation
in accordance with paragraph (l)(iii) subsequent to the Issue Date;
provided, however, that concurrently with or immediately following such
merger the Corporation uses an amount equal to such net cash proceeds to
redeem or repurchase the Corporation's Capital Stock, plus (f)
$2,500,000.
FOURTH: The definition of "Issue Date" appearing in paragraph (m)
of the Certificate of Designation be, and it hereby is, amended and restated to
read in its entirety as follows:
3
<PAGE> 4
"Issue Date" means February 28, 1997.
FIFTH: The definition of "Subsidiary" appearing in paragraph (m) of the
Certificate of Designation be, and it hereby is, amended and restated to read
in its entirety as follows:
"Subsidiary," with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the
time, directly or indirectly, owned by such Person; provided, however,
that notwithstanding the foregoing, Smith Acquisition Company shall be
deemed to be a "Subsidiary" of the Corporation. Notwithstanding
anything in this Certificate of Designation to the contrary, all
references to the Corporation and its consolidated Subsidiaries or to
financial information prepared on a consolidated basis in accordance
with GAAP shall be deemed to include the Corporation and its
Subsidiaries as to which financial statements are prepared on a combined
basis in accordance with GAAP and to financial information prepared on
such a combined basis. Notwithstanding anything herein to the contrary,
an Unrestricted Subsidiary shall not be deemed to be a Subsidiary for
purposes hereof.
SIXTH: The definition of "Wholly Owned Subsidiary" appearing in
paragraph (m) of the Certificate of Designation be, and it hereby is, amended
and restated to read in its entirety as follows:
"Wholly Owned Subsidiary" of any Person means any Subsidiary
of such Person of which all the outstanding voting securities (other
than directors' qualifying shares) which normally have the right to vote
in the election of directors are owned by such Person or any
Wholly-Owned Subsidiary of such Person; provided, however, that "Wholly
Owned Subsidiary" shall also include Smith Acquisition Company and any
other Restricted Subsidiary of which in excess of 95% of the common
equity securities are owned by the Company or another Wholly-Owned
Subsidiary and which is organized for the purpose of facilitating the
acquisition of any broadcasting business that, but for the formation of
such Person, the Company and its
4
<PAGE> 5
Restricted Subsidiaries could not acquire under applicable laws related
to the ownership of broadcast businesses.
SEVENTH: The aforementioned amendment to the Certificate of
Designation was duly adopted in accordance with Section 242 of the DGCL.
Written consent of the Corporation's stockholders has been given in accordance
with the provisions of Section 228 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officer of the Corporation as of this 18th day of
March, 1997.
STC BROADCASTING, INC.
By: /s/ ROBERT N. SMITH
----------------------------------
Name: Robert N. Smith
---------------------------------
Title: Chief Executive Officer
--------------------------------
<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
STC BROADCASTING, INC.
A Delaware Corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . 2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . 2
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . 2
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . 3
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . 3
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . 4
2.10 Conduct of Meeting . . . . . . . . . . . . . . . . . 5
2.11 Inspectors . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . 6
3.2 Number; Qualification; Election; Term . . . . . . . . 6
3.3 Change in Number . . . . . . . . . . . . . . . . . . 6
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Meetings of Directors . . . . . . . . . . . . . . . . 7
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . 7
3.8 Election of Officers . . . . . . . . . . . . . . . . 7
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . 7
3.10 Special Meetings . . . . . . . . . . . . . . . . . . 8
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . 8
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Presumption of Assent . . . . . . . . . . . . . . . . 8
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
3.15 Compensation . . . . . . . . . . . . . . . . . . . . 9
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . 9
4.2 Number; Qualification; Term . . . . . . . . . . . . . 9
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Committee Changes . . . . . . . . . . . . . . . . . . 9
4.5 Alternate Members of Committees . . . . . . . . . . . 9
4.6 Regular Meetings . . . . . . . . . . . . . . . . . . 10
4.7 Special Meetings . . . . . . . . . . . . . . . . . . 10
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . 10
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Compensation . . . . . . . . . . . . . . . . . . . . 10
4.11 Responsibility . . . . . . . . . . . . . . . . . . . 10
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . 11
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Compensation . . . . . . . . . . . . . . . . . . . . 12
6.6 Chairman of the Board . . . . . . . . . . . . . . . . 12
6.7 Chief Executive Officer . . . . . . . . . . . . . . . 12
6.8 President . . . . . . . . . . . . . . . . . . . . . . 12
6.9 Chief Operating Officer . . . . . . . . . . . . . . . 13
6.10 Chief Financial Officer . . . . . . . . . . . . . . . 13
6.11 Vice Presidents . . . . . . . . . . . . . . . . . . . 13
6.12 Treasurer . . . . . . . . . . . . . . . . . . . . . . 14
6.13 Assistant Treasurers . . . . . . . . . . . . . . . . 14
6.14 Secretary . . . . . . . . . . . . . . . . . . . . . . 14
6.15 Assistant Secretaries . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
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ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . 15
7.2 Replacement of Lost or Destroyed Certificates . . . . 15
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . 15
7.4 Registered Stockholders . . . . . . . . . . . . . . . 16
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . 16
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Books and Records . . . . . . . . . . . . . . . . . . 16
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 16
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . 17
8.6 Resignations . . . . . . . . . . . . . . . . . . . . 17
8.7 Securities of Other Corporations . . . . . . . . . . 17
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . 17
8.9 Action Without a Meeting . . . . . . . . . . . . . . 17
8.10 Invalid Provisions . . . . . . . . . . . . . . . . . 18
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . 18
8.12 Headings . . . . . . . . . . . . . . . . . . . . . . 18
8.13 References . . . . . . . . . . . . . . . . . . . . . 18
8.14 Amendments . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<PAGE> 5
AMENDED AND RESTATED
BYLAWS
OF
STC BROADCASTING, INC.
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of STC Broadcasting, Inc., a Delaware corporation
(the "Corporation"). In the event of a direct conflict between the provisions
of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and
registered agent of the Corporation shall be as designated from time to time by
the appropriate filing by the Corporation in the office of the Secretary of
State of the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
<PAGE> 6
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be held
at any place within or without the State of Delaware designated by the board of
directors. A special meeting of stockholders may be held at any place within
or without the State of Delaware designated in the notice of the meeting or a
duly executed waiver of notice of such meeting. Meetings of stockholders shall
be held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person(s) calling the meeting, to each stockholder of record
entitled to vote at such meeting. If such notice is to be sent by mail, it
shall be directed to such stockholder at his address as it appears on the
records of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy and shall not,
at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
2.5 Voting List. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on file
at a place within the city where the meeting is to
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be held, which place shall be specified in the notice of meeting or a duly
executed waiver of notice of such meeting or, if not so specified, at the place
where the meeting is to be held and shall be open to examination by any
stockholder during ordinary business hours. Such list shall be produced at
such meeting and kept at the meeting at all times during such meeting and may
be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present at
any meeting, the vote of the holders of at least a majority of the outstanding
shares entitled to vote who are present, in person or by proxy, shall decide
any question brought before such meeting, unless the question is one on which,
by express provision of statute, the certificate of incorporation of the
Corporation, or these bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question. The
stockholders present at a duly constituted meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in the
certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
such proxy shall be filed with the Secretary of the Corporation before or at
the time of the meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the
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<PAGE> 8
proxy. If no date is stated in a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each
proxy shall be revocable unless expressly provided therein to be irrevocable
and coupled with an interest sufficient in law to support an irrevocable power
or unless otherwise made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the board
of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law or these bylaws, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Delaware, its
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<PAGE> 9
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office in the State of
Delaware, principal place of business, or such officer or agent shall be by
hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the board of directors and prior action by the
board of directors is required by law or these bylaws, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office
has been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these bylaws or by some person
appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail
to appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request, or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as an inspector
of an election of directors. Inspectors need not be stockholders.
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<PAGE> 10
ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation shall
be managed by the board of directors. Subject to the restrictions imposed by
law, the certificate of incorporation of the Corporation, or these bylaws, the
board of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of directors
which shall constitute the entire board of directors shall be not less than
one. The first board of directors shall consist of the number of directors
named in the certificate of incorporation of the Corporation or, if no
directors are so named, shall consist of the number of directors elected by the
incorporator(s) at an organizational meeting or by unanimous written consent in
lieu thereof. Thereafter, within the limits above specified, the number of
directors which shall constitute the entire board of directors shall be
determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate
of incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Each director so chosen shall hold office until the first annual
meeting of stockholders held after his election and until his successor is
elected and qualified or, if earlier, until his death, resignation, or removal
from office. None of the directors need be a stockholder of the Corporation or
a resident of the State of Delaware. Each director must have attained the age
of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote on the election of
directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the certificate of
incorporation of the Corporation, if less than the entire board of directors is
to be removed, no one of the directors may be removed if the votes cast against
his removal would be sufficient to elect him if then cumulatively voted at an
election of the entire board of directors.
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<PAGE> 11
3.5 Vacancies. Vacancies and newly-created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by the
sole remaining director, and each director so chosen shall hold office until
the first annual meeting of stockholders held after his election and until his
successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly-created directorship, the
directors then in office shall constitute less than a majority of the whole
board of directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least 10% of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly-created directorships or to replace
the directors chosen by the directors then in office. Except as otherwise
provided in these bylaws, when one or more directors shall resign from the
board of directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in these bylaws with respect to the filling of
other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings and
may have an office and keep the books of the Corporation, except as otherwise
provided by statute, in such place or places within or without the State of
Delaware as the board of directors may from time to time determine or as shall
be specified in the notice of such meeting or duly executed waiver of notice of
such meeting.
3.7 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
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<PAGE> 12
3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
3.11 Notice. The Secretary shall give notice of each special meeting
to each director at least 24 hours before the meeting. Notice of any such
meeting need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of notice to him.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. Unless the act of a greater
number is required by law, the certificate of incorporation of the Corporation,
or these bylaws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors. At
any time that the certificate of incorporation of the Corporation provides that
directors elected by the holders of a class or series of stock shall have more
or less than one vote per director on any matter, every reference in these
bylaws to a majority or other proportion of directors shall refer to a majority
or other proportion of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business shall
be transacted in such order as from time to time the board of directors may
determine. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, the
President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by
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certified or registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution adopted
by a majority of the entire board of directors, designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of one
or more directors appointed by resolution adopted by a majority of the entire
board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the
earliest of (i) the expiration of his term as director, (ii) his resignation as
a committee member or as a director, or (iii) his removal as a committee member
or as a director.
4.3 Authority. Each committee, to the extent expressly provided in
the resolution establishing such committee, shall have and may exercise all of
the authority of the board of directors in the management of the business and
property of the Corporation except to the extent expressly restricted by law,
the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the power
at any time to fill vacancies in, to change the membership of, and to discharge
any committee.
4.5 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may
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unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee
member at least two days before such special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of any committee need
be specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority
of the number of members designated by the board of directors shall constitute
a quorum for the transaction of business. If a quorum is not present at a
meeting of any committee, a majority of the members present may adjourn the
meeting from time to time, without notice other than an announcement at the
meeting, until a quorum is present. The act of a majority of the members
present at any meeting at which a quorum is in attendance shall be the act of a
committee, unless the act of a greater number is required by law, the
certificate of incorporation of the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings
to be prepared and shall report the same to the board of directors upon the
request of the board of directors. The minutes of the proceedings of each
committee shall be delivered to the Secretary of the Corporation for placement
in the minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the board
of directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
10
<PAGE> 15
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation of
the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by telegram, telex, or telefax shall be
deemed to be delivered and given at the time transmitted with all charges
prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation
shall be a President, a Secretary, and such other officers as the board of
directors may from time to time elect or appoint, including a Chairman of the
Board, a Chief Executive Officer, a Chief Operating Officer, a Chief Financial
Officer, one or more Vice Presidents (with each Vice President to have such
descriptive title, if any, as the board of directors shall determine), and a
Treasurer. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
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6.2 Removal. Any officer or agent elected or appointed by the board
of directors may be removed by the board of directors whenever in its judgment
the best interest of the Corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal, or otherwise) may be filled by the
board of directors.
6.4 Authority. Officers shall have such authority and perform such
duties in the management of the Corporation as are provided in these bylaws or
as may be determined by resolution of the board of directors not inconsistent
with these bylaws.
6.5 Compensation. The compensation, if any, of officers and agents
shall be fixed from time to time by the board of directors; provided, however,
that the board of directors may delegate the power to determine the
compensation of any officer and agent (other than the officer to whom such
power is delegated) to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected by
the board of directors, shall have such powers and duties as may be prescribed
by the board of directors. Such officer shall preside at all meetings of the
stockholders and of the board of directors. Such officer may sign all
certificates for shares of stock of the Corporation.
6.7 Chief Executive Officer. The Chief Executive Officer, if elected
by the board of directors, shall be the chief executive officer of the
Corporation and, subject to the board of directors, shall have general
executive charge, management, and control of the properties and operations of
the Corporation in the ordinary course of its business, with all such powers
with respect to such properties and operations as may be reasonably incident to
such responsibilities. If the board of directors has not elected a Chairman of
the Board or in the absence or inability to act of the Chairman of the Board,
the Chief Executive Officer shall exercise all of the powers and discharge all
of the duties of the Chairman of the Board. As between the Corporation and
third parties, any action taken by the Chief Executive Officer in the
performance of the duties of the Chairman of the Board shall be conclusive
evidence that there is no Chairman of the Board or that the Chairman of the
Board is absent or unable to act.
6.8 President. The President shall be the executive officer of the
Corporation next in authority to the Chief Executive Officer, whom he shall
assist in the general executive charge, management, and control of the
properties and operations of the Corporation and shall have such other powers
and duties as may be assigned to him by the board of directors, the
12
<PAGE> 17
Chairman of the Board, or the Chief Executive Officer. If the board of
directors has not elected a Chief Executive Officer or in the absence or
inability to act of the Chief Executive Officer, the President shall exercise
all of the powers and discharge all of the duties of the Chief Executive
Officer. As between the Corporation and third parties, any action taken by the
President in the performance of the duties of the Chief Executive Officer shall
be conclusive evidence that there is no Chief Executive Officer or that the
Chief Executive Officer is absent or unable to act.
6.9 Chief Operating Officer. The Chief Operating Officer, if elected
by the board of directors, shall be the executive officer of the Corporation
next in authority to the President, whom he shall assist, and shall have such
other powers and duties as may be assigned to him by the board of directors,
the Chairman of the Board, or the Chief Executive Officer. During the absence
or inability to act of the President, the Chief Operating Officer shall
exercise all the powers and discharge all of the duties of the President. As
between the Corporation and third parties, any action taken by the Chief
Operating Officer in the performance of the duties of the President shall be
conclusive evidence of the absence or inability to act of the President at the
time such action was taken.
6.10 Chief Financial Officer. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained, adequate and current books
and records of account of the properties and business transactions of the
Corporation. The Chief Financial Officer shall disburse, or cause to be
disbursed, the funds of the Corporation in accordance with the Corporation's
budget, business plan or otherwise as generally authorized by the board of
directors and shall render to the board of directors, the Chairman of the
Board, or the Chief Executive Officer, whenever they request, an account of the
financial condition of the Corporation, shall advise the board of directors,
the Chairman of the Board, and the Chief Executive Officer in regard to
financial matters, and shall have such additional powers and duties as may be
assigned by the board of directors, the Chairman of the Board, or the Chief
Executive Officer. The Chief Financial Officer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, and shall deposit all monies and valuable effects
in the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors.
6.11 Vice Presidents. Each Vice President shall have such powers and
duties as may be assigned to him by the board of directors, the Chairman of the
Board, the Chief Executive Officer, the President, or the Chief Operating
Officer and (in order of their seniority as determined by the board of
directors or, in the absence of such determination, as determined by the length
of time they have held the office of Vice President) shall exercise the powers
of the Chief Operating Officer if the board of directors has not elected a
Chief Operating Officer
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or during that officer's absence or inability to act. As between the
Corporation and third parties, any action taken by a Vice President in the
performance of the duties of the Chief Operating Officer shall be conclusive
evidence of the absence or inability to act of the Chief Operating Officer at
the time such action was taken. Each Vice President shall have such
descriptive title, if any, as the board of directors may determine.
6.12 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the board of directors, and shall perform such other duties as
may be prescribed by the board of directors, the Chairman of the Board, the
Chief Executive Officer, the President, or the Chief Financial Officer.
6.13 Assistant Treasurers. Each Assistant Treasurer shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, the Chief Executive Officer, the President, or the Chief
Financial Officer. The Assistant Treasurers (in the order of their seniority
as determined by the board of directors or, in the absence of such a
determination, as determined by the length of time they have held the office of
Assistant Treasurer) shall exercise the powers of the Treasurer during that
officer's absence or inability to act.
6.14 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board, the Chief Executive Officer or the President, in the name of the
Corporation, all contracts of the Corporation and affix the seal of the
Corporation thereto. He may sign with the Chairman of the Board or the
President all certificates for shares of stock of the Corporation, and he shall
have charge of the certificate books, transfer books, and stock papers as the
board of directors may direct, all of which shall at all reasonable times be
open to inspection by any director upon application at the office of the
Corporation during business hours. He shall in general perform all duties
incident to the office of the Secretary, subject to the control of the board of
directors, the Chairman of the Board, the Chief Executive Officer and the
President.
6.15 Assistant Secretaries. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, the Chief Executive Officer or the President. The
Assistant Secretaries (in the order of their seniority as determined by the
board of directors or, in the absence of such a determination, as
14
<PAGE> 19
determined by the length of time they have held the office of Assistant
Secretary) shall exercise the powers of the Secretary during that officer's
absence or inability to act.
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue. The certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
15
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7.4 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock bear such
legends as the board of directors deems appropriate to assure that the
Corporation does not become liable for violations of federal or state
securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate of
incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out of
funds of the Corporation legally available therefor such reserve or reserves as
the directors from time to time, in their discretion, consider proper to
provide for contingencies, to equalize dividends, or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation, and the board of
directors may modify or abolish any such reserve in the manner in which it was
created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed
by the board of directors; provided, that if such fiscal year is not fixed by
the board of directors and the
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selection of the fiscal year is not expressly deferred by the board of
directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to
time may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the Board, the
President, or the Secretary. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board, the
President, or any Vice President of the Corporation shall have the power and
authority to transfer, endorse for transfer, vote, consent, or take any other
action with respect to any securities of another issuer which may be held or
owned by the Corporation and to make, execute, and deliver any waiver, proxy,
or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors, and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors, or committee by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in the
certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which the holders of all shares entitled to vote thereon were present and
voted and shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of
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stockholders are recorded. Every written consent of stockholders shall bear the
date of signature of each stockholder who signs the consent and no written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered in the manner
required by this Section 8.9(a) to the Corporation, written consents signed by
a sufficient number of holders to take action are delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office, principal place of
business, or such officer or agent shall be by hand or by certified or
registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of incorporation
of the Corporation or by these bylaws, any action required or permitted to be
taken at a meeting of the board of directors, or of any committee of the board
of directors, may be taken without a meeting if a consent or consents in
writing, setting forth the action so taken, shall be signed by all the
directors or all the committee members, as the case may be, entitled to vote
with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as the
case may be, and may be stated as such in any certificate or document filed
with the Secretary of State of the State of Delaware or in any certificate
delivered to any person. Such consent or consents shall be filed with the
minutes of proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust,
mortgage, or other instrument executed by the Corporation through its duly
authorized officer or officers, the attestation to such execution by the
Secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.
8.12 Headings. The headings used in these bylaws have been inserted
for administrative convenience only and do not constitute matter to be
construed in interpretation.
8.13 References. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
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8.14 Amendments. These bylaws may be altered, amended, or repealed or
new bylaws may be adopted by the stockholders or by the board of directors at
any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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The undersigned, being the Secretary of the Corporation, hereby
certifies that the foregoing bylaws were adopted by the Consent of the sole
director of the Corporation as of February 24, 1997.
/s/ LAWRENCE D. STUART, JR.
------------------------------------
Lawrence D. Stuart, Jr., Secretary
20
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
Dated as of March 25, 1997
Between
STC BROADCASTING, INC., as Issuer
and
U.S. TRUST COMPANY OF TEXAS, N.A., as Trustee
________________________
$100,000,000
11% Senior Subordinated Notes due 2007, Series A
11% Senior Subordinated Notes due 2007, Series B
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
------- ---------
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 10.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07; 4.09; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 10.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a) (1) (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a) (1) (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
317 (a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
- --------------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose be deemed to be a
part of this Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Incorporation by Reference of TIA . . . . . . . . . . 22
SECTION 1.03. Rules of Construction. . . . . . . . . . . . . . . . 22
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . 23
SECTION 2.02. Execution and Authentication; Aggregate Principal
Amount. . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . 25
SECTION 2.04. Paying Agent To Hold Assets in Trust . . . . . . . . 26
SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . 26
SECTION 2.07. Replacement Notes. . . . . . . . . . . . . . . . . . 27
SECTION 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . 28
SECTION 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . 28
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . 29
SECTION 2.13. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . 30
SECTION 2.14. Deposit of Moneys . . . . . . . . . . . . . . . . . . 30
SECTION 2.15. Book-Entry Provisions for Global Notes . . . . . . . 31
SECTION 2.16. Special Transfer Provisions . . . . . . . . . . . . . 32
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . 35
SECTION 3.02. Selection of Notes To Be Redeemed . . . . . . . . . . 36
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . 36
SECTION 3.04. Effect of Notice of Redemption. . . . . . . . . . . . 37
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . 37
SECTION 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . 38
SECTION 4.02. Maintenance of Office or Agency. . . . . . . . . . . 38
SECTION 4.03. Limitation on Restricted Payments. . . . . . . . . . 39
SECTION 4.04. Corporate Existence . . . . . . . . . . . . . . . . . 44
SECTION 4.05. Payment of Taxes and Other Claims . . . . . . . . . . 44
SECTION 4.06. Maintenance of Properties and Insurance . . . . . . . 44
SECTION 4.07. Compliance Certificate; Notice of Default . . . . . . 45
SECTION 4.08. Compliance with Laws . . . . . . . . . . . . . . . . 46
SECTION 4.09. Reports . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.10. Waiver of Stay, Extension or Usury Laws . . . . . . . 47
SECTION 4.11. Limitations on Transactions with Affiliates. . . . . 47
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock . . . . . 48
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . 49
SECTION 4.14. Change of Control. . . . . . . . . . . . . . . . . . 50
SECTION 4.15. Limitation on Asset Sales. . . . . . . . . . . . . . 53
SECTION 4.16. Limitation on Asset Swaps. . . . . . . . . . . . . . 55
SECTION 4.17. Limitation on Layering. . . . . . . . . . . . . . . . 55
SECTION 4.18. FCC Compliance. . . . . . . . . . . . . . . . . . . . 56
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets. . . . . . . 56
SECTION 5.02. Successor Corporation Substituted. . . . . . . . . . 57
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. . . . . . . . . . . . . . . . . . 58
SECTION 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . 60
SECTION 6.04. Waiver of Past Defaults. . . . . . . . . . . . . . . 61
SECTION 6.05. Control by Majority. . . . . . . . . . . . . . . . . 61
SECTION 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . 61
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 6.07. Rights of Holders To Receive Payment. . . . . . . . . 62
SECTION 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . 62
SECTION 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . 62
SECTION 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . 64
SECTION 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . 64
SECTION 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . 66
SECTION 7.03. Individual Rights of Trustee. . . . . . . . . . . . . 67
SECTION 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . 67
SECTION 7.05. Notice of Default. . . . . . . . . . . . . . . . . . 67
SECTION 7.06. Reports by Trustee to Holders. . . . . . . . . . . . 68
SECTION 7.07. Compensation and Indemnity. . . . . . . . . . . . . . 68
SECTION 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . 69
SECTION 7.09. Successor Trustee by Merger, Etc. . . . . . . . . . . 71
SECTION 7.10. Eligibility; Disqualification. . . . . . . . . . . . 71
SECTION 7.11. Preferential Collection of Claims Against the Company. 71
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations. . . . . . . 72
SECTION 8.02. Acknowledgment of Discharge by Trustee. . . . . . . . 74
SECTION 8.03. Application of Trust Money. . . . . . . . . . . . . . 75
SECTION 8.04. Repayment to the Company. . . . . . . . . . . . . . . 75
SECTION 8.05. Reinstatement. . . . . . . . . . . . . . . . . . . . 75
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. . . . . . . . . . . . . . 76
SECTION 9.02. With Consent of Holders. . . . . . . . . . . . . . . 76
SECTION 9.03. Compliance with TIA. . . . . . . . . . . . . . . . . 78
SECTION 9.04. Revocation and Effect of Consents. . . . . . . . . . 78
SECTION 9.05. Notation on or Exchange of Notes. . . . . . . . . . . 79
SECTION 9.06. Trustee To Sign Amendments, Etc. . . . . . . . . . . 79
ARTICLE TEN
SUBORDINATION
SECTION 10.1. Agreement To Subordinate. . . . . . . . . . . . . . . 80
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. . . . . . . . . 80
SECTION 10.03. Default on Senior Indebtedness. . . . . . . . . . . 80
SECTION 10.04. Acceleration of Payment of Notes. . . . . . . . . . 82
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 10.05. When Distribution Must Be Paid Over. . . . . . 82
SECTION 10.06. Subrogation. . . . . . . . . . . . . . . . . . 82
SECTION 10.07. Relative Rights. . . . . . . . . . . . . . . . 83
SECTION 10.08. Subordination May Not Be Impaired by Company. . 83
SECTION 10.09. Rights of Trustee and Paying Agent. . . . . . 83
SECTION 10.10. Distribution or Notice to Representative. . . 84
SECTION 10.11. Article Ten Not To Prevent Events of Default or
Limit Right To Accelerate. . . . . . . . . . . 84
SECTION 10.12. Trust Moneys Not Subordinated. . . . . . . . . 84
SECTION 10.13. Trustee Entitled To Rely. . . . . . . . . . . 84
SECTION 10.14. Trustee To Effectuate Subordination. . . . . . 85
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. . . . . . . . . . . . . . . . . 85
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. . . . . . . . . . . 86
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls. . . . . . . . . . . . . . . . . 86
SECTION 11.02. Notices. . . . . . . . . . . . . . . . . . . . 86
SECTION 11.03. Communications by Holders with Other Holders. . 87
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. . . . . . . . . . . . . . . . . . . 87
SECTION 11.05. Statements Required in Certificate or Opinion.. 88
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar. . . 88
SECTION 11.07. Legal Holidays. . . . . . . . . . . . . . . . 89
SECTION 11.08. Governing Law. . . . . . . . . . . . . . . . . 89
SECTION 11.09. No Adverse Interpretation of Other Agreements. 89
SECTION 11.10. No Recourse Against Others. . . . . . . . . . 89
SECTION 11.11. Successors. . . . . . . . . . . . . . . . . . 89
SECTION 11.12. Duplicate Originals. . . . . . . . . . . . . . 90
SECTION 11.13. Severability. . . . . . . . . . . . . . . . . 90
SECTION 11.14. Independence of Covenants. . . . . . . . . . . 90
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
v
<PAGE> 7
Exhibit A - Form of Series A Note
Exhibit B - Form of Series B Note
Exhibit C - Form of Legend for Global Notes
Exhibit D - Transfer Certificate
Exhibit E - Transferee Certificate for Institutional Accredited
Investors
NOTE: This Table of Contents shall not, for any purpose, be deemed to
be part of the Indenture.
vi
<PAGE> 8
INDENTURE, dated as of March 25, 1997, between STC Broadcasting,
Inc., a Delaware corporation (the "Company"), and U.S. Trust Company of Texas,
N.A., a national banking association, as trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 11%
Senior Subordinated Notes due 2007, Series A, and 11% Senior Subordinated Notes
due 2007, Series B, to be issued in exchange for the 11% Senior Subordinated
Notes due 2007, Series A, pursuant to a registration rights agreement and, to
provide therefor, the Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make the Notes, when duly issued and
executed by the Company and authenticated and delivered hereunder, the valid
and binding obligations of the Company and to make this Indenture a valid and
binding agreement of the Company, have been done.
Each party hereto agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 11%
Senior Subordinated Notes due 2007, Series A and Series B:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" has the meaning provided in Section 6.02.
"Acquired Indebtedness" means Indebtedness of a Person or any of
its Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Company. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through
<PAGE> 9
the ownership of voting SECURITIES, by contract or otherwise.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or Co-Registrar.
"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged
with the Company or any Subsidiary of the Company or (ii) the acquisition by
the Company or any Subsidiary of the Company of assets of any Person comprising
a division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Subsidiaries (excluding any Sale and Leaseback
Transaction or any pledge of assets or stock by the Company or any of its
Subsidiaries) to any Person other than the Company or a Wholly Owned Subsidiary
of the Company of (i) any Capital Stock of any Subsidiary of the Company or
(ii) any other property or assets of the Company or any Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
for purposes of Section 4.15, Asset Sales shall not include (a) a transaction
or series of related transactions in which the Company or its Subsidiaries
receive aggregate consideration of less than $500,000, (b) transactions
permitted under Section 4.16 or (c) transactions covered by Section 5.01.
"Asset Swap" means the execution of a definitive agreement,
subject only to Federal Communications Commission ("FCC") approval, if
applicable, and other customary closing conditions, that the Company in good
faith believes will be satisfied, for a substantially concurrent purchase and
sale, or exchange, of Productive Assets between the Company or any of its
Subsidiaries and another Person or group of affiliated Persons; provided that
any amendment to or waiver of any closing condition that individually or in the
aggregate is material to the Asset Swap shall be deemed to be a new Asset Swap.
2
<PAGE> 10
"Bankruptcy Law" means Title 11, United States Code or any
similar federal, state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board
of Directors (or any other equivalent governing body) of such Person or any
committee of the Board of Directors of such Person duly authorized, with
respect to any particular matter, to exercise the power of the Board of
Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as a
capital lease obligation under GAAP, and for purposes of this definition, the
amount of such obligation at any date shall be the capitalized amount of such
obligation at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of
3
<PAGE> 11
acquisition, having a rating of at least A-1 from Standard & Poor's Corporation
or at least P-1 from Moody's Investors Service, Inc.; (iv) certificates of
deposit or bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any commercial bank organized under the laws of
the United States of America or any state thereof or the District of Columbia
or any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $200,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying SECURITIES
of the types described in clause (i) above entered into with any bank meeting
the qualifications specified in clause (iv) above; and (vi) investments in
money market funds that invest substantially all their assets in Securities of
the types described in clauses (i) through (v) above (including the Excelsior
Money Market funds sponsored by the Trustee or an Affiliate of the Trustee).
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group") (whether or not
otherwise in compliance with the provisions of this Indenture), other than to
Hicks Muse, any of its Affiliates, officers and directors or Robert N. Smith or
any of his Affiliates (the "Permitted Holders"); or (ii) a majority of the
board of directors of the Company or Holdings shall consist of Persons who are
not Continuing Directors; or (iii) the acquisition by any Person or Group
(other than the Permitted Holders or any direct or indirect Subsidiary of any
Permitted Holder, including without limitation Holdings) of the power, directly
or indirectly, to vote or direct the voting of securities having more than 50%
of the ordinary voting power for the election of directors of the Company or
Holdings.
"Change of Control Date" has the meaning provided in Section
4.14.
"Change of Control Offer" has the meaning provided in Section
4.14.
"Change of Control Payment Date" has the meaning provided in
Section 4.14.
4
<PAGE> 12
"Change of Control Redemption" has the meaning specified in
paragraph 5 of the Notes.
"Commission" or "SEC" means the Securities and Exchange
Commission.
"Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered into by the
Company or any of its Subsidiaries designed to protect the Company or any of
its Subsidiaries against fluctuations in the price of commodities actually used
in the ordinary course of business of the Company and its Subsidiaries.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor and also includes for the purposes of any provision contained herein
and required by the TIA any other obligor on the Notes.
"Consolidated Cash Flow" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income and
(ii) to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of such Person and its Subsidiaries paid or accrued in accordance
with GAAP for such period (other than income taxes attributable to
extraordinary or non-recurring gains or losses), (B) Consolidated Interest
Expense and (C) Consolidated Non-Cash Charges, all as determined on a
consolidated basis for such Person and its Subsidiaries in conformity with
GAAP.
"Consolidated Interest Expense" means, with respect to any Person
for any period, without duplication, the sum of (i) the interest expense of
such Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Interest Swap
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities, and (e) all accrued interest and (ii) the
interest component of Capitalized Lease Obligations paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
5
<PAGE> 13
"Consolidated Net Income" of any Person means, for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided,
however, that there shall be excluded therefrom, without duplication, (a) gains
and losses from Asset Sales (without regard to the $500,000 limitation set
forth in the definition thereof) or abandonments or reserves relating thereto
and the related tax effects, (b) items classified as extraordinary or non-
recurring gains and losses, and the related tax effects according to GAAP, (c)
the net income (or loss) of any Person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Subsidiary of such first-
referred-to Person or is merged or consolidated with it or any of its
Subsidiaries, (d) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is restricted by contract, operation of law or otherwise, and (e) the
net income of any Person, other than a Subsidiary, except to the extent of the
lesser of (x) dividends or distributions paid to such first-referred-to Person
or its Subsidiary by such Person and (y) the net income of such Person (but in
no event less than zero), and the net loss of such Person shall be included
only to the extent of the aggregate Investment of the first-referred-to Person
or a consolidated Subsidiary of such Person and any non-cash expenses
attributable to grants or exercises of employee stock options.
"Consolidated Non-Cash Charges" means, with respect to any Person
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries (excluding any such charges
constituting an extraordinary or non-recurring item) reducing Consolidated Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the board of directors of the Company or
Holdings on the Issue Date, (ii) was nominated for election or elected to the
board of directors of the Company or Holdings, as the case may be, with the
affirmative vote of a majority of the Continuing Directors who were members of
such board of directors at the time of such nomination or election or (iii) is
a representative of a Permitted Holder.
6
<PAGE> 14
"Credit Agreement" means the Credit Agreement, dated as of
February 28, 1997, among the Company, The Chase Manhattan Bank, as agent,
NationsBank of Texas, N.A., as documentation agent, and any other financial
institutions from time to time party thereto, together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents), in each case as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding Subsidiaries
of the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders (or other institutions).
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is,
or with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Notes issued in the form
of one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designated Senior Indebtedness" means (i) all obligations under
the Credit Agreement and (ii) any other Senior Indebtedness of the Company
which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $20,000,000 and is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this
Indenture.
7
<PAGE> 15
"Discharged" means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations under,
the Notes and to have satisfied all the obligations under this Indenture
relating to the Notes (and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging the same upon compliance by the
Company with the provisions of Article Eight, except (i) the rights of the
Holders of Notes to receive, from the trust fund described in Article Eight,
payment of the principal of and the interest on such Notes when such payments
are due, (ii) the Company's obligations with respect to the Notes under
Sections 2.03 through 2.07, 7.07 and 7.08 and (iii) the rights, powers, trusts,
duties and immunities of the Trustee hereunder.
"Disqualified Capital Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof (except,
in each case, upon the occurrence of a Change of Control), in whole or in part,
on or prior to the final maturity date of the Notes.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the SECURITIES Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission
thereunder.
"Exchange and Registration Rights Agreement" means the exchange
and registration rights agreement dated the Issue Date between the Company and
the Initial Purchasers.
"Exchange Notes" means the 11% Senior Subordinated Notes due
2007, Series B, to be issued in exchange for the Initial Notes pursuant to the
Exchange and Registration Rights Agreement.
"Financial Monitoring and Oversight Agreements" means,
collectively, the Monitoring and Oversight Agreement among the Company,
Holdings and Hicks Muse Partners, as in effect on the Issue Date, and the
Financial Advisory
8
<PAGE> 16
Agreement among the Company, Holdings and Hicks Muse Partners, as in effect on
the Issue Date.
"Funds" means the aggregate amount of U.S. Legal Tender and/or
U.S. Government Obligations deposited with the Trustee pursuant to Article
Eight.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of the Issue Date.
"Global Notes" means one or more IAI Global Notes and 144A Global
Notes.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated, a
Delaware corporation.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"IAI Global Note" means a permanent global note in registered
form representing the aggregate principal amount of Notes sold to Institutional
Accredited Investors.
"Holdings" means Sunrise Television Corp., which owns all of the
common stock of the Company.
"Indebtedness" means with respect to any Person, without
duplication, any liability of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments, (iii)
constituting Capitalized Lease Obligations, (iv) incurred or assumed as the
deferred purchase price of property, or pursuant to conditional sale
obligations and title retention agreements (but excluding trade accounts
payable arising in the ordinary course of business), (v) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) for Indebtedness of others guaranteed by such Person, (vii)
for Interest Swap Obligations, Commodity Agreements and Currency Agreements and
(viii) for Indebtedness of any other Person of the type referred to in clauses
(i) through (vii) which is secured by any Lien on any property or asset of such
first-referred-to Person, the amount of such Indebtedness being deemed to be
the lesser of the value of such property or asset or the amount of the
Indebtedness so secured. The amount of Indebtedness of any Person at any date
shall be the outstanding principal amount of all unconditional obligations
described above, as such
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amount would be reflected on a balance sheet prepared in accordance with GAAP,
and the maximum liability at such date of such Person for any contingent
obligations described above.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Initial Notes" means the 11% Senior Subordinated Notes due 2007,
Series A, of the Company.
"Initial Purchasers" means Chase Securities Inc., NationsBanc
Capital Markets, Inc. and Schroder Wertheim & Co. Incorporated.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap or other interest rate hedge
or arrangement.
"Investment" means (i) any transfer or delivery of cash, stock or
other property of value in exchange for Indebtedness, stock or other security
or ownership interest in any Person by way of loan, advance, capital
contribution, guarantee or otherwise and (ii) an investment deemed to have been
made by the Company at the time any entity which was a Subsidiary of the
Company ceases to be such a Subsidiary in an amount equal to the value of the
loans and advances made to, and any remaining ownership interest in, such
entity immediately following such entity ceasing to be a Subsidiary of the
Company. The amount of any non-cash Investment shall be the fair market value
of such Investment, as determined conclusively in good faith by management of
the Company unless the fair market value of such Investment exceeds $1,000,000,
in which case the fair market value shall be determined conclusively in good
faith by the Board of Directors of the Company at the time such Investment is
made.
"Issue Date" means the date on which the Notes are originally
issued.
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"Legal Holiday" has the meaning provided in Section 11.07.
"Leverage Ratio" shall mean, as to any Person, the ratio of (i)
the aggregate outstanding amount of Indebtedness of the Company and its
Subsidiaries as of the date of calculation on a consolidated basis in
accordance with GAAP plus the aggregate liquidation preference of all
outstanding Disqualified Capital Stock of the Company and of all outstanding
Preferred Stock of Subsidiaries of the Company to (ii) the Consolidated Cash
Flow of the Company for the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of determination.
For purposes of this definition, the aggregate outstanding
principal amount of Indebtedness of the Person and its Subsidiaries for which
such calculation is made shall be determined on a pro forma basis as if the
Indebtedness giving rise to the need to perform such calculation had been
incurred and the proceeds therefrom had been applied, and all other
transactions in respect of which such Indebtedness is being incurred had
occurred, on the last day of the Four Quarter Period. In addition to the
foregoing, for purposes of this definition, "Consolidated Cash Flow" shall be
calculated on a pro forma basis after giving effect to (i) the incurrence of
the Indebtedness of such Person and its Subsidiaries (and the application of
the proceeds therefrom) giving rise to the need to make such calculation and
any incurrence (and the application of the proceeds therefrom) or repayment of
other Indebtedness, other than the incurrence or repayment of Indebtedness
pursuant to working capital facilities, at any time subsequent to the beginning
of the Four Quarter Period and on or prior to the date of determination, as if
such incurrence (and the application of the proceeds thereof), or the
repayment, as the case may be, occurred on the first day of the Four Quarter
Period, (ii) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Subsidiaries (including
any Person that becomes a Subsidiary as a result of such Asset Acquisition)
incurring, assuming or otherwise becoming liable for Indebtedness) at any time
on or subsequent to the first day of the Four Quarter Period and on or prior to
the date of determination, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Indebtedness
and also including any Consolidated Cash Flow associated with such
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Asset Acquisition) occurred on the first day of the Four Quarter Period and
(iii) cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales representation commissions and
other contract rates, and reductions in taxes other than income taxes
(collectively, "Cost Savings Measures"), which cost savings the Company
reasonably believes in good faith could have been achieved during the Four
Quarter Period as a result of such Asset Acquisition (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the Commission or any other
regulation or policy of the Commission), less the amount of any additional
expenses that the Company reasonably estimates would result from anticipated
replacements of any items constituting Cost Savings Measures in connection with
such Asset Acquisition; provided, however, that both (A) such cost savings and
Cost Savings Measures were identified and such cost savings were quantified in
an officer's certificate delivered to the Trustee at the time of the
consummation of the Asset Acquisition and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90
days of such Asset Acquisition to effect the Cost Savings Measures identified
in such officer's certificate (regardless, however, of whether the
corresponding cost savings have been achieved). Furthermore, in calculating
"Consolidated Interest Expense" for purposes of the calculation of
"Consolidated Cash Flow," (i) interest on Indebtedness determined on a
fluctuating basis as of the date of determination (including Indebtedness
actually incurred on the date of the transaction giving rise to the need to
calculate the Leverage Ratio) and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i) above, interest determined on a
fluctuating basis, to the extent such interest is covered by Interest Swap
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind
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(including any conditional sale or other title retention agreement, any lease
in the nature thereof and any agreement to give any security interest).
"Maturity Date" means March 15, 2007.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Subsidiaries from such Asset
Sale net of (i) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions, recording fees, title insurance premiums,
appraiser's fees and costs reasonably incurred in preparation of any asset or
property for sale), (ii) taxes paid or reasonably estimated to be payable
(calculated based on the combined state, federal and foreign statutory tax
rates applicable to the Company or the Subsidiary engaged in such Asset Sale)
and (iii) repayment of Indebtedness secured by assets subject to such Asset
Sale; provided, however, that if the instrument or agreement governing such
Asset Sale requires the transferor to maintain a portion of the purchase price
in escrow (whether as a reserve for adjustment of the purchase price or
otherwise) or to indemnify the transferee for specified liabilities in a
maximum specified amount, the portion of the cash or Cash Equivalents that is
actually placed in escrow or segregated and set aside by the transferor for
such indemnification obligation shall not be deemed to be Net Cash Proceeds
until the escrow terminates or the transferor ceases to segregate and set aside
such funds, in whole or in part, and then only to the extent of the proceeds
released from escrow to the transferor or that are no longer segregated and set
aside by the transferor.
"Net Proceeds Offer" has the meaning provided in Section 4.15.
"Notes" means, collectively, the Initial Notes, the Private
Exchange Notes, if any, and the Unrestricted Notes, treated as a single class
of securities under this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under
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the documentation governing, or otherwise relating to, any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such Person and otherwise complying with
the requirements of Sections 11.04 and 11.05, as they relate to the making of
an Officers' Certificate.
"144A Global Note" means a permanent global note in registered
form representing the aggregate principal amount of Notes sold in reliance on
Rule 144A under the Securities Act.
"Opinion of Counsel" means a written opinion from legal counsel
who is reasonably acceptable to the Trustee complying with the requirements of
Sections 11.04 and 11.05, as they relate to the giving of an Opinion of
Counsel.
"Paying Agent" shall have the meaning provided in Section 2.03,
except that, during the continuance of a Default or Event of Default and for
the purposes of Articles Three and Eight and Sections 4.14 and 4.15, the Paying
Agent shall not be the Company or any Affiliate of the Company.
"Permitted Indebtedness" means, without duplication, (i)
Indebtedness outstanding on the Issue Date; (ii) Indebtedness of the Company or
a Subsidiary incurred under the Credit Agreement in an aggregate principal
amount at any time outstanding not to exceed the sum of the aggregate
commitments pursuant to the Credit Agreement as in effect on the Issue Date;
(iii) Indebtedness evidenced by or arising under the Notes and this Indenture;
(iv) Interest Swap Obligations; provided, however, that such Interest Swap
Obligations are entered into to protect the Company from fluctuations in
interest rates of its Indebtedness; (v) additional Indebtedness of the Company
or any of its Subsidiaries not to exceed $10,000,000 in principal amount
outstanding at any time (which amount may, but need not, be incurred under the
Credit Agreement); (vi) Refinancing
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Indebtedness; (vii) Indebtedness owed by the Company to any Wholly Owned
Subsidiary of the Company or by any Subsidiary of the Company to the Company or
any Wholly Owned Subsidiary of the Company; (viii) guarantees by Subsidiaries
of any Indebtedness permitted to be incurred pursuant to this Indenture; (ix)
Indebtedness in respect of performance bonds, bankers' acceptances and surety
or appeal bonds provided by the Company or any of its Subsidiaries to their
customers in the ordinary course of their business; (x) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in each case incurred in connection
with the disposition of any business assets or Subsidiaries of the Company
(other than guarantees of Indebtedness or other obligations incurred by any
Person acquiring all or any portion of such business assets or Subsidiaries of
the Company for the purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received by the Company or any
of its Subsidiaries in connection with such disposition; provided, however,
that the principal amount of any Indebtedness incurred pursuant to this clause
(x), when taken together with all Indebtedness incurred pursuant to this clause
(x) and then outstanding, shall not exceed $7,500,000; and (xi) Indebtedness
represented by Capitalized Lease Obligations, mortgage financings or purchase
money obligations, in each case incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property used in a related business or incurred to refinance any such purchase
price or cost of construction or improvement, in each case incurred no later
than 365 days after the date of such acquisition or the date of completion of
such construction or improvement; provided, however, that the principal amount
of any Indebtedness incurred pursuant to this clause (xi) shall not exceed
$3,000,000 at any time outstanding.
"Permitted Investments" means (i) Investments by the Company or
any Subsidiary of the Company to acquire the stock or assets of any Person (or
Acquired Indebtedness acquired in connection with a transaction in which such
Person becomes a Subsidiary of the Company) engaged in the broadcast business
or businesses reasonably related thereto; provided, however, that if any such
Investment or series of related Investments involves an Investment by the
Company in
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excess of $5,000,000, the Company is able, at the time of such investment and
immediately after giving effect thereto, to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.12, (ii) Investments received by the Company or its Subsidiaries as
consideration for a sale of assets, (iii) Investments by the Company or any
Wholly Owned Subsidiary of the Company in any Wholly Owned Subsidiary of the
Company (whether existing on the Issue Date or created thereafter) or any
Person that after such Investments, and as a result thereof, becomes a Wholly
Owned Subsidiary of the Company and Investments in the Company by any Wholly
Owned Subsidiary of the Company, (iv) Investments in cash and Cash Equivalents,
(v) Investments in securities of trade creditors, wholesalers or customers
received pursuant to any plan of reorganization or similar arrangement, (vi)
loans or advances to employees of the Company or any Subsidiary thereof for
purposes of purchasing the Company's Capital Stock and other loans and advances
to employees made in the ordinary course of business consistent with past
practices of the Company or such Subsidiary, and (vii) additional Investments
in an aggregate amount not to exceed $1,000,000 at any time outstanding.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Notes" shall have the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Exchange Notes" shall have the meaning provided in the
Exchange and Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth
on the Initial Notes in the form set forth on Exhibit A.
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"Productive Assets" means assets of a kind used or usable by the
Company and its Subsidiaries in broadcast businesses or businesses reasonably
related thereto, and specifically includes assets acquired through Asset
Acquisitions.
"pro forma" means, unless otherwise provided herein, with respect
to any calculation made or required to be made pursuant to the terms of this
Indenture, a calculation in accordance with Article 11 of Regulation S-X
promulgated under the Securities Act.
"Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Disqualified Capital Stock) of the Company or
Holdings (to the extent, in the case of Holdings, that the net cash proceeds
thereof are contributed to the common or non-redeemable preferred equity
capital of the Company), pursuant to an effective registration statement filed
with the Commission in accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redemption Date" means, with respect to any Notes, the Maturity
Date of such Note or the earlier date on which such Note is to be redeemed by
the Company pursuant to paragraph 5 of the Notes.
"Redemption Price" shall have the meaning provided in Section
3.03.
"Refinancing Indebtedness" means any refinancing by the Company
of Indebtedness of the Company or any of its Subsidiaries incurred in
accordance with Section 4.12 (other than pursuant to clause (iii) or (iv) of
the definition of Permitted Indebtedness) that does not (i) result in an
increase in the aggregate principal amount of Indebtedness (such principal
amount to include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing Indebtedness) of
such Person or (ii) create Indebtedness with (A) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being refinanced or (B) a final maturity earlier than the final
maturity of the Indebtedness being refinanced.
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"Registrar" shall have the meaning provided in Section 2.03.
"Representative" means the indenture trustee or other trustee,
agent or representative in respect of any Senior Indebtedness; provided,
however, that if, and for so long as, any issue of Senior Indebtedness lacks
such a representative, then the Representative for such issue of Senior
Indebtedness shall at all times constitute the holders of a majority in
outstanding principal amount of such issue of Senior Indebtedness.
"Restricted Note" means a Note that is a "Restricted Security" as
defined in Rule 144(a)(3) under the Securities Act; provided, however, that the
Trustee shall be entitled to request and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Note.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock or in options, rights or
warrants to acquire Qualified Capital Stock) on shares of the Company's Capital
Stock, (ii) the purchase, redemption, retirement or other acquisition for value
of any Capital Stock of the Company, or any warrants, rights or options to
acquire shares of Capital Stock of the Company, other than through the exchange
of such Capital Stock or any warrants, rights or options to acquire shares of
any class of such Capital Stock for Qualified Capital Stock or warrants, rights
or options to acquire Qualified Capital Stock, (iii) the making of any
principal payment on, or the purchase, defeasance, redemption, prepayment,
decrease or other acquisition or retirement for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, of, any
Indebtedness of the Company or its Subsidiaries that is subordinated or junior
in right of payment to the Notes or (iv) the making of any Investment (other
than a Permitted Investment).
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
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"Secured Indebtedness" means any Indebtedness of the Company or a
subsidiary secured by a Lien.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, (x) all obligations under the Credit Agreement and
(y) all other Indebtedness of the Company, including interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or any Subsidiary whether or not a claim
for post-filing interest is allowed in such proceeding) and premium, if any,
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations in
respect of such Indebtedness are not superior in right of payment to the Notes;
provided, however, that Senior Indebtedness will not include (1) any obligation
of the Company to any Subsidiary, (2) any liability for federal, state, foreign
local or other taxes owed or owing by the Company, (3) any account payable or
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities) or
(4) any Indebtedness, guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Obligations.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means for any Person each Subsidiary of
such Person which (i) for the most recent fiscal year of such Person accounted
for more than 5% of the consolidated net income of such Person or (ii) as at
the end of such fiscal year, was the owner of more than 5% of the consolidated
assets of such Person.
"SAC" means Smith Acquisition Company.
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"Subsidiary," with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority
of the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, through one
or more intermediaries, by such Person or (ii) any other Person of which at
least a majority of the voting interest under ordinary circumstances is at the
time, directly or indirectly, through one or more intermediaries, owned by such
Person; provided, however, that notwithstanding the foregoing, SAC shall be
deemed to be a "Subsidiary" of the Company. Notwithstanding anything in this
Indenture to the contrary, all references to the Company and its consolidated
Subsidiaries or to financial information prepared on a consolidated basis in
accordance with GAAP shall be deemed to include the Company and its
Subsidiaries as to which financial statements are prepared on a combined basis
in accordance with GAAP and to financial information prepared on such a
combined basis. Notwithstanding anything in this Indenture to the contrary, an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary for purposes of
this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as amended, as in effect on the date on which this Indenture
is qualified under the TIA, except as otherwise provided in Section 9.03.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters or,
in the case of a successor trustee, an officer assigned to the department,
division or group performing the corporate trust work of such successor.
"Unrestricted Notes" means one or more Notes that do not and are
not required to bear the Private Placement Legend in the form set forth in
Exhibit A, including, without limitation, the Exchange Notes.
"Unrestricted Subsidiary" means a Subsidiary of the Company
created after the Issue Date and so designated by a resolution adopted by the
Board of Directors of the Company; provided, however, that (a) neither the
Company nor
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any of its other Subsidiaries (other than Unrestricted Subsidiaries) (1)
provides any credit support for any Indebtedness of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Indebtedness) or (2)
is directly or indirectly liable for any Indebtedness of such Subsidiary and
(b) at the time of designation of such Subsidiary, such Subsidiary has no
property or assets (other than de minimis assets resulting from the initial
capitalization of such Subsidiary). The Board of Directors may designate any
Unrestricted Subsidiary to be a Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.12 hereof and (y) no Default or Event of Default shall have occurred
and be continuing. Any designation pursuant to this definition by the Board of
Directors of the Company shall be evidenced to the Trustee by the filing with
the Trustee of a certified copy of the resolution of the Company's Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of
such Person of which all the outstanding
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voting securities (other than directors' qualifying shares) which normally have
the right to vote in the election of directors are owned by such Person or any
Wholly Owned Subsidiary of such Person; provided, however, that "Wholly Owned
Subsidiary" shall also include SAC and any other Subsidiary of which in excess
of 95% of the common equity securities are owned by the Company or another
Wholly Owned Subsidiary and which is organized for the purpose of facilitating
the acquisition of any broadcasting business that, but for the formation of
such Person, the Company and its Restricted Subsidiaries could not acquire
under applicable laws related to the ownership of broadcast businesses.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, that
portion of such provision that is required to be incorporated for this
Indenture to be qualified under the TIA is incorporated by reference in, and
made a part of, this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture security holder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA by reference to another statute or defined by SEC
rule and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect on the Issue Date;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular; and
(5) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Exchange Notes and
the Trustee's certificate of authentication relating thereto shall be
substantially in the form of Exhibit B hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company shall approve the form of the Notes and any notation, legend or
endorsement thereon. Each Note shall be dated the date of issuance and shall
show the date of its authentication.
The terms and provisions contained in the Notes annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby. Notes offered and sold in reliance on
Rule 144A, Notes offered and sold to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) shall be
issued initially in the form of one or more Global Notes, substantially in the
form set forth in Exhibit A, deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Exhibit C. The
aggregate principal amount of the Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided.
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Notes issued in exchange for interests in a Global Note pursuant
to Section 2.16 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Physical
Notes").
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary, shall
sign, or one Officer shall sign, and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to, the Notes for the Company by manual or
facsimile signature.
If an Officer or Assistant Secretary whose signature is on a Note
was an Officer or Assistant Secretary at the time of such execution but no
longer holds that office or position at the time the Trustee authenticates the
Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature of such representative of the Trustee shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for original
issue in an aggregate principal amount not to exceed $100,000,000, (ii) Private
Exchange Notes from time to time only in exchange for a like principal amount
of Initial Notes and (iii) Unrestricted Notes from time to time only in
exchange for (A) a like principal amount of Initial Notes or (B) a like
principal amount of Private Exchange Notes, in each case upon a written order
of the Company in the form of an Officers' Certificate of the Company. Each
such written order shall specify the amount of Notes to be authenticated and
the date on which the Notes are to be authenticated, whether the Notes are to
be Initial Notes, Private Exchange Notes or Unrestricted Notes and whether the
Notes are to be issued as Physical Notes or Global Notes and such other
information as the Trustee may reasonably request. The aggregate principal
amount of Notes outstanding at any time may not exceed $100,000,000, except as
provided in Sections 2.07 and 2.08.
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Notwithstanding the foregoing, all Notes issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Notes may vote or consent) as one class and no series of Notes will have
the right to vote or consent as a separate class on any matter.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless otherwise provided in
the appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
The Notes shall be issuable in fully registered form only,
without coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in the City of New York, State of New
York), where (a) Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (b) Notes may be presented or
surrendered for payment ("Paying Agent") and (c) notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company, upon notice to the Trustee, may have one or more co-
Registrars and one or more additional paying agents reasonably acceptable to
the Trustee. The term "Paying Agent" includes any additional paying agent.
The Company may change the Paying Agent or Registrar without notice to any
Holder.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee, in advance, of the
name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such.
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The Company initially appoints the Trustee as Registrar and
Paying Agent until such time as the Trustee has resigned or a successor has
been appointed. Any of the Registrar, the Paying Agent or any other agent may
resign upon 30 days' notice to the Company.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that each Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all assets held by the Paying Agent for
the payment of principal of, premium, if any, or interest on, the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and shall notify the Trustee of any default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it
to the Trustee and to account for any assets distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by the Company to the
Paying Agent and the completion of any accounting required to be made
hereunder, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee five (5)
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing a list as of the applicable Record Date and in
such form as the Trustee may reasonably require of the names and addresses of
the Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.06. Transfer and Exchange.
Subject to Section 2.15, when Notes are presented to the
Registrar or a co-Registrar with a request to register the transfer of such
Notes or to exchange such
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Notes for an equal principal amount of Notes of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its requirements for such transaction are met; provided,
however, that the Notes presented or surrendered for transfer or exchange shall
be duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's or co-Registrar's written
request. No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith.
The Registrar or co-Registrar shall not be required to register the transfer of
or exchange of any Note (i) during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption pursuant to
Section 3.03 and paragraph 5 of the Notes and ending at the close of business
on the day of such mailing and (ii) selected for redemption in whole or in part
pursuant to Article Three, except the unredeemed portion of any Note being
redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book entry system maintained
by the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note claims that the Note has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Note if the Trustee's requirements are met. If required by the Trustee or the
Company, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of the Company and the Trustee, to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Note is replaced. The Company and the Trustee may charge such Holder for its
reasonable out-of-pocket expenses in replacing a Note, including reasonable
fees and expenses of
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counsel. Every replacement Note shall constitute an additional obligation of
the Company.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to
it for cancellation and those described in this Section as not outstanding.
Subject to Section 2.09, a Note does not cease to be outstanding because the
Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent
holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of
the principal, premium, if any, and interest due on the Notes payable on that
date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such
Notes cease to be outstanding and interest on them ceases to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver, consent or
notice, Notes owned by the Company or an Affiliate shall be considered as
though they are not outstanding, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes which the Trustee actually knows are so owned shall be
so considered. The Company shall notify the Trustee, in writing, when it or
any of its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate
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temporary Notes upon receipt of a written order of the Company in the form of
an Officers' Certificate. The Officers' Certificate shall specify the amount
of temporary Notes to be authenticated and the date on which the temporary
Notes are to be authenticated. Temporary Notes shall be substantially in the
form of definitive Notes but may have variations that the Company considers
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and execute, and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02, definitive Notes in
exchange for temporary Notes.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee,
or at the direction of the Trustee, the Registrar or the Paying Agent, and no
one else, shall cancel and, at the written direction of the Company, shall
dispose and deliver evidence of disposal of all Notes surrendered for transfer,
exchange, payment or cancellation. Subject to Section 2.07, the Company may
not issue new Notes to replace Notes that the Company has paid or delivered to
the Trustee for cancellation. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Company will pay interest on overdue principal from time to
time on demand at the rate of interest then borne by the Notes. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate of interest then borne by the Notes. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months, and, in the case of
a partial month, the actual number of days elapsed.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent
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special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior
to the expiration of the 30-day period set forth in Section 6.01(a) shall be
paid to Holders as of the regular record date for the Interest Payment Date for
which interest has not been paid.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Notes may use one or more "CUSIP"
numbers, and if so, the Trustee shall use the CUSIP numbers in notices of
redemption or exchange as a convenience to Holders; provided; however, that no
representation is hereby deemed to be made by the Trustee as to the correctness
or accuracy of the CUSIP numbers printed in the notice or on the Notes, and
that reliance may be placed only on the other identification numbers printed on
the Notes. The Company shall promptly notify the Trustee of any change in the
CUSIP number.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment
Date, Maturity Date, Redemption Date, Change of Control Payment Date, and Net
Proceeds Offer Payment Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date, Maturity Date, Redemption Date, Change
of Control Payment Date, and Net Proceeds Offer Payment Date, as the case may
be, in a timely manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date, Maturity Date, Redemption Date, Change
of Control Payment Date, and Net Proceeds Offer Payment Date, as the case may
be.
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SECTION 2.15. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be
delivered to the Trustee as custodian for such Depository and (iii) bear
legends as set forth in Exhibit C.
Members of, or participants in, the Depository ("Participants")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under
the Global Note, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and Participants, the operation of customary practices governing the exercise
of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to
transfers in whole, but not in part, to the Depository, its successors
or their respective nominees. Interests of beneficial owners in the
Global Notes may be transferred or exchanged for Physical Notes in
accordance with the rules and procedures of the Depository and the
provisions of Section 2.16. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial
interests in Global Notes if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for any Global
Note and a successor Depository is not appointed by the Company within
90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request from the Depository
to issue Physical Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in a Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical
Notes are to be issued) reflect on its books and records the date and a
decrease in the principal
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amount of such Global Note in an amount equal to the principal amount of
the beneficial interest in the Global Note to be transferred, and the
Company shall execute and the Trustee shall authenticate and deliver,
one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b) of this Section
2.15, the Global Notes shall be deemed to be surrendered to the Trustee
for cancellation, and the Company shall execute, and the Trustee shall
upon written instructions from the Company authenticate and deliver, to
each beneficial owner identified by the Depository in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal
amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note
delivered in exchange for an interest in a Global Note pursuant to
paragraph (b) or (c) of this Section 2.15 shall, except as otherwise
provided by Section 2.16, bear the Private Placement Legend.
(f) The Holder of any Global Note may grant proxies and
otherwise authorize any Person, including Participants and Persons that
may hold interests through Participants, to take any action which a
Holder is entitled to take under this Indenture or the Notes.
SECTION 2.16. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following additional provisions shall apply with respect
to the registration of any proposed transfer of a Note constituting a
Restricted Note to any Institutional Accredited Investor which is not a
QIB:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date; provided, however, that neither
the Company nor any Affiliate of the Company has held any beneficial
interest in such note, or portion thereof, at any time on or prior to
the third anniversary of the Issue Date) or (y) in the
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case of a transfer to an Institutional Accredited Investor which is not
a QIB, the proposed transferee has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto;
(ii) if the proposed transferee is a Participant, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the IAI Global Note, upon receipt
by the Registrar of (x) written instructions given in accordance with
the Depository's and the Registrar's procedures and (y) the certificate,
if any, required by clause (y) of paragraph (i) above, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of such IAI Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred; and
(iii) if the proposed transferor is a Participant seeking
to transfer an interest in the 144A Global Note, upon receipt by the
Registrar of (x) written instructions given in accordance with the
Depository's and the Registrar's procedures and (y) the certificate, if
any, required by clause (y) of paragraph (i) above, the Registrar shall
reflect on its books and records the date and (A) a decrease in the
principal amount of the 144A Global Note in an amount equal to the
principal amount of the Notes to be transferred and (B) an increase in
the principal amount of the IAI Global Note in an amount equal to the
principal amount of the Notes to be transferred.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a
Note constituting a Restricted Security to a QIB:
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note for its own
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account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning
of Rule 144A, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A;
(ii) if the proposed transferee is a Participant and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the 144A Global Note, upon receipt
by the Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on its book and records the date and an increase in the principal amount
of such 144A Global Note in an amount equal to the principal amount of
the Physical Notes to be transferred, and the Trustee shall cancel the
Physical Note so transferred; and
(iii) if the proposed transferor is a Participant seeking
to transfer an interest in the IAI Global Note, upon receipt by the
Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date and (A) a decrease in the principal
amount of the IAI Global Note in an amount equal to the principal amount
of the Notes to be transferred and (B) an increase in the principal
amount of the 144A Global Note in an amount equal to the principal
amount of the Notes to be transferred.
(c) Restrictions on Transfer and Exchange of Global
Notes. Notwithstanding any other provisions of this Indenture, a Global
Note may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such
successor Depository.
(d) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing
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the Private Placement Legend, the Registrar or co-Registrar shall
deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement
Legend, the Registrar or co-Registrar shall deliver only Notes that bear
the Private Placement Legend unless, and the Trustee is hereby
authorized to deliver Notes without the Private Placement Legend if (i)
there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither
such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act
or (ii) such Note has been sold pursuant to an effective registration
statement under the Securities Act.
(e) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in
the Private Placement Legend and agrees that it will transfer such Note
only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5 of
the Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the aggregate principal amount of the Notes to be redeemed.
Such notice must be given at least 60 days prior to the Redemption Date (unless
a shorter notice shall be satisfactory to the Trustee), but shall not be given
more than 90 days before the Redemption Date. Any such notice may be cancelled
at any time prior to notice of such
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redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.02. Selection of Notes To Be Redeemed.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, in the absence of such requirements or if the
Notes are not so listed, on a pro rata basis; provided, however, that no Notes
of $1,000 or less shall be redeemed in part. On and after the Redemption Date,
interest shall cease to accrue on the Note or portions of them called for
redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail or cause to be mailed a notice of redemption by
first-class mail to each Holder whose Notes are to be redeemed at its
registered address, with a copy to the Trustee. At the Company's request, the
Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. Each notice for redemption shall identify the Notes to be
redeemed and shall state:
(1) the Redemption Date;
(2) the redemption price and the amount of accrued interest, if any,
to be paid (the "Redemption Price");
(3) the paragraph and subparagraph of the Notes pursuant to which the
Notes are being redeemed;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(6) that, unless the Company defaults in making the redemption
payment, interest, if any, on Notes called for redemption shall cease to accrue
on and after the Redemption Date, and the only remaining right of the Holders
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of such Notes is to receive payment of the Redemption Price upon surrender to
the Paying Agent of the Notes redeemed;
(7) in the case of a redemption pursuant to paragraph 5(a) or (b) of
the Notes, if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the Redemption Date, and
upon surrender of such Note, a new Note or Notes in the aggregate principal
amount equal to the unredeemed portion thereof will be issued; and
(8) in the case of a redemption pursuant to paragraph 5(a) or (b) of
the Notes, if less than all the Notes are to be redeemed, the identification of
the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Notes to be outstanding after such partial redemption.
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
purchase of Notes.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon surrender to the Trustee or Paying Agent,
such Notes called for redemption shall be paid at the Redemption Price, but
installments of interest, the maturity of which is on or prior to the
Redemption Date, shall be payable to Holders of record at the close of business
on the relevant record dates referred to in the Notes. Interest shall accrue
on or after the Redemption Date and shall be payable only if the Issuer
defaults on payment of the Redemption Price.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with
the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price of
all Notes to be redeemed on that date. The Paying Agent shall promptly return
to the Company any U.S. Legal Tender so deposited
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that is not required for that purpose, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding paragraph
and defaults in the payment of such Redemption Price, interest on the Notes to
be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.
SECTION 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Note or Notes equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.
The Company shall pay the interest on the Notes on the dates and
in the manner provided in the Notes. An installment of principal of or
interest on the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and
sufficient to pay the installment. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal, premium or interest payments hereunder.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain the office or agency required under
Section 2.03. The Company shall give prior notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands
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may be made or served at the address of the Trustee set forth in Section 11.02.
SECTION 4.03. Limitation on Restricted Payments.
(a) Neither the Company nor any of its Subsidiaries will,
directly or indirectly, make any Restricted Payment if at the time of such
Restricted Payment and immediately after giving effect thereto:
(i) a Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted Payment; or
(ii) the Company is not able to incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with Section 4.12 hereof; or
(iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date (the amount expended for such purposes, if other than in cash,
being the fair market value of such property as determined by the Board of
Directors of the Company in good faith) exceeds the sum of
(A) (x) 100% of the aggregate Consolidated Cash Flow of
the Company (or, in the event such Consolidated Cash Flow shall
be a deficit, minus 100% of such deficit) accrued subsequent to
the Issue Date to the most recent date for which financial
information is available to the Company, taken as one accounting
period, less (y) 1.4 times Consolidated Interest Expense for the
same period, plus
(B) 100% of the aggregate net proceeds, including the
fair market value of property other than cash as determined by
the Board of Directors of the Company in good faith, received
subsequent to February 28, 1997 by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and
sale subsequent to February 28, 1997 of Qualified Capital Stock
of the Company (excluding (i) any net proceeds from issuances and
sales financed directly or indirectly using funds borrowed from
the Company or any Subsidiary of the Company, until and to the
extent such borrowing is repaid, but including the proceeds from
the issuance and sale of any securities convertible
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into or exchangeable for Qualified Capital Stock to the extent
such securities are so converted or exchanged and including any
additional proceeds received by the Company upon such conversion
or exchange and (ii) any net proceeds received from issuances and
sales that are used to consummate a transaction described in
clauses (2) and (3) of paragraph (b) below), plus
(C) without duplication of any amount included in
clause (iii)(B) above, 100% of the aggregate net proceeds,
including the fair market value of property other than cash
(valued as provided in clause (iii)(B) above), received by the
Company as a capital contribution subsequent to February 28,
1997, plus
(D) the amount equal to the net reduction in
Investments (other than Permitted Investments) made by the
Company or any of its Subsidiaries in any Person resulting from
(i) repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an
unaffiliated purchaser and repayments of loans or advances or
other transfers of assets by such Person to the Company or any
Subsidiary of the Company or (ii) the redesignation of
Unrestricted Subsidiaries as Subsidiaries (valued in each case as
provided in the definition of "Investment") not to exceed, in the
case of any Subsidiary, the amount of Investments previously made
by the Company or any Subsidiary in such Unrestricted Subsidiary,
which amount was included in the calculation of Restricted
Payments; provided, however, that no amount shall be included
under this clause (D) to the extent it is already included in
Consolidated Cash Flow, plus
(E) the aggregate net cash proceeds received by a
Person in consideration for the issuance of such Person's Capital
Stock (other than Disqualified Capital Stock) that are held by
such Person at the time such Person is merged with and into the
Company in accordance with Article Five subsequent to the Issue
Date; provided, however, that concurrently with or immediately
following such merger the Company uses an amount equal to
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such net cash proceeds to redeem or repurchase the Company's
Capital Stock, plus
(F) $2,500,000.
(b) Notwithstanding the foregoing, these provisions will not
prohibit:
(1) the payment of any dividend or the making of any
distribution within 60 days after the date of its declaration if such dividend
or distribution would have been permitted on the date of declaration;
(2) the purchase, redemption or other acquisition or
retirement of any Capital Stock of the Company or any warrants, options or
other rights to acquire shares of any class of such Capital Stock either (x)
solely in exchange for shares of Qualified Capital Stock or other rights to
acquire Qualified Capital Stock or (y) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock or warrants,
options or other rights to acquire Qualified Capital Stock or (z) in the case
of Disqualified Capital Stock, solely in exchange for, or through the
application of the net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of, Disqualified Capital Stock that
has a redemption date no earlier than, and requires the payment of current
dividends or distributions in cash no earlier than, in each case, the
Disqualified Capital Stock being purchased, redeemed or otherwise acquired or
retired;
(3) the acquisition of Indebtedness of the Company that is
subordinate or junior in right of payment to the Notes either (x) solely in
exchange for shares of Qualified Capital Stock (or warrants, options or other
rights to acquire Qualified Capital Stock), for shares of Disqualified Capital
Stock that have a redemption date no earlier than, and require the payment of
current dividends or distributions in cash no earlier than, in each case, the
maturity date and interest payments dates, respectively, of the Indebtedness
being acquired, or for Indebtedness of the Company that is subordinate or
junior in right of payment to the Notes, at least to the extent that the
Indebtedness being acquired is subordinated to the Notes and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being acquired
or (y) through the application of the net proceeds of a substantially
concurrent sale for
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cash (other than to a Subsidiary of the Company) of shares of Qualified Capital
Stock (or warrants, options or other rights to acquire Qualified Capital
Stock), shares of Disqualified Capital Stock that have a redemption date no
earlier than, and require the payment of current dividends or distributions in
cash no earlier than, in each case, the maturity date and interest payments
dates, respectively, of the Indebtedness being refinanced, or Indebtedness of
the Company that is subordinate or junior in right of payment to the Notes at
least to the extent that the Indebtedness being acquired is subordinated to the
Notes and has a Weighted Average Life to Maturity no less than that of the
Indebtedness being refinanced;
(4) payments by the Company to repurchase, or to enable Holdings to
repurchase, Capital Stock or other securities from employees of the Company or
Holdings in an aggregate amount not to exceed $2,000,000;
(5) payments to enable Holdings to redeem or repurchase stock
purchase or similar rights granted by Holdings with respect to its Capital
Stock in an aggregate amount not to exceed $500,000;
(6) payments, not to exceed $100,000 in the aggregate, to enable
Holdings to make cash payments to holders of its Capital Stock in lieu of the
issuance of fractional shares of its Capital Stock;
(7) payments made pursuant to any merger, consolidation or sale of
assets effected in accordance with Article Five; provided, however, that no
such payment may be made pursuant to this clause (7) unless, after giving
effect to such transaction (and the incurrence of any Indebtedness in
connection therewith and the use of the proceeds thereof), the Company would be
able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12 such that after incurring that
$1.00 of additional Indebtedness, the Leverage Ratio would be less than 6.0 to
1;
(8) payments to enable Holdings or the Company to pay dividends on
its Capital Stock (other than Disqualified Capital Stock) after the first
Public Equity Offering in an annual amount not to exceed 6.0% of the gross
proceeds (before deducting underwriting discounts and commissions and other
fees and expenses of the offering) received from shares of Capital Stock (other
than Disqualified Capital
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Stock) sold for the account of the issuer thereof (and not for the account of
any stockholder) in such initial Public Equity Offering;
(9) payments by the Company to fund the payment by any direct or
indirect holding company thereof of audit, accounting, legal or other similar
expenses, to pay franchise or other similar taxes and to pay other corporate
overhead expenses, so long as such dividends are paid as and when needed by its
respective direct or indirect holding company and so long as the aggregate
amount of payments pursuant to this clause (9) does not exceed $500,000 in any
calendar year;
(10) payments by the Company to fund taxes of Holdings for a given
taxable year in an amount equal to the lesser of (x) the Company's "separate
return liability" and (y) the portion of the tax liability of the "affiliated
group" (within the meaning of Section 1504(a)(I) of the Code (as defined)) of
which the Company is a member in accordance with the method described in
Treasury Regulations Section 1.1552-1(a)(I) pursuant to (x) or (y) of this
clause (10) to the extent that the Company files a combined or consolidated
income tax return with Holdings under any state or local income tax law for a
taxable year, the payment by the Company to Holdings to fund such tax liability
for such taxable year shall be provided for in a manner as similar as possible
to that provided for United States federal income taxes (for purposes of this
clause (10) "separate return liability" for a given taxable year shall mean the
hypothetical United States tax liability of the Company defined as if the
Company had filed its own U.S. federal tax return for such taxable year); and
(11) on and after May 31, 2002, the payment of cash dividends in
respect of the Company's 14% Redeemable Preferred Stock, par value $.01;
provided, however, that in the case of clauses (3), (4), (5), (6), (7), (8) and
(11), no Event of Default shall have occurred and be continuing at the time of
such payment or as a result thereof. In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date, amounts expended
pursuant to clauses (1), (4), (5), (6), (7), (8) and (11) shall be included in
such calculation.
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SECTION 4.04. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall
do or cause to be done all things reasonably necessary to preserve and keep in
full force and effect its corporate or other existence and the corporate or
other existence of each of its Significant Subsidiaries in accordance with the
respective organizational documents of each such Significant Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Significant Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Significant Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or such
Significant Subsidiary, as the case may be, shall determine that the
preservation thereof is no longer reasonably necessary or desirable in the
conduct of the business of the Company or any such Significant Subsidiary.
SECTION 4.05. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon it or any of
its Subsidiaries or properties of it or any of its Subsidiaries and (ii) all
material lawful claims for labor, materials, supplies and services that, if
unpaid, might by law become a Lien upon the property of it or any of its
Subsidiaries; provided, however, that there shall not be required to be paid or
discharged any such tax, assessment or charge, the amount, applicability or
validity of which is being contested in good faith by appropriate proceedings
and for which adequate provision has been made or where the failure to effect
such payment or discharge is not adverse in any material respect to the
Holders.
SECTION 4.06. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its
Subsidiaries to, maintain its material properties in normal condition
(subject to ordinary wear and tear) and make all reasonably necessary
repairs, renewals or replacements thereto as in the
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judgment of the Company may be reasonably necessary to the conduct of
the business of the Company and its Subsidiaries; provided, however,
that nothing in this Section 4.06 shall prevent the Company or any of
its Subsidiaries from discontinuing the operation and maintenance of any
of its properties, if such properties are, in the reasonable and good
faith judgment of the Board of Directors of the Company or the
Subsidiary, as the case may be, no longer reasonably necessary in the
conduct of their respective businesses.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company, are reasonably adequate
and appropriate for the conduct of the business of the Company and such
Subsidiaries.
SECTION 4.07. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each of the Company's fiscal years, an Officers'
Certificate (signed by the principal executive officer, principal
financial officer and principal accounting officer) stating that a
review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the
signing officers with a view to determining whether it has kept,
observed, performed and fulfilled its obligations under this Indenture
and further stating, as to each such officer signing such certificate,
that to the best of his knowledge the Company during such preceding
fiscal year has kept, observed, performed and fulfilled each and every
such obligation and no Default or Event of Default occurred during such
year and at the date of such certificate there is no Default or Event of
Default that has occurred and is continuing or, if such signers do know
of such Default or Event of Default, the certificate shall describe the
Default or Event of Default and its status with particularity. The
Officers' Certificate shall also notify the Trustee should the Company
elect to change the manner in which it fixes its fiscal year end.
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(b) The annual financial statements delivered to the
Trustee pursuant to Section 4.09 shall be accompanied by a written
report of the Company's independent accountants that in conducting their
audit of the financial statements which are a part of such annual report
or such annual financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any
provisions of Article Four, Five or Six insofar as they relate to
accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any
Person for any failure to obtain knowledge of any such violation.
(c) So long as any of the Notes are outstanding (i) if
any Default or Event of Default has occurred and is continuing or (ii)
if any Holder seeks to exercise any remedy hereunder with respect to a
claimed Default under this Indenture or the Notes, the Company shall
promptly deliver to the Trustee by registered or certified mail or by
telegram, telex or facsimile transmission followed by hard copy by
registered or certified mail an Officers' Certificate specifying such
event, notice or other action.
SECTION 4.08. Compliance with Laws.
The Company shall comply, and shall cause each of its
Subsidiaries to comply, with all applicable statutes, rules, regulations,
orders and restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department, commission, board,
regulatory authority, bureau, agency and instrumentality of the foregoing, in
respect of the conduct of their respective businesses and the ownership of
their respective properties, except for such noncompliances as are not in the
aggregate reasonably likely to have a material adverse effect on the financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole.
SECTION 4.09. Reports.
So long as any of the Notes are outstanding, the Company will
provide to the holders of Notes and file with the Commission, to the extent
such submissions are accepted for filing by the Commission, copies of the
annual reports
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and of the information, documents and other reports that the Company would have
been required to file with the Commission pursuant to Sections 13 or 15(d) of
the Exchange Act regardless of whether the Company is then obligated to file
such reports.
SECTION 4.10. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, premium or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the obligations or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 4.11. Limitations on Transactions with Affiliates.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with or for the benefit of any of its Affiliates
(other than transactions between the Company and a Wholly Owned Subsidiary of
the Company or among Wholly Owned Subsidiaries of the Company) (an "Affiliate
Transaction"), other than Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a comparable
transaction on an arm's-length basis from a person that is not an Affiliate;
provided, however, that for a transaction or series of related transactions
involving value of $1,000,000 or more, such determination will be made in good
faith by a majority of members of the Board of Directors of the Company and by
a majority of the disinterested members of the Board of Directors of the
Company, if any; provided, further, that for a transaction or series of related
transactions involving value of $5,000,000 or more, the Board of Directors of
the Company has received an opinion from a nationally recognized investment
banking firm that such
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Affiliate Transaction is fair, from a financial point of view, to the Company
or such Subsidiary. The foregoing restrictions will not apply to (1)
reasonable and customary directors' fees, indemnification and similar
arrangements and payments thereunder, (2) any obligations of the Company under
the Financial Monitoring and Oversight Agreements or any employment agreement,
noncompetition or confidentiality agreement with any officer of the Company
(provided that each amendment of any of the foregoing agreements shall be
subject to the limitations of this covenant), (3) reasonable and customary
investment banking, financial advisory, commercial banking and similar fees and
expenses paid to any of the Initial Purchasers and their Affiliates, (4) any
Restricted Payment permitted to be made pursuant to the covenant described
under Section 4.03, (5) any issuance of securities or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by
the board of directors of the Company, (6) loans or advances to employees in
the ordinary course of business of the Company or any of its Subsidiaries
consistent with past practices, (7) payments made in connection with the
Acquisition, including fees to Hicks Muse, as described in the Offering
Memorandum dated March 19, 1997 relating to the Notes and (8) the issuance of
Capital Stock of the Company (other than Disqualified Stock).
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness and Issuance
of Disqualified Capital Stock.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur"), any
Indebtedness (other than Permitted Indebtedness) and the Company will
not issue any Disqualified Capital Stock, and its Subsidiaries will not
issue any Preferred Stock; provided, however, that the Company and its
Subsidiaries may incur Indebtedness or issue shares of such Capital
Stock if, in either case, the Company's Leverage Ratio at the time of
incurrence of such Indebtedness or the issuance of such Capital Stock,
as the case may be, after giving pro forma effect to such incurrence or
issuance as of such date and to the use of proceeds therefrom is less
than 7.0 to 1.
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(b) In addition, the Company will not incur any Secured
Indebtedness (other than Senior Indebtedness) unless contemporaneously
therewith effective provision is made to secure the Notes equally and
ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
Neither the Company nor any of its Subsidiaries will, directly or
indirectly, create or otherwise cause to permit to exist or become effective,
by operation of the charter of such Subsidiary or by reason of any agreement,
instrument, judgment, decree, rule, order, statute or governmental regulation,
any encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its Capital Stock; (b) make loans
or advances or pay any Indebtedness or other obligation owed to the Company or
any of its Subsidiaries; or (c) transfer any of its property or assets to the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) this Indenture; (3) customary non-assignment
provisions of any lease governing a leasehold interest of the Company or any
Subsidiary; (4) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired; (5) agreements existing on the Issue Date (including
the Credit Agreement) as such agreements are from time to time in effect;
provided, however, that any amendments or modifications of such agreements that
affect the encumbrances or restrictions of the types subject to this covenant
shall not result in such encumbrances or restrictions being less favorable to
the Company in any material respect, as determined in good faith by the board
of directors of the Company, than the provisions as in effect before giving
effect to the respective amendment or modification; (6) any restriction with
respect to such a Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of all or substantially all the Capital Stock or assets
of such Subsidiary pending the closing of such sale or disposition; (7) an
agreement effecting a refinancing, replacement or substitution of Indebtedness
issued, assumed or incurred pursuant to an agreement referred to in clause (2),
(4) or (5) above or any other agreement evidencing Indebtedness permitted under
this
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Indenture; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such refinancing, replacement or substitution
agreement or any such other agreement are no less favorable to the Company in
any material respect as determined in good faith by the Board of Directors of
the Company than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5); (8)
restrictions on the transfer of the assets subject to any Lien imposed by the
Holder of such Lien; or (9) a licensing agreement to the extent such
restrictions or encumbrances limit the transfer of property subject to such
licensing agreement.
SECTION 4.14. Change of Control.
(a) Upon the occurrence of a Change of Control, each
Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes in cash pursuant to the offer described
below (the "Change of Control Offer"), at a purchase price equal to 101%
of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase.
(b) Prior to the mailing of the notice referred to below,
but in any event within 30 days following the date on which the Company
becomes aware that a Change of Control has occurred, the Company
covenants that if the purchase of the Notes would violate or constitute
a default under any other Indebtedness of the Company, then the Company
shall, to the extent needed to permit such purchase of Notes, either (i)
repay all such Indebtedness and terminate all commitments outstanding
thereunder or (ii) obtain the requisite consents, if any, under any such
Indebtedness required to permit the purchase of the Notes as provided
below. The Company will first comply with the covenant in the preceding
sentence before it will be required to make the Change of Control Offer
or purchase the Notes pursuant to the provisions described below.
(c) Within 30 days following the date on which the
Company becomes aware that a Change of Control has occurred (the "Change
of Control Date"), the Company shall send, by first class mail, postage
prepaid, a notice to each Holder of Notes, which notice
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shall govern the terms of the Change of Control Offer. The notice to
the Holders shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Change of Control
Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to
this Section 4.14 and that all Notes validly tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued
interest, if any) and the purchase date (which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than as may
be required by law) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in making payment
therefor, any Note accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Note purchased pursuant to
a Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Paying Agent and Registrar for the Notes at the address
specified in the notice prior to the close of business on the Business Day
prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than five Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Notes
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(7) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased portion of
the Notes surrendered; provided, however, that each Note purchased and each new
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Note issued shall be in a principal amount of $1,000 or integral multiples
thereof; and
(8) the circumstances and relevant facts regarding such
Change of Control.
(d) On or before the Change of Control Payment
Date, the Company shall (i) accept for payment Notes or portions
thereof (in integral multiples of $1,000) validly tendered
pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent in accordance with Section 2.14 U.S. Legal Tender
sufficient to pay the purchase price plus accrued and unpaid
interest, if any, of all Notes so tendered and (iii) deliver to
the Trustee Notes so accepted together with an Officers'
Certificate stating the Notes or portions thereof being purchased
by the Company. Upon receipt by the Paying Agent of the monies
specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent
shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price plus accrued and unpaid
interest, if any, out of the funds deposited with the Paying
Agent in accordance with the preceding sentence. The Trustee
shall promptly authenticate and mail to such Holders new Notes
equal in principal amount to any unpurchased portion of the Notes
surrendered. Upon the payment of the purchase price for the
Notes accepted for purchase, the Trustee shall return the Notes
purchased to the Company for cancellation. Any monies remaining
after the purchase of Notes pursuant to a Change of Control Offer
shall be returned within three Business Days by the Trustee to
the Company except with respect to monies owed as obligations to
the Trustee pursuant to Article Seven. For purposes of this
Section 4.14, the Trustee shall, except with respect to monies
owed as obligations to the Trustee pursuant to Article Seven, act
as the Paying Agent.
(e) The Company will comply with the requirements
of Rule 14e-1 under the Exchange Act and any other notes laws and
regulations thereunder to the extent such laws and regulations
are applicable in connection with the purchase of the Notes
pursuant to a Change of Control Offer. To the extent the
provisions of any such rule conflict with the provisions of this
Indenture relating to a Change of Control Offer, the
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Company shall comply with the provisions of such rule and be deemed not
to have breached its obligations relating to such Change of Control
Offer by virtue thereof.
(f) Paragraphs (a)-(e) of this Section 4.14 notwithstanding,
the Company shall not be required to make a Change of Control Offer if,
instead, the Company elects to effect a Change of Control Redemption in
compliance with the requirements listed on the Notes in Exhibit A and
Exhibit B hereof.
SECTION 4.15. Limitation on Asset Sales.
(a) Neither the Company nor any of its Subsidiaries will
consummate an Asset Sale unless (i) the Company or the applicable
Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets
sold or otherwise disposed of (as determined in good faith by management
of the Company or, if such Asset Sale involves consideration in excess
of $2,500,000, by the board of directors of the Company, as evidenced by
a board resolution), (ii) at least 75% of the consideration received by
the Company or such Subsidiary, as the case may be, from such Asset Sale
is in the form of cash or Cash Equivalents (other than to the extent
that the Company is exchanging all or substantially all the assets of
one or more broadcast businesses operated by the Company (including by
way of the transfer of capital stock) for all or substantially all the
assets (including by way of the transfer of capital stock) constituting
one or more broadcast businesses operated by another Person, in which
event, to such extent, the foregoing requirement with respect to the
receipt of cash or Cash Equivalents shall not apply) and is received at
the time of such disposition and (iii) upon the consummation of an Asset
Sale, the Company applies, or causes such Subsidiary to apply, such Net
Cash Proceeds within 180 days of receipt thereof either (A) to repay any
Senior Indebtedness of the Company or any Indebtedness of a Subsidiary
of the Company (and, to the extent such Senior Indebtedness relates to
principal under a revolving credit or similar facility, to obtain a
corresponding reduction in the commitments thereunder), (B) to reinvest,
or to be contractually committed to reinvest pursuant to a binding
agreement, in Productive Assets and, in the
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latter case, to have so reinvested within 360 days of the date of
receipt of such Net Cash Proceeds or (C) to purchase Notes and other
Senior Subordinated Indebtedness, pro rata tendered to the Company for
purchase at a price equal to 100% of the principal amount thereof (or
the accreted value of such other Senior Subordinated Indebtedness, if
such other Senior Subordinated Indebtedness is issued at a discount)
plus accrued interest thereon, if any, to the date of purchase pursuant
to an offer to purchase made by the Company as set forth below (a "Net
Proceeds Offer"); provided, however, that the Company may defer making a
Net Proceeds Offer until the aggregate Net Cash Proceeds from Asset
Sales not otherwise applied in accordance with this covenant equal or
exceed $5,000,000.
(b) Subject to the deferral right set forth in the final proviso
of the preceding paragraph, each notice of a Net Proceeds Offer will be
mailed, by first-class mail, to holders of Notes not more than 180 days
after the relevant Asset Sale or, in the event the Company or a
Subsidiary has entered into a binding agreement as provided in (B)
above, within 180 days following the termination of such agreement but
in no event later than 360 days after the relevant Asset Sale. Such
notice will specify, among other things, the purchase date (which will
be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, except as otherwise required by law) and will
otherwise comply with the procedures set forth in this Indenture. Upon
receiving notice of the Net Proceeds Offer, holders of Notes may elect
to tender their Notes in whole or in part in integral multiples of
$1,000. To the extent holders properly tender Notes in an amount which,
together with all other Senior Subordinated Indebtedness so tendered,
exceeds the Net Proceeds Offer, Notes and other Senior Subordinated
Indebtedness of tendering holders will be repurchased on a pro rata
basis (based upon the aggregate principal amount tendered). To the
extent that the aggregate principal amount of Notes tendered pursuant to
any Net Proceeds Offer, which, together with the aggregate principal
amount or aggregate accreted value, as the case may be, of all other
Senior Subordinated Indebtedness so tendered, is less than the amount of
Net Cash Proceeds subject to such Net Proceeds Offer, the Company may
use any remaining portion of such Net
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Cash Proceeds not required to fund the repurchase of tendered Notes and
other Senior Subordinated Indebtedness for any purposes otherwise
permitted by this Indenture. Upon the consummation of any Net Proceeds
Offer, the amount of Net Cash Proceeds subject to any future Net
Proceeds Offer from the Asset Sales giving rise to such Net Cash
Proceeds shall be deemed to be zero.
The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act to the extent applicable in connection with the repurchase of
Notes pursuant to a Net Proceeds Offer. To the extent the provisions of any
such rule conflict with the provisions of this Indenture relating to a Net
Proceeds Offer, the Company shall comply with the provisions of such rule and
be deemed not to have breached its obligations relating to such Net Proceeds
Offer by virtue thereof.
SECTION 4.16. Limitation on Asset Swaps.
The Company will not, and will not permit any Subsidiary to, engage
in any Asset Swaps, unless: (i) at the time of entering into such Asset Swap,
and immediately after giving effect to such Asset Swap, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof; (ii) in the event such Asset Swap involves an aggregate amount in
excess of $1,000,000, the terms of such Asset Swap have been approved by a
majority of the members of the Board of Directors of the Company; and (iii) in
the event such Asset Swap involves an aggregate amount in excess of $5,000,000,
the Company has received a written opinion from an independent investment
banking firm of nationally recognized standing that such Asset Swap is fair to
the Company or such Subsidiary, as the case may be, from a financial point of
view.
SECTION 4.17. Limitation on Layering.
The Company will not incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is
contractually subordinated in right of payment to all Senior Subordinated
Indebtedness (including the Notes).
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SECTION 4.18. FCC Compliance.
Notwithstanding anything in this Indenture to the contrary, the
Company shall not be required to take any action hereunder that constitutes or
would represent a transfer of control to the Company of SAC or any Subsidiary
of SAC without first obtaining the consent of the FCC to such transfer of
control.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Merger, Consolidation and Sale of Assets.
(a) The Company may not, in a single transaction or a series of
related transactions, consolidate with or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or adopt a plan of
liquidation unless:
(1) either (A) the Company is the surviving or continuing Person or (B)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person that acquires by conveyance, transfer
or lease the properties and assets of the Company substantially as an entirety
or in the case of a plan of liquidation, the Person to which assets of the
Company have been transferred, shall be a corporation, partnership or trust
organized and existing under the laws of the United States or any State thereof
or the District of Columbia;
(2) such surviving Person shall assume all of the obligations of the
Company under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee;
(3) immediately after giving effect to such transaction and the use of
the proceeds therefrom (on a pro forma basis, including giving effect to any
Indebtedness incurred or anticipated to be incurred in connection with such
transaction), the Company (in the case of clause (A) of the foregoing clause
(1)) or such Person (in the case of clause (B) of the foregoing clause (1))
shall be able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12;
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(4) immediately after giving effect to such transactions, no Default or
Event of Default shall have occurred and be continuing; and
(5) the Company has delivered to the Trustee prior to the consummation
of the proposed transaction an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger or transfer complies with this
Indenture and that all conditions precedent in this Indenture relating to such
transaction have been satisfied.
(b) For purposes of this Section 5.01, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all of the properties and
assets of one or more Subsidiaries, the Capital Stock of which
constitutes all or substantially all of the properties or assets of the
Company, will be deemed to be the transfer of all or substantially all
of the properties and assets of the Company.
(c) Notwithstanding the foregoing clauses (a)(2) and (3),
subject to applicable FCC requirements, if any, (i) any Subsidiary of
the Company may consolidate with, merge into or transfer all or part of
its properties and assets to the Company and (ii) the Company may merge
with a corporate Affiliate thereof incorporated solely for the purpose
of reincorporating the Company in another jurisdiction in the U.S. to
realize tax or other benefits.
SECTION 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein. When a successor corporation
assumes all of the obligations of the Company hereunder and under the Notes
and agrees to be bound hereby and thereby, the predecessor shall be released
from such obligations.
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ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
Each of the following shall be an "Event of Default":
(1) the failure to pay interest on the Notes when the same becomes
due and payable and, which Default continues for a period of 30 days (whether
or not such payment is prohibited by the provisions described under Article
Ten);
(2) the failure to pay principal of or premium, if any, on any
Notes when such principal or premium, if any, becomes due and payable, at
maturity, upon redemption or otherwise (whether or not such payment is
prohibited by the provisions described Article Ten);
(3) a default in the observance or performance of any other
covenant or agreement contained in the Notes or this Indenture, which Default
continues for a period of 30 days after the Company receives written notice
thereof specifying the default from the Trustee or Holders of at least 25% in
aggregate principal amount of outstanding Notes;
(4) the failure to pay at the final stated maturity (giving effect
to any extensions thereof) the principal amount of any Indebtedness of the
Company or any Subsidiary of the Company, or the acceleration of the final
stated maturity of any such Indebtedness, if the aggregate principal amount of
such Indebtedness, together with the aggregate principal amount of any other
such Indebtedness in default for failure to pay principal at the final stated
maturity (giving effect to any extensions thereof) or which has been
accelerated, aggregates $5,000,000 or more at any time in each case after a 10-
day period during which such Default shall not have been cured or such
acceleration rescinded;
(5) one or more judgments in an aggregate amount in excess of
$5,000,000 (which are not covered by insurance as to which the insurer has not
disclaimed coverage) being rendered against the Company or any of its
Significant Subsidiaries and such judgment or judgments remain
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undischarged or unstayed for a period of 60 days after such judgment or
judgments become final and nonappealable;
(6) the Company or any Significant Subsidiary (A) commences a
voluntary case or proceeding under any Bankruptcy Law with respect to itself,
(B) consents to the entry of a judgment, decree or order for relief against it
in an involuntary case or proceeding under any Bankruptcy Law, (C) consents to
the appointment of a custodian of it or for substantially all of its property,
(D) consents to or acquiesces in the institution of a bankruptcy or an
insolvency proceeding against it or (E) makes a general assignment for the
benefit of its creditors; or
(7) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any Significant Subsidiary in an
involuntary case or proceeding under any Bankruptcy Law, which shall (A)
approve as properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company or any Significant
Subsidiary, (B) appoint a custodian of the Company or any Significant
Subsidiary or for substantially all of its property or (C) order the winding-up
or liquidation of its affairs; and such judgment, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days.
SECTION 6.02. Acceleration.
(a) If an Event of Default (other than an Event of Default
specified in Section 6.01(6) or (7)) occurs and is continuing and has not been
waived pursuant to Section 6.04, the Trustee may, and the Trustee upon request
to the Trustee of Holders of 25% in principal amount of the outstanding Notes
shall, or the Holders of at least 25% in principal amount of outstanding Notes
may, declare the principal of all the Notes, together with all accrued and
unpaid interest and premium, if any, to be due and payable by notice in writing
to the Company and, in the case of an acceleration notice from the Holders of
at least 25% in principal amount of the outstanding Notes, the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same (i) shall become
immediately due and payable or (ii) if there are any amounts outstanding under
the Credit Agreement, will become due and payable upon the first to occur of an
acceleration under the Credit Agreement or five business days after receipt by
the Company and the agent
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under the Credit Agreement of such Acceleration Notice (unless all Events of
Default specified in such Acceleration Notice have been cured or waived). If
an Event of Default specified in Section 6.01(6) or (7) occurs and is
continuing, then such amount will ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of the Notes.
(b) At any time after a declaration of acceleration with
respect to the Notes as described in the preceding paragraph, the Holders of a
majority in principal amount of the Notes then outstanding (by notice to the
Trustee) may rescind and cancel such declaration and its consequences if (i)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction, (ii) all existing Events of Default have been cured or
waived except nonpayment of principal of or interest on the Notes that has
become due solely by such declaration of acceleration, (iii) to the extent the
payment of such interest is lawful, interest (at the same rate specified in the
Notes) on overdue installments of interest and overdue payments of principal,
which has become due other than by such declaration of acceleration, has been
paid, (iv) the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) in
the event of the cure or waiver of a Default or Event of Default of the type
described in Sections 6.01(6) and (7), the Trustee has received an Officers'
Certificate and Opinion of Counsel that such Default or Event of Default has
been cured or waived and the Trustee shall be entitled to conclusively rely
upon such Officers' Certificate and Opinion of Counsel. No such rescission
shall affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or accrued and unpaid interest on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing
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upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of
any other remedy. All available remedies are cumulative to the extent
permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of a majority in
principal amount of the Notes by notice to the Trustee may waive an existing
Default or Event of Default and its consequences, except a Default in the
payment of the principal of or interest on any Note as specified in clauses (1)
and (2) of Section 6.01.
SECTION 6.05. Control by Majority.
Subject to Section 2.09, the Holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it, including, without limitation, any remedies
provided for in Section 6.03. Subject to Section 7.01, however, the Trustee
may, in its discretion, refuse to follow any direction that conflicts with any
law or this Indenture, that the Trustee determines may be unduly prejudicial to
the rights of another Holder, or that may involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee, in its discretion, that is not inconsistent with such
direction.
SECTION 6.06. Limitation on Suits.
A Noteholder may not pursue any remedy with respect to this
Indenture or the Notes unless:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) Holders of at least 25% in aggregate principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holders offer to the Trustee indemnity or security against
any loss, liability or expense to be incurred in compliance with such request
which is satisfactory to the Trustee;
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(4) the Trustee does not comply with the request within 45 days
after receipt of the request and the offer of satisfactory indemnity or
security; and
(5) during such 45-day period the Holders of a majority in
aggregate principal amount of the then outstanding Notes do not give the
Trustee a direction which, in the opinion of the Trustee, is inconsistent with
the request.
A Holder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over such other
Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right
of any Holder to receive payment of principal of, premium and interest on a
Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Notes for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest at the rate set forth in the Notes
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings
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relating to the Company or any other obligor upon the Notes, any of their
respective creditors or any of their respective property, and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any custodian in
any such judicial proceedings is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, taxes,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07. The Company's payment
obligations under this Section 6.09 shall be secured in accordance with the
provisions of Section 7.07. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Sections 6.09 and 7.07;
Second: if the Holders are forced to proceed against the Company
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, and interest,
respectively; and
Fourth: to the Company or any other obligor on the Notes, as
their interests may appear, or as a court of competent jurisdiction
may direct.
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The Trustee, upon prior notice to the Company, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more
than 10% in aggregate principal amount of the outstanding Notes.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and
skill in its exercise thereof as a prudent Person would exercise or
use under the circumstances in the conduct of its own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture or the TIA and no duties, covenants,
responsibilities or obligations shall be implied in this Indenture that are
adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates (including Officers'
Certificates) or opinions (including Opinions of Counsel)
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furnished to the Trustee and conforming to the requirements of this Indenture.
However, as to any certificates or opinions which are required by any provision
of this Indenture to be delivered or provided to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein
contained, the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c) and (d) of
this Section 7.01.
(f) The Trustee shall not be liable for interest on any
money or assets received by it except as the Trustee may agree with the
Company. Assets held in trust by the Trustee need not be segregated
from other assets except to the extent required by law.
(g) In the absence of bad faith, negligence or willful
misconduct on the part of the Trustee, the
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Trustee shall not be responsible for the application of any money by any
Paying Agent other than the Trustee.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may consult with counsel and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 11.04 and 11.05.
The Trustee shall not be liable for and shall be fully protected in
respect of any action it takes or omits to take in good faith in
reliance on such Officers' Certificate, or an Opinion of Counsel or
advice of counsel.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action that
it takes or omits to take in good faith that it reasonably believes to
be authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate (including any Officers' Certificate), statement,
instrument, opinion (including any Opinion of Counsel), notice, request,
direction, consent, order, bond, debenture, or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit and, if the
Trustee shall determine to make such further inquiry or investigation,
it shall be entitled, upon reasonable notice to the Company, to examine
the books, records, and premises of the Company, personally or by agent
or attorney.
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(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Holders of the Notes pursuant
to the provisions of this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and
protection from liability with respect to any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice
or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiary or Unrestricted Subsidiary, or their respective Affiliates, with the
same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee must comply with Sections 7.10 and
7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, and it shall not be accountable for
the Company's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Company in this Indenture or the Notes
other than the Trustee's certificate of authentication.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Noteholder notice
of the uncured Default or Event of Default within 60 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of
Default in the payment of interest or principal of, premium or interest on, any
Note, including an accelerated payment and the failure to make payment on the
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Change of Control Payment Date pursuant to a Change of Control Offer or on the
Proceeds Purchase Date pursuant to a Net Proceeds Offer and, except in the case
of a failure to comply with Article Five, the Trustee may withhold the notice
if and so long as its Board of Directors, the executive committee of its Board
of Directors or a committee of its Board of Directors and/or Trust Officers in
good faith determines that withholding the notice is in the interest of the
Holders. The Trustee shall not be deemed to have knowledge of a Default or
Event of Default other than (i) any Event of Default occurring pursuant to
Sections 6.01(1) or 6.01(2); or (ii) any Default or Event of Default of which a
Trust Officer shall have received written notification or obtained actual
knowledge.
SECTION 7.06. Reports by Trustee to Holders.
Within 60 days after March 1 of each year beginning with March 1,
1998, the Trustee shall, to the extent that any of the events described in TIA
Section 313(a) occurred within the previous twelve months, but not otherwise,
mail to each Noteholder a brief report dated as of such date that complies with
TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b)
and 313(c).
A copy of each report at the time of its mailing to Noteholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if the Notes become
listed on any stock exchange, and if the Notes are so listed, the Trustee shall
comply with TIA Section 313(d).
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as may be agreed upon by the Company and the Trustee. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses, disbursements and advances
incurred or made by it in connection with the performance of its duties and the
discharge of its obligations under this Indenture. Such expenses shall include
the reasonable fees and expenses of the Trustee's agents and counsel.
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The Company shall indemnify the Trustee and its agents,
employees, officers, stockholders and directors for, and hold them harmless
against, any loss, liability or expense incurred by them except for such
actions to the extent caused by any negligence, bad faith or willful misconduct
on their part, arising out of or in connection with the acceptance or
administration of this trust including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of the Trustee's rights, powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee or any of its agents, employees, officers, stockholders and
directors for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee and its agents,
employees, officers, stockholders and directors subject to the claim may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel; provided, however, that the Company will not be required to pay
such fees and expenses if it assumes the Trustee's defense and there is no
conflict of interest between the Company and the Trustee and its agents,
employees, officers, stockholders and directors subject to the claim in
connection with such defense as reasonably determined by the Trustee. The
Company need not pay for any settlement made without its written consent. The
Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or interest on particular Notes.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, such expenses and
the compensation for such services shall be paid to the extent allowed under
any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing at
least 10 days in advance. The Holders of a
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majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee and may appoint a successor Trustee
with the Company's consent. A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only with the
successor Trustee's acceptance of appointment as provided in this Section. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year
after the successor Trustee takes office, the Holders of a majority in
principal amount of the Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Promptly after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Holder.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company
or the Holders of at least 10% in aggregate principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirement of TIA Sections 310(a)(1) and 310(a)(2). The Trustee (or in the
case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding
company, shall meet the capital requirements of TIA Section 310(a)(2). The
Trustee shall comply with TIA Section 310(b); provided, however, that there
shall be excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other notes, or certificates of interest or
participation in other notes, of the Company are outstanding, if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
The provisions of TIA Section 310 shall apply to the Company and any other
obligor of the Notes.
SECTION 7.11. Preferential Collection of Claims Against the Company.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b).
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A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein. The provisions of TIA Section 311
shall apply to the Company and any other obligor of the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Termination of the Company's Obligations.
This Indenture will be Discharged and will cease to be of further
effect and the obligations of the Company under the Notes and this Indenture
shall terminate (except that the obligations under Sections 2.03 through 2.07,
7.07 and 7.08 and the rights, powers, trusts, duties and immunities of the
Trustee hereunder shall survive the effect of this Article Eight) when (a)
either (i) all Notes, theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the issuer or discharged from
such trust) have been delivered to the Trustee for cancellation or (ii) all
Notes theretofore delivered to the Trustee for cancellation have become due and
payable and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the Notes to
the date of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be; (b) the Company has paid all other sums payable
under this Indenture by the Company; and (c) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel stating that all
conditions precedent under this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with; provided, however, that
such counsel may rely, as to matters of fact, on a certificate or certificates
of officers of the Company.
In addition, at the Company's option, either (a) the Company
shall be deemed to have been Discharged from any and all obligations with
respect to the Notes ("Legal Defeasance") after the applicable conditions set
forth below
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have been satisfied (except for the obligations of the Company under Sections
2.03, 2.04, 2.06, 2.07, 7.07 and this Section 8.01) or (b) the Company shall
cease to be under any obligation to comply with any term, provision or
condition set forth in Sections 4.03, 4.09 and 4.11 through 4.17 and Section
5.01 ("Covenant Defeasance") after the applicable conditions set forth below
have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of the Notes
U.S. Legal Tender or U.S. Government Obligations or a combination thereof that,
through the payment of interest and premium thereon and principal in respect
thereof in accordance with their terms, will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay all the
principal of and interest and premium on the Notes on the dates such payments
are due in accordance with the terms of such Notes, as well as the Trustee's
fees and expenses; provided, however, that no deposits made pursuant to this
Section 8.01(1) shall cause the Trustee to have a conflicting interest as
defined in and for purposes of the TIA; and provided, further, that, as
confirmed by an Opinion of Counsel, no such deposit shall result in the
Company, the Trustee or the trust becoming or being deemed to be an "investment
company" under the Investment Company Act of 1940;
(2) No Event of Default or Default with respect to the Notes shall
have occurred and be continuing on the date of such deposit after giving effect
to such deposit;
(3) The Company shall have delivered to the Trustee an Opinion of
Counsel, subject to certain qualifications, to the effect that (i) the Funds
will not be subject to any rights of any other holders of Indebtedness of the
Company, and (ii) the Funds so deposited will not be subject to avoidance under
applicable Bankruptcy Law;
(4) The Company shall have paid or duly provided for payment of all
amounts then due to the Trustee pursuant to Section 7.07;
(5) No such deposit will result in a Default under this Indenture or
a breach or violation of, or constitute a default under, any other instrument
or
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agreement (including, without limitation, the Credit Agreement) to which the
Company or any of its Subsidiaries is a party or by which it or its property is
bound;
(6) The Company shall have delivered to the Trustee an Opinion
of Counsel or a private letter ruling issued to the Company by the Internal
Revenue Service (the "IRS") to the effect that the Holders of the Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of the deposit pursuant to clause (1) above and related Legal Defeasance or
Covenant Defeasance, as the case may be, and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such option had not been exercised and, in the case of an
Opinion of Counsel furnished in connection with a Legal Defeasance, accompanied
by a private letter ruling issued to the Company by the IRS to such effect;
(7) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and
(8) An Officers' Certificate and an Opinion of Counsel to the
effect that all conditions precedent to Legal Defeasance or Covenant
Defeasance, as the case may be, have been complied with.
Notwithstanding the foregoing, the Opinion of Counsel required by
subparagraph 6 above need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable on the Maturity Date within one year, or (iii) are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Company.
SECTION 8.02. Acknowledgment of Discharge by Trustee.
Subject to Section 8.05, after (i) the conditions of Section
8.01, have been satisfied and (ii) the Company has delivered to the Trustee an
Opinion of Counsel, stating that all conditions precedent referred to in clause
(i) above relating to the satisfaction and discharge of this
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Indenture have been complied with, the Trustee upon written request of the
Company shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified in this
Article Eight.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust Funds deposited with it pursuant
to Section 8.01. It shall apply the Funds through the Paying Agent and in
accordance with this Indenture to the payment of all the principal of, or
premium, if any, and interest on the Notes.
SECTION 8.04. Repayment to the Company.
The Trustee and the Paying Agent shall promptly pay to the
Company any Funds held by them for the payment of all the principal of, or
premium, if any, and interest that remains unclaimed for one year; provided,
however, that the Trustee or such Paying Agent may, at the expense of the
Company, cause to be published once in a newspaper of general circulation in
the City of New York or mailed to each Holder, notice that such Funds remain
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication or mailing, any unclaimed
balance of such Funds then remaining will be repaid to the Company. After
payment to the Company, Holders entitled to the Funds must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another Person and all liability of the Trustee and Paying Agent
with respect to such Funds shall cease.
SECTION 8.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any Funds by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.01 until such time as the Trustee or Paying Agent is permitted to
apply all such Funds in accordance with Section 8.01; provided, however, that
if the Company has made any payment of principal, or premium, if any, and
interest on any Notes because of the reinstatement of its obligations, the
Company
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shall be subrogated to the rights of the Holders of such Notes to receive such
payment from Funds held by the Trustee or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Notes without the
consent of any Holders:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article Five;
(3) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(4) to comply with requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the TIA; or
(5) to make any other change that would provide any additional
benefit or rights to the Holders or that does not adversely affect in any
material respect the rights of any Noteholders hereunder;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel and an Officers' Certificate, each stating that such amendment or
supplement complies with the provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder
or Holders of at least a majority in principal amount of the then outstanding
Notes may make all other modifications and amendments of this Indenture or the
Notes, except that, without the consent of each Holder of Notes affected
thereby, no amendment may, directly or indirectly,:
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(1) reduce the amount of Notes whose Holders must consent to
an amendment;
(2) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change the fixed maturity of
any Notes, or change the date on which any Notes may be subject to redemption
or repurchase, or reduce the redemption or repurchase price thereof;
(4) make any Notes payable in money other than that stated in
the Notes and this Indenture;
(5) make any change in provisions of this Indenture protecting
the right of each holder of a Note to receive payment of principal of, premium
on and interest on such Note on or after the due date thereof or to bring suit
to enforce such payment or permitting holders of a majority in principal amount
of the Notes to waive Default or Event of Default; or
(6) after the Company's obligation to purchase the Notes
arises under Sections 4.14 or 4.15, amend, modify or change the obligation of
the Company to make or consummate a Change of Control Offer or a Net Proceeds
Offer or waive any default in the performance thereof or modify any of the
provisions or definitions with respect to any such offers.
It shall not be necessary for the consent of the Holders under
this Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective (as provided in Section 9.04), the Company shall mail to the
Holders affected thereby a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
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SECTION 9.03. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder's Note, even if notation of the consent is not made on
any Note. Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to his Note or portion of his Note by notice
to the Trustee or the Company received before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver (at which time such amendment,
supplement or waiver shall become effective).
The Company may, but shall not be obligated to, fix such record
date as it may select for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 120
days after such record date.
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After an amendment, supplement or waiver becomes effective, it
shall bind every Holder, unless it makes a change described in any of clauses
(1) through (6) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as a consenting Holder's Note; provided, however that any such waiver shall not
impair or affect the right of any Holder to receive payment of principal of and
interest on a Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may require the Holder of the Note to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Note shall issue and
the Trustee shall authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to and adopted in accordance with this Article Nine;
provided, however, that the Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel and an Officers' Certificate each stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture. Such Opinion of Counsel shall not
be an expense of the Trustee.
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ARTICLE TEN
SUBORDINATION
SECTION 10.1. Agreement To Subordinate.
The Company agrees, and each Holder by accepting a Note agrees,
that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article Ten, to the
payment when due of all Senior Indebtedness of the Company and that such
subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness. The Notes shall in all respects rank pari passu with all other
Senior Subordinated Indebtedness of the Company, and only Indebtedness of the
Company which is Senior Indebtedness will rank senior to the Notes in
accordance with the provisions set forth herein. Secured Indebtedness is not
deemed to be Senior Indebtedness merely because it is secured. All provisions
of this Article Ten shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy.
Upon any payment or distribution of the assets of the Company
upon a total or partial liquidation or dissolution or reorganization or
bankruptcy of or similar proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be entitled
to receive payment in full of all Senior Indebtedness of the Company before
Holders shall be entitled to receive any payment of principal of or interest on
or other amounts with respect to the Notes from the Company; and
(2) until the Senior Indebtedness of the Company is paid in full, any
payment or distribution to which Holders would be entitled but for the
provisions of this Article Ten shall be made to holders of Senior Indebtedness
as its interest may appear.
SECTION 10.03. Default on Senior Indebtedness.
The Company may not pay the principal of, premium (if any), or
interest on the Notes or make any deposit pursuant to Section 8.01 or
repurchase, redeem or otherwise retire any Notes (collectively, "pay the
Notes") if (i) any Senior Indebtedness is not paid when due or (ii) any other
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default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either
case, (x) the default has been cured or waived or is no longer continuing
and/or and any such acceleration has been rescinded or (y) such Senior
Indebtedness has been paid in full; provided, however, that the Company may pay
the Notes but subject to the provisions of the first sentence of this Section
10.03 and the provisions of Section 10.02, without regard to the foregoing if
the Company and the Trustee receive written notice approving such payment from
the Representative of the Senior Indebtedness with respect to which either of
the events set forth in clause (i) or (ii) of this sentence has occurred or is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Notes (except (i) in Qualified Capital
Stock issued by the Company to pay interest on the Notes or issued in exchange
for the Notes, (ii) in securities substantially identical to the Notes issued
by the Company in payment of interest accrued thereon or (iii) in securities
issued by the Company which are subordinated to the Senior Indebtedness at
least to the same extent as the Notes and having a Weighted Average Life to
Maturity at least equal to the remaining Weighted Average Life to Maturity of
the Notes) for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing) or
(iii) because such Designated Senior Indebtedness has been repaid in full.
Notwithstanding the provisions of the immediately preceding sentence, but
subject to the provisions of the first sentence of this Section 10.03 and the
provisions of Section 10.02, the Company may resume payments on the Notes after
the end of such Payment Blockage Period. Not more than one Blockage Notice may
be given, and not more than one Payment Blockage Period may occur, in any
consecutive 360-day period,
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irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period.
SECTION 10.04. Acceleration of Payment of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify the holders of the Representative
(if any) of any issue of Designated Senior Indebtedness which is then
outstanding; provided, however, that the Company shall be obligated to notify
such a Representative only if such Representative has delivered or caused to be
delivered an address for the service of such a notice to the Company (and the
Company shall only obligated to deliver the notice to the address so
specified). If a notice is required pursuant to the immediately preceding
sentence, the Company may not pay the Notes (except payment (i) in Qualified
Capital Stock issued by the Company to pay interest on the Notes or issued in
exchange for the Notes, (ii) in securities substantially identical to the Notes
issued by the Company in payment of interest accrued thereon or (iii)
securities issued by the Company which are subordinated to the Senior
Indebtedness at least to the same extent as the Notes and have a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the Notes), until five Business Days after the respective
Representative of the Designated Senior Indebtedness receives notice (at the
address specified in the preceding sentence) of such acceleration and, a
thereafter, may pay the Notes only if the provisions of this Article Ten
otherwise permit payment at that time.
SECTION 10.05. When Distribution Must Be Paid Over.
If a distribution is made to Holders that because of this Article
Ten should not have been made to them, the Holders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and promptly pay it
over to them as their respective interests may appear.
SECTION 10.06. Subrogation.
After all Senior Indebtedness is paid in full and until the Notes
are paid in full, Holders shall be subrogated to the rights of holders of
Senior Indebtedness to receive distributions applicable to Senior Indebtedness.
A distribution made under this Article Ten to holders of Senior Indebtedness
which otherwise would have been made to
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Holders is not, as between the Company and the Holders, a payment by the
Company of Senior Indebtedness.
SECTION 10.07. Relative Rights.
This Article Ten defines the relative rights of Holders of the
Notes on the one hand and holders of Senior Indebtedness on the other hand.
Nothing in this Indenture shall:
(1) impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise payable to
Holders.
SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or by the failure of the Company to
comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may
continue to make payments on the Notes and shall not be charged with knowledge
of the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of such payment, a
Trust Officer of the Trustee receives notice satisfactory to it that payments
may not be made under this Article Ten. The Company, the Registrar or co-
registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that if an issue of Senior
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-
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registrar and the Paying Agent may do the same with like rights. The Trustee
shall be entitled to all the rights set forth in this Article Ten with respect
to any Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in Article Seven
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article Ten shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative (if any).
SECTION 10.11. Article Ten Not To Prevent Events of Default or Limit
Right To Accelerate.
The failure to make a payment in respect of the Notes by reason
of any provision in this Article Ten shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article Ten shall
have any effect on the right of the Holders or the Trustee to accelerate the
maturity of the Notes.
SECTION 10.12. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government Obligations held in
trust under Article Eight by the Trustee for the payment of principal of and
interest on the Notes shall not be subordinated to the prior payment of any
Senior Indebtedness or subject to the restrictions set forth in this Article
Ten, and none of the Holders shall be obligated to pay over any such amount to
the Company, any holder of Senior Indebtedness of the Company, or any other
creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely.
Upon any payment or distribution pursuant to this Article Ten,
the Trustee and the Holders shall be entitled to rely (i) upon any order or
decree of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 10.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such
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payment or distribution to the Trustee or to the Holders or (iii) upon the
Representatives for the holders of Senior Indebtedness for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Ten. In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article Ten, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The Trustee shall have
the right to seek a declaratory judgment as to any right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article Ten.
SECTION 10.14. Trustee To Effectuate Subordination.
Each Holder by accepting a Note authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holder and the holders
of Senior Indebtedness as provided in this Article Ten and appoints the Trustee
as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall mistakenly pay over or distribute to Holders or the Company, or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article Ten or otherwise.
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SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions.
Each Holder by accepting a Note acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Notes, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
SECTION 11.02. Notices.
Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by telex, by telecopier or registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
if to the Company:
STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attention: Chief Executive Officer
with a copy to:
Weil Gotshal & Manges
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Attention: Jeremy Dickens
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<PAGE> 94
if to the Trustee:
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue
Suite 2700
Dallas, Texas 75201
Attention: Corporate Trust Department
The Company and the Trustee by written notice to each other may
designate additional or different addresses for notices. Any notice or
communication to the Company or the Trustee shall be deemed to have been given
or made as of the date so delivered if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if faxed; and five (5) calendar
days after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
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<PAGE> 95
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the signers, all
conditions precedent to be performed by the Company, if any, provided for in
this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Company, if any,
provided for in this Indenture relating to the proposed action have been
complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.07, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is reasonably necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
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<PAGE> 96
SECTION 11.07. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York, Dallas, Texas or at such place of payment are not required to
be open. If a payment date is a Legal Holiday at such place, payment may be
made at such place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
SECTION 11.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE NOTES.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse Against Others.
A past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company shall not have any
liability for any obligations of the Company under the Notes or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creations. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 11.11. Successors.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
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<PAGE> 97
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together shall represent
the same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or in
the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 11.14. Independence of Covenants.
All covenants and agreements in this Indenture and the Notes
shall be given independent effect so that if any particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or otherwise be within the limitations of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 98
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, all as of the date first written above.
STC BROADCASTING, INC.
By: /s/ DAVID A. FITZ
----------------------------------
Name: David A. Fitz
--------------------------------
Title: Senior Vice President,
Chief Financial Officer
and Secretary
-------------------------------
U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By: /s/ JAMES J. McGINLEY
----------------------------------
Name: James J. McGinley
--------------------------------
Title: Authorized Signatory
-------------------------------
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<PAGE> 99
EXHIBIT A
[FORM OF SERIES A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, IN FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF THE FOREGOING CAUSE (E), A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND THE TRUSTEE, THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.
1
<PAGE> 100
STC BROADCASTING, INC.
11% Senior Subordinated Note due 2007, Series A
No. $
STC BROADCASTING, INC., a Delaware corporation (the "Company"),
for value received, promises to pay to CEDE & CO. or registered assigns, the
principal sum of Dollars, on March 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: STC BROADCASTING, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
2
<PAGE> 101
Trustee's Certificate of Authentication
This is one of the 11% Senior Subordinated Notes due 2007, Series
A, referred to in the within-mentioned Indenture.
Dated:
U.S. TRUST COMPANY OF
TEXAS, N.A., as Trustee
By:
---------------------------
Authorized Signatory
3
<PAGE> 102
(REVERSE OF NOTE)
11% Senior Subordinated Note due 2007, Series A
1. Interest. STC BROADCASTING, INC., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Notes will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from March 25, 1997. The Company will pay interest semi-annually in
arrears on each March 15 and September 15 (each, an "Interest Payment Date")
and at stated maturity, commencing on September 15, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes
to a Paying Agent to collect principal payments. The Company shall pay
principal, premium and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal, premium and interest by its
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, U.S. Trust Company
of Texas, N.A. (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice
to the Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Registrar or co-Registrar.
4
<PAGE> 103
4. Indenture. The Company issued the Notes under an
Indenture, dated as of March 25, 1997 (the "Indenture"), between the Company
and the Trustee. This Note is one of a duly authorized issue of Notes of the
Company designated as its 11% Senior Subordinated Notes due 2007, Series A (the
"Initial Notes"), limited (except as otherwise provided in the Indenture) in
aggregate principal amount to $100,000,000, which may be issued under the
Indenture. The Notes include the Initial Notes, the Private Exchange Notes (as
defined in the Indenture) and the Unrestricted Notes, as defined below, issued
in exchange for the Initial Notes pursuant to the Exchange and Registration
Rights Agreement. The Initial Notes and the Unrestricted Notes are treated as
a single class of securities under the Indenture. Capitalized terms used
herein shall have the meanings assigned to them in the Indenture unless
otherwise defined herein. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"), as in
effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Notes are subject to all such terms, and Holders of Notes are
referred to the Indenture and the TIA for a statement of them. The Notes are
general unsecured obligations of the Company.
5. Optional Redemption. (a) The Notes may be redeemed at any
time on or after March 15, 2002, in whole or in part, at the option of the
Company, at the redemption prices (expressed as a percentage of the principal
amount thereof on the applicable redemption date) set forth below, plus accrued
and unpaid interest, if any, to the redemption date, if redeemed during the 12-
month period beginning March 15 on each of the years set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 105.500%
2003 103.667%
2004 101.833%
2005 and thereafter 100.000%
</TABLE>
(b) Prior to March 15, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings to redeem up to
25% of the principal amount of the Notes at a redemption price equal to 111% of
the principal amount thereof plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption, at least 75% of the
aggregate principal amount
5
<PAGE> 104
of the Notes originally issued would remain outstanding immediately after
giving effect to such redemption. Any such redemption will be required to
occur on or prior to the date that is one year after the receipt by the Company
of the proceeds of a Public Equity Offering. The Company shall effect such
redemption on a pro rata basis.
(c) Prior to March 15, 2002, upon the occurrence of a Change
of Control, the Company will have the option to redeem the Notes in whole but
not in part (a "Change of Control Redemption") at a redemption price equal to
100% of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, plus the Applicable Premium. In order to effect a Change of
Control Redemption, the Company must send a notice to each holder of the Notes,
which notice shall govern the terms of the Change of Control Redemption. Such
notice must comply with the provisions of Section 3.03 of the Indenture;
provided, however, that such notice must be mailed to holders of the Notes
within 30 days following the date the Change of Control occurred (the "Change
of Control Redemption Date") and state that the Company is effecting a Change
of Control Redemption in lieu of a Change of Control Offer.
"Applicable Premium" means, with respect to a Note at any Change
of Control Redemption Date, the greater of (i) 1.0% of the principal amount of
such Note and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Note at March 15, 2002 (such redemption price being
described in paragraph (a) above) plus (2) all semi-annual payments of interest
through March 15, 2002 computed using a discount rate equal to the Treasury
Rate plus 100 basis points over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury SECURITIES with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) that has become publicly available at least two business days prior
to the Change of Control Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source or similar market data)) most
nearly equal to the period from the Change of Control Redemption Date to March
15, 2002; provided, however, that if the period from the Change of Control
Redemption Date to March 15, 2002 is not equal to the constant maturity of a
United States Treasury security for which a weekly average
6
<PAGE> 105
yield is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury SECURITIES for which such yields are given
except that if the period from the Change of Control Redemption Date to March
15, 2002 is less than one year, the weekly average yield on actually traded
United States Treasury SECURITIES adjusted to a constant maturity of one year
shall be used.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of
Control, upon the satisfaction of the conditions set forth in the Indenture,
the Company shall be required to offer to repurchase all of the then
outstanding Notes pursuant to a Change of Control Offer at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Asset Sales. Under certain circumstances
the Company is required to apply the net proceeds from Asset Sales to offer to
repurchase Notes and other Senior Subordinated Indebtedness, pro rata at a
price equal to 100% of the principal amount thereof (or the accreted value of
such other Senior Subordinated Indebtedness, if such other Senior Subordinated
Indebtedness is issued at a discount) plus accrued interest to the date of
repurchase.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer or exchange of Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
7
<PAGE> 106
register the transfer or exchange of any Notes during a period beginning 15
days before the mailing of a redemption notice for any Notes or portions
thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee
and such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of, premium and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of, premium and interest on the
Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Notes. Without consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness and issue Disqualified Capital Stock,
engage in certain Asset Swaps, enter into transactions with
8
<PAGE> 107
Affiliates, create dividend or other payment restrictions affecting
Subsidiaries and merge or consolidate with any other Person, sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets or adopt a plan of liquidation. Such limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has been offered indemnity or security reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest) if it
determines in good faith that withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries,
Unrestricted Subsidiaries or their respective Affiliates as if it were not the
Trustee.
18. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of a Note by accepting a
Note waives and releases all
9
<PAGE> 108
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
19. Authentication. This Note shall not be valid until the
Trustee or authenticating agent manually signs the certificate of
authentication on this Note.
20. Governing Law. This Note shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of laws to the extent that the
application of the laws of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform SECURITY Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Registration Rights. Pursuant to the Exchange and
Registration Rights Agreement, the Company will be obligated upon the
occurrence of certain events to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Series A Note for
an 11% Senior Subordinated Note due 2007, Series B, of the Company (an
"Unrestricted Note") which have been registered under the Securities Act, in
like principal amount and having terms identical in all material respects as
the Series A Notes. The Holders shall be entitled to receive certain
additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Exchange and Registration Rights Agreement.
24. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
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<PAGE> 109
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the Indenture.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
STC BROADCASTING, INC., 3839 4th Street North, Suite 420, St. Petersburg,
Florida 33703.
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<PAGE> 110
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
________________________________
_______________________________________________________________
(please print or type name and address)
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
_______________________________________________________________
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated: _____________________________ _____________________________
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Note in every particular without alteration
or enlargement or any change whatsoever and be guaranteed by the endorser's
bank or broker.
Signature Guarantee:
In connection with any transfer of this Note occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") covering resales of
this Note (which effectiveness shall not have been suspended or terminated at
the date of the transfer) and (ii) March 25, 1999 the undersigned confirms
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<PAGE> 111
that it has not utilized any general solicitation or general advertising in
connection with the transfer:
[Check One]
(1) ___ to the Issuer or a subsidiary thereof; or
(2) ___ pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
(3) ___ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) ___ pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933, as amended; or
(5) ___ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(6) ___ pursuant to another available exemption from the registration
statement requirements of the Securities Act of 1933, as amended.
(7) and unless the box below is checked, the undersigned confirms
that such Note is not being transferred to an "affiliate" of the
Issuers as defined in Rule 144 under the Securities Act of 1933,
as amended (an "Affiliate"):
? The transferee is an Affiliate of the Issuers.
Unless one of the items is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than
the registered Holder thereof; provided, however, that if item (3), (4) or (6)
is checked, the Company or the Trustee may require, prior to registering any
such transfer of the Notes, in their sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
and
13
<PAGE> 112
other information as the Trustee or the Company have reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of l933, as amended.
14
<PAGE> 113
If none of the foregoing items are checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.16 of the Indenture shall have
been satisfied.
Dated: Signed:
------------------------------ ----------------------------
(Sign exactly as
name appears on
the other side
of this Note)
Signature Guarantee:
------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, as amended, and is aware that the sale to it is being made in reliance
on Rule 144A and acknowledges that it has received such information regarding
the Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
------------------------------ ----------------------------
NOTICE: To be executed
by an executive
officer
15
<PAGE> 114
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the
appropriate box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by
the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state
the amount: $_____________
Date: Your Signature:
---------------------- -------------------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature
Guarantee:
--------------------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
16
<PAGE> 115
EXHIBIT B
STC BROADCASTING, INC.
11% Senior Subordinated Note due 2007, Series B
No. 1 $
STC BROADCASTING, INC., a Delaware corporation (the "Company"),
for value received, promises to pay to or registered assigns, the
principal sum of Dollars, on March 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: STC BROADCASTING, INC.
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
1
<PAGE> 116
Trustee's Certificate of Authentication
This is one of the 11% Senior Subordinated Notes due 2007, Series
B referred to in the within-mentioned Indenture.
Dated:
U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By:
----------------------------------
Authorized Signatory
2
<PAGE> 117
(REVERSE OF NOTE)
11% Senior Subordinated Note due 2007, Series B
1. Interest. STC BROADCASTING, INC., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Notes will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from March 25, 1997. The Company will pay interest semi-annually in
arrears on each March 15 and September 15 (each, an "Interest Payment Date")
and at stated maturity, commencing on September 15, 1997. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Notes and on overdue installments of interest (without regard to any
applicable grace periods) to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date even if the Notes are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender Notes
to a Paying Agent to collect principal payments. The Company shall pay
principal, premium and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal, premium and interest by its
check payable in such U.S. Legal Tender. The Company may deliver any such
interest payment to the Paying Agent or to a Holder at the Holder's registered
address.
3. Paying Agent and Registrar. Initially, U.S. Trust Company
of Texas, N.A. (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice
to the Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act as Registrar or co-Registrar.
3
<PAGE> 118
4. Indenture. The Company issued the Notes under an
Indenture, dated as of March 25, 1997 (the "Indenture"), between the Company
and the Trustee. This Note is one of a duly authorized issue of Notes of the
Company designated as its 11% Senior Subordinated Notes due 2007, Series B (the
"Unrestricted Notes"), limited (except as otherwise provided in the Indenture)
in aggregate principal amount to $100,000,000, which may be issued under the
Indenture. The Notes include the 11% Senior Subordinated Notes due 2007,
Series A (the "Initial Notes"), the Private Exchange Notes (as defined in the
Indenture) and the Unrestricted Notes. The Initial Notes, the Private Exchange
Notes and the Unrestricted Notes are treated as a single class of securities
under the Indenture. Capitalized terms used herein shall have the meanings
assigned to them in the Indenture unless otherwise defined herein. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the TIA for
a statement of them. The Notes are general unsecured obligations of the
Company.
5. Optional Redemption. (a) The Notes may be redeemed at
any time on or after March 15, 2002, in whole or in part, at the option of the
Company, at the redemption prices (expressed as a percentage of the principal
amount thereof on the applicable redemption date) set forth below, plus accrued
and unpaid interest, if any, to the redemption date, if redeemed during the 12-
month period beginning on March 15 of each of the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 105.500%
2003 103.667%
2004 101.833%
2005 and thereafter 100.000%
</TABLE>
(b) Prior to March 15, 2000, the Company may, at its option, use
the net cash proceeds of one or more Public Equity Offerings to redeem up to
25% of the principal amount of the Notes at a redemption price equal to 111% of
the principal amount thereof plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption, at least 75% of the
aggregate principal amount
4
<PAGE> 119
of the Notes originally issued would remain outstanding immediately after
giving effect to such redemption. Any such redemption will be required to
occur on or prior to the date that is one year after the receipt by the Company
of the proceeds of a Public Equity Offering. The Company shall effect such
redemption on a pro rata basis.
(c) Prior to March 15, 2002, upon the occurrence of a Change of
Control, the Company will have the option to redeem the Notes in whole but not
in part (a "Change of Control Redemption") at a redemption price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, plus the Applicable Premium. In order to effect a Change of
Control Redemption, the Company must send a notice to each holder of the Notes,
which notice shall govern the terms of the Change of Control Redemption. Such
notice must comply with the provisions of Section 3.03 of the Indenture;
provided, however, that such notice must be mailed to holders of the Notes
within 30 days following the date the Change of Control occurred (the "Change
of Control Redemption Date") and state that the Company is effecting a Change
of Control Redemption in lieu of a Change of Control Offer.
"Applicable Premium" means, with respect to a Note at any Change
of Control Redemption Date, the greater of (i) 1.0% of the principal amount of
such Note and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Note at March 15, 2002 (such redemption price being
described in paragraph (a) above) plus (2) all semi-annual payments of interest
through March 15, 2002 computed using a discount rate equal to the Treasury
Rate plus 100 basis points over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury Notes with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) that has become publicly available at least two business days prior
to the Change of Control Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source or similar market data)) most
nearly equal to the period from the Change of Control Redemption Date to March
15, 2002; provided, however, that if the period from the Change of Control
Redemption Date to March 15, 2002 is not equal to the constant maturity of a
United States Treasury Note for which a weekly average yield is given, the
5
<PAGE> 120
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury Notes for which such yields are given except that if the period from
the Change of Control Redemption Date to March 15, 2002 is less than one year,
the weekly average yield on actually traded United States Treasury Notes
adjusted to a constant maturity of one year shall be used.
6. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at such Holder's registered address. Notes in
denominations larger than $1,000 may be redeemed in part.
7. Change of Control Offer. In the event of a Change of
Control, upon the satisfaction of the conditions set forth in the Indenture,
the Company shall be required to offer to repurchase all of the then
outstanding Notes pursuant to a Change of Control Offer at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase. Holders of Notes that are the subject of such
an offer to repurchase shall receive an offer to repurchase and may elect to
have such Notes repurchased in accordance with the provisions of the Indenture
pursuant to and in accordance with the terms of the Indenture.
8. Limitation on Assets Sales. Under certain circumstances
the Company is required to apply the net proceeds from Asset Sales to offer to
repurchase Notes and other Senior Subordinated Indebtedness, pro rata at a
price equal to 100% of the principal amount thereof (or the accreted value of
such other Senior Subordinated Indebtedness, if such other Senior Subordinated
Indebtedness is issued at a discount), plus accrued interest to the date of
repurchase.
9. Denominations; Transfer; Exchange. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. A Holder shall register the transfer of or exchange Notes
in accordance with the Indenture. The Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay certain transfer taxes or similar governmental charges payable in
connection therewith as permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Notes during a
6
<PAGE> 121
period beginning 15 days before the mailing of a redemption notice for any
Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note
shall be treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee and the Paying Agent will
pay the money back to the Company. After that, all liability of the Trustee
and such Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Company
at any time deposits with the Trustee U.S. Legal Tender or U.S. Government
Obligations sufficient to pay the principal of, premium and interest on the
Notes to redemption or maturity and complies with the other provisions of the
Indenture relating thereto, the Company will be discharged from certain
provisions of the Indenture and the Notes (including certain covenants, but
excluding its obligation to pay the principal of, premium and interest on the
Notes).
13. Amendment; Supplement; Waiver. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the Holders of at least a majority in aggregate principal
amount of the then outstanding Notes, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Notes. Without consent of any Holder, the parties thereto may
amend or supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Notes in
addition to or in place of certificated Notes, or comply with Article Five of
the Indenture or make any other change that does not adversely affect in any
material respect the rights of any Holder of a Note.
14. Restrictive Covenants. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness and issue Disqualified Capital Stock,
engage in certain Asset Swaps, enter into transactions with Affiliates, create
dividend or other payment restrictions
7
<PAGE> 122
affecting Subsidiaries and merge or consolidate with any other Person, sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its assets or adopt a plan of liquidation. Such limitations are subject
to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with
the Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor will be released from those obligations.
16. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Notes may declare all the Notes to be due and payable
in the manner, at the time and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Notes unless it has been offered indemnity or Security reasonably satisfactory
to it. The Indenture permits, subject to certain limitations therein provided,
Holders of a majority in aggregate principal amount of the Notes then
outstanding to direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default in payment of principal or interest) if it
determines in good faith that withholding notice is in their interest.
17. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Company, its Subsidiaries,
Unrestricted Subsidiaries or their respective Affiliates as if it were not the
Trustee.
18. No Recourse Against Others. No past, present or future
stockholder, director, officer, employee or incorporator, as such, of the
Company shall have any liability for any obligation of the Company under the
Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder of a Note by accepting a
Note waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Notes.
8
<PAGE> 123
19. Authentication. This Note shall not be valid until the
Trustee or authenticating agent manually signs the certificate of
authentication on this Note.
20. Governing Law. This note shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of laws to the extent that the
application of the law of another jurisdiction would be required thereby.
21. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders
of the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other
identification numbers printed hereon.
23. Indenture. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time. Capitalized terms used herein and not defined
herein have the meanings ascribed thereto in the Indenture.
The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
STC BROADCASTING, INC., 3839 4th Street North, Suite 420, St. Petersburg,
Florida 33703.
9
<PAGE> 124
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
________________________________
_______________________________________________________________
(please print or type name and address)
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints
_______________________________________________________________
attorney to transfer the Note on the books of the Company with full power of
substitution in the premises.
Dated:___________________
NOTICE: The signature on this assignment must correspond with the name as it
appears upon the face of the within Note in every particular without alteration
or enlargement or any change whatsoever and be guaranteed by the endorser's
bank or broker.
Signature
Guarantee:____________________________________________________________
10
<PAGE> 125
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the
appropriate box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Note purchased by
the Company pursuant to Section 4.14 or Section 4.15 of the Indenture, state
the amount: $
-------------
Date: Your Signature:
----------------------------- -----------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature
Guarantee:
----------------------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
11
<PAGE> 126
EXHIBIT C
FORM OF LEGEND FOR GLOBAL NOTE
Any Global Note authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A
DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY
TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT
IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
1
<PAGE> 127
EXHIBIT D
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
STC Broadcasting, Inc.
c/o U.S. Trust Company of Texas, N.A.
Dear Sirs:
This certificate is delivered to request a transfer of $ principal
amount of the 11% Senior Subordinated Notes due 2007 (the "Notes") of STC
Broadcasting, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of the new beneficial
owner as follows:
Name:
----------------------------------------------
Address:
-------------------------------------------
Taxpayer ID Number:
--------------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and we
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
2. We understand that the Notes have not been registered
under the Securities Act and, unless so
1
<PAGE> 128
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Notes to offer, sell or otherwise transfer such Notes prior to the
date which is two years after the later of the date of original issue and the
last date on which the Company or any affiliate of the Company was the owner of
such Notes (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) to the Company, (b) pursuant to a registration statement which
has been declared effective under the Securities Act, (c) in a transaction
complying with the requirements of Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act, that is purchasing for its
own account or for the account of such an institutional "accredited investor,"
in each case in a minimum principal amount of Notes of $250,000 or (e) pursuant
to any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (d) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Restriction
Termination Date of the Notes pursuant to clause (d) or (e) above to require
the delivery of an opinion of counsel, certificates and/or other information
satisfactory to the Company and the Trustee.
Dated:
-----------------------------
TRANSFEREE:
------------------------
By:
--------------------------------
2
<PAGE> 1
EXHIBIT 10.1
================================================================================
CREDIT AGREEMENT
DATED AS OF
FEBRUARY 28, 1997
AMONG
STC BROADCASTING, INC.,
AS BORROWER,
THE LENDERS PARTY HERETO,
NATIONSBANK OF TEXAS, N.A.,
AS DOCUMENTATION AGENT
AND
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AND SYNDICATION AGENT
____________________________
CHASE SECURITIES INC.,
AS ARRANGER
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1 Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Procedure for Term Loan Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.5 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Commitment Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.7 Termination or Reduction of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . 24
2.8 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.9 Mandatory Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.10 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.11 Minimum Amounts and Maximum Number of Eurodollar Tranches . . . . . . . . . . . . . . . . . . . . 27
2.12 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.13 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.14 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.15 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.16 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.18 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.19 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.20 Replacement of Lenders under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Procedure for Issuance of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3 Commissions, Fees and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . 39
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
<S> <C> <C>
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.11 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.18 Accuracy of Information, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.19 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.21 Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.22 Regulation H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.23 Station Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1 Conditions to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.4 Conduct of Business and Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . 53
6.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . . 53
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.9 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.10 Additional Collateral, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.11 WTOV-TV Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 Financial Condition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.5 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.6 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.7 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.8 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc. . . . . . . . . . . . 64
7.10 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.11 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.12 Limitation on Changes in Fiscal Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.13 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.14 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
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<TABLE>
<S> <C>
7.15 Limitation on Amendments to Constituent and Acquisition Documents . . . . . . . . . . . . . . . . 65
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.10 Documentation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.6 Successors and Assigns; Participations and Assignments . . . . . . . . . . . . . . . . . . . . . . 74
10.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.16 FCC Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.17 Release of Preferred Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ANNEX A Pricing Grid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULES:
<S> <C>
1.1A Commitments
1.1B Mortgaged Property
1.1C Consolidated EBITDA Prior to Closing Date
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.12 Labor Matters
4.15 Subsidiaries
4.17 Environmental Matters
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
4.23 Station Licenses
5.1(s) License Subsidiary Licenses
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.8(g) Existing Investments
EXHIBITS:
A-1 Form of Guarantee and Collateral Agreement
A-2 Form of Pledge Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D-1 Form of Mortgage -- Borrower
D-2 Form of Mortgage -- Subsidiary Guarantor
E Form of Assignment and Acceptance
F Form of Legal Opinion of Weil, Gotshal & Manges
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
</TABLE>
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CREDIT AGREEMENT, dated as of February 28, 1997, among STC
BROADCASTING, INC., a Delaware corporation (the "Borrower"), the several banks
and other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), NATIONSBANK OF TEXAS, N.A., as documentation agent
(in such capacity, the "Documentation Agent"), and THE CHASE MANHATTAN BANK, as
administrative and syndication agent for the Lenders hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by
Chase as its prime rate in effect at its principal office
in New York City (the Prime Rate not being intended to be
the lowest rate of interest charged by Chase in connection
with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus the
C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day,
the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding
Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York
(which rate will, under the current practices of the Board,
be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major
money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from
three New York City negotiable certificate of deposit
dealers of recognized standing selected by it; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds
transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative
Agent from three federal
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<PAGE> 7
funds brokers of recognized standing selected by it. Any
change in the ABR due to a change in the Prime Rate, the
Base CD Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective
day of such change in the Prime Rate, the Base CD Rate or
the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to
which is based upon the ABR.
"Acquisition Agreements": the collective reference to
the Multi-Station Acquisition Agreement and the WTOV-TV
Acquisition Agreement.
"Acquisitions": the collective reference to the
Multi-Station Acquisition and the WTOV-TV Acquisition.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": Chase, together with its
affiliates, as the arranger of the Commitments and as the
administrative and syndication agent for the Lenders under
this Agreement and the other Loan Documents, together with
any of its successors.
"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes
of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 51% or more of
the securities having ordinary voting power for the
election of directors (or persons performing similar
functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person,
whether by contract or otherwise.
"Agents": the collective reference to the
Administrative Agent and the Documentation Agent.
"Agreement": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": for ABR Loans, 1.50%, and for
Eurodollar Loans, 2.75%; provided, that on and after the
first Adjustment Date occurring after the Closing Date, the
Applicable Margin will be determined pursuant to the
Pricing Grid.
"Application": an application, in such form
(reasonably acceptable to the Borrower) as the Issuing
Lender may specify from time to time, requesting the
Issuing Lender to open a Letter of Credit.
2
<PAGE> 8
"Asset Sale": any sale, transfer or other disposition
(including any sale and leaseback of assets and any sale of
accounts receivable in connection with a receivable
financing transaction) by the Borrower or any of its
Subsidiaries of any property of the Borrower or any such
Subsidiary (including property subject to any Lien under
any Security Document), other than as permitted pursuant to
subsection 7.5(a), (b) (provided that, except with respect
to the loss or condemnation of all or substantially all of
the assets of the Borrower and its Subsidiaries, the
proceeds from such casualty or condemnation (including
insurance) are used to replace or rebuild the lost or
condemned assets within the time period specified in
subsection 2.9(b)) or (c) through (e).
"Assignee": as defined in subsection 10.6(c).
"Assignor": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment": as to any
Lender at any time, an amount equal to (a) such Lender's
Revolving Credit Commitment minus (b) such Lender's
Revolving Extensions of Credit.
"Board": the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrowing Date": any Business Day specified by the
Borrower as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Broadcast Cash Flow": for any period, Consolidated
EBITDA for such period plus Corporate Overhead for such
period.
"Business": as defined in subsection 4.17(b).
"Business Day": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to close, provided that when
used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which
commercial banks are not open for dealing in Dollar
deposits in the London interbank market.
"Capital Contribution": as defined in subsection
5.1(c).
"Capital Contribution Agreement": as defined in
subsection 5.1(c).
"Capital Expenditures": for any period, with respect
to any Person, the aggregate of all expenditures (whether
paid in cash or accrued as a liability) by such Person and
its Subsidiaries for the acquisition or leasing (pursuant
to a capital lease)
3
<PAGE> 9
of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and
improvements during such period), excluding the
Acquisitions, which should be capitalized under GAAP on a
consolidated balance sheet of such Person and its
Subsidiaries. For purposes of this definition, the
following items will be excluded from the definition of
"Capital Expenditures": (i) Capital Expenditures to the
extent funded by insurance proceeds, (ii) Capital
Expenditures to the extent made through barter transactions
and (iii) for purposes of subsections 7.1(c) and 7.7,
Capital Expenditures made in 1997 that were deferred
Capital Expenditures from the 1996 fiscal year in the
amount of $300,000.
"Capital Lease Obligations": as to any Person, the
obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination
thereof, which obligations are required to be classified
and accounted for as capital leases on a balance sheet of
such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall
be the capitalized amount thereof at such time determined
in accordance with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any
of the foregoing.
"Cash Equivalents": (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and
backed by the full faith and credit of the United States,
in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits, bankers' acceptances and
repurchase agreements, or overnight bank deposits having
maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or
any state thereof having combined capital and surplus of
not less than $500,000,000; (c) commercial paper of an
issuer rated at least A-2 by Standard & Poor's Ratings
Services or P-2 by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of
acquisition; (d) money market accounts or funds with or
issued by Qualified Issuers; (e) repurchase obligations
with a term of not more than 90 days for underlying
securities of the types described in clause (a) above
entered into with any bank meeting the qualifications
specified in clause (b) above and (f) demand deposit
accounts maintained in the ordinary course of business with
any Lender or with any bank that is not a Lender not in
excess of $100,000 in the aggregate on deposit with such
Lender or any such bank.
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<PAGE> 10
"C/D Assessment Rate": for any day as applied to the
Base CD Rate, the net annual assessment rate (rounded
upward to the nearest 1/100th of 1%) determined by Chase to
be payable on such day to the Federal Deposit Insurance
Corporation or any successor (the "FDIC") for the FDIC's
insuring time deposits made in Dollars at offices of Chase
in the United States.
"C/D Reserve Percentage": for any day as applied to
the Base CD Rate, that percentage (expressed as a decimal)
which is in effect on such day, as prescribed by the Board,
for determining the maximum reserve requirement for a
member of the Federal Reserve System in New York City with
deposits exceeding one billion Dollars in respect of new
non-personal time deposits in Dollars having a three month
maturity and in an amount of $100,000 or more.
"Change of Control": Hicks Muse, its principals and
Affiliates and management of Holdings and the Borrower
("HMTF") shall cease to have the power, directly or
indirectly, to vote or direct the voting of securities
having a majority of the ordinary voting power for the
election of directors of Holdings, provided that the
occurrence of the foregoing event shall not be deemed a
Change of Control if (a) at any time prior to the
consummation of an Initial Public Offering, and for any
reason whatever, (i) HMTF otherwise has the right to
designate (and does so designate) a majority of the board
of directors of Holdings or (ii) HMTF and their employees,
directors and officers (the "HMTF Group") own of record and
beneficially an amount of common stock of Holdings equal to
at least 50% of the amount of common stock of Holdings
owned by the HMTF Group of record and beneficially as of
the Closing Date and such ownership by the HMTF Group
represents the largest single block of voting securities of
Holdings held by any Person or related group for purposes
of Section 13(d) of the Securities Exchange Act of 1934, as
amended, or (b) at any time after the consummation of an
Initial Public Offering, and for any reason whatever, (i)
no "Person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), excluding the HMTF Group, shall become the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under such Act), directly or indirectly, of the greater of
(x) 15% of the shares outstanding or (y) the percentage of
the then outstanding voting stock of Holdings owned by the
HMTF Group and (ii) the board of directors of Holdings
shall consist of a majority of Continuing Directors.
"Chase": The Chase Manhattan Bank.
"Closing Date": February 28, 1997.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
5
<PAGE> 11
"Commitment": as to any Lender, the sum of the Term
Loan Commitment and the Revolving Credit Commitment of such
Lender.
"Commitment Fee Rate": 1/2 of 1% per annum, provided
that upon and after issuance of the Senior Subordinated
Notes and the payment in full of the Term Loans, the
Commitment Fee Rate shall be 3/8 of 1% per annum.
"Commonly Controlled Entity": an entity, whether or
not incorporated, which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or is
part of a group which includes the Borrower and which is
treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed
by a Responsible Officer substantially in the form of
Exhibit B.
"Consolidated Cash Interest Expense": for any period,
Consolidated Interest Expense (including, without
limitation, that attributable to Capital Lease Obligations
but excluding capitalized financing fees) for such period
(a) minus, in each case to the extent included in
determining such Consolidated Interest Expense for such
period, the sum of the following: (i) non-cash expenses for
interest payable in kind and (ii) amortization of debt
discount and fees and (b) plus the sum of cash payments
made by Holdings or any of its Subsidiaries during such
period in respect of the items referred to in clause (a)(i)
of this definition to the extent previously subtracted
pursuant to clause (a) of this definition (including,
without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Interest
Rate Protection Agreements to the extent such net costs are
allocable to such period in accordance with GAAP). Prior
to the completion of 12 full calendar months after the
Closing Date, Consolidated Cash Interest Expense will be
annualized by multiplying Consolidated Cash Interest
Expense for the number of then completed months after the
Closing Date by a fraction, the numerator of which is 12
and the denominator of which is the number of months in
such shorter period.
"Consolidated Current Assets": at a particular date,
all amounts (other than cash, Cash Equivalents and the
current portion of programming rights) which would, in
conformity with GAAP, be set forth opposite the caption
"total current assets" (or any like caption) on a
consolidated balance sheet of Holdings and its Subsidiaries
at such date.
"Consolidated Current Liabilities": at a particular
date, all amounts which would, in conformity with GAAP, be
set forth opposite the caption "total current liabilities"
(or any like caption) on a consolidated balance sheet of
Holdings and its Subsidiaries at such date, but excluding
(a) the current portion of any Funded Debt
6
<PAGE> 12
and Film Obligations of the Borrower and its Subsidiaries
and (b) without duplication of clause (a) above, all
Indebtedness consisting of Revolving Credit Loans to the
extent otherwise included therein.
"Consolidated Debt Service": for any period, the sum of
Consolidated Cash Interest Expense plus any scheduled
amortization payments on any Indebtedness made or payable
during such period, but excluding mandatory prepayments on
any such Indebtedness.
"Consolidated EBITDA": for any period and as
determined on a consolidated basis, net revenues (defined
as gross operating revenue plus rental income minus the sum
of barter and trade revenue, agency and advertising
commissions and sales representative fees) of Holdings and
its Subsidiaries during such period, minus, with respect to
such period and without duplication (i) operating expenses,
(ii) Corporate Overhead and (iii) Film Cash Payments. For
purposes of this definition "net revenues", "operating
expenses", Corporate Overhead and Film Cash Payments shall
each be determined exclusive of (i) depreciation and
amortization (including, without limitation, amortization
of financing fees, film amortization and related write-off
of programming and amortization in respect of Film Debt),
(ii) Consolidated Interest Expense, (iii) any other
non-cash charges (including, without limitation, non-cash
pension expense and non-cash compensation expense), (iv)
income taxes accrued for such period, restructuring charges
incurred for changes in capitalization, financing fees and
closing costs associated with the Acquisitions, (v) barter
and trade revenues and expenses and (vi) any extraordinary
gains or losses, and any gains or losses from the sale or
other disposition of assets. If during any period for
which Consolidated EBITDA is being determined Holdings or
any of its Subsidiaries shall have made a Permitted
Acquisition or Permitted Disposition, then, for all
purposes of this Agreement (other than for purposes of the
definition of Consolidated EBITDA as used for purposes of
making the calculations to determine (x) compliance with
subsection 7.1(b) and (c) hereof, (y) Excess Cash Flow or
(z) Broadcast Cash Flow, for each of which purposes actual
Consolidated EBITDA for the relevant period shall be used),
Consolidated EBITDA shall be adjusted for the relevant
period as if the relevant Permitted Acquisition or
Permitted Disposition had been made or consummated on the
first day of such period by such amount as shall be agreed
between the Borrower and the Required Lenders (or, if the
Borrower and the Required Lenders shall fail to agree to an
amount within 30 days after the consummation of the
Permitted Acquisition or Permitted Disposition, the actual
amount of Consolidated EBITDA attributable to the Station
or Stations which are the subject of such Permitted
Acquisition or Permitted Disposition). For all purposes of
this Agreement (other than for purposes of determining
Consolidated EBITDA as used in the definition of Excess
Cash Flow), any Film Cash Payments to the extent consisting
of an up-front payment made with respect to a Film
Obligation incurred during such period, shall not be
deducted in determining Consolidated EBITDA for such period
but shall instead (x) in the event
7
<PAGE> 13
such contract has a term of twelve months or less, be
amortized over the term of such contract and (y) in the
event such contract has a term of more than twelve months,
be amortized over the term of such contract (or, if
shorter, the pay period of such contract), and in the case
of both (x) and (y), only the portion of such Film Cash
Payments so amortized during such period shall be deducted
in determining Consolidating EBITDA for such period. For
purposes of determining the covenants set forth in
subsection 7.1 prior to the completion of 12 full calendar
months from the Closing Date, Consolidated EBITDA shall be
deemed to equal actual Consolidated EBITDA for the period
of completed fiscal months from the Closing Date plus, (i)
for the Test Period ending March 31, 1997, $13,165,000 plus
actual Consolidated EBITDA for February 1997 as agreed
between the Borrower and the Administrative Agent, (ii) for
the Test Period ending June 30, 1997, $9,240,000 plus
actual Consolidated EBITDA for February 1997 as agreed
between the Borrower and the Administrative Agent, (iii)
for the Test Period ending September 30, 1997, $5,937,000
plus actual Consolidated EBITDA for February 1997 as agreed
between the Borrower and the Administrative Agent and (iv)
for the Test Period ending December 31, 1997, $575,000 plus
actual Consolidated EBITDA for February 1997 as agreed
between the Borrower and the Administrative Agent (which
numbers in the foregoing items (i) through (iv) are based
on actual Consolidated EBITDA of the Stations for the
periods prior to the Closing Date set forth on Schedule
1.1C; provided that if the Borrower shall acquire and/or
dispose of a Station Consolidated EBITDA shall be adjusted
on a pro forma basis to reflect such acquisition and/or
disposition as agreed between the Borrower and the
Administrative Agent.
"Consolidated Fixed Charge Coverage Ratio": for any
period, the ratio of (a) Consolidated EBITDA for such
period to (b) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges": for any period, the sum
(without duplication) of (a) Consolidated Debt Service for
such period, (b) Capital Expenditures made during such
period and (c) any income taxes paid by Holdings or any of
its Subsidiaries during such period, (d) any increases
during such period in Consolidated Working Capital (minus
any decreases during such period in Consolidated Working
Capital) and (e) cash dividends paid during such period.
Prior to the completion of 12 full calendar months after
the Closing Date, Consolidated Fixed Charges will be
annualized by multiplying Consolidated Fixed Charges for
the number of then completed months after the Closing Date
by a fraction, the numerator of which is 12 and the
denominator of which is the number of months in such
shorter period.
"Consolidated Interest Coverage Ratio": for any
period, the ratio of (a) Consolidated EBITDA for such
period to (b) Consolidated Cash Interest Expense for such
period.
8
<PAGE> 14
"Consolidated Interest Expense": for any period the
amount of interest expense, both expensed and capitalized,
of Holdings and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, for such period
on the aggregate principal amount of its Indebtedness.
"Consolidated Leverage Ratio": as at the last day of
any period, the ratio of (a) Consolidated Total Debt on
such day to (b) Consolidated EBITDA for such period.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of Holdings and its
Subsidiaries at such date, determined on a consolidated
basis in accordance with GAAP (including, without
limitation and without duplication, all Film Debt).
"Consolidated Working Capital": the excess of
Consolidated Current Assets over Consolidated Current
Liabilities.
"Continuing Directors": the directors of Holdings on
the Closing Date, after giving effect to the Acquisitions
and the other transactions contemplated hereby, and each
other director, if, in each case, such other director's
nomination for election to the board of directors of the
Borrower is recommended by a majority of the then
Continuing Directors or such other director receives the
vote of HMTF in his or her election by the shareholders of
Holdings.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking (including,
without limitation, any undertaking made to the FCC) to
which such Person is a party or by which it or any of its
property is bound.
"Corporate Overhead: for any period, that amount
classified on an income statement of the Borrower and its
Subsidiaries as corporate overhead for such period (which
shall be deemed to include, without duplication, the
management fees of Hicks Muse and its Affiliates
contemplated by subsection 7.10 and the compensation of
senior management of Holdings referred to in subsection
5.1(u)(i) (other than with respect to John Purcell)) less
any "development" expenses in conjunction with corporate
development activities (such exclusion in any fiscal year
to be limited to the lesser of (i) the actual amount of
such expenses and (ii) $300,000).
"Default": any of the events specified in Section 8,
whether or not any requirement for the giving of notice,
the lapse of time, or both, has been satisfied.
"Dollars" and "$": lawful currency of the United
States of America.
"ECF Percentage": 66-2/3%.
9
<PAGE> 15
"Environmental Laws": any and all applicable foreign,
Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, legally
binding requirements of any Governmental Authority or other
Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct
concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as
applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or
other Governmental Authority having jurisdiction with
respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day
during each Interest Period pertaining to a Eurodollar
Loan, the rate per annum equal to the rate at which Chase
is offered Dollar deposits at or about 10:00 A.M., New York
City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where
the eurodollar and foreign currency and exchange operations
in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for
the number of days comprised therein and in an amount
comparable to the amount of its Eurodollar Loans to be
outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, a
rate per annum determined for such day in accordance with
the following formula (rounded upward to the nearest
1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to
Eurodollar Loans the then current Interest Periods with
respect to all of which begin on the same date and end
10
<PAGE> 16
on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in
Section 8, provided that any requirement for the giving of
notice, the lapse of time, or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the
Borrower, the excess, if any, of (a) Consolidated EBITDA
for such fiscal year over (b) Consolidated Fixed Charges,
plus or minus the cash portion of any extraordinary gains
or losses incurred during such fiscal year without
duplication of mandatory prepayments resulting from any
transaction giving rise thereto.
"Excess Cash Flow Application Date": as defined in
subsection 2.9(c).
"Facility": each of (a) the Term Loan Commitments and
the Term Loans made thereunder (the "Term Loan Facility")
and (b) the Revolving Credit Commitments and the extensions
of credit made thereunder (the "Revolving Credit
Facility").
"FCC": the Federal Communications Commission or any
governmental authority substituted therefor.
"Federal Funds Effective Rate": as defined in the
definition of "ABR".
"Film Cash Payments: for any period, the sum
(determined on a combined basis in accordance with GAAP) of
all scheduled payments made and to be made by Holdings or
any of its Subsidiaries during such period on Film
Obligations, excluding payments on Film Debt, which were
existing as of, or have been incurred at any time after the
Closing Date, as the same may be modified by the
penultimate sentence of the definition of "Consolidated
EBITDA".
"Film Debt": as at any time, the sum of the scheduled
payments remaining at such time in respect of the
programming Wonder Years, Empty Nest and Doogie Howser at
the Michigan Station, which payments are in the amount of
$63,535 and will fully amortize during the 1997 fiscal year
of the Michigan Station.
"Film Obligations": all obligations (other than Film
Debt) in respect of the purchase, use, license or
acquisition of programs, programming materials, films and
similar assets used in connection with the business and
operation of Holdings and its Subsidiaries.
"Fund": Hicks, Muse, Tate & Furst Equity Fund III,
L.P.
11
<PAGE> 17
"Funded Debt": as to any Person, all Indebtedness of
such Person that matures more than one year from the date
of its creation or matures within one year from such date
but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a
period of more than one year from such date, including,
without limitation, all current maturities and current
sinking fund payments in respect of such Indebtedness
whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.
"GAAP": generally accepted accounting principles in
the United States of America as in effect from time to time
set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board
and the rules and regulations of the Securities and
Exchange Commission, or in such other statements by such
other entity as may be in general use by significant
segments of the accounting profession, which are applicable
to the circumstances of the Borrower as of the date of
determination, except that for purposes of subsection 7.1,
GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in
the preparation of the audited financial statements
referred to in subsection 4.1(b). In the event that any
"Accounting Change" (as defined below) shall occur and such
change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement,
then the Borrower and the Administrative Agent agree to
enter into negotiations in order to amend such provisions
of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition
shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as
such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in
this Agreement shall continue to be calculated or construed
as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto
or agencies with similar functions).
"Governmental Authority": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Guarantee and Collateral Agreement": the Guarantee
and Collateral Agreement to be executed and delivered by
Holdings, the Borrower, each Subsidiary
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<PAGE> 18
Guarantor, substantially in the form of Exhibit A-1, as the
same may be amended, supplemented or otherwise modified
from time to time.
"Guarantee Obligation": as to any Person (the
"guaranteeing person"), any obligation of (a) the
guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other
obligations (the "primary obligations") of any other third
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2)
to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against
loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to
the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are
not stated or determinable, in which case the amount of
such Guarantee Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith.
"Hicks Muse": Hicks, Muse, Tate & Furst Incorporated.
"HMTF": as defined in the definition of "Change of
Control".
"Holdings": Sunrise Television Corp., a Delaware
corporation.
"Holdings Investors": as defined in subsection 5.1(b).
"Incur": as defined in subsection 7.2; and the term
"Incurrence" shall have a correlative meaning.
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<PAGE> 19
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than
current trade payables and accrued expenses incurred in the
ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property
acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of
such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or
otherwise, as an account party under acceptance, letter of
credit or similar facilities, (g) all obligations in
respect of Film Debt (but excluding obligations in respect
of Film Obligations), (h) the obligations of such Person
under any Interest Rate Protection Agreement, (i) all
Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through
(h) above and (j) all obligations of the kind referred to
in clauses (a) through (i) above secured by (or for which
the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such
Person has assumed or become liable for the payment of such
obligation and on which obligations such Person has
recourse only to such property, provided, however, that the
amount of such Indebtedness of any Person described in this
clause (j) shall, for the purposes of this Agreement, be
deemed to be equal to the lesser of (i) the aggregate
unpaid amount of such Indebtedness and (ii) the fair market
value of the property or asset encumbered, as determined by
such Person in good faith.
"Insolvency": with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the
meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Initial Public Offering": an underwritten public
offering by Holdings of Capital Stock of Holdings pursuant
to a registration statement filed with the Securities and
Exchange Commission in accordance with the Securities Act
of 1933, as amended.
"Intellectual Property": as defined in subsection 4.9.
"Interest Payment Date": (a) as to any ABR Loan, the
last day of each March, June, September and December to
occur while such Loan is outstanding, (b) as to any
Eurodollar Loan having an Interest Period of three months
or less, the last day of such Interest Period, (c) as to
any Eurodollar Loan having an Interest Period longer than
three months, each day which is three months, or a whole
multiple
14
<PAGE> 20
thereof, after the first day of such Interest Period and
the last day of such Interest Period and (d) as to any
Loan, the date of repayment thereof at final stated
maturity.
"Interest Period": as to any Eurodollar Loan, (a)
initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three, six or (if
available to all Lenders under the relevant Facility) nine
or twelve months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three, six or (if
available to all Lenders under the relevant Facility) nine
or twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less
than three Business Days prior to the last day of the then
current Interest Period with respect thereto; provided
that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry
such Interest Period into another calendar month in
which event such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend
beyond the Revolving Credit Termination Date or beyond
the date final payment is due on the Term Loans shall
end on the Revolving Credit Termination Date or such
due date, as applicable;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;
and
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any
Eurodollar Loan during an Interest Period for such
Loan.
"Interest Rate Protection Agreement": any interest
rate protection agreement, interest rate futures contract,
interest rate option, interest rate cap or other interest
rate hedge arrangement, to or under which the Borrower or
any of its Subsidiaries is a party or a beneficiary on the
date hereof or becomes a party or a beneficiary after the
date hereof.
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<PAGE> 21
"Issuing Lender": Chase or any of its affiliates, in
its capacity as issuer of any Letter of Credit.
"L/C Commitment": $20,000,000.
"L/C Fee Payment Date": the last day of each March,
June, September and December and the last day of the
Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the
sum of (a) the aggregate then undrawn and unexpired amount
of the then outstanding Letters of Credit and (b) the
aggregate amount of drawings under Letters of Credit which
have not then been reimbursed pursuant to subsection 3.5.
"L/C Participants": with respect to any Letter of
Credit, the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender that issued
such Letter of Credit.
"Letters of Credit": as defined in subsection 3.1(a).
"License Subsidiary": (a) in the case of the Michigan
Station, the Rochester Station and the Salinas-Monterey
Station, STC License Company, (b) in the case of the
Steubenville Station, Smith Acquisition License Company and
(c) in the case of any Station acquired after the date
hereof, the Subsidiary of a Borrower that shall hold the
respective Station Licenses under the authority of which
such Station is operated.
"Lien": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), charge or other security interest or
any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or
other title retention agreement and any capital lease
having substantially the same economic effect as any of the
foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Security
Documents and the Notes.
"Loan Parties": Holdings, the Borrower and each
Subsidiary of the Borrower which is a party to a Loan
Document.
"Majority Facility Lenders": with respect to any
Facility, at least two Lenders which collectively are the
holders of not less than 51% of the aggregate unpaid
principal amount of the Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under
such Facility (or, in the case of the
16
<PAGE> 22
Revolving Credit Facility, prior to any termination of the
Revolving Credit Commitments, at least two Lenders which
are collectively the holders of not less than 51% of the
aggregate Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the
Majority Facility Lenders in respect of the Revolving
Credit Facility.
"Material Adverse Effect": a material adverse effect
on (a) the business, assets, property, condition (financial
or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan
Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or
petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or
under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Michigan Station": television station WEYI-TV,
Channel 25, Flint-Saginaw, Michigan.
"Mortgaged Properties": the real properties listed on
Schedule 1.1B, as to which the Administrative Agent for the
benefit of the Lenders shall be granted a Lien pursuant to
the Mortgages.
"Mortgages": each of the mortgages and deeds of trust
made by any Loan Party in favor of, or for the benefit of,
the Administrative Agent for the benefit of the Lenders,
substantially in the form of Exhibit D-1 or D-2, as the
case may be (with such changes thereto as shall be
advisable under the law of the jurisdiction in which such
mortgage or deed of trust is to be recorded), as the same
may be amended, supplemented or otherwise modified from
time to time.
"Multiemployer Plan": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Multi-Station Acquisition": as defined in subsection
5.1(b).
"Multi-Station Acquisition Agreement": the Asset
Purchase Agreement, dated as of November 4, 1996, by and
among the Multi-Station Sellers and the Multi-Station
Buyer.
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<PAGE> 23
"Multi-Station Buyer": STV Acquisition Company, a
Delaware corporation and predecessor through name change to
the Borrower.
"Multi-Station Sellers": the collective reference to
Smith Television of Michigan, L.P., Smith Television of
Michigan License, L.P., Smith Television of Rochester,
L.P., Smith Television of Rochester License, L.P., Smith
Television of Salinas-Monterey, L.P., Smith Television of
Salinas- Monterey License, L.P.
"Net Cash Proceeds": (a) in connection with any Asset
Sale or any Recovery Event, the proceeds thereof in the
form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale or Recovery Event, net of
attorneys' fees, accountants' fees, investment banking
fees, survey costs, title insurance premiums, amounts
required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted hereunder on any
asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document)
and other customary fees and expenses actually incurred in
connection therewith, net of taxes paid or reasonably
estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and
any tax sharing arrangements) and net of purchase price
adjustments reasonably expected to be payable in connection
therewith and (b) in connection with any issuance or sale
of equity securities or debt securities or instruments or
the incurrence of loans, the cash proceeds received from
such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and
expenses actually incurred in connection therewith,
provided that, with respect to any issuance or sale of debt
securities or instruments (other than the Senior
Subordinated Notes) as described in this clause (b), to the
extent that such cash proceeds are used to refinance any
Indebtedness permitted by this Agreement, then such cash
proceeds shall not constitute "Net Cash Proceeds" for the
purpose of this Agreement.
"Non-Excluded Taxes": as defined in subsection
2.17(a).
"Non-Funding Lender": as defined in subsection 2.17(b)
"Non-U.S. Lender": as defined in subsection 2.17(b).
"Notes": the collective reference to the Term Notes
and the Revolving Credit Notes.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the
maturity of the Loans and Reimbursement
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<PAGE> 24
Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or,
in the case of Interest Rate Protection Agreements, any
affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan
Document, the Letters of Credit, any Interest Rate
Protection Agreement entered into with any Lender or any
affiliate of any Lender or any other document made,
delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of
counsel to the Administrative Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or
otherwise.
"Participant": as defined in subsection 10.6(b).
"Partnership": as defined in subsection 5.1(c).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or
any successor).
"Permitted Acquisition": the acquisition by the
Borrower or its Subsidiaries of one or more additional
Stations in the United States on terms and conditions for
each such acquisition such that, among other things, on a
pro forma basis for the most recently completed 12-month
fiscal period for which financial statements are available
on the date of such acquisition and on a projected basis
for the immediately succeeding 12 months, no Default or
Event of Default will have occurred and be continuing
(including, without limitation, pursuant to subsection 7.1)
and the Borrower will be able to meet its obligations
pursuant to the Loan Documents and so long as the Borrower
provides the Administrative Agent with a certificate
showing compliance with all of the covenants contained in
subsection 7.1 (with appropriate supporting documentation
if requested by the Administrative Agent, including,
without limitation, any acquisition documents in connection
with such acquisition, opinions of counsel, including FCC
counsel, in connection therewith and copies of an FCC
consent on Form 732 relating to the transfer of control of
the licenses of the acquired Station to the Borrower or its
Subsidiary and such consent shall no longer be subject to
reconsideration or review by the FCC).
"Permitted Disposition": with respect to any Station,
any sale, lease, sale and leaseback, assignment,
conveyance, transfer or other disposition thereof.
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<PAGE> 25
"Permitted Issuance": (a) the issuance by the Borrower
of shares of Capital Stock as dividends on issued and
outstanding Capital Stock of the same class of the Borrower
or pursuant to any dividend reinvestment plan, (b) the
issuance by the Borrower of options or other equity
securities of the Borrower to outside directors, members of
management or employees of the Borrower or any Subsidiary
of the Borrower, (c) the issuance of securities as interest
or dividends on pay-in-kind debt or preferred equity
securities permitted hereunder and under the Security
Documents, (d) the issuance to the Borrower or any
Subsidiary (or any director, with respect to directors'
qualifying shares) by any Subsidiary of the Borrower of any
of its Capital Stock, in each case with respect to this
clause (d) to the extent such Capital Stock is pledged to
the Administrative Agent for the benefit of the Lenders
pursuant to the Guarantee and Collateral Agreement, (e) the
issuance by the Borrower of the Preferred Stock, (f) the
issuance by Holdings of the Holdings common stock pursuant
to the terms and conditions of the Securities Purchase
Agreement dated as of February 28, 1997 by and among
Holdings and the purchasers party thereto, and (g) cash
payments made in lieu of issuing fractional shares of
Holdings common stock or Preferred Stock, in an aggregate
amount not to exceed $50,000.00.
"Person": an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such
plan were terminated at such time, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Pledge Agreement": the Pledge Agreement to
be executed and delivered by the holders of the Preferred
Stock, substantially in the form of Exhibit A-2, as the
same may be amended, supplemented or otherwise modified
from time to time.
"Preferred Stock": the 14% Redeemable Preferred Stock,
par value $.01 per share, liquidation preference $100.00
per share of the Borrower.
"Pricing Grid": the pricing grid attached hereto as
Annex A.
"Prime Rate": as defined in the definition of "ABR".
"Pro Forma Balance Sheet": as defined in subsection
4.1(a).
"Projections": as defined in subsection 6.2(c).
"Properties": as defined in subsection 4.17(a).
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<PAGE> 26
"Property": any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible, including, without
limitation, Capital Stock.
"Qualified Issuer": any commercial bank (a) which has,
or whose obligations are guaranteed by an affiliated
commercial bank which has, capital and surplus in excess of
$500,000,000 and (b) the outstanding long-term debt
securities of which are rated at least A-2 by Standard &
Poor's Ratings Services or at least P-2 by Moody's
Investors Service, Inc., or carry an equivalent rating by a
nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of
investments.
"Recovery Event": any settlement of or payment in
respect of any property insurance or casualty insurance
claim or any condemnation proceeding relating to any
Property of the Borrower or any of its Subsidiaries,
excluding any such settlement or payment which, together
with any related settlement or payment, yields gross
proceeds to the Borrower or any of its Subsidiaries of less
than $1,000,000.
"Register": as defined in subsection 10.6(d).
"Reimbursement Obligation": the obligation of the
Borrower to reimburse the Issuing Lender pursuant to
subsection 3.5 for amounts drawn under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds
received by the Borrower or any of its Subsidiaries in
connection therewith which are not applied to prepay the
Term Loans or reduce the Revolving Credit Commitments
pursuant to subsection 2.9(b) as a result of the delivery
of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event
in respect of which the Borrower has delivered a
Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has
occurred and is continuing and that the Borrower (directly
or indirectly through a Subsidiary) intends and expects to
use all or a specified portion of the Net Cash Proceeds of
an Asset Sale or Recovery Event to acquire assets useful in
its business.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount
relating thereto less any amount expended prior to the
relevant Reinvestment Prepayment Date to acquire assets
useful in the Borrower's business.
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<PAGE> 27
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring
180 days after such Reinvestment Event and (b) the date on
which the Borrower shall have determined not to, or shall
have otherwise ceased to, acquire assets useful in the
Borrower's business with all or any portion of the relevant
Reinvestment Deferred Amount; provided, that if the
Reinvestment Notice with respect to such Reinvestment Event
relates to the acquisition of a new Station by the Borrower
or any of its Subsidiaries and the Borrower or such
Subsidiary has filed within 180 days of the Reinvestment
Event an application with the FCC for the approval of the
transfer of control of the Station License of such acquired
Station the period specified in paragraph (a) shall be
extended by a period equal to the lesser of (i) 180 days
and (ii) within five Business Days after the time required
for the FCC to issue a final approval order relating to the
transfer of control of such Station License, which order is
no longer subject to reconsideration or review by the FCC.
"Reorganization": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty day notice period is waived under the
regulations issued pursuant to Section 4043(b) of ERISA.
"Required Lenders": at least two Lenders which
collectively are the holders of not less than 51% of the
sum of (i) the aggregate unpaid principal amount of the
Term Loans and (ii) the aggregate Revolving Credit
Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"Requirement of Law": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation (including, without
limitation, Environmental Laws or rules, regulations or
orders, whether addressed to Holdings or any of its
Subsidiaries, the Multi-Station Sellers, the WTOV-TV
Sellers or any of the Stations, of the FCC) or
determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer": the chief executive officer,
the president, any vice president or senior vice president,
the treasurer or any assistant treasurer, the secretary or
assistant secretary and the chief financial officer of the
Borrower (including, in any event, any person who is an
officer of the Borrower and is named on the closing
certificate delivered by the Borrower on the Closing Date
pursuant to subsection 5.1(h) whether or not such person
holds any of the foregoing positions).
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<PAGE> 28
"Revolving Credit Commitment": as to any Revolving
Credit Lender, the obligation of such Revolving Credit
Lender, if any, to make Revolving Credit Loans and Letters
of Credit, in an aggregate principal and/or face amount not
to exceed the amount set forth under the heading "Revolving
Credit Commitment" opposite such Lender's name on Schedule
1.1A, as the same may be changed from time to time pursuant
to the terms hereof. The original aggregate amount of the
Revolving Credit Commitments is $35,000,000.
"Revolving Credit Commitment Period": the period from
and including the Closing Date to the Revolving Credit
Termination Date.
"Revolving Credit Facility": as defined in the
definition of "Facility".
"Revolving Credit Lender": each Lender which has a
Revolving Credit Commitment or which has made Revolving
Credit Loans or has participations in outstanding Letters
of Credit.
"Revolving Credit Loans": as defined in subsection
2.4.
"Revolving Credit Note": any promissory note of the
Borrower evidencing Revolving Credit Loans.
"Revolving Credit Percentage": as to any Revolving
Credit Lender at any time, the percentage which such
Lender's Revolving Credit Commitment then constitutes of
the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired
or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Credit Loans then
outstanding constitutes of the aggregate principal amount
of the Revolving Credit Loans then outstanding).
"Revolving Credit Termination Date": the earliest of
(a) the Scheduled Revolving Credit Termination Date or, if
such date is not a Business Day, the Business Day next
preceding such date and (b) the date upon which the
Revolving Credit Commitments shall be earlier terminated
pursuant hereto.
"Revolving Extensions of Credit": as to any Revolving
Credit Lender at any time, an amount equal to the sum of
(a) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding and (b) such
Lender's Revolving Credit Percentage of the L/C Obligations
then outstanding.
"Rochester Station": television station WROC-TV,
Channel 8, Rochester, New York.
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<PAGE> 29
"SAC Pledge Agreement": the Pledge Agreement to be
executed and delivered by SBP, substantially in the form of
Exhibit A-2, as the same may be amended, supplemented or
otherwise modified from time to time.
"Salinas-Monterey Station": television station
KSBW-TV, Channel 8, Salinas, California.
"SBP": Smith Broadcasting Partners, L.P., a Delaware
limited partnership.
"SBP Stock": the voting common stock of the WTOV-TV
Buyer, which represents 1% of the equity of the WTOV-TV
Buyer, but which entitles SBP to 100% of voting power in
the election of the directors of the WTOV-TV Buyer.
"Scheduled Revolving Credit Termination Date":
February 27, 2004.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the SAC Pledge
Agreement, the Preferred Pledge Agreement, the Mortgages
and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any Property of any
Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"Senior Subordinated Note Indenture": the Indenture to
be entered into by the Borrower and certain of its
Subsidiaries in connection with the issuance of the Senior
Subordinated Notes, together with all instruments and other
agreements entered into by the Borrower or such
Subsidiaries in connection therewith, all in form and
substance satisfactory to the Administrative Agent, as the
same may be amended, supplemented or otherwise modified
from time to time in accordance with subsection 7.9.
"Senior Subordinated Notes": the subordinated notes of
the Borrower to be issued pursuant to the Senior
Subordinated Note Indenture.
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means
that, as of any date of determination, (a) the fair value
of the property of such Person is greater than the total
amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less
than the amount that will be required to pay the probable
liability of such Person on its debts as they become
absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (d) such Person is not
engaged in
24
<PAGE> 30
business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property
would constitute an unreasonably small capital.
"Station Licenses": all authorizations, licenses or
permits issued by the FCC and granted or assigned to the
Borrower or any of its Subsidiaries, or, prior to the
merger contemplated by subsection 6.11, with respect to the
Steubenville Station, the WTOV-TV Buyer or any of its
Subsidiaries, or under which the Borrower or any of its
Subsidiaries, or, prior to the merger contemplated by
subsection 6.11, with respect to the Steubenville Station,
the WTOV-TV Buyer or any of its Subsidiaries, has the right
to operate any Station, together with any extensions or
renewals thereof.
"Stations": collectively, (a) the Michigan Station,
(b) the Steubenville Station, (c) the Rochester Station,
(d) the Salinas-Monterey Station and (e) any additional
Station acquired after the date hereof.
"Steubenville Station": television station WTOV-TV,
Channel 9, Steubenville, Ohio.
"Subsidiary": as to any Person, a corporation,
partnership, limited liability company or other entity of
which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to
a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Borrower after
giving effect to the Acquisitions and notwithstanding the
foregoing shall be deemed to include the WTOV-TV Buyer and
its Subsidiaries.
"Subsidiary Guarantor": each Subsidiary of the
Borrower party to the Guarantee and Collateral Agreement.
"Term Loan Commitment": as to any Term Loan Lender,
the obligation of such Term Loan Lender, if any, to make a
Term Loan to the Borrower hereunder in a principal amount
not to exceed the amount set forth under the heading "Term
Loan Commitment" opposite such Lender's name on Schedule
1.1A. The original aggregate amount of the Term Loan
Commitments is $60,000,000.
"Term Loan Facility": as defined in the definition of
"Facility".
"Term Loan Lender": each Lender which has a Term Loan
Commitment or which has made a Term Loan.
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<PAGE> 31
"Term Loan Percentage": as to any Term Loan Lender at
any time, the percentage which such Lender's Term Loan
Commitment then constitutes of the aggregate Term Loan
Commitments (or, at any time after the Closing Date, the
percentage which the principal amount of such Lender's Term
Loan then outstanding constitutes of the aggregate
principal amount of the Term Loans then outstanding).
"Term Loans": as defined in subsection 2.1.
"Term Note": any promissory note of the Borrower
evidencing Term Loans.
"Test Period": any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full
fiscal quarters of the Borrower subsequent to the Closing
Date).
"Total Revolving Extensions of Credit": at any time,
the aggregate amount of the Revolving Extensions of Credit
of the Revolving Credit Lenders at such time.
"Transferee": as defined in subsection 10.6(g).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Unapplied Excess Cash Flow": any Excess Cash Flow
that is not required to be applied toward the prepayment of
the Term Loans and the reduction of the Revolving Credit
Commitments pursuant to subsection 2.9(c), as determined on
each Excess Cash Flow Application Date in respect of the
immediately preceding fiscal year of the Borrower.
"Uniform Customs": the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500, as the same may be
revised from time to time.
"Wholly Owned Subsidiary": as to any Person, any other
Person all of the Capital Stock of which (other than
directors' qualifying shares required by law) is owned by
such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary
Guarantor that is a Wholly Owned Subsidiary of the
Borrower.
"WTOV-TV Acquisition": as defined in subsection
5.1(b).
"WTOV-TV Acquisition Agreement": the Asset Purchase
Agreement, dated as of November 4, 1996, among the WTOV-TV
Sellers and the WTOV-TV Buyer.
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<PAGE> 32
"WTOV-TV Buyer": Smith Acquisition Company, a Delaware
corporation.
"WTOV-TV Sellers": the collective reference to Smith
Television-WTOV, L.P. and Smith Television-WTOV License,
L.P.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents,
and any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to the Borrower and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and
conditions hereof, each Term Loan Lender severally agrees to make a term loan
(a "Term Loan") to the Borrower on the Closing Date in an amount not to exceed
the amount of the Term Loan Commitment of such Lender. The Term Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with subsections 2.2 and
2.10.
2.2 Procedure for Term Loan Borrowing. The Borrower
shall give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 10:00 A.M., New York City time,
one Business Day prior to the anticipated Closing Date) requesting that the
Term Loan Lenders make the Term Loans on the Closing Date and specifying the
amount to be borrowed. The Term Loans made on the Closing Date shall initially
be ABR Loans. Upon receipt of such notice the Administrative Agent shall
promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon, New
York City time, on the Closing Date each Term Loan Lender shall make available
to the Administrative Agent at its office specified in subsection 10.2 an
amount in immediately available funds equal to the Term Loan or Term Loans to
be made by such Lender. The Administrative Agent
27
<PAGE> 33
shall credit the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.
2.3 Repayment of Term Loans. The Term Loan of each
Term Loan Lender shall mature in 25 consecutive quarterly installments,
commencing on March 31, 1998, each of which installments in any calendar year
specified below shall be in an amount equal to the product of (x) one quarter
of the percentage set forth opposite such calendar year (except with respect to
2004, during which there will be one installment made on February 27, 2004 in
the lesser of the amount of Term Loans then outstanding and the percentage set
forth below opposite the year 2004), (y) the amount of the outstanding Term
Loans as of December 31, 1997 after giving effect to the application of the
Capital Contribution to the repayment of the Term Loans pursuant to subsections
2.9(d) and (e) and (z) such Lender's Term Loan Percentage:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998 10%
1999 10%
2000 15%
2001 15%
2002 15%
2003 15%
2004 20%
</TABLE>
2.4 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the L/C Obligations then outstanding, does not exceed the
amount of such Lender's Revolving Credit Commitment. During the Revolving
Credit Commitment Period the Borrower may use the Revolving Credit Commitments
by borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Credit Loans may from time to time be Eurodollar Loans or ABR Loans,
as determined by the Borrower and notified to the Administrative Agent in
accordance with subsections 2.5 and 2.10, provided that no Revolving Credit
Loan shall be made as a Eurodollar Loan after the day that is one month prior
to the Scheduled Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.
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<PAGE> 34
2.5 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of ABR Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case
of Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in
the case of ABR Loans, $500,000 or a whole multiple of $100,000 in excess
thereof (or, if the then aggregate Available Revolving Credit Commitments are
less than $500,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof. Upon
receipt of any such notice from the Borrower, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. Each Revolving Credit
Lender will make the amount of its pro rata share of each borrowing available
to the Administrative Agent for the account of the Borrower at the office of
the Administrative Agent specified in subsection 10.2 prior to 12:00 Noon, New
York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders and in like funds as received by the Administrative Agent.
2.6 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment
of such Lender during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and on
the Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent
the fees in the amounts and on the dates set forth in the Fee Letter dated
February 27, 1997 in writing by the Borrower and the Administrative Agent.
2.7 Termination or Reduction of Revolving Credit Commitments.
(a) The Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving Credit
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Revolving Credit
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Commitments then in effect. Any such reduction shall be in an amount equal to
$500,000, or a whole multiple of $100,000 in excess thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect. Upon receipt of
any notice pursuant to this subsection 2.7, the Administrative Agent shall
promptly notify each Revolving Credit Lender of the contents thereof.
(b) Notwithstanding any other provision of this Agreement,
each Revolving Credit Lender's Revolving Credit Commitment shall automatically
be permanently reduced at the end of each fiscal quarter by the product of (x)
one quarter of the percentage set forth opposite such calendar year (except
with respect to 2004, during which there will be one reduction on the Revolving
Credit Termination Date in the percentage set forth below opposite the year
2004), (y) the amount of the Revolving Credit Commitments then in effect as of
December 31, 1999 and (z) such Lender's Revolving Credit Percentage:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 20%
2001 20%
2002 20%
2003 20%
2004 20%
</TABLE>
If at the time of any mandatory reduction of the Revolving Credit Commitments
pursuant to this subsection 2.7(b), the aggregate principal amount of the
Revolving Credit Loans and Letters of Credit then outstanding exceeds the
Revolving Credit Commitments as so reduced on such date, the Borrower shall on
such date prepay the Revolving Credit Loans in the amount of such excess,
together with accrued interest thereon to the date of payment.
2.8 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of ABR Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to subsection
2.18. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments of Eurodollar Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple of $100,000 in excess thereof.
Partial prepayments of ABR Loans shall be in an aggregate principal amount of
$500,000 or a whole
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multiple of $100,000 thereof. Optional prepayments on account of the Term
Loans shall be applied ratably to the then remaining number of installments
thereof and may not be reborrowed.
2.9 Mandatory Prepayments and Commitment Reductions. (a) If
any Capital Stock or Indebtedness shall be issued or Incurred by the Borrower
or any of its Subsidiaries (excluding any Permitted Issuance and any Incurrence
of Indebtedness (other than the Senior Subordinated Notes) in accordance with
subsection 7.2 as in effect on the date of this Agreement), an amount equal to
100% of the Net Cash Proceeds thereof shall be applied on the date of such
issuance or Incurrence toward the prepayment of the Term Loans and to the
extent of any excess to the prepayment of the Revolving Credit Loans and, with
respect to the Incurrence of any such Indebtedness, the reduction of the
Revolving Credit Commitments as set forth in subsection 2.9(e).
(b) If on any date the Borrower or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash Proceeds shall be applied, within five Business Days after such date,
toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in subsection 2.9(e); provided, that, none of
the Net Cash Proceeds of Asset Sales may be excluded from the foregoing
requirement pursuant to a Reinvestment Notice to the extent of any Term Loans
then outstanding; and provided, further, (i) the aggregate Net Cash Proceeds of
Asset Sales that may be excluded from the foregoing requirement pursuant to a
Reinvestment Notice (x) with respect to the acquisition of a new Station
contemplated by subsection 7.5(h) shall not exceed $90,000,000 and (y) with
respect to the acquisition of other assets useful in the Borrower's or any of
its Subsidiaries' business, shall not exceed in any fiscal year of the Borrower
$200,000 and (ii) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loans and the Revolving
Credit Loans and, under certain circumstances, to the reduction of the
Revolving Credit Commitments as set forth in subsection 2.9(e).
(c) If, for any fiscal year of the Borrower commencing with
the fiscal year ending December 31, 1997, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the
ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans
and the Revolving Credit Loans (but not the reduction of the Revolving Credit
Commitments) as set forth in subsection 2.9(e) and the definition of "ECF
Percentage". Each such prepayment shall be made on a date (an "Excess Cash
Flow Application Date") no later than five days after the earlier of (i) the
date on which the financial statements of the Borrower referred to in
subsection 6.1(a), for the fiscal year with respect to which such prepayment is
made, are required to be delivered to the Lenders and (ii) the date such
financial statements are actually delivered.
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(d) On the date the Borrower receives the Capital
Contribution, the Borrower shall apply 100% of the amount of the Capital
Contribution toward the prepayment of the Term Loans and the Revolving Credit
Loans (but not the reduction of the Revolving Credit Commitments) as set forth
in subsection 2.9(e).
(e) The amount of the Capital Contribution to be applied
pursuant to subsection 2.9(d) shall be applied first, to the prepayment of the
Term Loans and, second, to the prepayment of the Revolving Credit Loans but not
to reduce the Revolving Credit Commitments (except in the event of a
bankruptcy, insolvency or similar condition of Holdings or the Borrower, in
which case the Capital Contribution shall be applied ratably to the prepayment
of the Term Loans and the permanent reduction of the Revolving Credit
Commitments based on the respective amounts thereof. Each of (i) the Excess
Cash Flow to be applied pursuant to subsection 2.9(b) and (ii) the Net Cash
Proceeds of the Senior Subordinated Notes to be applied pursuant to subsection
2.9(a), shall be applied first, to the prepayment of the Term Loans and second,
to the prepayment of any outstanding Revolving Credit Loans but not to reduce
the Revolving Credit Commitments. Subject to subsection 2.9(b), 100% of the
Net Cash Proceeds of any Asset Sale or Recovery Event shall be applied first,
to the prepayment of the Term Loans and to the extent of any excess, second,
unless a Reinvestment Notice shall be delivered in respect thereof (in which
case the terms of subsection 2.9(b) shall apply), to the permanent reduction of
the Revolving Credit Commitments and the prepayment of the Revolving Credit
Loans. Any such reduction of the Revolving Credit Commitments shall be
accompanied by prepayment of the Revolving Credit Loans to the extent, if any,
that the Total Revolving Extensions of Credit exceed the amount of the
aggregate Revolving Credit Commitments as so reduced, provided that if the
aggregate principal amount of Revolving Credit Loans then outstanding is less
than the amount of such excess (because L/C Obligations constitute a portion
thereof), the Borrower shall, to the extent of the balance of such excess,
replace outstanding Letters of Credit and/or deposit an amount in cash in a
cash collateral account established with the Administrative Agent for the
benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to this
subsection 2.9 shall be made first to ABR Loans and second to Eurodollar Loans.
Amounts prepaid on account of the Term Loans shall be applied ratably to the
then remaining number of installments thereof and may not be reborrowed. Any
such permanent reductions of the Revolving Credit Commitments shall be applied
ratably to the then remaining number of scheduled reductions of the Revolving
Credit Commitments as set forth in subsection 2.7(b).
2.10 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election (but no later than 12:00 Noon, New York City time on the
Business Day immediately prior to such election), provided that, unless the
Borrower elects to deposit with the Administrative Agent the amount of any
breakage costs and other Eurodollar Loans related costs to be incurred by the
Borrower under this Agreement with respect to any prepayment or conversion of
such
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Eurodollar Loans prior to the end of an Interest Period, any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Borrower may elect from time to time to convert ABR Loans
to Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election (which notice shall specify the
length of the initial Interest Period therefor), provided that no ABR Loan
under a particular Facility may be converted into a Eurodollar Loan (i) when
any Event of Default has occurred and is continuing and the Administrative
Agent or the Majority Facility Lenders in respect of such Facility have
determined that such a conversion is not appropriate or (ii) after the date
that is one month prior to the final scheduled termination or maturity date of
such Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
subsection 1.1, of the length of the next Interest Period to be applicable to
such Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined that such a continuation is not appropriate or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and provided, further, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Eurodollar Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.11 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (a) the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $100,000 in excess thereof, (b) no more than six Eurodollar
Tranches under a particular Facility shall be outstanding at any one time and
(c) no more than ten Eurodollar Tranches in the aggregate shall be outstanding
at any one time.
2.12 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.
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<PAGE> 39
(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this subsection 2.12 plus 2% or (y) in the case of Reimbursement Obligations,
the rate applicable to ABR Loans under the Revolving Credit Facility plus 2%,
and (ii) if all or a portion of any interest payable on any Loan or
Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate applicable to ABR Loans under the relevant Facility
plus 2% (or, in the case of any such other amounts that do not relate to a
particular Facility, the rate applicable to ABR Loans under the Revolving
Credit Facility plus 2%), in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
subsection 2.12 shall be payable from time to time on demand.
2.13 Computation of Interest and Fees. (a) Interest, fees
and other amounts payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on
a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate pursuant to
subsections 2.12(a) or (c).
2.14 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
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(a) the Administrative Agent shall have determined (which
determination, absent manifest error, shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that
the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted to ABR Loans on the last day of the
Interest Period applicable thereto. Until such notice has been withdrawn by
the Administrative Agent (which the Administrative Agent agrees to do if the
circumstances that prompted delivery of such notice no longer exist), no
further Eurodollar Loans under the relevant Facility shall be made or continued
as such, nor shall the Borrower have the right to convert Loans under the
relevant Facility to Eurodollar Loans.
2.15 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made, with regard to the applicable Facility, pro rata
according to the respective Term Loan Percentages or Revolving Credit
Percentages, as the case may be, of the relevant Lenders.
(b) Whenever (i) any payment received by the Administrative
Agent under this Agreement or any Note or (ii) any other amounts received by
the Administrative Agent for or on behalf of the Borrower (including, without
limitation, proceeds of collateral or payments under any guarantee) is
insufficient to pay in full all amounts then due and payable to the
Administrative Agent and the Lenders under this Agreement and any Note, such
payment shall be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the following order: First, to the
payment of fees and expenses due and payable to the Administrative Agent under
and in connection with this Agreement; Second, to the payment of all expenses
due and payable under Section 10.5, ratably among the Administrative Agent and
the Lenders in accordance with the aggregate amount of such payments owed to
the Administrative Agent and each such Lender; Third, to the payment of fees
due and payable under Sections 2.6 and 3.3, ratably among the Revolving Credit
Lenders in accordance with the Revolving Credit Commitment of each Revolving
Credit Lender and,
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in the case of the Issuing Lender, the amount retained by the Issuing Lender
for its own account pursuant to Section 3.3(a); Fourth, to the payment of
interest then due and payable under the Loans, ratably in accordance with the
aggregate amount of interest owed to each such Lender; and Fifth, to the
payment of the principal amount of the Loans and the L/C Obligations then due
and payable and, in the case of proceeds of collateral or payments under any
guarantee, to the payment of any other obligations to any Lender not covered in
First through Fourth above ratably secured by such collateral or ratably
guaranteed under any such guarantee, ratably among the Lenders in accordance
with the aggregate principal amount and, in the case of proceeds of collateral
or payments under any guarantee, the obligations secured or guaranteed thereby
owed to each such Lender.
(c) If any Revolving Credit Lender (a "Non-Funding Lender")
has (x) failed to make a Revolving Credit Loan required to be made by it
hereunder, and the Administrative Agent has determined that such Revolving
Credit Lender is not likely to make such Revolving Credit Loan or (y) given
notice to the Borrower or the Administrative Agent that it will not make, or
that it has disaffirmed or repudiated any obligation to make, any Revolving
Credit Loans, in each case by reason of the provisions of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended, or
otherwise, any payment made on account of the principal of the Revolving Credit
Loans outstanding shall be made as follows:
(i) in the case of any such payment made on any date when and
to the extent that, in the determination of the Administrative Agent,
the Borrower would be able, under the terms and conditions hereof, to
reborrow the amount of such payment under the Revolving Credit
Commitments and to satisfy any applicable conditions precedent set
forth in Section 5.2 to such reborrowing, such payment shall be made
on account of the outstanding Revolving Credit Loans held by the
Revolving Credit Lenders other than the Non-Funding Lender pro rata
according to the respective outstanding principal amounts of the
Revolving Credit Loans of such Revolving Credit Lenders;
(ii) otherwise, such payment shall be made on account of the
outstanding Revolving Credit Loans held by the Revolving Credit
Lenders pro rata according to the respective outstanding principal
amounts of such Revolving Credit Loans; and
(iii) any payment made on account of interest on the
Revolving Credit Loans shall be made pro rata according to the
respective amounts of accrued and unpaid interest due and payable on
the Revolving Credit Loans with respect to which such payment is being
made.
The Borrower agrees to give the Administrative Agent such assistance in making
any determination pursuant to this paragraph as the Administrative Agent may
reasonably request. Any such determination by the Administrative Agent shall
be conclusive and binding on the Lenders.
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(d) Otherwise, each payment (including each prepayment) by
the Borrower on account of principal of and interest on the Term Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Term Loans then held by the Term Loan Lenders.
(e) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Credit Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(f) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in subsection 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day (except, in the
case of Eurodollar Loans, as otherwise provided in clause (i) of the definition
of "Interest Period"). In the case of any extension of any payment of
principal pursuant to the preceding sentence, interest thereon shall be payable
at the then applicable rate during such extension.
(g) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a Borrowing Date that such Lender will not
make the amount that would constitute its share of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such Lender
is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such amount is not made available to
the Administrative Agent by the required time on the Borrowing Date therefor,
such Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this subsection
2.15(e) shall be conclusive in the absence of manifest error. If such Lender's
share of such borrowing is not made available to the Administrative Agent by
such Lender within three Business Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to ABR Loans under the
relevant Facility, on demand, from the Borrower. The failure of any Lender to
make any Loan to be made by it shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on such Borrowing Date, but no
Lender shall be responsible for the failure of any other Lender to make the
Loan to be made by such other Lender on such Borrowing Date.
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2.16 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by subsection 2.17 and the establishment of
a tax based on the overall net income of such Lender and changes in
the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable, provided, that before making
any such demand, each Lender agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions and so long as such
efforts would not be disadvantageous to it, in its reasonable discretion, in
any legal, economic or regulatory manner) to designate a different Eurodollar
lending office of the making of such designation would allow the Lender or its
Eurodollar lending office to continue to perform its obligations to make
Eurodollar Loans or to continue to fund or maintain Eurodollar Loans and avoid
the need for, or materially reduce the amount of, such increased cost. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection 2.16, it shall promptly (and in any event no later than 90 days
after such Lender becomes entitled to make such claim) notify the Borrower,
through the Administrative Agent, of the event by reason of which it has become
so entitled. If the Borrower notifies the Administrative Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this subsection 2.16(a), the Borrower
may convert all Eurodollar Loans of such Lender then outstanding into ABR Loans
in accordance with subsection 2.10 and shall, additionally, reimburse such
Lender for any cost in accordance with subsection 2.18.
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(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time, after submission by such Lender, to the Borrower, through the
Administrative Agent, of a written request therefor, the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
such corporation for such reduction; provided that the Borrower shall not be
required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than ninety days prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; and
provided further that, if the circumstances giving rise to such claim have a
retroactive effect, then such ninety-day period shall be extended to include
the period of such retroactive effect.
(c) A certificate as to any additional amounts payable
pursuant to this subsection 2.16, showing in reasonable detail the calculation
thereof and certifying that it is generally charging such costs to other
similarly situated borrowers under similar credit facilities, submitted by any
Lender through the Administrative Agent shall be conclusive in the absence of
manifest error, provided that the determination of such amounts shall be made
in good faith in a manner generally consistent with such Lender's standard
practices. The obligations of the Borrower pursuant to this subsection 2.16
shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder for a period of nine months thereafter.
2.17 Taxes. (a) Except as provided below in this
subsection, all payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Administrative Agent or any Lender as a result of a
present or former connection between the Administrative Agent or such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender
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hereunder, the amounts so payable to the Administrative Agent or such Lender
shall be increased to the extent necessary to yield to the Administrative Agent
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall be entitled to
deduct and withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof to the extent such
Lender's compliance with the requirements of subsection 2.17(b) at the time
such Lender becomes a party to this Agreement fails to establish a complete
exemption from such withholding. Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of such Lender,
as the case may be, a certified copy of an original official receipt received
by the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this subsection 2.17 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder for a period of nine months thereafter.
(b) Each Lender (or Transferee) that is not a corporation,
partnership or other entity created or organized in or under the laws of the
United States of America (or any jurisdiction thereof) (a "Non-U.S. Lender")
shall deliver to the Borrower and the Administrative Agent (or, in the case of
a Participant, to the Lender from which the related participation shall have
been purchased) two copies of either U.S. Internal Revenue Service Form 1001 or
Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
W-8, an annual certificate representing, under penalty of perjury, that such
Non-U.S. Lender is not a "bank" for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower and is not a controlled foreign corporation related to
the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall
be delivered by each Non-U.S. Lender on or before the date it becomes a party
to this Agreement (or, in the case of any Participant, on or before the date
such Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms on or before the expiration or
obsolescence and promptly upon the invalidity of any form previously delivered
by such Non-U.S. Lender and after the occurrence of any event requiring a
change in the most recently provided form and, if necessary, obtain any
extensions of time reasonably requested
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by the Borrower of the Administrative Agent for filing and completing such
forms. Each Non-U.S. Lender agrees, to the extent legally entitled to do so,
upon reasonable request by the Borrower, to provide to the Borrower (for the
benefit of the Borrower and the Administrative Agent) such other forms as may
be reasonably required in order to establish the legal entitlement of such
Lender to an exemption from withholding with respect to payments of interest
under this Agreement or the other Loan Documents, provided that in determining
the reasonableness of such a request, such Lender shall be entitled to consider
the cost of complying with such request (to the extent unreimbursed by the
Borrower) that would be imposed on such Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in
a position to provide any previously delivered certificate to the Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this subsection 2.17(b), a
Non-U.S. Lender shall not be required to deliver any form pursuant to this
subsection 2.17(b) that such Non-U.S. Lender is not legally able to deliver.
2.18 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss (excluding loss of profit) or
expense which such Lender may sustain or incur as a consequence of (a) default
by the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower
in making any prepayment after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market. A
certificate as to any amounts payable pursuant to this subsection 2.18, showing
in reasonable detail the calculation thereof, submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder for a period of nine months thereafter.
2.19 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of subsection 2.16 or
2.17(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided,
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that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic,
legal or regulatory disadvantage, and provided, further, that nothing in this
subsection 2.19 shall affect or postpone any of the obligations of any Borrower
or the rights of any Lender pursuant to subsection 2.16 or 2.17(a).
2.20 Replacement of Lenders under Certain Circumstances. If
at any time (a) the Borrower becomes obligated to pay additional amounts
described in subsections 2.16, 2.17 or 2.18 as a result of any condition
described in such subsections or any Lender ceases to make Eurodollar Loans
pursuant to Section 2.16, (b) any Lender becomes insolvent and its assets
become subject to a receiver, liquidator, trustee, custodian or other Person
having similar powers or (c) any Lender becomes a "Non-Funding Lender", then
the Borrower may, on ten Business Days' prior written notice to the
Administrative Agent and such Lender, replace such Lender by causing such
Lender to (and such Lender shall) assign pursuant to Section 10.6(c) all of its
rights and obligations under this Agreement to a Lender or other entity
selected by the Borrower and acceptable to the Administrative Agent for a
purchase price equal to the outstanding principal amount of such Lender's Loans
and all accrued interest and fees and other amounts payable hereunder
(including amounts payable under Section 2.18 as though such Loans were being
paid instead of being purchased); provided that (i) the Borrower shall have no
right to replace the Administrative Agent, (ii) neither the Administrative
Agent nor any Lender shall have any obligation to the Borrower to find a
replacement Lender or other such entity, (iii) in the event of a replacement of
a Lender to which the Borrower becomes obligated to pay additional amounts
pursuant to clause (a) of this Section 2.20, in order for the Borrower to be
entitled to replace such a Lender, such replacement must take place no later
than 180 days after the Lender shall have demanded payment of additional
amounts under one of the subsections described in clause (a) of this Section
2.20, as the case may be, and (iv) in no event shall the Lender hereby replaced
be required to pay or surrender to such replacement Lender or other entity any
of the fees received by such Lender hereby replaced pursuant to this Agreement.
In the case of a replacement of a Lender to which the Borrower becomes
obligated to pay additional amounts pursuant to clause (a) of this subsection
2.20, the Borrower shall pay such additional amounts to such Lender prior to
such Lender being replaced and the payment of such additional amounts shall be
a condition to the replacement of such Lender. The Borrower's right to replace
a Non-Funding Lender pursuant to this subsection 2.20 is, and shall be, in
addition to, and not in lieu of, all other rights and remedies available to the
Borrower against such Non-Funding Lender under this Agreement, at law, in
equity, or by statute.
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SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, the Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in subsection 3.4(a), agrees to issue
letters of credit ("Letters of Credit") for the account of the Borrower on any
Business Day during the Revolving Credit Commitment Period in such form as may
be approved from time to time by the Issuing Lender; provided that the Issuing
Lender shall not have any obligation to issue any Letter of Credit if, after
giving effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving Credit
Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Scheduled Revolving Credit Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) The Issuing Lender shall not at any time be obligated to
issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits imposed
by, any applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the satisfaction of the Issuing Lender,
and such other certificates, documents and other papers and information as the
Issuing Lender may reasonably request. Upon receipt of any Application, the
Issuing Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its
receipt of the Application therefor and all such other certificates, documents
and other papers and information relating thereto) by issuing the original of
such Letter of Credit to the beneficiary thereof or as otherwise may be agreed
to by the Issuing Lender and the Borrower. The Issuing Lender shall furnish a
copy of such Letter of Credit to the Borrower promptly following the issuance
thereof. The Issuing Lender shall promptly furnish to the Administrative Agent
notice of the issuance of each Letter of Credit (including the amount thereof).
The Administrative Agent will furnish to the Revolving Credit Lenders (a)
prompt notice of the issuance of each standby Letter of Credit and (b) a
monthly report setting forth for the relevant month the total aggregate daily
amount available to be drawn under commercial Letters of Credit that were
outstanding during such month.
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3.3 Commissions, Fees and Other Charges. (a) The Borrower
will pay to the Administrative Agent, for the account of each Revolving Credit
Lender, a commission on all outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with respect to Eurodollar Loans
under the Revolving Credit Facility minus the fronting fee referred to below,
shared ratably among the Revolving Credit Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to the Issuing Lender for its own account a fronting fee of
1/4 of 1% per annum of the average daily face amount of each Letter of Credit
issued by the Issuing Lender, payable quarterly in arrears on each L/C Fee
Payment Date after the Issuance Date.
(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing Lender
in issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the Issuing Lender, on the terms and conditions hereinafter stated, for such
L/C Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued by the Issuing Lender and the
amount of each draft paid by the Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Issuing Lender
that, if a draft is paid under any Letter of Credit issued by the Issuing
Lender for which the Issuing Lender is not reimbursed in full by the Borrower
in accordance with the terms of this Agreement, such L/C Participant shall pay
to the Issuing Lender upon demand an amount equal to such L/C Participant's
Revolving Credit Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to the Issuing Lender pursuant to subsection 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit is paid to the Issuing Lender within three Business Days after the
date such payment is due, such L/C Participant shall pay to the Issuing Lender
on demand an amount equal to the product of (i) such amount, times (ii) the
daily average Federal Funds Effective Rate during the period from and including
the date such payment is required to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 3.4(a) is not made available to the Issuing
Lender by such L/C Participant within three Business Days after the date such
payment is due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to ABR Loans under the Revolving
Credit Facility. A certificate of the Issuing Lender
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submitted to any L/C Participant with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with subsection 3.4(a), the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by the Issuing Lender in connection with such payment. Each such
payment shall be made to the Issuing Lender in lawful money of the United
States of America and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
subsection from the date such amounts become payable (whether at stated
maturity, by acceleration or otherwise) until payment in full at the rate set
forth in subsection 2.12(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in subsection 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing pursuant to subsection 2.5 of ABR Loans in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date
of payment of the relevant draft.
3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Issuing Lender
(except to the extent resulting from the gross negligence or willful misconduct
of the Issuing Lender), any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with the Issuing Lender that, subject to the
last sentence of this subsection 3.6, the Issuing Lender shall not be
responsible for, and the Borrower's Reimbursement Obligations under subsection
3.5 shall not be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even though such documents shall
in fact prove to be invalid, fraudulent or forged, or any dispute between or
among the Borrower and any beneficiary of any Letter of Credit or any other
party to which such Letter of Credit may be transferred or any claims
whatsoever of the Borrower against
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any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors,
omissions or delays in transmission found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Issuing Lender. The Borrower agrees that any
action taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards or
care specified in the Uniform Commercial Code of the State of New York, shall
be binding on the Borrower and shall not result in any liability of the Issuing
Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the Issuing Lender shall
promptly notify the Borrower of the date and amount thereof. The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit issued by it shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents (including each draft)
delivered under such Letter of Credit in connection with such presentment are
substantially in conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of Holdings and its consolidated Subsidiaries
(including for this purpose the WTOV-TV Buyer and its Subsidiaries) as at
January 31, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"),
copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to (i) the
consummation of the Acquisitions, (ii) the Loans to be made and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet presents fairly on a pro forma
basis the financial position of Holdings and its consolidated Subsidiaries as
at January 31, 1997 and is based upon good faith estimates and assumptions
believed by management of Holdings and the Borrower to be reasonable at the
time made, assuming that the events specified in the preceding sentence had
actually occurred at such date.
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(b) The unaudited combined and combining balance sheet of the
Multi-Station Sellers and the WTOV-TV Sellers for the fiscal year ending
December 31, 1996 and the related combined and combining statements of income
and cash flows for the fiscal year ended on such date and delivered to the
Administrative Agent by the Borrower, present fairly the combined and combining
financial condition of the Multi-Station Sellers and the WTOV-TV Sellers, as
the case may be, as at such dates, and the combined and combining results of
its operations and cash flows for the fiscal year then ended (subject to
year-end audit adjustments). The audited combined and unaudited combining (on
a Station by Station basis) statements of operations and cash flows of the
Michigan Station, the Steubenville Station and the Rochester Station and the
audited statements of operations and cash flows of the Salinas-Monterey Station
for each of the fiscal years ended December 31, 1994 and December 31, 1995,
reported on by, and accompanied by unqualified reports from, Arthur Andersen
LLP, present fairly the combined and combining (on a Station by Station basis)
results of operations and cash flows of the Michigan Station, the Steubenville
Station and the Rochester Station and the results of operations and cash flows
of the Salinas-Monterey Station for the respective fiscal years then ended.
The unaudited combined and combining balance sheets of the Multi-Station
Sellers and the WTOV-TV Sellers for each of the fiscal quarters and for each
fiscal month ended subsequent to the date of the latest audited financial
statements as to which financial statements are available, and the related
unaudited combined and combining statements of income and cash flows for the
periods ended on such dates, present fairly the combined and combining
financial condition of the Multi-Station Sellers and the WTOV-TV Sellers, as
the case may be, as at such date, and the combined and combining results of its
operations and its combined and combining cash flows for the periods then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the relevant firm of accountants and disclosed therein).
The most recent balance sheets referred to above reflect, as required by GAAP,
any material Guarantee Obligations, contingent liabilities and liabilities for
taxes, and any long-term leases and unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, in each
case as of the date of such balance sheets. During the period from the date of
the most recent audited financial statements delivered pursuant to this
paragraph to and including the date hereof there has been no sale, transfer or
other disposition by any of the Multi-Station Sellers or the WTOV-TV Sellers of
any material part of its business or Property (other than in connection with
the Acquisitions).
(c) The most recent financial statements for the
Multi-Station Sellers and the WTOV-TV Sellers delivered pursuant to subsection
4.1(b) (which shall be for a period ended not more than 60 days prior to the
Closing Date) shall indicate on a pro forma basis (after giving effect to the
Acquisitions) that as of the Closing Date, the ratio of Consolidated Total Debt
to Consolidated EBITDA is no greater than 6.40 to 1.00.
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4.2 No Change. Since the date of the most recent audited
financial statements delivered pursuant to subsection 4.1(b), there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries and Holdings (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right,
to own and operate its property, to lease the property it operates as lessee
and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification except to the extent that the
failure to so qualify could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow and obtain other extensions of credit
hereunder. Each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the
borrowings and other extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisitions and the borrowings and other extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the other Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and
are in full force and effect, (ii) consents under immaterial Contractual
Obligations relating to limitations on the assignability thereof and (iii) the
filings referred to in subsection 4.19(b). Each Loan Document has been duly
executed and delivered on behalf of each Loan Party party thereto. This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any material Contractual Obligation of any of the
Loan Parties and will not result in, or require,
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the creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such material Contractual
Obligation (other than the Liens created by the Security Documents). No
Requirement of Law or Contractual Obligation applicable to the any of the Loan
Parties could reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. Except as set forth in Schedule
4.6, no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against any of the Loan Parties or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
4.7 No Default. None of the Loan Parties is in default under
or with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Loan Parties
has title in fee simple to, or a valid leasehold interest in, all its real
property, and good title to, or a valid leasehold interest in, all its other
property, and none of such property is subject to any Lien except as permitted
by subsection 7.3.
4.9 Intellectual Property. Each of the Borrower and each of
its Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
service marks, copyrights, technology, know-how and processes ("Intellectual
Property") necessary for the conduct of its business as currently conducted.
Except as, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect and to the knowledge of the Borrower and each of its
Subsidiaries (a) no claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
of any Intellectual Property (nor does the Borrower know of any valid basis for
any such claim) and (b) the use of Intellectual Property by the Borrower and
its Subsidiaries does not infringe on the rights of, and no Intellectual
Property of the Borrower or any of its Subsidiaries is being infringed upon by,
any Person.
4.10 Taxes. Each of the Loan Parties has filed or caused to
be filed all Federal and all material state and other material tax returns
which are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than (i) any taxes, fees or other
charges the amount or validity of which are currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the applicable Loan
Party, and (ii) taxes, assessments, fees or other charges
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imposed by an Governmental Authority, other than income taxes imposed by the
United States of America, with respect to which the failure to make payments
could not, by reason of the amount thereof or of remedies available to such
Governmental Authorities, reasonably be expected to have a Material Adverse
Effect); and no tax Lien has been filed, and, to the knowledge of the Borrower,
no material claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 Federal Regulations. No Letters of Credit and no part
of the proceeds of any Loans will be used for "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under
Regulation G or Regulation U of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form G-3 or FR Form U-1 referred to in said Regulation G or Regulation U, as
the case may be.
4.12 Labor Matters. Except as set forth on Schedule 4.12,
there are no strikes or other labor disputes against the Borrower or any of its
Subsidiaries pending or, to the knowledge of the Borrower, threatened that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect. Hours worked by and payment made to employees of the
Borrower and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect. To the knowledge of Borrower and its
Subsidiaries, all payments due from the Borrower or any of its Subsidiaries on
account of employee health and welfare insurance that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect if
not paid have been paid or accrued as a liability on the books of the Borrower
or the relevant Subsidiary.
4.13 ERISA. Except where the liability, individually or in
the aggregate, which could reasonably be expected to result has not had or
could not reasonably be expected to have a Material Adverse Effect: (i) neither
a Reportable Event nor an "accumulated funding deficiency" (within the meaning
of Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan; (ii) each Plan (other
than a Multiemployer Plan) has complied in all material respects with the
applicable provisions of ERISA and the Code; (iii) no termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Single
Employer Plan has arisen and remains outstanding, during such five-year period;
(iv) the present value of all accrued benefits under each Single Employer Plan
(based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits; (v) none of the Loan Parties nor any Commonly Controlled
Entity has had a complete or partial withdrawal
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from any Multiemployer Plan, and, to the best knowledge of the Loan Parties,
none of the Loan Parties nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Loan Parties or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made; (vi) no such Multiemployer Plan is in
Reorganization or Insolvent; (vii) the present value (determined using
actuarial and other assumptions which are reasonable in respect of the benefits
provided and the employees participating) of the liability of the Borrower and
each Commonly Controlled Entity for post retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the
assets under all such Plans allocable to such benefits.
4.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof. Holdings
has no Subsidiaries other than the Borrower.
4.16 Use of Proceeds. The proceeds of the Term Loans shall
be used to finance a portion of the Acquisitions and to pay related fees and
expenses. The proceeds of the Revolving Credit Loans and the Letters of Credit
shall be used to finance (a) a portion of the Acquisitions, (b) related fees
and expenses of the Acquisitions, (c) general corporate purposes in the
ordinary course of business and (d) Permitted Acquisitions (including deposits
made in connection with Permitted Acquisitions).
4.17 Environmental Matters. Except as set forth on Schedule
4.17:
(a) The facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "Properties") do not contain, and
have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under such conditions which (i) constitute or
constituted a violation of, or could reasonably be expected to give rise to
liability under, any Environmental Law in effect at the time of the making of
this representation, or (ii) could materially and adversely interfere with the
continued operation of the Properties, or (iii) materially impair the fair
saleable value thereof except in each case insofar as such violation,
liability, interference, or reduction in fair market value, or any aggregation
thereof, is not reasonably likely to result in a Material Adverse Effect.
(b) The business operated by the Borrower or any of its
Subsidiaries (the "Business"), Properties and all operations at the Properties
are, and to the knowledge of
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Holdings and the Borrower have been, in compliance in all material respects
with all applicable Environmental Laws except for noncompliance which is not
reasonably likely to result in a Material Adverse Effect.
(c) Neither Holdings nor any of its Subsidiaries has received
any written notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the Business, nor
does Holdings or the Borrower have knowledge or reason to believe that any such
notice will be received or is being threatened except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that is or are reasonably likely to result in a Material Adverse
Effect.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location which could reasonably be expected to give rise to liability
under, any Environmental Law in effect at the time of the making of this
representation, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give rise to
liability under, any applicable Environmental Law in effect at the time of the
making of this representation except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, is not reasonably
likely to result in a Material Adverse Effect.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of Holdings or the Borrower, threatened,
under any Environmental Law to which Holdings or any of its Subsidiaries is or
will be named as a party with respect to the Properties or the Business, nor
are there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Properties or the
Business except insofar as such proceeding, action, decree, order or other
requirement, or any aggregation thereof, is not reasonably likely to result in
a Material Adverse Effect.
(f) There has been no release or, to the best knowledge of
Holdings or the Borrower, threat of release of Materials of Environmental
Concern at or from the Properties, or arising from or related to the operations
of Holdings or any of its Subsidiaries in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in
a manner that could reasonably give rise to liability under Environmental Laws
in effect at the time of making this representation except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, is not reasonably likely to result in a Material Adverse Effect.
4.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document or any other
document, certificate or statement furnished to the Administrative Agent or the
Lenders, or any of them, by or on behalf of any
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Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents (but excluding all projections and pro
forma financial information and other estimates covered by the next sentence),
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
and other estimates and opinions contained in the materials referenced above
are based upon good faith estimates and assumptions believed by management of
the Borrower to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is not
to be viewed as fact and that actual results during the period or periods
covered by such financial information may differ from the projected results set
forth therein by a material amount. As of the date hereof, the representations
and warranties of the Multi-Station Buyer, the WTOV-TV Buyer and, to the best
knowledge of the Borrower, the Multi-Station Sellers and the WTOV-TV Sellers in
the Acquisition Agreements are true and correct in all material respects. As
of the Closing Date, there is no fact known to any Loan Party (other than
general economic conditions, which conditions are commonly known and affect
businesses generally) that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in the other Loan
Documents or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
4.19 Security Documents. (a) Except as described in
subsection 10.16, the Guarantee and Collateral Agreement is effective to create
in favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the collateral described therein and
proceeds thereof. In the case of the Pledged Stock described in the Guarantee
and Collateral Agreement, when stock certificates representing such Pledged
Stock are delivered to the Administrative Agent, and in the case of the other
collateral described in the Guarantee and Collateral Agreement, when financing
statements in appropriate form are filed in the offices specified on Schedule
4.19(a), the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person subject, except in the
case of such Pledged Stock, to Liens permitted by paragraphs (a) through (f) of
subsection 7.3.
(b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each Mortgage shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the Mortgaged
Properties and the proceeds thereof, as security for the Obligations (as
defined in the relevant
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Mortgage), in each case prior and superior in right to any other Person,
subject to Liens permitted by paragraphs (a) through (f) of subsection 7.3.
4.20 Solvency. Each Loan Party is, and after giving effect
to the Acquisitions and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith will be, Solvent.
4.21 Senior Indebtedness. The Obligations will constitute
"Senior Indebtedness" of the Borrower under and as defined in the Senior
Subordinated Note Indenture. The obligations of each Subsidiary Guarantor and
Holdings under the Guarantee and Collateral Agreement will constitute
"Guarantor Senior Indebtedness" of such Subsidiary Guarantor or Holdings under
and as defined in the Senior Subordinated Note Indenture (it being understood
that this representation will be deemed repeated at the time of the issuance of
the Senior Subordinated Notes).
4.22 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.
4.23 Station Licenses. Schedule 4.23 accurately and
completely lists as of the date hereof (after giving effect to the
Acquisitions), for each Station, all Station Licenses granted or assigned to
the Borrower or any of its Subsidiaries (or, in the case of the Steubenville
Station, to the WTOV-TV Buyer or any of its Subsidiaries), or under which the
Borrower and its Subsidiaries (or the WTOV-TV Buyer or any of its Subsidiaries)
have the right to operate such Station. The Station Licenses listed on
Schedule 4.23 with respect to any Station include all material authorizations,
licenses and permits issued by the FCC that are required or necessary for the
operation of such Station, and the conduct of the business of the Borrower and
its Subsidiaries (or the WTOV-TV Buyer and its Subsidiaries) with respect to
such Station, as now conducted or proposed to be conducted. The Station
Licenses listed on Schedule 4.23 will be, as of the Closing Date, issued in the
name of, or validly assigned to the respective License Subsidiary for the
Station being operated under authority of such Licenses and validly issued and
in full force and effect, and the Borrower and its Subsidiaries (or the WTOV-TV
Buyer and its Subsidiaries) will have fulfilled and performed in all material
respects of their obligations with respect thereto and have full power and
authority to operate thereunder, and, except as described in Schedule 4.23
hereto, all consents of the FCC to the transfer of the principal broadcasting
licenses and any other material Station Licenses in connection with the
transactions contemplated hereby will have been approved by orders of the FCC
that shall have become final (i.e. no longer subject to further judicial or
administrative review).
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SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, (ii) the Guarantee and Collateral
Agreement, executed and delivered by a duly authorized officer of
Holdings, the Borrower and each Subsidiary Guarantor, (iii) each of
the Preferred Pledge Agreement and the SAC Pledge Agreement, executed
and delivered by a duly authorized officer of the parties thereto,
(iv) each of the Mortgages, executed and delivered by a duly
authorized officer of each party thereto, and (v) for the account of
each relevant Lender, Notes conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Borrower.
(b) Acquisitions, Equity Issuances. The following
transactions shall have been consummated, in each case on terms and
conditions reasonably satisfactory to the Lenders:
(i) (x) the Borrower shall have acquired (the
"Multi-Station Acquisition") all of the assets of the
Multi-Station Sellers pursuant to the Multi-Station
Acquisition Agreement for an aggregate purchase price of not
more than $128,500,000, plus or minus the Net Working Capital
Amount (as defined in the Multi-Station Acquisition Agreement)
and (y) the WTOV-TV Buyer shall have acquired (the "WTOV-TV
Acquisition") all of the assets of the WTOV-TV Sellers
pursuant to the WTOV-TV Acquisition Agreement for an aggregate
purchase price of not more than $28,500,000, plus or minus the
Net Working Capital Amount (as defined in the WTOV-TV
Acquisition Agreement), and none of the material terms and
conditions of the Acquisition Agreements shall have been
amended or waived without the consent of the Required Lenders;
and
(ii) (x) the Borrower shall have received (1) at
least $50,000,000 from the proceeds of the issuance of its
common equity to Holdings and (2) at least $30,000,000
liquidation preference of the Preferred Stock from certain
other investors satisfactory to the Administrative Agent; and
(y) Holdings shall have received at least $50,000,000 from the
proceeds of the issuance of its common equity to Sunrise
Television Partners, L.P., a Delaware limited partnership (the
"Partnership"), whose partners shall include the Fund and
other investors satisfactory to the Lenders (collectively,
with the Fund, the "Holdings Investors"), each on terms and
conditions satisfactory to the
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Administrative Agent, including, without limitation, in the
case of the Preferred Stock a restriction that any regularly
scheduled dividends on such Preferred Stock shall only be
payable in kind until at least August 31, 2002 and shall only
be payable so long as after giving pro forma effect thereto
(as certified to the Administrative Agent by a Responsible
Officer prior to the payment of any such dividends), no
Default or Event of Default shall have occurred and be
continuing (including, without limitation, pursuant to
subsection 7.1).
(c) Capital Contribution Agreement. The Partnership shall
have entered into a definitive equity contribution agreement
satisfactory to the Lenders (the "Capital Contribution Agreement")
with Holdings, the Borrower and the Administrative Agent which shall
provide, among other things, that the Partnership will, if the Senior
Subordinated Notes are not issued or the Term Loans have not been paid
in full on or prior to December 31, 1997, contribute equity to
Holdings, which, in turn, will agree to contribute equity to the
Borrower, within 45 days of December 31, 1997 in an aggregate amount
equal to the lesser of (i) the principal amount of the Loans the
prepayment of which would cause the ratio of Total Debt to
Consolidated EBITDA on a pro forma basis as of December 31, 1997 to be
no greater than 5.50 to 1.00 (subject to adjustment based on the
Borrower's audited financial statements for the year then ended) or
(ii) $15,000,000 (such lesser amount, the "Capital Contribution").
The Capital Contribution Agreement shall also provide that (i) in the
event of a bankruptcy, insolvency or similar condition of Holdings,
the Borrower or the Partnership, the Capital Contribution shall be
made by the Partnership through a purchase of a subordinated
participation in the Loans and (ii) the Fund shall, so long as the
Capital Contribution Agreement is in effect, reserve from the capital
contributions available to it from its partners an amount equal its
share of the maximum required Capital Contribution for use in funding
such share and the Fund will guarantee (in form and substance
satisfactory to the Administrative Agent) the Partnership's obligation
to make the Capital Contribution.
(d) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii)
audited combined and combining financial statements of the
Multi-Station Sellers and the WTOV-TV Sellers for the periods for
which audited financial statements are required pursuant to subsection
4.1(b) and (iii) unaudited interim combined and combining financial
statements of the Multi-Station Sellers and the WTOV-TV Sellers for
each fiscal month and quarterly period ended subsequent to the date of
the latest applicable financial statements delivered pursuant to
clause (ii) of this paragraph as to which such financial statements
are available, and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of the Multi-Station
Sellers and the WTOV-TV Sellers, as reflected in the financial
statements or projections previously furnished to the Lenders.
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(e) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the
jurisdictions where assets of the Loan Parties are located, and such
search shall reveal no liens on any of the assets of the Borrower or
its Subsidiaries except for liens permitted by subsection 7.3.
(f) Environmental Audit. The Lenders shall have received and
be reasonably satisfied with environmental audits prepared as of a
date reasonably satisfactory to the Administrative Agent with respect
to the real properties of the Borrower and its Subsidiaries.
(g) Expenses. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in
connection with the Acquisitions and the financing thereof shall not
exceed $7,000,000.
(h) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.
(i) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:
(i) the legal opinion of Weil, Gotshal & Manges
LLP, counsel to the Loan Parties and the Affiliate of Hicks
Muse party to the Preferred Pledge Agreement, substantially in
the form of Exhibit F;
(ii) the legal opinion of special FCC counsel to
the Loan Parties;
(iii) the legal opinion of Hogan and Hartson
L.L.P., counsel to SBP; and
(iv) within 15 days of the Closing Date, the
legal opinion of local counsel in each of the states in which
the properties covered by the Mortgages to be executed and
delivered by the Borrower or any of its Subsidiaries are
located and any other jurisdiction reasonably requested by the
Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.
(j) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor
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thereof and the Pledged Notes (as defined in the Guarantee and
Collateral Agreement) pledged pursuant to the Guarantee and Collateral
Agreement endorsed in blank by a duly authorized officer of the
pledgor thereof.
(k) Consents, Licenses and Approvals. (i) All governmental
and material third party approvals (including, without limitation, a
consent from the FCC, which consent shall have become final, and
landlords' and other consents) reasonably necessary or advisable in
connection with the execution, delivery and performance of the Loan
Documents and the Acquisitions and the financing thereof and the
continuing operation of the Stations shall have been obtained and be
in full force and effect, (ii) all applicable waiting periods shall
have expired without any action being taken or threatened by any
competent Governmental Authority which would restrain, prevent or
otherwise impose adverse conditions on Holdings, the Borrower or any
of their Subsidiaries and (iii) the Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of a
Responsible Officer of the Borrower (A) attaching copies of all
consents, authorizations and filings in connection with the Loan
Documents and the Acquisitions and the financing thereof and (B)
stating that such consents, licenses and filings are in full force and
effect, and each such consent, authorization and filing shall be in
form and substance satisfactory to the Administrative Agent.
(l) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement and any filings with the FCC or the United States Patent and
Trademark Office) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien
on the collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted
by subsection 7.3), shall be in proper form for filing, registration
or recordation.
(m) Mortgages, etc. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed
and delivered by a duly authorized officer of each party thereto.
(ii) Within 15 days of the Closing Date, if reasonably
requested by the Administrative Agent, the Administrative Agent shall
have received, and the title insurance company issuing the policy
referred to in subsection 5.1(m)(iii) (the "Title Insurance Company")
shall have received, maps or plats of an as-built survey of the sites
of the Mortgaged Properties certified to the Administrative Agent and
the Title Insurance Company in a manner satisfactory to them, dated a
recent date by an independent professional licensed land surveyor
reasonably satisfactory to the Administrative Agent and the Title
Insurance Company, which maps or plats and the
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surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (A) the locations
on such sites of all the buildings, structures and other improvements
and the established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent
from a physical inspection of the sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on the sites; (F) if the site is
described as being on a filed map, a legend relating the survey to
said map; and (G) the flood zone designations, if any, in which the
Mortgaged Properties are located.
(iii) The Administrative Agent shall have received in respect
of each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall (A) be in an amount reasonably satisfactory to the
Administrative Agent with respect to each Mortgage Property covered
thereby; (B) be issued at ordinary rates; (C) insure that the Mortgage
insured thereby creates a valid first Lien on such Mortgaged Property
free and clear of all defects and encumbrances, except as disclosed
therein; (D) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (E) be in the form of ALTA Loan
Policy - 1992 (or equivalent policies) to the extent available in the
applicable jurisdictions; (F) contain such endorsements and
affirmative coverage as the Administrative Agent may reasonably
request to the extent available in the applicable jurisdictions; and
(G) be issued by title companies satisfactory to the Administrative
Agent (including any such title companies acting as co-insurers or
reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence satisfactory to it
that all premiums in respect of each such policy, all charges for
mortgage recording tax, and all related expenses, if any, have been
paid.
(iv) If any Mortgage encumbers improved real property which
is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards
and in which flood insurance has been made available under the
National Flood Insurance Act of 1968, and if reasonably requested by
the Administrative Agent, the Administrative Agent shall have received
(A) a policy of flood insurance which (1) covers any parcel of
improved real property which is encumbered by any Mortgage, (2) is
written in an amount not less than the outstanding principal amount of
the indebtedness secured by such Mortgage which is reasonably
allocable to such real property or the maximum limit of coverage made
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available with respect to the particular type of property under the
National Flood Insurance Act of 1968, whichever is less, and (3) has a
term ending not later than the maturity of the Indebtedness secured by
such Mortgage and (B) confirmation that the Borrower has received the
notice required pursuant to Section 208(e)(3) of Regulation H of the
Board.
(v) The Administrative Agent shall have received a copy of
all recorded documents referred to, or listed as exceptions to title,
in the title policy or policies referred to in subsection 5.1(m)(iii)
and a copy of all other material documents affecting the Mortgaged
Properties.
(n) Solvency Opinion. The Administrative Agent shall have
received a solvency opinion from the chief financial officer of
Holdings in form and substance satisfactory to the Administrative
Agent.
(o) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of the Guarantee
and Collateral Agreement, the Mortgages and subsection 6.5(b) of this
Agreement.
(p) Capital Structure. The capital structure of each Loan
Party, after giving effect to the Acquisitions shall be reasonably
satisfactory to the Administrative Agent. Neither Holdings, the
Borrower or any of their subsidiaries shall have any outstanding
indebtedness or preferred equity other than as permitted pursuant to
subsection 7.2 and other than the Preferred Stock.
(q) Fees and Expenses of Lenders. The Administrative Agent
and the Lenders (and their Affiliates) shall have received all fees
and expenses required to be paid by the Borrower on or before the
Closing Date, or provision for payment with proceeds of the initial
extensions of credit hereunder shall have been made by the Borrower.
(r) Tax Matters. The Administrative Agent shall have
received a certificate of the chief financial officer of the Borrower
to the effect that as of the Closing Date (after giving effect to the
Acquisitions) the Borrower and its Subsidiaries shall have tax
depreciable or amortizable assets for federal income tax purposes of
at least the sum of $141,000,000 plus the fees and expenses in
connection with the Acquisitions and the financing thereof (including
for this purpose each of the Stations on the date hereof).
(s) Station Licenses, etc.. The Administrative Agent shall
have received evidence that all of the principal broadcasting licenses
appearing in Schedule 5.1(s) hereto for each of the Stations shall
have been validly issued in the name of, or will be validly assigned
to, the relevant License Subsidiary, and shall be in full force and
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<PAGE> 66
effect, and the Borrower and its Subsidiaries will have fulfilled and
performed in all material respects their obligations with respect
thereto and have full power and authority to operate thereunder, and
all consents to such assignments will have been approved by orders of
the FCC that shall have become final (i.e. no longer subject to
further judicial or administrative review).
(t) Network Affiliations. The Administrative Agent shall
have received evidence that the respective network affiliation
agreements of the Stations for the carriage of programming over the
facilities of such Stations to be operated by the Borrower and its
Subsidiaries (and, with respect to the Steubenville Station, SBP)
shall each be in full force and effect and that each such agreement
shall be for a term reasonably satisfactory to the Administrative
Agent and that the aggregate annual compensation to be paid to the
Borrower (and, with respect to the Steubenville Station, SBP) for all
such Stations under such agreements shall be not less than $2,500,000.
Each such network affiliation agreement and each other material
programming contract for each Station and the principal lease
contracts for each Station shall be in form and substance satisfactory
to the Administrative Agent and true and complete copies of each shall
have been provided to the Administrative Agent, with copies for each
of the Lenders. The Administrative Agent shall have received a
certificate of a Responsible Officer to the effect that, to the best
knowledge of such Responsible Officer, (i) there is no fact known to
such Responsible Officer that would prevent each such network
affiliation agreement from remaining in full force and effect through
its current term and (ii) there is no reason to believe that each such
network affiliation agreement as then in effect will not be renewed
upon termination thereof in accordance with its terms.
(u) Management Agreements. The Administrative Agent shall
have received and be reasonably satisfied with (i) the employment
agreements of senior management of Holdings with respect to the
management of the Stations and (ii) the management agreement with
Hicks Muse or its Affiliate.
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date
except for any representation and warranty which is expressly made as
of an earlier date, which representation and warranty shall have been
true and correct in all material respects as of such earlier date.
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(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.
(c) Revolving Credit Facility. In the case of any extension
of credit under the Revolving Credit Facility, after giving effect
thereto, the sum of the Total Revolving Extensions of Credit shall not
exceed $35,000,000.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
subsection 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall and shall cause Holdings and (except in the case of delivery of
financial information reports and notices) each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative
Agent (with sufficient copies for each Lender, which shall in turn be promptly
distributed by the Administrative Agent to the Lenders):
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Holdings, a copy of the audited
consolidated and unaudited consolidating (or, if prior to the merger
contemplated by subsection 6.11, audited combined and unaudited
combining on a Station by Station basis) balance sheet of Holdings and
its consolidated Subsidiaries as at the end of such year and the
related audited consolidated and unaudited consolidating (or audited
combined and unaudited combining) statements of operations and of cash
flows for such year, setting forth in each case in comparative form
the figures for the previous year (for the 1997 fiscal year, such
previous year's figures shall be on a pro forma combined and combining
Station by Station basis), reported on without a "going concern" or
like qualification or exception, or qualification arising out of the
scope of the audit, by independent certified public accountants of
nationally recognized standing;
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of Holdings, the unaudited consolidated and
consolidating (or, if prior to the merger contemplated by subsection
6.11, combined and combining on a Station by Station basis) balance
sheet of Holdings and its consolidated Subsidiaries as at the end of
such quarter and the
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<PAGE> 68
related unaudited consolidated and consolidating (or combined and
combining) statements of income and of cash flows for such quarter and
the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding period in the previous year (for the first twelve months
from the Closing Date, such previous year's figures shall be on a pro
forma combined and combining Station by Station basis), certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 30
days after the end of each month occurring during each fiscal year of
Holdings, the unaudited consolidated and consolidating (or, if prior
to the merger contemplated by subsection 6.11, combined and combining
on a Station by Station basis) balance sheet of Holdings and its
consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated and consolidating (or combined and combining)
statements of income and of cash flows for such month and the portion
of the fiscal year through the end of such month, setting forth in
each case in comparative form the figures for the corresponding period
in the previous year (for the first twelve months from the Closing
Date, such previous year's figures shall be on a pro forma combined
and combining Station by Station basis), certified by a Responsible
Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments).
All such financial statements shall fairly present in all material respects the
financial position of Holdings and its Subsidiaries as of such date and shall
be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein). Prior to the WTOV-TV merger contemplated by subsection
6.11, the Borrower shall be required to deliver with respect to the
Steubenville Station the financial statements required by this subsection 6.1.
6.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender, which shall in
turn be promptly distributed by the Administrative Agent to the Lenders) or, in
the case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial
statements referred to in subsection 6.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default relating
to the covenants contained in subsection 7.1, except as specified in
such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to subsection 6.1, (i) a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, each Loan Party during such period has
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observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other
Loan Documents to which it is a party to be observed, performed or
satisfied by it in all material respects, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate, (ii) in the case of quarterly
or annual financial statements, (x) a Compliance Certificate
containing all information necessary for determining compliance by
Holdings and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the relevant fiscal quarter
or fiscal year and (y) to the extent not previously disclosed to the
Administrative Agent, a listing of any state or province within the
United States where any Loan Party keeps inventory or equipment and of
any Intellectual Property arising under the laws of the United States
(or any jurisdiction therein) acquired by any Loan Party since the
date of the most recent list delivered pursuant to this clause (y)
(or, in the case of the first such list so delivered, since the
Closing Date) and (iii) any accountants' management letters delivered
by the independent certified public accountants reporting on such
financial statements to Holdings or any of its Subsidiaries;
(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of Holdings, a detailed
consolidated and consolidating budget for the following fiscal year
(including a projected consolidated and consolidating balance sheet of
Holdings and its Subsidiaries as of the end of the following fiscal
year, and the related consolidated statements of projected cash flow,
projected changes in financial position and projected income), and, as
soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by
a certificate of a Responsible Officer stating that such Projections
are based upon good faith estimates and assumptions believed by
management of Holdings to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual
results during the period or periods covered by such financial
information may differ from the projected results set forth therein by
a material amount;
(d) unless the same is included in reports being provided
under paragraph (e) of this subsection 6.2, within 45 days after the
end of each fiscal quarter of Holdings, a narrative discussion and
analysis of the financial condition and results of operations of
Holdings and its Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end
of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous
year;
(e) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Borrower sends
to the holders of any class of its debt securities or public equity
securities and within five days after the same are filed,
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copies of all financial statements and reports which Holdings or the
Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(f) as soon as available, and in any event no later than 45
days after the end of each fiscal quarter of Holdings, a schedule
setting forth, for each Station on a program-by-program basis, the
respective Film Cash Payments for each fiscal year commencing with the
beginning of the then current fiscal year through and including the
fiscal year ending December 31, 2004;
(g) promptly upon their becoming available, copies of any and
all periodic or special reports filed by Holdings or any of its
Subsidiaries or, if prior to the merger contemplated by subsection
6.11, SBP, with the FCC or with any other Federal, state or local
governmental authority, if such reports indicate any material adverse
change in the business, operations or financial condition of Holdings
or any of its Subsidiaries or either of the WTOV-TV Sellers or if
copies thereof are requested by any Lender or the Administrative
Agent, and copies of any and all material notices and other material
communications from the FCC or from any other Federal, state or local
Governmental Authority with respect to Holdings or any of its
Subsidiaries or either of the WTOV-TV Sellers or any Station; and
(h) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be,
provided that, notwithstanding the foregoing, the Borrower and each of its
Subsidiaries shall have the right to pay any such obligation and in good faith
contest, by proper legal actions or proceedings, the validity or amount of such
claims.
6.4 Conduct of Business and Maintenance of Existence, etc.
(a) (i) Continue to engage in business of the same general type as now
conducted by it, (ii) preserve, renew and keep in full force and effect its
corporate existence and (iii) take all reasonable action to maintain all
rights, privileges, licenses and franchises necessary or desirable in the
normal conduct of its business, except, in each case, as otherwise permitted by
subsection 7.4 and except, in the case of clause (iii) above, to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect and except if (a) in the reasonable business judgment of the
Borrower or such Subsidiary, as the case may be, it is in its best economic
interest not to preserve and maintain such rights or franchises (other than the
Station Licenses), and (b) such failure to preserve and maintain such
privileges, rights or
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franchises (other than the Station Licenses) would not materially adversely
affect the rights of the Lenders hereunder or the value of the collateral
security for the Loans, and as otherwise permitted pursuant to subsection 7.4;
and (b) comply with all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and accounts in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made of
all dealings and transactions in relation to its business and activities and
(b) upon reasonable prior notice and at any reasonable time, permit
representatives of the Administrative Agent or any Lender to visit and inspect
any of its properties and examine and, if reasonably requested, make copies of
its contracts, books and records and to discuss the business, operations,
properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants, provided that the
Administrative Agent or such Lender shall notify the Borrower prior to any
contact with such accountants and give the Borrower the opportunity to
participate in such discussions.
6.7 Notices. Promptly give notice to the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority and which has a reasonable likelihood of being adversely
determined, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $1,000,000 or
more and not covered by insurance or in which injunctive or similar
relief is sought;
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(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to
any Plan (other than a MultiEmployer Plan), a failure to make any
required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection 6.7 shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Except as could not reasonably
be expected to have a Material Adverse Effect, comply with, and use reasonable
best efforts to ensure compliance by all tenants and subtenants, if any, with,
all applicable Environmental Laws, and obtain and comply with and maintain, and
use reasonable best efforts to ensure that all tenants and subtenants obtain
and comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws and in a timely fashion comply in all material
respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws, except to the extent that the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse Effect.
6.9 Interest Rate Protection. In the case of the Borrower,
within 60 days after the Closing Date, enter into Interest Rate Protection
Agreements to the extent necessary to provide that at least 60% of the
aggregate principal amount of Indebtedness of the Borrower and its Subsidiaries
outstanding on the date of entering into such Interest Rate Protection
Agreements, if necessary is subject to either a fixed interest rate or interest
rate protection for a period of not less than two years (provided, that in the
event that the term thereof shall be less than two years, such Interest Rate
Protection Agreements shall be extended or replaced no later than the
expiration of such term, with the term of such extended or replacement Interest
Rate Protection Agreements ending no earlier than the second anniversary of the
date on which the original Interest Rate Protection Agreements were entered
into), which Interest Rate Protection Agreements shall in each case have terms
and conditions reasonably satisfactory to the Administrative Agent. Borrower
shall use its best
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efforts to maintain in full force and effect Interest Rate Protection
Agreements reasonably satisfactory to the Administrative Agent in order to
ensure compliance with the terms of this subsection 6.9 and shall not default
(beyond any applicable grace period) in the performance of any of its material
obligations thereunder.
6.10 Additional Collateral, etc. (a) If at any time
following the Closing Date the aggregate monetary value (as determined by
aggregating the monetary value of each item or items of property so acquired on
the date of the acquisition thereof) of all property (to the extent not already
secured) of any nature whatsoever acquired by the Borrower or any Subsidiary
after the Closing Date is in excess of $250,000 (other than (x) any Property
described in paragraph (b), (c) or (d) below and (y) any Property subject to a
Lien expressly permitted by subsection 7.3(g)) as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements and filings with the
United States Patent and Trademark Office in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent.
(b) With respect to any fee interest in any real estate
acquired after the Closing Date by the Borrower or any of its Subsidiaries
(other than any such real estate subject to a Lien expressly permitted by
subsection 7.3(g)), promptly (i) execute and deliver a first priority mortgage
or deed of trust (subject only to Liens permitted by subsection 7.3) in favor
of the Administrative Agent, for the benefit of the Lenders, covering such real
estate, in form and substance reasonably satisfactory to the Administrative
Agent, (ii) if reasonably requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
estate in an amount at least equal to the purchase price of such real estate
(or such other amount as shall be reasonably specified by the Administrative
Agent) as well as a current ALTA survey thereof, together with a surveyor's
certificate and (y) any consents or estoppels reasonably deemed necessary or
advisable by the Administrative Agent in connection with such mortgage or deed
of trust, each of the foregoing in form and substance reasonably satisfactory
to the Administrative Agent and (iii) if reasonably requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Subsidiary created or acquired
after the Closing Date by the Borrower or any of its Subsidiaries, promptly (i)
execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the
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Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary which is
owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be,
(iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement and (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the collateral described in the Guarantee
and Collateral Agreement with respect to such new Subsidiary, including,
without limitation, the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be reasonably requested by the Administrative
Agent, and (iv) if reasonably requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
6.11 WTOV-TV Merger. (a) (i) As soon as practicable after
the Closing Date, take all actions to obtain FCC approval for the merger of the
operations, assets and licenses of the Steubenville Station into the Borrower
and (ii) as soon as practicable after obtaining such FCC approval, consummate
such merger, so that immediately thereafter, the Steubenville Station (and each
of its Subsidiaries, including, without limitation, its License Subsidiary)
becomes wholly-owned and controlled by the Borrower and (b) simultaneously with
the consummation of such merger, take all actions necessary for the redemption
or retirement of the SBP Stock.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Letter of Credit remains outstanding or any Loan or other
amount is owing to any Lender or the Administrative Agent hereunder, the
Borrower shall not, and shall not permit Holdings or (except with respect to
subsection 7.1) any of its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. (i) At any time prior to
the issuance of the Senior Subordinated Notes, permit the Consolidated Leverage
Ratio at any time during any Test Period ending during any period set forth
below to exceed the ratio set forth below opposite such period:
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<TABLE>
<CAPTION>
Period Consolidated Leverage Ratio
------ ---------------------------
<S> <C>
Closing Date-12/30/97 6.50 to 1.0
12/31/97-12/30/98 5.50 to 1.0*
12/31/98-12/30/99 5.00 to 1.0
12/31/99-12/30/00 4.50 to 1.0
12/31/00 and thereafter 4.00 to 1.0
</TABLE>
* The ratio during this period will be calculated on a pro
forma basis after giving effect to the Capital Contribution,
if any.
and (ii) after the issuance of the Senior Subordinated Notes, permit the
Consolidated Leverage Ratio at any time during any Test Period ending during
any period set forth below to exceed the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Consolidated Leverage Ratio
--------------------- ---------------------------
<S> <C>
Closing Date-6/29/98 7.00 to 1.0
6/30/98-12/30/98 6.75 to 1.0
12/31/98-12/30/00 5.75 to 1.0
12/31/00-12/30/02 4.75 to 1.0
12/31/02 and thereafter 4.25 to 1.0
</TABLE>
(b) Consolidated Interest Coverage Ratio. (i) At any time
prior to the issuance of the Senior Subordinated Notes, permit the Consolidated
Interest Coverage Ratio at any time during any Test Period ending during any
period set forth below to exceed the ratio set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Consolidated Interest Coverage Ratio
------ ------------------------------------
<S> <C>
Closing Date-12/30/97 1.60 to 1.0
12/31/97-12/30/98 1.75 to 1.0*
12/31/98-12/30/99 2.25 to 1.0
12/31/99-12/30/00 2.50 to 1.0
12/31/00 and thereafter 3.00 to 1.0
</TABLE>
* The ratio during this period will be calculated on a pro
forma basis after giving effect to the Capital Contribution,
if any.
and (ii) after the issuance of the Senior Subordinated Notes, permit the
Consolidated Interest Coverage Ratio at any time during any Test Period ending
during any period set forth below to exceed the ratio set forth below opposite
such period:
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<TABLE>
<CAPTION>
Fiscal Quarter Ending Consolidated Interest Coverage Ratio
--------------------- ------------------------------------
<S> <C>
Closing Date-12/30/98 1.25 to 1.0
12/31/98-12/30/00 1.50 to 1.0
12/31/00-12/30/02 1.90 to 1.0
12/31/02 and thereafter 2.20 to 1.0
</TABLE>
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio at any time during any Test Period to
be less than 1.05 to 1.00.
(d) Corporate Overhead. Permit Corporate Overhead for any
fiscal year to exceed 10% of Broadcast Cash Flow for such fiscal year.
(e) Film Cash Payments. (i) Incur any Film Obligations
unless on the date of the proposed incurrence of any Film Obligation, and after
giving effect thereto, Film Cash Payments shall not exceed in the aggregate for
the then current or any subsequent fiscal year set forth below, the amount set
forth opposite such fiscal year:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1997 $4,250,000
1998 $4,500,000
1999 $5,000,000
2000 $5,000,000
2001 $5,000,000
2002 $5,000,000
2003 $5,000,000
2004 $5,000,000
</TABLE>
or (ii) modify or supplement any agreement or other instrument evidencing or
relating to any Film Obligation, the effect of which is to advance or defer all
or any portion of the payments to be made by the Borrower or any Subsidiary
thereunder, as the case may be, unless, after giving effect thereto, the
Borrower or any of its Subsidiaries would be permitted to incur at least $1.00
of additional Film Obligations without resulting in a breach of this subsection
7.1(e).
It is understood that for purposes of the covenants contained in this
subsection 7.1, that for any period prior to the merger contemplated by
subsection 6.11, to the extent not already included therein all items in this
subsection 7.1 shall be deemed to include the amounts with respect to such
items attributable to the Steubenville Station.
7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist (in each case, to "Incur") any Indebtedness, except:
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(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary;
(c) purchase money Indebtedness and Indebtedness secured by
Liens permitted by subsection 7.3(g), provided, that the aggregate
amount of Indebtedness incurred pursuant to this subsection 7.2(c)
shall not exceed $500,000 at any one time outstanding;
(d) Capital Lease Obligations, provided, that the aggregate
principal amount of Capital Lease Obligations incurred pursuant to
this subsection 7.2(d) in any fiscal year of the Borrower, when added
to the aggregate amount of other Capital Expenditures made during such
fiscal year pursuant to subsection 7.7(a), shall not exceed the amount
permitted to be expended during such fiscal year pursuant to
subsection 7.7(a);
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof);
(f) guarantees made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;
(g) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$85,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor
in respect of such Indebtedness;
(h) Film Debt;
(i) additional Indebtedness of the Borrower (which may be
guaranteed by the Subsidiaries of the Borrower) secured by Liens
permitted under subsection 7.3(l) owing to one or more of the Lenders
up to but not exceeding $10,000,000 in the aggregate at any one time
outstanding which Indebtedness shall be extended under and be governed
by the terms and conditions of this Agreement (subject to an agreement
between the Borrower and such Lender governing solely the procedures
for the initial borrowing thereof and whether such Indebtedness will
be in the form of Term Loans or Revolving Credit Loans) and shall be
treated for all purposes hereunder as Loans;
(j) Indebtedness in respect of any Interest Rate Protection
Agreements permitted hereunder;
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(k) Indebtedness of the Borrower or any of its Subsidiaries
(i) to the seller on an unsecured basis representing the purchase
price in a Permitted Acquisition or (ii) assumed in connection with
any Permitted Acquisition, in an aggregate amount for all Permitted
Acquisitions not to exceed, in the case of clause (i), $2,500,000 and,
in the case of clause (ii), $500,000; and
(l) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and
all Subsidiaries) not to exceed $5,000,000 at any one time
outstanding.
7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', statutory landlord's, warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, insurance contracts, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, restrictions, covenants, minor
exceptions to title and other similar encumbrances (i) incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract
from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of
its Subsidiaries or (ii) which are set forth in the "marked up"
commitments for title insurance delivered to the Administrative Agent
on the Closing Date;
(f) Liens in existence on the date hereof listed on Schedule
7.3(f), securing Indebtedness permitted by subsection 7.2(e), provided
that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of Indebtedness secured thereby is
not increased;
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(g) (i) Liens securing Indebtedness of the Borrower or any of
its Subsidiaries incurred to finance the acquisition of fixed or
capital assets (provided that (x) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or
capital assets, (y) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (z)
the amount of Indebtedness secured thereby is not increased) and (ii)
Liens existing on any property or asset at the time of acquisition
thereof by the Borrower or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date hereof
at the time such Person becomes a Subsidiary (provided that (x) such
Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be,
(y) such Lien shall not apply to any other property or assets of the
Borrower or any of its Subsidiaries and (z) such Lien shall secure
only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be);
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the assets so leased;
(j) any obligations or duties affecting any of the Property
of the Borrower or its Subsidiaries to any municipality or public
authority with respect to any franchise, grant, license or permit
which do not materially impair the use of such Property for the
purposes for which it is held;
(k) Liens imposed by operation of law with respect to any
judgments or orders not constituting an Event of Default;
(l) Liens on the assets subject to the Security Documents
securing Indebtedness permitted under subsection 7.2(i), which Liens
shall be pari passu with the Liens referred to in subsection 7.3(h);
(m) licenses, leases or subleases (other than with respect to
any Station Licenses) permitted hereunder granted to others not
interfering in any material respect in the business of the Borrower or
any of its Subsidiaries;
(n) attachment or judgment Liens (other than judgment Liens
paid or fully covered by insurance which are not outstanding for more
than 60 days) in an aggregate amount outstanding at any one time not
in excess of $1,000,000;
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(o) Liens arising from precautionary Uniform Commercial Code
financing statement filings with respect to operating leases entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of business;
(p) Liens in favor of a banking institution arising by
operation of law encumbering deposits (including the right of set-off)
held by such banking institution incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry; and
(q) Liens not otherwise permitted by this subsection 7.3 so
long as neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets
subject thereto exceeds (as to the Borrower and all Subsidiaries)
$2,500,000 at any one time.
7.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or dispose of all or substantially
all of its property, business or assets, or make any material change in its
present method of conducting business, except:
(a) any Subsidiary of the Borrower (other than any License
Subsidiary) may be merged or consolidated with or into the Borrower
(provided that the Borrower shall be the continuing or surviving
corporation) or with or into any Wholly Owned Subsidiary Guarantor
(provided that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
(b) any Subsidiary of the Borrower (other than any License
Subsidiary) may sell, lease, transfer or otherwise dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(c) the Borrower may effectuate the merger of the
Steubenville Station contemplated by subsection 6.11.
7.5 Limitation on Sale of Assets. Dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or issue or sell
any shares of Capital Stock to any Person, except:
(a) obsolete or worn out property disposed of in the ordinary
course of business or property that is no longer useful in the conduct
of the Borrower's business disposed of in the ordinary course of
business;
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(b) transfers resulting from any casualty or condemnation of
property or assets;
(c) any sale or other transfer at fair market value of any
property or assets constituting fixed assets for cash, provided that
the aggregate net cash proceeds of the sales and transfers made
pursuant to this paragraph (c) in the aggregate do not exceed $500,000
in any fiscal year;
(d) intercompany sales or transfers of assets made in the
ordinary course of business;
(e) the sale or discount of overdue accounts receivable
arising in the ordinary course of business, but only in connection
with the compromise or collection thereof;
(f) licenses or sublicenses of intellectual property and
general intangibles (other than any Station Licenses) and licenses,
leases, or subleases of other property (other than any Station
Licenses) in the ordinary course of business and which do not
materially interfere with the business of the Borrower and its
Subsidiaries;
(g) dispositions permitted by subsection 7.4(b); and
(h) the sale of one Station for aggregate consideration equal
to the fair market value of such Station (as determined in good faith
by the board of directors of the Borrower, as evidenced by a board
resolution) and in any event not to exceed $90,000,000; provided, that
at least 75% of such consideration received by the Borrower in respect
thereof shall be in the form of Cash and Cash Equivalents; and
provided further, that the Net Cash Proceeds of such sale shall be
applied, on the date of receipt of such Net Cash Proceeds, first,
toward the prepayment of the Term Loans and second, to the extent of
any excess either (i) to the permanent reduction of the Revolving
Credit Commitments in the manner prescribed by the last sentence of
subsection 2.9(e) and to the prepayment of the Revolving Credit Loans
or (ii) if a Reinvestment Notice shall be delivered in respect
thereof, deposited in a cash collateral account with the
Administrative Agent (the proceeds of which will be invested by the
Administrative Agent in Cash Equivalents at the request of the
Borrower) to be released by the Administrative Agent at the request of
the Borrower, subject to compliance by the Borrower at the time of
such release with the terms and conditions of this Agreement, to the
extent the Borrower is using the Net Cash Proceeds then on deposit for
a Permitted Acquisition; provided that on the Reinvestment Prepayment
Date with respect thereto, such Net Cash Proceeds shall be applied to
the permanent reduction of the Revolving Credit Commitments and the
prepayment of the Revolving Credit Loans in the manner set forth in
clause (i) of this paragraph.
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7.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (collectively,
"Restricted Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(b) Permitted Issuances may be made;
(c) so long as no Default or Event of Default shall have
occurred and be continuing, Holdings may (i) purchase Holding's common
stock or common stock options from present or former officers or
employees of Holdings, the Borrower or any Subsidiary upon the death,
disability or termination of employment of such officer or employee,
provided, that the aggregate amount of payments under this clause (i)
during any fiscal year shall not exceed $2,500,000 net of any proceeds
received by Holdings in connection with resales of any common stock or
common stock options so purchased and (ii) pay management fees to
Hicks Muse and its Affiliates expressly permitted by subsection 7.10;
and
(d) the Borrower may declare dividends on the Preferred Stock
as set forth in the terms of the Preferred Stock, provided, that the
Borrower may not pay such dividends in cash on or prior to May 31,
2002; and provided further that the Borrower may pay such dividends in
cash after May 31, 2002 so long as no Default or Event of Default has
occurred and is continuing or would occur as a result of such payment
and the Borrower provides the Administrative Agent with a certificate
showing compliance with all of the covenants contained in subsection
7.1 (with appropriate supporting documentation if requested by the
Administrative Agent).
7.7 Limitation on Capital Expenditures. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise but not
duplicative of Investments permitted by subsection 7.8(k)) any Capital
Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding for any fiscal
year the greater of (i) $2,500,000 and (ii) 15% of Consolidated EBITDA for the
immediately preceding fiscal year.
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7.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by subsection 7.2(f);
(d) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for the Borrower and its Subsidiaries not to exceed
$750,000 at any one time outstanding;
(e) the Acquisitions;
(f) investments by the Borrower or any of its Subsidiaries in
the Borrower or any Wholly Owned Subsidiary Guarantor;
(g) loans, advances or investments in existence on the
Closing Date and listed on Schedule 7.8(g), and extensions, renewals,
modifications or restatements or replacements thereof, provided that
no such extension, renewal, modification or restatement shall (i)
increase the amount of the original loan, advance or investment, or
(ii) adversely affect the interests of the Lenders with respect to
such original loan, advance or investment or the interests of the
Lenders under this Agreement or any other Loan Document in any
respect;
(h) investments constituting (but not duplicative of) Capital
Expenditures permitted by subsection 7.7;
(i) investments consisting of Interest Rate Protection
Agreements entered into in the ordinary course of business of the
Borrower or any of its Subsidiaries and not for purposes of
speculation;
(j) investments (including debt obligations and Capital
Stock) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(k) Permitted Acquisitions; and
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(l) in addition to investments otherwise expressly permitted
by this subsection 7.8, investments by the Borrower or any of its
Subsidiaries in an aggregate amount (valued at cost) not to exceed
$2,500,000 at any one time outstanding, so long as, after giving pro
forma effect thereto, no Default or Event of Default shall have
occurred and be continuing (including, without limitation, pursuant to
subsection 7.1).
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any optional payment, prepayment,
repurchase or redemption of or otherwise defease or segregate funds with
respect to the Senior Subordinated Notes, (b) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any uof the terms of the Senior Subordinated Notes or the Senior
Subordinated Note Indenture (other than any such amendment, modification,
waiver or other change which (i) would extend the maturity or reduce the amount
of any payment of principal thereof or which would reduce the rate or extend
the date for payment of interest thereon and (ii) does not involve the payment
of a consent fee), the Preferred Stock or the management agreement with Hick
Muse referred to in subsection 5.1(u) (other than changes that do not increase
the amount or affect the timing of payments by Holdings, the Borrower or any of
their Subsidiaries thereunder) or (c) designate any Indebtedness as "Designated
Senior Indebtedness" for the purposes of the Senior Subordinated Note
Indenture.
7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the Borrower or such Subsidiary, as the case may
be, and (c) upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate. Notwithstanding
the foregoing, Holdings, the Borrower and its Subsidiaries may pay to Hicks
Muse and its Affiliates fees and expenses pursuant to a monitoring and
oversight agreement and a financial advisory agreement, in each case approved
by the board of directors of Holdings; provided that such agreements may not be
amended to increase the amount of such fees above those set forth in such
agreements as of the Closing Date without the consent of the Administrative
Agent.
7.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary.
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7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of Holdings or the Borrower to end on a day other than December 31
or change Holdings' or the Borrower's method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into with
any Person, or suffer to exist, any agreement, other than (a) this Agreement
and the other Loan Documents, (b) the Senior Subordinated Note Indenture and
(c) in the case of clause (i) below only, any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby), which prohibits or limits the ability of Holdings, the
Borrower or any of its Subsidiaries to (i) create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, or (ii) pay dividends or make other distributions, or pay
any Indebtedness owed, to Holdings, the Borrower or any of its Subsidiaries.
7.14 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which Holdings, the Borrower and its Subsidiaries are engaged on
the date of this Agreement or which are reasonably related thereto (including,
without limitation, in connection with any Permitted Acquisition).
7.15 Limitation on Amendments to Constituent and Acquisition
Documents and Material Contracts. (a) Amend, supplement or otherwise modify
its certificate of incorporation or by-laws or any of its other material
contracts unless such amendment does not adversely affect the interests of any
Lender in any material respect, (b) amend, supplement or otherwise modify
(pursuant to a waiver or otherwise) the terms and conditions of the indemnities
and licenses furnished to the Multi-Station Buyer or the WTOV-TV Buyer pursuant
to the Acquisition Agreements or any other document delivered by the
Multi-Station Sellers or the WTOV-TV Sellers or any of their affiliates in
connection therewith such that after giving effect thereto such indemnities and
licenses shall be materially less favorable to the interests of the Loan
Parties or the Lenders with respect thereto or (c) otherwise amend, supplement
or otherwise modify the terms and conditions of the Acquisition Agreements or
any such other documents except to the extent that any such amendment,
supplement or modification could not reasonably be expected to have a Material
Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or
under any other Loan Document, within five
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days after any such interest or other amount becomes due in accordance
with the terms hereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been inaccurate in any
material respect on or as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of
subsection 6.4(a) (with respect to the Borrower only), subsection
6.7(a), Section 7 of this Agreement or subsections 5.1(i)(iv) or
5.1(m)(ii) of this Agreement or subsection 5.5 or 5.7(b) of the
Guarantee and Collateral Agreement or (ii) an "Event of Default" under
and as defined in any Mortgage shall have occurred and be continuing;
or
(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through
(c) of this subsection), and such default shall continue unremedied
for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of or interest on any
Indebtedness (including, without limitation, any Guarantee Obligation
and any Film Debt, but excluding the Loans, Reimbursement Obligations
and Guarantee Obligations pursuant to the Guarantee and Collateral
Agreement) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(ii) default in the observance or performance of any other agreement
or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its
stated maturity or (in the case of any such Indebtedness constituting
a Guarantee Obligation) to become payable; provided, that a default,
event or condition described in clause (i) or (ii) of this paragraph
(e) shall not at any time constitute an Event of Default under this
Agreement unless, at such time, one or more defaults, events or
conditions (without duplication as to the same item of Indebtedness)
of the type described in clauses (i) and (ii) of this paragraph (e)
shall have occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$1,000,000; or
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(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower
or any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed
(or a trustee shall be appointed) to administer, or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or
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(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $1,000,000 or
more, and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 45 days from the
entry thereof; or
(i) Any Loan Document shall, at any time, cease to be in full
force and effect (unless released by the Administrative Agent at the
direction of the Required Lenders or all Lenders (to the extent
required by subsection 10.1) or as otherwise permitted under this
Agreement or the other Loan Documents) or shall be declared null and
void (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Administrative
Agent and the Lenders thereunder, the relevant Loan Party shall have
failed to cure such invalidity within 30 days after notice from the
Administrative Agent or such shorter time period as is specified by
the Administrative Agent in such notice and is reasonable in the
circumstances), or the validity or enforceability thereof shall be
contested by any Loan Party, or any of the Liens intended to be
created by any Security Document shall cease to be or shall not be a
valid and perfected Lien having the priority contemplated thereby
(and, if such invalidity is such so as to be amenable to cure without
materially disadvantaging the position of the Administrative Agent and
the Lenders as secured parties thereunder, the relevant Loan Party
shall have failed to cure such invalidity within 30 days after notice
from the Administrative Agent or such shorter time period as specified
by the Administrative Agent in such notice and is reasonable in the
circumstances); or
(j) A Change of Control shall occur or Holdings shall fail to
own directly or indirectly, beneficially and of record 100% of the
Capital Stock of the Borrower (other than the Preferred Stock) free
and clear of all Liens other than Liens in favor of the Lenders
pursuant to the Loan Documents; or
(k) (i) The Senior Subordinated Notes or the guarantees
thereof shall cease, for any reason, to be validly subordinated to the
Obligations or the obligations of the Subsidiary Guarantors or
Holdings under the Guarantee and Collateral Agreement, as the case may
be, as provided in the Senior Subordinated Note Indenture, or any Loan
Party, any Affiliate of any Loan Party, the trustee in respect of the
Senior Subordinated Notes or the holders of at least 25% in aggregate
principal amount of the Senior Subordinated Notes shall so assert or
(ii) an event of default shall occur with respect to the Senior
Subordinated Notes or any event shall occur which does or with the
giving of notice or passage of time would require the Borrower to
prepay, purchase, redeem, retire, defease or otherwise acquire, or to
make any payment on account of any principal of or premium payable in
connection with the prepayment, purchase, redemption, retirement,
defeasance or other acquisition of, any of the Senior Subordinated
Notes; or
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(l) Holdings, the Borrower or any Subsidiary shall incur any
liability (not paid or fully covered by insurance) under any
Environmental Law in an amount which would result in a Material
Adverse Effect; or
(m) Failure by Holdings or the Holdings Investors or the
Partnership to make the Capital Contribution as required by the
Capital Contribution Agreement; or
(n) The principal broadcasting licenses of any Station, or
any other material authorizations, licenses or permits issued by the
FCC, shall be revoked or cancelled or expire by its terms and not be
renewed, or shall be modified in a manner which would have a Material
Adverse Effect; or
(o) The Borrower (or, prior to the merger contemplated by
subsection 6.11, the WTOV-TV Buyer) shall have received a notice of
termination with respect to its network affiliation agreements in
existence on the Closing Date (or any alternative network affiliation
agreement in compliance with this clause (o)) unless, within 30 days
after receipt of such termination notice, an alternative network
affiliation agreement in form and substance satisfactory to the
Required Lenders with American Broadcasting Companies, Inc., Columbia
Broadcasting Systems, Inc., Fox Broadcasting Company or National
Broadcasting Company shall have been executed and delivered and come
into effect prior to or concurrently with the termination date of such
network affiliation agreement; or any such network affiliation
agreement shall otherwise for any reason be terminated or cease to be
in full force and effect; or
(p) the Borrower or any of its Subsidiaries shall default in
the payment when due of any Film Obligations in an aggregate amount in
excess of $250,000 and such default shall continue unremedied for a
period of 90 or more days, except to the extent the same shall be
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained; or
(q) Holdings shall conduct, transact or otherwise engage in
any business or operations, incur, create, assume or suffer to exist
any Indebtedness or other liabilities or obligations or Liens (other
than pursuant to any of the Loan Documents), or own, lease, manage or
otherwise operate any properties or assets, other than (1) incident to
the ownership of all of the Capital Stock of the Borrower or (2) as
otherwise permitted by this Agreement;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall
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immediately become due and payable, and (B) if such event is any other Event of
Default, either or both of the following actions may be taken: (i) with the
consent of the Majority Revolving Credit Facility Lenders, the Administrative
Agent may, or upon the request of the Majority Revolving Credit Facility
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Revolving Credit Commitments to be terminated forthwith, whereupon the
Revolving Credit Commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable forthwith,
whereupon the same shall immediately become due and payable. With respect to
all Letters of Credit with respect to which presentment for honor shall not
have occurred at the time of an acceleration pursuant to this paragraph, the
Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and
unexpired amount of such Letters of Credit. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon,
if any, shall be applied to repay other obligations of the Borrower hereunder
and under the other Loan Documents. After all such Letters of Credit shall
have expired or been fully drawn upon, all Reimbursement Obligations shall have
been satisfied and all other obligations of the Borrower hereunder and under
the other Loan Documents shall have been paid in full, the balance, if any, in
such cash collateral account shall be returned to the Borrower (or such other
Person as may be lawfully entitled thereto). Except as otherwise expressly
provided above in this Section 8, the Borrower waives presentment, demand,
protest or other notice of any kind.
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto
to the extent permitted by applicable law. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
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9.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action. The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request
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and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Revolving Credit
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Percentages and Term Loan Percentages in effect on the date on which
indemnification is sought under this subsection 9.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating
to or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that
no Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements which are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this subsection 9.7 shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall be approved by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
9.10 Documentation Agent. The Documentation Agent shall not
have any duties or responsibilities hereunder in its capacity as such.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection 10.1. The Required Lenders and each Loan Party party to the
relevant Loan Documents may, or, with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party party to the relevant
Loan Document may, from time to time, (a) enter into written amendments,
supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Loan Parties
hereunder or thereunder or (b) waive, on such terms and conditions as the
Required Lenders or the Administrative Agent, as the case may be, may specify
in such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Term Loan, reduce the stated rate of any interest, fee or letter
of credit commission payable hereunder or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment, in each case without the consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this subsection 10.1 or reduce any percentage specified in the definition of
Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the collateral or release all or
substantially all of the Subsidiary Guarantors or Holdings from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all Lenders; (iii) amend, modify or waive any condition
precedent to any extension of credit under the Revolving Credit Facility set
forth in subsection 5.2 without the written consent of the Majority Revolving
Credit Facility Lenders; (iv) change the allocation of payments among the Term
Loan Facilities specified in subsection 2.15(b) or the allocation of payments
between the Term Loan Facilities and the Revolving Credit Facility pursuant to
subsection 2.9(e), in each case without the consent of the Majority Facility
Lenders in respect of each Facility adversely affected thereby; (v) reduce the
percentage specified in the definition of Majority Facility Lenders without the
written consent of all Lenders under each affected Facility; (vi) amend, modify
or waive any provision of Section 9 without the written consent of the
Administrative Agent; or (vii) amend, modify or waive any provision of Section
3 without the written consent of the Issuing Lender. Any such waiver and any
such amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Loan Parties, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not
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continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
The Borrower: STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy: 813-821-8092
with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313
The Administrative Agent: Chase Agency Services
1 Chase Manhattan Plaza
New York, New York 10017
Attention: Sandra Miklave
Telecopy: 212-552-7953
with a copy to: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Stephen Mumblow
Telecopy: 212-270-1480
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver
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thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to the Administrative
Agent and, at any time after and during the continuance of an Event of Default,
of one counsel of all the Lenders, (c) to pay, indemnify, and hold harmless
each Lender and the Administrative Agent from and against any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify and hold harmless each
Lender and the Administrative Agent and their respective officers, directors,
trustees, professional advisors, employees, affiliates, agents and controlling
persons (each, an "indemnitee") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Borrower any of its
Subsidiaries or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the Borrower shall
have no obligation hereunder to any indemnitee with respect to indemnified
liabilities to the extent such indemnified liabilities are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from the gross negligence or
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willful misconduct of such indemnitee. The agreements in this subsection 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks, financial institutions or other entities
(each, a "Participant") participating interests in any Loan owing to such
Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents. In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event
shall any Participant under any such participation have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the extent that such
amendment, waiver or consent would reduce the principal of, or interest on, the
Loans or any fees payable hereunder, or postpone the date of the final maturity
of the Loans, in each case to the extent subject to such participation. The
Borrower agrees that if amounts outstanding under this Agreement and the Loans
are due or unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall, to
the maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to
have agreed to share with the Lenders the proceeds thereof as provided in
subsection 10.7(a) as fully as if it were a Lender hereunder. The Borrower
also agrees that each Participant shall be entitled to the benefits of
subsections 2.16, 2.17 and 2.18 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it were a Lender;
provided that, in the case of subsection 2.17, such Participant shall have
complied with the requirements of said subsection and provided, further, that
no Participant shall be entitled to receive any greater amount pursuant to any
such subsection than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
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(c) Any Lender (an "Assignor") may, in the ordinary course of
its business and in accordance with applicable law, at any time and from time
to time assign to any Lender or any affiliate thereof or, with the consent of
the Borrower and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed), to an additional bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit E, executed by such Assignee and such Assignor (and, in the
case of an Assignee that is not then a Lender or an affiliate thereof, by the
Borrower and the Administrative Agent) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that no such
assignment to an Assignee (other than any Lender or any affiliate thereof)
shall be in an aggregate principal amount of less than $2,500,000 (other than
in the case of an assignment of all of a Lender's interests under this
Agreement), unless otherwise agreed by the Borrower and the Administrative
Agent. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (x) the
Assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment and/or Loans as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). Notwithstanding any provision of this subsection 10.6, the
consent of the Borrower shall not be required, and, unless requested by the
Assignee and/or the Assignor, new Notes shall not be required to be executed
and delivered by the Borrower, for any assignment which occurs at any time when
any of the events described in Section 8(f) shall have occurred and be
continuing.
(d) The Administrative Agent shall maintain at its address
referred to in subsection 10.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitments of, and the principal
amount of the Loans owing to, each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, each other Loan Party, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. Any assignment of
any Loan or other obligation hereunder (whether or not evidenced by a Note)
shall be effective only upon appropriate entries with respect thereto being
made in the Register. The Register shall be available for inspection by the
Borrower of any Lender at any reasonable time and from time to time upon
reasonable prior notice.
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(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained
therein in the Register on the effective date determined pursuant thereto and
give notice of such acceptance and recordation to the Borrower. On or prior to
such effective date, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent (in exchange for any Revolving Credit Note
or Term Note of the assigning Lender) a new Revolving Credit Note or Term Note,
as the case may be, to the order of such Assignee in an amount equal to the
Revolving Credit Commitment or portion of the Term Loan, as the case may be,
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Revolving Credit Commitment or portion of a Term Loan
hereunder, a new Revolving Credit Note or Term Note, as the case may be, to the
order of the assigning Lender in an amount equal to the Revolving Credit
Commitment or Term Loan, as the case may be, retained by it hereunder. Such
new Notes shall be dated the Closing Date and shall otherwise be in the form of
the Note replaced thereby.
(f) The Loans made by each Lender shall be evidenced by a
Note issued by the Borrower, substantially in the form of Exhibit G-1 or G-2,
as the case may be, payable to the order of such Lender. Each Lender is hereby
authorized to record, on the schedule annexed to and constituting a part of the
relevant Note, information regarding the relevant Loans made by such Lender,
and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded, provided that the failure to make any such
recordation or any error in such recordation shall not affect the Borrower's
obligations hereunder or under any Note. On or prior to the effective date of
an Assignment and Acceptance, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent, in exchange for the relevant Notes,
new Notes to the order of the Assignee and, if applicable, the Assignor. Such
new Notes shall be dated the Closing Date and shall otherwise be in the form of
the Notes replaced thereby.
(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information concerning the Loan Parties and their
respective affiliates which has been delivered to such Lender by or on behalf
of any Loan Party pursuant to this Agreement or any other Loan Document or
which has been delivered to such Lender by or on behalf any Loan Party in
connection with such Lender's credit evaluation of the Loan Parties and their
respective affiliates, under the condition that such Transferee or prospective
Transferee shall previously have agreed to be bound by the provisions of
subsection 10.15.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection 10.6 concerning assignments
of Loans and Notes relate only to absolute assignments and that such provisions
do not prohibit assignments creating security
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interests, including, without limitation, any pledge or assignment by a Lender
of any Loan or Note to any Federal Reserve Bank in accordance with applicable
law; provided that no such pledge or assignment of a security interest shall
release a Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such lender as a party hereunder.
10.7 Adjustments; Set-off. (a) Except to the extent that
this Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or the
Reimbursement Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans and/or
of the Reimbursement Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
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10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan
Documents represent the entire agreement of the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof or thereof
not expressly set forth or referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in subsection 10.2
or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
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(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection 10.12 any special,
exemplary, punitive or consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between Administrative Agent and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each Lender agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (a) to such
Lender's employees, representatives, directors, attorneys, auditors, agents,
professional advisors, trustees or affiliates who are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Lender on a
non-confidential basis from any source or such information that is in the
public domain at the time of disclosure, (c) to the extent disclosure is
required by law (including applicable securities laws), regulation, subpoena or
judicial order or process (provided that notice of such requirement or order
shall be promptly furnished to the Borrower unless such notice is legally
prohibited) or requested or required by bank, securities, insurance or
investment company regulations or auditors or any administrative body or
commission to whose jurisdiction such Lender may be subject, (d) to any rating
agency to the extent required in connection with any rating to be assigned to
such Lender, (e) to Transferees or prospective Transferees who agree to be
bound by the provisions of this subsection 10.15, (f) to the extent required in
connection with any litigation between any Loan Party and any Lender with
respect to the Loans or this
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Agreement and the other Loan Documents or (g) with the Borrower's prior written
consent. The agreements in this subsection 10.15 shall survive repayment of
the Loans and all other amounts payable hereunder.
10.16 FCC Compliance. Notwithstanding anything to the
contrary contained herein or in any other agreement, instrument or document
executed in connection herewith, no party hereto shall take any actions
hereunder that would constitute or result in a transfer or assignment of any
Station License, permit or authorization or a change of control over such
Station License, permit or authorization requiring the prior approval of the
FCC without first obtaining such prior approval of the FCC.
10.17 Release of Preferred Pledge Agreement. Upon the
payment in full of the Term Loans, together with accrued interest, fees and
other amounts with respect thereto, whether out of the proceeds of the Senior
Subordinated Notes or otherwise, the obligations of the pledgors under the
Preferred Pledge Agreement (except for those obligations which are expressly
stated to survive the termination thereof) shall terminate and the
Administrative Agent and the Lenders agree to release to the pledgors thereof
the Preferred Stock from the lien and pledge created by the Preferred Pledge
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
STC BROADCASTING, INC.
By: /s/ DAVID A. FITZ
--------------------------------
Name: David A. Fitz
Title: Senior V.P., CFO & Secretary
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ MARIAN N. SCHULMAN
--------------------------------
Name: Marian N. Schulman
Title: Attorney-in-fact
NATIONSBANK OF TEXAS, N.A., as
Documentation Agent and as a Lender
By: /s/ DAVID G. JAMES
--------------------------------
Name: David G. James
Title: Vice President
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EXHIBIT 10.2
GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 28,
1997, made by each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "Grantors"), in favor of
THE CHASE MANHATTAN BANK, as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions or
entities (the "Lenders") from time to time parties to the Credit Agreement,
dated as of February 28, 1997 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among STC BROADCASTING, INC., a
Delaware corporation (the "Borrower"), the Lenders, NATIONSBANK OF TEXAS, N.A.,
as documentation agent, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and
indirect benefit from the making of the extensions of credit under the Credit
Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
SECTION I. DEFINED TERMS
A. Definitions. 1. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement, and the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.
<PAGE> 2
2. The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time.
"Borrower Obligations": the collective reference to the
unpaid principal of and interest on the Loans and Reimbursement
Obligations and all other obligations and liabilities of the Borrower
(including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of
the Loans and Reimbursement Obligations and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to the Administrative Agent or any Lender (or, in the
case of any Interest Rate Protection Agreement referred to below, any
affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, this Agreement, the other Loan Documents, any Letter
of Credit or any Interest Rate Protection Agreement entered into by
the Borrower or any of its Subsidiaries with any Lender (or any
affiliate of any Lender) or any other document made, delivered or
given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by the Borrower pursuant to the
terms of any of the foregoing agreements).
"Code": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by
the Administrative Agent as provided in Section 6.1 or 6.4.
"Communications Act": the Communications Act of 1934, as
amended.
"Copyrights": (i) all copyrights, in the United States or any
other country, whether registered or unregistered, or published or
unpublished (including, without limitation, those listed in Schedule
6), all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all
registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.
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"Copyright Licenses": any written agreement naming any
Grantor as licensor or licensee (including, without limitation, those
listed in Schedule 6), granting any right under any Copyright,
including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.
"General Intangibles": all "general intangibles" as such term
is defined in Section 9-106 of the Uniform Commercial Code in effect
in the State of New York on the date hereof and, in any event,
including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a party or under which such
Grantor has any right, title or interest or to which such Grantor or
any property of such Grantor is subject, as the same may from time to
time be amended, supplemented or otherwise modified, including,
without limitation, (i) all rights of such Grantor to receive moneys
due and to become due to it thereunder or in connection therewith,
(ii) all rights of such Grantor to damages arising thereunder and
(iii) all rights of such Grantor to perform and to exercise all
remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its
right, title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement, instrument or
indenture without the consent of any other party thereto, would not
give any other party to such contract, agreement, instrument or
indenture the right to terminate its obligations thereunder, or is
permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto
(it being understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided, that the
foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this
Agreement in any Receivable or any money or other amounts due or to
become due under any such contract, agreement, instrument or
indenture.
"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or
in connection with this Agreement or any other Loan Document to which
such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees
and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Intellectual Property": all rights, priorities and
privileges provided under U.S., multinational and foreign law relating
to intellectual property, including without
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limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all
rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any of the foregoing referred to in Schedule 6,
(ii) all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-
part thereof, including, without limitation, any of the foregoing
referred to in Schedule 6, and (iii) all rights to obtain any reissues
or extensions of the foregoing.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in part by
a Patent, including, without limitation, any of the foregoing referred
to in Schedule 6.
"Pledged Notes": all promissory notes issued to or held by
any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of
business), including, without limitation, those listed on Schedule 2.
"Pledged Securities": the collective reference to the Pledged
Notes and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the Capital
Stock of any Person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New
York on the date hereof and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased
or for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper
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and whether or not it has been earned by performance (including,
without limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related
thereto, including, without limitation, any of the foregoing referred
to in Schedule 6, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing
referred to in Schedule 6.
"Undelivered Instruments": as defined in Section 4.8.
B. Other Definitional Provisions. 1. The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.
2. The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
3. Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
4. For the purposes of this Agreement, each reference to
Collateral or to any relevant type or item of Property constituting Collateral
shall be deemed to exclude any Station License to the extent the Grantor is
prohibited at that time from granting a security interest therein pursuant to
Communications Act, and the regulations promulgated thereunder.
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<PAGE> 6
SECTION II. GUARANTEE
A. Guarantee. 1. Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
2. Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
3. Each Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
4. The guarantee contained in this Section 2 shall remain in
full force and effect until all the Borrower Obligations and the obligations of
each Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
5. No payment made by the Borrower, any of the Guarantors,
any other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time
in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until, subject to Section 2.6, the
Borrower Obligations are paid in full, no Letter of Credit shall be outstanding
and the Commitments are terminated.
B. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek
and receive contribution from and against any other Guarantor hereunder which
has not paid its proportionate share of such payment.
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Each Guarantor's right of contribution shall be subject to the terms and
conditions of Section 2.3. The provisions of this Section 2.2 shall in no
respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the Lenders, and each Guarantor shall remain liable to
the Administrative Agent and the Lenders for the full amount guaranteed by such
Guarantor hereunder.
C. No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower
on account of the Borrower Obligations are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall
be paid to any Guarantor on account of such subrogation rights at any time when
all of the Borrower Obligations shall not have been paid in full, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Guarantor, and shall, forthwith
upon receipt by such Guarantor, be turned over to the Administrative Agent in
the exact form received by such Guarantor (duly indorsed by such Guarantor to
the Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
D. Amendments, etc. with respect to the Borrower Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any Lender, and
the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agent
(or the Required Lenders or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Administrative Agent or any Lender for the payment of the
Borrower Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time
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held by it as security for the Borrower Obligations or for the guarantee
contained in this Section 2 or any property subject thereto.
E. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Borrower Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
2 or acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
the Administrative Agent or any Lender, other than payment in full of the
Obligations (except as set forth elsewhere in this Agreement), or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Borrower Obligations, or
of such Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor or any other Person or against
any collateral security or guarantee for the Borrower Obligations or any right
of offset with respect thereto, and any failure by the Administrative Agent or
any Lender to make any such demand, to pursue such other rights or remedies or
to collect any payments from the Borrower, any other Guarantor or any other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or
right of offset, shall not relieve any Guarantor of any obligation or liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the Administrative Agent
or any Lender against any Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
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F. Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
G. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at
270 Park Avenue, New York, New York 10017.
SECTION III. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Lenders, a security interest in, all of the following
property now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"), as collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Grantor's Obligations:
1. all Accounts;
2. all Chattel Paper;
3. all Documents;
4. all Equipment;
5. all General Intangibles;
6. all Instruments;
7. all Intellectual Property;
8. all Inventory;
9. all Pledged Securities;
10. all books and records pertaining to the Collateral; and
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11. to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security
and guarantees given by any Person with respect to any of the
foregoing.
"Collateral" shall not include, with respect to any Grantor,
any General Intangible or Intellectual Property to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its rights under
such General Intangible or Intellectual Property, as the case may be, is
prohibited or restricted by such General Intangible or Intellectual Property,
as the case may be, and the consent of applicable Persons has not been and
cannot be obtained, provided that the foregoing limitation shall not affect,
limit, restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Account or any money or other amounts due or
to become due under any such General Intangible or Intellectual Property, as
the case may be, to the extent provided in Section 9-318 of the Code as in
effect on the date hereof.
SECTION IV. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Administrative Agent and each Lender that:
A. Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and warranty
to the Borrower's knowledge shall, for the purposes of this Section 4.1, be
deemed to be reference to each Guarantor's knowledge.
B. Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens expressly permitted to exist on
the Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as
have been filed in favor of the Administrative Agent, for the ratable benefit
of the Lenders, pursuant to this Agreement or as are expressly permitted by the
Credit Agreement.
C. Perfected First Priority Liens. The security interests
granted pursuant to this Agreement 1. that are capable of perfection pursuant
to the Code upon completion of the
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filings and other actions specified on Schedule 3 (which, in the case of all
filings and other documents referred to on said Schedule, have been delivered
to the Administrative Agent in completed and duly executed form) will
constitute valid perfected security interests in all of the Collateral in favor
of the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for such Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and 2. are prior to all
other Liens on the Collateral except for Liens expressly permitted by the
Credit Agreement to be prior to the Liens granted pursuant to this Agreement.
D. Chief Executive Office. On the date hereof, such
Grantor's jurisdiction of organization and the location of such Grantor's chief
executive office or sole place of business are specified on Schedule 4.
E. Inventory and Equipment. On the date hereof, the
Inventory and the Equipment (other than mobile goods) are kept at the locations
listed on Schedule 5.
F. Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
G. Pledged Securities. 1. The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of each Issuer, except, (i) with
respect to the WTOV-TV Buyer, the SBP Stock, which is being pledged by SBP in
favor of the Administrative Agent pursuant to the SAC Pledge Agreement and (ii)
the Preferred Stock, which is being pledged by the holders thereof in favor of
the Administrative Agent pursuant to the Preferred Pledge Agreement.
2. All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
3. Each of the Pledged Notes in existence on the date hereof
are set forth in Schedule 2 and each of the Pledged Notes constitutes, to the
knowledge of the Grantor that is the payee thereof, the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4. Such Grantor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by it
hereunder, free of any and all Liens or options in favor of, or claims of, any
other Person, except the security interest created by this Agreement.
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H. Receivables. The aggregate of all amounts payable to the
Grantors under or in connection with any Receivable that is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Administrative
Agent (collectively, "Undelivered Instruments") does not exceed $1,000,000.
I. Intellectual Property. 1. Schedule 6 lists all
Intellectual Property owned or licensed by such Grantor in its own name on the
date hereof.
2. To the best of such Grantor's knowledge, all material
Intellectual Property is on the date hereof valid, subsisting, unexpired,
enforceable and has not been abandoned.
3. Except as set forth in Schedule 6, none of the material
Intellectual Property is on the date hereof the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
4. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of,
or such Grantor's rights in, any Intellectual Property in any respect that
could reasonably be expected to have a Material Adverse Effect.
5. No action or proceeding is pending or, to the knowledge of
such Grantor, threatened on the date hereof seeking to limit, cancel or
question the validity, or such Grantor's ownership, of any Intellectual
Property which, if adversely determined, would have a Material Adverse Effect.
SECTION V. COVENANTS
Each Grantor covenants and agrees with the Administrative
Agent and the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
A. Covenants in Credit Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of
its Subsidiaries.
B. Delivery of Instruments and Chattel Paper. If the
aggregate of all amounts payable to the Grantors pursuant to Undelivered
Instruments shall exceed $1,000,000, such Undelivered Instruments, to the
extent necessary to eliminate such excess,
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shall be immediately delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
C. Insurance. Each Grantor shall cause each casualty
insurance policy maintained by it to (a) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Administrative Agent of written
notice thereof, (b) name the Administrative Agent as insured party or loss
payee, (c) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (d) be reasonably satisfactory in all other
respects to the Administrative Agent.
D. Maintenance of Perfected Security Interest; Further
Documentation. 1. Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
2. Upon reasonable written request of the Administrative
Agent, such Grantor will furnish to the Administrative Agent and the Lenders
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
3. At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such Grantor,
such Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Code (or other similar laws) in effect in any jurisdiction
with respect to the security interests created hereby.
E. Changes in Locations, Name, etc. Such Grantor will not,
except upon not less than 15 days' prior written notice to the Administrative
Agent and delivery to the Administrative Agent of all additional executed
financing statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein:
(a) permit any of the Inventory or Equipment (other than (i)
immaterial Inventory and Equipment and (ii) Inventory and Equipment in
transit in the ordinary course of business) to be kept at a location
other than those listed on Schedule 5;
(b) change the location of its chief executive office or sole
place of business from that referred to in Section 4.4; or
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(c) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative
Agent in connection with this Agreement would become misleading.
F. Notices. Such Grantor will advise the Administrative
Agent and the Lenders promptly after such Grantor become aware thereof, in
reasonable detail, of any Lien (other than security interests created hereby or
Liens permitted under the Credit Agreement) on any of the Collateral which
would adversely affect the ability of the Administrative Agent to exercise any
of its remedies hereunder.
G. Pledged Securities. 1. If such Grantor shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver the same
forthwith to the Administrative Agent in the exact form received, duly indorsed
by such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by such
Grantor to be held by the Administrative Agent, subject to the terms hereof, as
additional collateral security for the Obligations. If an Event of Default
shall have occurred and be continuing, (i) any sums paid upon or in respect of
the Pledged Securities upon the liquidation or dissolution of any Issuer shall
be paid over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations and (ii) in case any
distribution of capital shall be made on or in respect of the Pledged
Securities or any property shall be distributed upon or with respect to the
Pledged Securities pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof, the property
so distributed shall, unless otherwise subject to a perfected security interest
in favor of the Administrative Agent, be delivered to the Administrative Agent
to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Securities shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the Lenders,
segregated from other funds of such Grantor, as additional collateral security
for the Obligations.
2. Without the prior written consent of the Administrative
Agent, such Grantor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of any nature
(except to the extent such stock or other securities are pledged to the
Administrative Agent hereunder) or to issue any other securities convertible
into or granting the right to purchase or exchange for any stock or other
equity securities of any nature of any Issuer, (ii) sell, assign, transfer,
exchange, or otherwise
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dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or option in
favor of, or any claim of any Person with respect to, any of the Pledged
Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any agreement
or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to dispose of any of the Pledged Securities or Proceeds
thereof.
3. In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement relating
to the Pledged Securities issued by it and will comply with such terms insofar
as such terms are applicable to it, (ii) it will notify the Administrative
Agent promptly in writing of the occurrence of any of the events described in
Section 5.7(a) with respect to the Pledged Securities issued by it and (iii)
the terms of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Pledged Securities issued by it.
H. Receivables. (a) Other than in the ordinary course of
business, such Grantor will not (i) grant any extension of the time of payment
of any Receivable, (ii) compromise or settle any Receivable for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable, (iv) allow any credit or discount whatsoever on
any Receivable or (v) amend, supplement or modify any Receivable in any manner
that could adversely affect the value thereof.
(b) Such Grantor will take all actions necessary to give
notice pursuant to the United States Assignment of Claims Act of 1940, as
amended, or such other analogous law if a material portion of the total amount
of the Receivables is owing from Governmental Authorities.
I. Intellectual Property. 1. Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its then-current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with all notices and legends required by
applicable law or regulations, and (iv) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby such
Trademark may become invalidated or impaired in any way.
2. Such Grantor (either itself or through licensees) will not
do any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
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3. Such Grantor (either itself or through licensees) will not
(and will not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of the Copyrights may
become invalidated or otherwise impaired. Such Grantor will not (either itself
or through licensees) do any act whereby any material portion of the Copyrights
may fall into the public domain.
4. Such Grantor (either itself or through licensees) will not
do any act that knowingly uses a material Intellectual Property to infringe the
Intellectual Property rights of a third party.
5. Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any application or
registration relating to any material Patent, Copyright or Trademark may become
abandoned or dedicated to the public, or of any adverse determination or
development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the U.S. Copyright Office or any court or tribunal in any
country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
6. Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for any Patent
or Trademark with the United States Patent and Trademark Office or any
Copyright in the U.S. Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, such Grantor shall report
such filing to the Administrative Agent within five Business Days after the
last day of the fiscal quarter in which such filing occurs. Upon written
request of the Administrative Agent, such Grantor shall execute and deliver,
and have recorded, any and all agreements, instruments, documents, and papers
as the Administrative Agent may reasonably request to evidence the
Administrative Agent's security interest in any such Copyright, Patent or
Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby.
7. Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, the U.S. Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain
each registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
8. In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent and the Lenders after it learns thereof.
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SECTION VI. REMEDIAL PROVISIONS
A. Certain Matters Relating to Receivables. 1. At any time
while an Event of Default shall have occurred and be continuing, upon the
Administrative Agent's request and at the expense of the relevant Grantor, such
Grantor shall cause independent public accountants or others satisfactory to
the Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.
2. The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
3. At the Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent, and have recorded, all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the then existing Receivables, including, without limitation, all
original orders, invoices and shipping receipts.
B. Communications with Obligors; Grantors Remain Liable. 1.
The Administrative Agent in its own name or in the name of others may at any
time after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's reasonable satisfaction the existence, amount and terms
of any Receivables.
2. Upon the request of the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have been
assigned to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the Administrative
Agent.
3. Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables to observe and
perform all the conditions and obligations
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to be observed and performed by it thereunder, all in accordance with the terms
of any agreement giving rise thereto. Neither the Administrative Agent nor any
Lender shall have any obligation or liability under any Receivable (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to
any Receivable (or any agreement giving rise thereto) to make any payment, to
make any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
C. Pledged Stock. 1. Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be
permitted to receive all cash dividends paid in respect of the Pledged Stock
and all payments made in respect of the Pledged Notes, in each case paid in the
normal course of business of the relevant Issuer, to the extent permitted in
the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however, that no vote shall be
cast or corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document.
2. If an Event of Default shall occur and be continuing and
the Administrative Agent shall give written notice of its intent to exercise
such rights to the relevant Grantor or Grantors, (i) the Administrative Agent
shall have the right to receive any and all cash dividends, payments or other
Proceeds paid in respect of the Pledged Securities and make application thereof
to the Obligations in such order as the Administrative Agent may determine, and
(ii) any or all of the Pledged Securities shall be registered in the name of
the Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by any Grantor or the
Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the
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Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do
so or delay in so doing.
3. Each Grantor hereby authorizes and instructs each Issuer
of any Pledged Securities pledged by such Grantor hereunder to (i) comply with
any instruction received by it from the Administrative Agent in writing that
(x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each
Issuer shall be fully protected in so complying, and (ii) unless otherwise
expressly permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.
D. Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, all Proceeds received by any Grantor consisting
of cash, checks and other near-cash items shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned
over to the Administrative Agent in the exact form received by such Grantor
(duly indorsed by such Grantor to the Administrative Agent, if required). All
Proceeds received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for the Administrative Agent
and the Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
E. Application of Proceeds. At any time after the occurrence
and during the continuance of an Event of Default, at the Administrative
Agent's election, the Administrative Agent may apply all or any part of
Proceeds held in any Collateral Account in payment of the Obligations in such
order as the Administrative Agent may elect, and any part of such funds which
the Administrative Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
F. Code and Other Remedies. If an Event of Default shall
occur and be continuing, the Administrative Agent, on behalf of the Lenders,
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code or any other applicable law. Without limiting the generality of
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the foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or
any Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's request, to assemble
the Collateral and make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in
part of the Obligations, in such order as the Administrative Agent may elect,
and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or
other disposition.
G. Registration Rights. 1. If the Administrative Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a
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period of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold, and (iii) make all amendments
thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
2. Each Grantor recognizes that the Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
3. Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales
of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid
and binding and in compliance with any and all other applicable Requirements of
Law. Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
H. Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Code. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
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SECTION VII. THE ADMINISTRATIVE AGENT
A. Administrative Agent's Appointment as Attorney-in-Fact,
etc. 1. Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action to the extent permitted
by law and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Administrative Agent the power and right, on behalf of such Grantor, without
notice to or assent by such Grantor, to do any or all of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such
moneys due under any Receivable or with respect to any other
Collateral whenever payable;
(ii) in the case of any Copyright, Patent or Trademark,
execute, deliver and have recorded, any and all agreements,
instruments, documents and papers as the Administrative Agent may
request to evidence the Administrative Agent's and the Lenders'
security interest in such Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and
(v) a. direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; b. ask or demand for, collect, and
receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or
arising out of any Collateral; c. sign and indorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications,
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notices and other documents in connection with any of the Collateral;
d. commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; e. defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; f.
settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; g. assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which
any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner,
as the Administrative Agent shall in its sole discretion determine;
and h. generally, sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's option
and such Grantor's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' security interests therein and
to effect the intent of this Agreement, all as fully and effectively
as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing.
2. If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
3. The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable under the Credit Agreement on past due Loans
that are or would be ABR Loans (whether or not any ABR Loans are then
outstanding), from the date of payment by the Administrative Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Administrative Agent on demand.
4. Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
B. Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its
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possession, under Section 9-207 of the Code or otherwise, shall be to deal with
it in the same manner as the Administrative Agent deals with similar property
for its own account. Neither the Administrative Agent, any Lender nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Administrative Agent and the Lenders
hereunder are solely to protect the Administrative Agent's and the Lenders'
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Lender to exercise any such powers. The
Administrative Agent and the Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
C. Execution of Financing Statements. Pursuant to Section
9-402 of the Code and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
D. Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION VIII. MISCELLANEOUS
A. Amendments in Writing. Subject to the terms of the Credit
Agreement, the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified by a written instrument executed by each
affected Grantor and the Administrative Agent, provided that, subject to the
terms of the Credit Agreement, any
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provision of this Agreement imposing obligations on any Grantor may be waived
by the Administrative Agent and the Lenders in a written instrument executed by
the Administrative Agent.
B. Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
C. No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Administrative Agent nor any Lender shall by any act (except by a
written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any Lender
of any right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy which the Administrative Agent or such Lender
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
D. Enforcement Expenses; Indemnification. 1. Each Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any
rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent and, at any time after and
during the continuance of an Event of Default, of one counsel of all the
Lenders.
2. Each Guarantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all liabilities
with respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes which may be payable or determined to be payable
with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
3. Each Guarantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement to the same extent the Borrower would be required to do so pursuant
to Section 9.7 of the Credit Agreement.
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4. The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Loan Documents.
E. Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the benefit
of the Administrative Agent and the Lenders and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
F. Set-Off. In addition to any rights and remedies of the
Administrative Agent and the Lenders provided by law, the Administrative Agent
and each Lender shall have the right, without prior notice to any Grantor, any
such notice being expressly waived by each Grantor to the extent permitted by
applicable law, upon any amount becoming due and payable by any Grantor
hereunder (whether at the stated maturity, by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of such Grantor. The Administrative Agent and each
Lender agrees promptly to notify the relevant Grantor and (if applicable) the
Administrative Agent after any such setoff and application made by the
Administrative Agent or such Lender, provided that the failure to give such
notice shall not affect the validity of such setoff and application.
G. Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
H. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
I. Integration. This Agreement and the other Loan Documents
represent the entire agreement of the Grantors, the Administrative Agent and
the Lenders with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof and
thereof not expressly set forth or referred to herein or in the other Loan
Documents.
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J. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
K. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
1. submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
2. consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
3. agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
4. agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
5. waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 8.11 any special, exemplary,
punitive or consequential damages.
L. Acknowledgements. Each Grantor hereby acknowledges that:
1. it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
2. neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or
in connection with this Agreement or any of the other Loan Documents,
and the relationship between
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Administrative Agent and Lenders, on one hand, and the Grantors, on
the other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
3. no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Grantors and the
Lenders.
M. WAIVERS OF JURY TRIAL. EACH GRANTOR, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
N. Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
O. Additional Grantors. Each Subsidiary of the Borrower that
is required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex 1 hereto.
P. Releases. (a) At such time as the Loans, the
Reimbursement Obligations and the other Obligations shall have been paid in
full, the Commitments have been terminated and no Letters of Credit shall be
outstanding, the Collateral shall be released from the Liens created hereby,
and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Administrative Agent and each Grantor
hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor
following any such termination, the Administrative Agent shall deliver to such
Grantor any Collateral held by the Administrative Agent hereunder, and execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral. At the request and sole expense of the
Borrower, a Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Guarantor shall be sold, transferred
or otherwise disposed of in a transaction permitted by the Credit Agreement.
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Q. FCC Compliance. (a) Notwithstanding anything to the
contrary contained herein or in any other agreement, instrument, or document
executed in connection herewith, no party hereto shall take any actions
hereunder that would constitute or result in a transfer or assignment of any
Station License, permit or authorization or a change of control over such
Station License, permit or authorization requiring the prior approval of the
FCC without first obtaining such prior approval of the FCC. In addition, the
parties acknowledge that the voting rights of the Pledged Stock shall remain
with the relevant Grantor thereof even upon the occurrence and during the
continuance of an Event of Default until the FCC shall have given its prior
consent to the exercise of stockholder rights by a purchaser at a public or
private sale of such Pledged Stock or the exercise of such rights by the
Administrative Agent or by a receiver, trustee, conservator or other agent duly
appointed pursuant to applicable law.
(b) If an Event of Default shall have occurred, each Grantor
shall take any action which the Administrative Agent may request in the
exercise of its rights and remedies under this Agreement in order to transfer
or assign the Collateral to the Administrative Agent or to such one or more
third parties as the Administrative Agent may designate, or to a combination of
the foregoing. To enforce the provisions of this Section 8.17, the
Administrative Agent is empowered to seek from the FCC and any other
Governmental Authority, to the extent required, consent to or approval of any
involuntary transfer of control of any entity whose Collateral is subject to
this Agreement for the purpose of seeking a bona fide purchaser to whom control
ultimately will be transferred. Each Grantor agrees to cooperate with any such
purchaser and with the Administrative Agent in the preparation, execution and
filing of any forms and providing any information that may be necessary or
helpful in obtaining the FCC's consent to the assignment to such purchaser of
the Collateral. Each Grantor hereby agrees to consent to any such voluntary or
involuntary transfer after and during the continuation of an Event of Default
and, without limiting any rights of the Administrative Agent under this
Agreement, to authorize the Administrative Agent to nominate a trustee or
receiver to assume control of the Collateral, subject only to required
judicial, FCC or other consents required by Governmental Authorities, in order
to effectuate the transactions contemplated by this Section 8.17. Such trustee
or receiver shall have all the rights and powers as provided to it by law or
court order, or to the Administrative Agent under this Agreement. Each Grantor
shall cooperate fully in obtaining the consent of the FCC and the approval or
consent of each other Governmental Authority required to effectuate the
foregoing.
(c) Without limiting the obligations of any Grantor hereunder
in any respect, each Grantor further agrees that if such Grantor, upon or after
the occurrence of an Event of Default, should fail or refuse for any reason
whatsoever, without limitation, including any refusal to execute any
application necessary or appropriate to obtain any governmental consent
necessary or appropriate for the exercise of any right of the Administrative
Agent hereunder, such Grantor agrees that such application may be executed on
such Grantor's behalf by the
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clerk of any court of competent jurisdiction without notice to such Grantor
pursuant to court order.
(d) In connection with this Section 8.17, the Administrative
Agent shall be entitled to rely in good faith upon an opinion of outside FCC
counsel of the Administrative Agent's choice with respect to any such
assignment or transfer, whether or not the advice rendered is ultimately
determined to have been accurate.
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IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
STC BROADCASTING, INC.
By:/s/ DAVID A. FITZ
----------------------------------
Title: Senior Vice President
Chief Financial Officer
Secretary
SUNRISE TELEVISION CORP.
By:/s/ DAVID A. FITZ
----------------------------------
Title: Senior Vice President
Chief Financial Officer
Secretary
SMITH ACQUISITION COMPANY
By:/s/ DAVID A. FITZ
----------------------------------
Title: Senior Vice President
Chief Financial Officer
Secretary
STC LICENSE COMPANY
By:/s/ DAVID A. FITZ
----------------------------------
Title: Senior Vice President
Chief Financial Officer
Secretary
SMITH ACQUISITION LICENSE COMPANY
By:/s/ DAVID A. FITZ
----------------------------------
Title: Senior Vice President
Chief Financial Officer
Secretary
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EXHIBIT 10.3
FIRST AMENDMENT
FIRST AMENDMENT, dated as of March 25, 1997 (this
"Amendment"), to the Credit Agreement, dated as of February 28, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among STC BROADCASTING, INC., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions or entities
from time to time parties thereto (the "Lenders"), NationsBank of Texas, N.A.,
as documentation agent for the Lenders thereunder and The Chase Manhattan Bank,
as administrative and syndication agent for the Lenders thereunder (in such
capacity, the "Administrative Agent").
W I T N E S S E T H
WHEREAS, pursuant to the Credit Agreement, the Lenders have
agreed to make, and have made, certain Loans to the Borrower; and
WHEREAS, the Borrower has requested that the Lenders amend,
and the Lenders have agreed to amend, certain of the provisions of the Credit
Agreement, upon the terms and subject to the conditions set forth below;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) As used herein, terms defined in
the Credit Agreement are used herein as so defined.
(b) The definitions of "Consolidated Fixed Charge Coverage
Ratio" and "Consolidated Interest Coverage Ratio are each hereby amended by
adding at the end of each of such definitions immediately prior to the period
the following:
"provided, that for any Test Period there shall be netted from
Consolidated Cash Interest Expense for the purpose of
computing such ratio the amount of any interest earned on the
Subordinated Debt Cash Balance during such period."
(c) The definition of "Consolidated Leverage Ratio" is hereby
amended by adding at the end of such definition immediately prior to the period
the following:
"provided, that at the end of any Test Period or on any
Adjustment Date there shall be netted from Consolidated Total
Debt for the purpose of computing such ratio the amount of the
Subordinated Debt Cash Balance at such time."
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(d) There shall be added to subsection 1.1 of the Credit
Agreement in the appropriate alphabetical order the following
new defined terms:
"'First Amendment': the First Amendment, dated as of March
25, 1997, to this Agreement.
"'First Amendment Effective Date': the date of effectiveness
of the First Amendment.
"'Subordinated Debt Cash Balance': an amount equal to the
difference (but not below zero) between (i) $6,600,000 and (ii) the
amount of cash expended by the Borrower subsequent to the First
Amendment Effective Date for Permitted Acquisitions (it being
understood that the first amounts of cash expended for Permitted
Acquisitions shall be deemed to have been expended from, and shall
reduce (but not below zero) by such amounts expended, the Subordinated
Debt Cash Balance)."
2. Addition of New Subsection 6.2(h). The Credit
Agreement is hereby amended by adding thereto the following new subsection
6.2(h) (and deleting the word "and" at the end of subsection 6.2(g) and
renumbering current subsection 6.2(h) as subsection 6.2(i)):
"(h) until the Subordinated Debt Cash Balance is deemed
to be reduced to zero in accordance with the definition thereof, at
time of consummating any Permitted Acquisition, a certificate of a
Responsible Officer, specifying the Subordinated Debt Cash Balance
after giving effect to such Permitted Acquisition; and"
3. Amendment to Subsection 7.2(g). Subsection 7.2(g) of
the Credit Agreement is hereby amended by deleting the number "$85,000,000"
where it appears therein and substituting in lieu thereof the number
"$100,000,000".
4. Representations and Warranties. On and as of the
date hereof after giving effect to this Amendment, the Borrower hereby
represents and warrants to the Lenders that:
(a) Each of its representations and warranties contained in
Section 4 of the Credit Agreement or in any certificate, document or
financial or other statement furnished at any time under or in
connection therewith are true and correct in all material respects on
and as of such date as if made on and as of such date, except to the
extent that such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties
shall be true and correct in all
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material respects as of such earlier date; provided that the
references to the Credit Agreement therein shall be deemed to include
this Amendment; and
(b) No Default or Event of Default has occurred and is
continuing.
5. Conditions Precedent. This Amendment shall be
effective upon the satisfaction of the following conditions precedent:
(a) The Administrative Agent shall have received this
Amendment duly executed and delivered by the Borrower and each of the
Lenders.
(b) The Administrative Agent shall have received, with a
copy for each Lender, a certificate of a Responsible Officer
specifying the Subordinated Debt Cash Balance as of the date hereof.
6. Release of New York Mortgage. Upon the effectiveness
of this Amendment, the Lenders hereby agree to release the Mortgages covering
the real property of the Rochester Station, pursuant to documentation in form
and substance satisfactory to the Borrower and the Administrative Agent.
7. Continuing Effect; No Other Amendments. Except as
expressly stated herein, all of the terms and provisions of the Credit
Agreement are and shall remain in full force and effect. The amendments
contained herein shall not constitute an amendment of any other provision of
the Credit Agreement or for any purpose except as expressly set forth herein.
8. Governing Law; Counterparts. (a) THIS AMENDMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) This Amendment may be executed in any number of
counterparts, all of which counterparts, taken together, shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
STC BROADCASTING, INC.
By: /s/ David Fitz
----------------------------------
Name: David Fitz
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Mary Bacon
----------------------------------
Name: Mary Bacon
Title: Vice President
NATIONSBANK OF TEXAS, N.A., as
Documentation Agent and as a Lender
By: /s/ David James
----------------------------------
Name: David James
Title: Vice President
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EXHIBIT 10.4
STC BROADCASTING, INC.
$100,000,000
11% Senior Subordinated Notes due 2007
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
March 25, 1997
CHASE SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
SCHRODER WERTHEIM & CO. INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
STC Broadcasting, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to you (the "Initial Purchasers"), upon
the terms and subject to the conditions set forth in a purchase agreement dated
March 19, 1997 (the "Purchase Agreement"), $100,000,000 aggregate principal
amount of its 11% Senior Subordinated Notes due 2007 (the "Securities").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to your obligations
thereunder, the Company agrees with you,
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for the benefit of the holders of the Transfer Restricted Securities (including
the Initial Purchasers) (the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall (i) prepare
and, not later than 90 days following the date of original issuance of the
Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act with respect to a proposed offer to the Holders (the
"Registered Exchange Offer") to issue and deliver to such Holders, in exchange
for the Transfer Restricted Securities, a like aggregate principal amount of
debt securities of the Company (the "Exchange Securities") identical in all
material respects to the Securities, except for the transfer restrictions
relating to the Transfer Restricted Securities, (ii) use its reasonable best
efforts to cause the Exchange Offer Registration Statement to become effective
under the Securities Act no later than 180 days after the Issue Date and the
Registered Exchange Offer to be consummated no later than 225 days after the
Issue Date, and (iii) keep the Exchange Offer Registration Statement effective
for not less than 30 days (or longer, if required by applicable law) after the
date that notice of the Registered Exchange Offer is mailed to the Holders
(such period being called the "Exchange Offer Registration Period"). The
Exchange Securities and the Private Exchange Securities (as defined below), if
any, will be issued under the Indenture or an indenture (the "Exchange
Securities Indenture") between the Company and the Trustee or such other bank
or trust company reasonably satisfactory to you, as trustee (the "Exchange
Securities Trustee"), such indenture to be identical in all material respects
to the Indenture except for the transfer restrictions relating to the
Securities (as described above). The Indenture or Exchange Securities
Indenture, as the case may be, shall provide that the holders of the Exchange
Securities, the Private Exchange Securities and the Securities shall vote and
consent together on all matters (as to which any of such holders may vote or
consent) as one class and that none of the holders of the Exchange Securities,
the Private Exchange Securities or the Securities will have the right to vote
or consent as a separate class on any matter.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Transfer Restricted Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company or an
Exchanging Dealer (as defined below) not complying with the requirements of the
next sentence, (b) acquires the Exchange Securities in the ordinary course of
such Holder's business and (c) has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities) and to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The
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Company, the Initial Purchasers and each Exchanging Dealer (as defined below)
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, (i) each Holder which is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received
by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) if
any Initial Purchaser elects to sell Private Exchange Securities acquired in
exchange for Securities constituting any portion of an unsold allotment, it is
required to deliver a prospectus containing the information required by Items
507 or 508 of Regulation S-K under the Securities Act and the Exchange Act
("Regulation S-K"), as applicable, in connection with such a sale.
Upon consummation of the Registered Exchange Offer in
accordance with this Section 1, the provisions of this Agreement shall continue
to apply, mutatis mutandis, solely with respect to Transfer Restricted
Securities that are Private Exchange Securities, Exchange Securities as to
which clause (v) of the first paragraph of Section 2 is applicable and Exchange
Securities held by Participating Broker-Dealers (as defined), and the Company
shall have no further obligations to register Transfer Restricted Securities
(other than Private Exchange Securities and other than in respect of any
Exchange Securities as to which clause (v) of the first paragraph of Section 2
hereof applies) pursuant to Section 2 hereof.
If, prior to the consummation of the Registered Exchange
Offer, any Initial Purchaser holds any Securities acquired by it that have, or
that are reasonably likely to be determined to have, the status of an unsold
allotment in an initial distribution, or any Holder is not entitled to
participate in the Registered Exchange Offer, the Company upon the request of
any such Holder, shall simultaneously with the delivery of the Exchange
Securities in the Registered Exchange Offer, issue and deliver to any such
Holder, in exchange (the "Private Exchange") for such Securities held by any
such Holder, a like principal amount of notes (the "Private Exchange
Securities") of the Company that are identical in all material respects to the
Exchange Securities except for the placement of a restrictive legend on the
Private Exchange Securities. The Private Exchange Securities shall be issued
pursuant to the same indenture as the Exchange Securities and shall bear the
same CUSIP number as the Exchange Securities.
In connection with the Registered Exchange Offer, the Company
shall:
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(a) mail to each Holder a copy of the prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less
than 30 days after the date that notice of the Registered Exchange
Offer is mailed to the Holders (or longer if required by applicable
law);
(c) utilize the services of a Depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan,
The City of New York;
(d) permit Holders to withdraw tendered Securities at any
time prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open;
and
(e) otherwise comply in all material respects with all
laws applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer and the Private Exchange, if any, the Company shall:
(a) accept for exchange all Transfer Restricted
Securities tendered and not validly withdrawn pursuant to the
Registered Exchange Offer;
(b) deliver to the Trustee for cancellation all Transfer
Restricted Securities so accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee,
as the case may be, promptly to authenticate and deliver to each
Holder of Securities, Private Exchange Securities or Exchange
Securities, as the case may be, equal in principal amount to the
Securities of such Holder so accepted for exchange.
The Company shall make available, for a period of 90 days
after the consummation of the Registered Exchange Offer, a copy of the
prospectus forming part of the Exchange Offer Registration Statement to any
broker-dealer for use in connection with any resale of any Private Exchange
Securities or Exchange Securities, as the case may be.
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Interest on each Exchange Security and Private Exchange
Security will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such Holder is not an
affiliate of the Company or, if it is such an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (iii) any prospectus forming part of any Exchange Offer
Registration Statement, and any supplement to such prospectus, does not
contain, as of the consummation of the Registered Exchange Offer, an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
2. Shelf Registration. If (i) because of any change in
law or applicable interpretations of the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, (ii) for any other reason the Registered Exchange Offer is not
consummated within 225 days after the Issue Date, (iii) any holder of Private
Exchange Securities so requests in writing to the Company within 60 days after
the Exchange Offer, (iv) any applicable law or interpretations do not permit
any Holder to participate in the Registered Exchange Offer, (v) any Holder that
participates in the Registered Exchange Offer does not receive freely
transferable Exchange Securities in exchange for tendered Securities, or (vi)
the Company so elects, then the following provisions shall apply:
(a) The Company shall use its reasonable best efforts to
file as promptly as practicable with the Commission, and thereafter shall use
its reasonable best efforts to cause to
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be declared effective, a shelf registration statement on an appropriate form
under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined below) by the Holders from time to time in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with any
Exchange Offer Registration Statement, a "Registration Statement"); provided,
however, that no Holder of Securities or Exchange Securities (other than any
Initial Purchaser) shall be entitled to have Securities or Exchange Securities
held by it covered by such Shelf Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder.
(b) The Company shall use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the prospectus forming part thereof to be used by Holders for a period of three
years from the Issue Date or such shorter period that will terminate when all
the Securities and Exchange Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (in any
such case, such period being called the "Shelf Registration Period"). The
Company shall be deemed not to have used its reasonable best efforts to keep
the Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities,
Private Exchange Securities or Exchange Securities covered thereby not being
able to offer and sell such Securities, Private Exchange Securities or Exchange
Securities during that period, unless such action is required by applicable
law; provided, however, that the foregoing shall not apply to actions taken by
the Company in good faith and for valid business reasons (not including
avoidance of their obligations hereunder),including, without limitation, the
acquisition or divestiture of assets, so long as the Company within 120 days
thereafter complies with the requirements of Section 4(j) hereof. Any such
period during which the Company fails to keep the registration statement
effective and usable for offers and sales of Securities and Exchange Securities
is referred to as a "Suspension Period." A Suspension Period shall commence on
and include the date that the Company gives notice that the Shelf Registration
Statement is no longer effective or the prospectus included therein is no
longer usable for offers and sales of Securities and Exchange Securities and
shall end on the date when each Holder of Securities and Exchange Securities
covered by such registration statement either receives the copies of the
supplemented or amended prospectus contemplated by Section 4(j) hereof or is
advised in writing by the Company that use of the prospectus may be resumed.
If one or more Suspension Periods occur, the three-year time period referenced
above shall be extended by the number of days included in each such Suspension
Period.
(c) Notwithstanding any other provisions hereof, the
Company will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus
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forming part thereof and any supplement thereto complies in all material
respects with the Securities Act and the rules and regulations of the
Commission thereunder, (ii) any Shelf Registration Statement and any amendment
thereto (in either case, other than with respect to information included
therein in reliance upon or in conformity with written information relating to
any Holder furnished to the Company by or on behalf of such Holder specifically
for use therein (the "Holders' Information")) does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either case,
other than with respect to Holders' Information), does not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree
that the Holders of Securities will suffer damages if the Company fails to
fulfill its obligations under Section 1 or Section 2, as applicable, and that
it would not be feasible to ascertain the extent of such damages. Accordingly,
if (i) the applicable Registration Statement is not filed with the Commission
on or prior to 90 days after the Issue Date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 180 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later,
within 45 days after publication of the change in law or interpretation), (iii)
the Registered Exchange Offer is not consummated on or prior to 225 days after
the Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 180 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 45 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain
the effectiveness thereof) without being succeeded within 90 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the Company
will be obligated to pay liquidated damages to each holder of Transfer
Restricted Securities, during the period of one or more such Registration
Defaults, in an amount equal to $0.10 per week per $1,000 principal amount of
the Securities constituting Transfer Restricted Securities held by such Holder
until (i) the applicable Registration Statement is filed, (ii) the Exchange
Offer Registration Statement is declared effective and the Registered Exchange
Offer is consummated, (iii) the Shelf Registration Statement is declared
effective or (iv) the Shelf Registration Statement again becomes effective, as
the case may be. Following the cure of all Registration Defaults, the accrual
of liquidated damages will cease. As used herein, the term
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"Transfer Restricted Securities" means each Security, Private Exchange Security
or Exchange Security until (i) the date on which such Security, Private
Exchange Security or Exchange Security has been exchanged for a freely
transferable Exchange Security in the Registered Exchange Offer, (ii) the date
on which such Security, Private Exchange Security or Exchange Security has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iii) the date on which such Security,
Private Exchange Security or Exchange Security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act. Notwithstanding anything to the contrary in
this Section 3(a), the Company shall not be required to pay liquidated damages
to the holder of Transfer Restricted Securities if such holder failed to comply
with its obligations to make the representations set forth in the second to
last paragraph of Section 1 or failed to provide the information required to be
provided by it, if any, pursuant to Section 4(n).
(b) The Company shall notify the Trustee and the Paying
Agent under the Indenture immediately upon the happening of each and every
Registration Default. The Company shall pay the liquidated damages due on the
Transfer Restricted Securities by depositing with the Paying Agent (which may
not be the Company for these purposes), in trust, for the benefit of the
holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the liquidated damages then due. The liquidated damages due shall be
payable on each interest payment date specified by the Indenture and the
Securities to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay liquidated damages shall be deemed
to accrue from and including the date of the applicable Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement, as the
case may be, to be filed, (ii) the Shelf Registration Statement to remain
effective or (iii) the Exchange Offer Registration Statement to be declared
effective and the Registered Exchange Offer to be consummated, in each case to
the extent required by this Agreement.
4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
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(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that any of the Initial Purchasers (with respect to
any portion of an unsold allotment from the original offering) are
participating in the Registered Exchange Offer or the Shelf Registration, shall
use its reasonable best efforts to reflect in each such document, when so filed
with the Commission, such comments as you reasonably may propose; (ii) if
applicable, include the information set forth in Annex A hereto on the cover,
in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose
of the Exchange Offer" section and in Annex C hereto in the "Plan of
Distribution" section of the prospectus forming a part of the Exchange Offer
Registration Statement, and include the information set forth in Annex D hereto
in the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; and (iii) if requested by any Initial Purchaser, include the information
required by Items 507 or 508 of Regulation S-K, as applicable, in the
prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise you and the Holders (if
applicable) and, if requested by you or any such Holder, confirm such advice in
writing (which advice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities,
the Private Exchange Securities or the Exchange Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
(v) of the happening of any event that requires the
making of any changes in any Registration Statement or the prospectus
included therein so that, as of such date,
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the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(c) The Company will make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company will furnish to each holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if the Holder so requests in writing, all
exhibits (including those incorporated by reference).
(e) The Company will, during the Shelf Registration
Period, promptly deliver to each holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto
by each of the selling holders of Transfer Restricted Securities in connection
with the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Exchanging Dealer or
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules and, if the
Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing,
all exhibits (including those incorporated by reference).
(g) The Company will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as applicable, promptly
deliver to each Exchanging Dealer or Initial Purchaser, as applicable, without
charge, as many copies of the prospectus included within the coverage of the
Exchange Offer Registration Statement or the Shelf Registration Statement and
any amendment or supplement thereto as such Exchanging Dealer or Initial
Purchaser, as applicable, may reasonably request for delivery by (i) such
Exchanging Dealer in connection with a sale of Exchange Securities received by
it pursuant to the Registered Exchange Offer or (ii) such Initial Purchaser in
connection with a sale of Private Exchange Securities received by it in
exchange for Securities constituting any portion of an unsold allotment; and
the Company
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consents to the use of such prospectus or any amendment or supplement thereto
by any such Exchanging Dealer or Initial Purchaser, as applicable, as
aforesaid.
(h) Prior to any public offering of Securities, Private
Exchange Securities or Exchange Securities pursuant to any Registration
Statement, the Company will use its reasonable best efforts to register or
qualify, or cooperate with the Holders of Securities, Private Exchange
Securities or Exchange Securities included therein and their respective counsel
in connection with the registration or qualification of, such Securities,
Private Exchange Securities or Exchange Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of the Securities,
Private Exchange Securities or Exchange Securities covered by such Registration
Statement; provided, however, that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.
(i) The Company will cooperate with the Holders of
Securities, Private Exchange Securities or Exchange Securities to facilitate
the timely preparation and delivery of certificates representing the
Securities, the Private Exchange Securities or the Exchange Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as Holders may request in
writing prior to sales of Securities, Private Exchange Securities or Exchange
Securities pursuant to such Registration Statement.
(j) If (i) any event contemplated by paragraphs (b)(ii)
through (v) above occurs during the period for which the Company is required to
maintain an effective Registration Statement or (ii) any Suspension Period
remains in effect more than 120 days after the occurrence thereof, the Company
will promptly prepare a post-effective amendment to the Registration Statement
or a supplement to the related prospectus or file any other required document
so that, as thereafter delivered to purchasers of the Securities, the Private
Exchange Securities or the Exchange Securities from a Holder, the prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the Private
Exchange Securities or Exchange
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<PAGE> 12
Securities, as the case may be, and provide the applicable trustee with printed
certificates for the Securities, the Private Exchange Securities or the
Exchange Securities, as the case may be, in a form eligible for deposit with
The Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of
Section 11(a) of the Securities Act; provided, however, that in no event shall
such earning statement be delivered later than 45 days after the end of a 12-
month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the applicable Registration Statement, which statement shall
cover such 12-month period.
(m) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each holder of Transfer
Restricted Securities to be sold pursuant to any Shelf Registration Statement
to furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may from
time to time reasonably require for inclusion in such Registration Statement,
and the Company may exclude from such registration the Transfer Restricted
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each
holder of Transfer Restricted Securities to be registered pursuant thereto
agrees by acquisition of such Transfer Restricted Securities that, upon receipt
of any notice of the Company (i) of a Suspension Period under Section 2(b)
hereof or (ii) pursuant to Section 4(b)(ii) through (v) hereof, such holder
will discontinue disposition of such Transfer Restricted Securities until such
holder's receipt of (x) notice that the Suspension Period has ended or (y)
copies of the supplemental or amended prospectus contemplated by Section 4(j)
hereof, as the case may be, or until advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each seller of
Transfer Restricted Securities covered by such Registration
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<PAGE> 13
Statement shall have received (x) the copies of the supplemental or amended
prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
(p) In the case of a Shelf Registration Statement, the
Company shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities,
Private Exchange Securities or Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities, Private Exchange Securities or
Exchange Securities being sold and any underwriter participating in any
disposition of Securities, Private Exchange Securities or Exchange Securities
pursuant to such Shelf Registration Statement, all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries and (ii) use its reasonable best efforts to have its officers,
directors, employees, accountants and counsel supply all relevant information
reasonably requested by such representative, Special Counsel or any such
underwriter (an "Inspector") in connection with such Shelf Registration
Statement.
(r) In the case of an underwritten Shelf Registration
Statement, the Company shall, if requested by the managing underwriters in
connection with such Shelf Registration Statement, use its reasonable best
efforts to cause (i) its counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities, Private Exchange Securities or
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities, Private
Exchange Securities or Exchange Securities being sold, their Special Counsel or
the managing underwriters (if any) and (iii) its independent public accountants
to provide a comfort letter in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
5. Registration Expenses. The Company will bear all
expenses incurred in connection with the performance of its obligations under
Sections 1, 2, 3 and 4 and the Company will reimburse the Initial Purchasers
and the Holders for the reasonable fees and
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<PAGE> 14
disbursements of one firm of attorneys chosen by the Holders of a majority in
aggregate principal amount of the Securities, the Private Exchange Securities
and the Exchange Securities to be sold pursuant to each Registration Statement
(the "Special Counsel") acting for the Initial Purchasers or Holders in
connection therewith.
6. Indemnification. (a) In the event of a Shelf
Registration Statement or in connection with any prospectus delivery pursuant
to an Exchange Offer Registration Statement by an Exchanging Dealer or Initial
Purchaser, as applicable, the Company shall indemnify and hold harmless each
Holder, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively referred to for purposes of this Section 6 and
Section 7 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Transfer Restricted Securities or Exchange Securities), to which
that Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, however, that with respect to any
such untrue statement in or omission from any related preliminary prospectus,
the indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Transfer Restricted Securities or Exchange
Securities to the extent that it is finally judicially determined that such
loss, claim, damage, liability or action of or with respect to such Holder
results from the fact that both (A) to the extent required by applicable law, a
copy of the final prospectus was not sent or given to such person at or prior
to the written confirmation of the sale of such Transfer Restricted Securities
or Exchange
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<PAGE> 15
Securities to such person and (B) the untrue statement in or omission from the
related preliminary prospectus was corrected in the final prospectus unless, in
either case, such failure to deliver the final prospectus was a result of non-
compliance by the Company with Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (collectively referred to
for purposes of this Section 6(b) and Section 7 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any action
in respect thereof, to which the Company may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained
in any such Registration Statement or any prospectus forming part thereof or in
any amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Holders'
Information furnished to the Company by such Holder, and shall reimburse the
Company promptly upon demand for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that no such Holder shall be liable for any
indemnity claims hereunder in excess of the amount of net proceeds received by
such Holder from the sale of Securities, Private Exchange Securities or
Exchange Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except to
the extent that it has been materially prejudiced by such failure; and
provided, further, however, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 6. If any such claim or action shall
be
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<PAGE> 16
brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than the reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the
indemnified party) or (3) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement (i) does not contain an admission of fault or wrongdoing
and (ii) includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
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<PAGE> 17
7. Contribution. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, in such proportion as shall be appropriate to
reflect (i) the relative benefits received by the indemnifying party or parties
on the one hand and the indemnified party or parties on the other hand from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party on the one hand and the
indemnified party on the other with respect to the actions, statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Holders on
the other shall be deemed to be in the same proportion as the total proceeds
from the Offering (net of discounts and commissions but before deducting
expenses) of the Securities received by the Company bear to the total proceeds
received by such Holders from the sale of the Securities, as set forth in the
table on the cover page of the Final Offering Memorandum in respect of the sale
of the Securities. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact, has been taken or made by, or relates to information supplied
by, such indemnifying party or indemnified party, and the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such action, statement or omission. The parties hereto agree that
it would not be just and equitable if contributions pursuant to this Section 7
were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 7 shall be deemed to include, for purposes of
this Section 7, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, an indemnifying
party that is a holder of Transfer Restricted Securities or Exchange Securities
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Transfer Restricted Securities or Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall
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<PAGE> 18
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. Rules 144 and 144A. The Company shall use its
reasonable best efforts to file the reports required to be filed by it under
the Securities Act and the Exchange Act in a timely manner and, if at any time
the Company is not required to file such reports, it will, upon the written
request of any holder of Transfer Restricted Securities, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144
and 144A (including, without limitation, the requirements of Rule 144A(d)(4)).
Upon the written request of any holder of Transfer Restricted Securities, the
Company shall deliver to such holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 8 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will administer the offering will be selected by
the Company, subject to the consent of the holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering (which shall not be unreasonably withheld or delayed), and such
holders shall be responsible for all underwriting commissions and discounts in
connection therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of a majority in
aggregate principal amount of the Securities, the Private Exchange Securities
and the Exchange Securities, taken as a single class.
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<PAGE> 19
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of the Holders of Securities, Private Exchange Securities or Exchange
Securities whose Securities, Private Exchange Securities or Exchange Securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders may be given by Holders of a
majority in aggregate principal amount of the Securities, Private Exchange
Securities or Exchange Securities being sold by such Holders pursuant to such
Registration Statement.
(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 10(b), which address initially is, with respect to each
Holder, the address of such Holder maintained by the Registrar under
the Indenture, with a copy in like manner to Chase Securities Inc.,
NationsBanc Capital Markets, Inc. and Schroder Wertheim & Co. Inc.;
(2) if to you, initially at your respective addresses set
forth in the Purchase Agreement; and
(3) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement, with a copy to Lawrence
D. Stuart, Jr., Hicks, Muse, Tate & Furst Incorporated, 200 Crescent
Court, Suite 1600, Dallas, Texas 75201.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the
recipient's telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be
binding upon the Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any
number of counterparts (which may be delivered in original form or by
telecopier) and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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<PAGE> 20
(e) Definition of Terms. For purposes of this Agreement,
(a) the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
(h) Remedies. In the event of a breach by the Company,
or by any holder of Transfer Restricted Securities, of any of their obligations
under this Agreement, each holder of Transfer Restricted Securities or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery
of damages for a breach by the Company of its obligations under Sections 1 or 2
hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company and each holder of Transfer Restricted Securities agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of any of the provisions of this Agreement and
hereby further agree that, in the event of any action for specific performance
in respect of such breach, it shall waive the defense that a remedy at law
would be adequate.
(i) No Inconsistent Agreements. The Company represents,
warrants and agrees that (i) it has not entered into shall not, on or after the
date of this Agreement, enter into any agreement that is inconsistent with the
rights granted to the holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof, (ii) it has not
previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person
and (iii) without limiting the generality of the foregoing, without the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Securities, it shall not grant to any person
the right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.
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<PAGE> 21
(j) No Piggyback on Registrations. Neither the Company
nor any of its security holders (other than the holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(k) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable best efforts
to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 22
Please confirm that the foregoing correctly sets forth the
agreement among the Company and you.
Very truly yours,
STC BROADCASTING, INC.
By:/s/ DAVID A. FITZ
-------------------------------------------
Name: David A. Fitz
Title: Senior Vice President,
Chief Financial Officer
and Secretary
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<PAGE> 23
Accepted:
CHASE SECURITIES INC.
By: /s/ Jeffrey L. Blumin
--------------------------
Authorized Signatory
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ Ian J. Hardington
--------------------------
Authorized Signatory
SCHRODER WERTHEIM & CO. INCORPORATED
By: /s/ Ethan S. Buyon
--------------------------
Authorized Signatory
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<PAGE> 24
ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a broker-
dealer in connection with resales of Exchange Securities received in exchange
for Securities where such Securities were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company
has agreed that, for a period of 90 days after the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
<PAGE> 25
ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE> 26
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 90 days after the Expiration Date,
it will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
_______________, 199_, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the Exchange Securities or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any broker-
dealer that resells Exchange Securities that were received by it for its own
account pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Securities and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
____________________
1. In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
<PAGE> 27
ANNEX D
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ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
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If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE> 1
EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of February 28, 1997 by and between Sunrise Television Corp., a
Delaware corporation (hereinafter, together with its successors, referred to as
the "Company"), and its Subsidiary, STC Broadcasting, Inc., a Delaware
corporation (hereinafter, together with its successors, referred to as "STC"),
on the one hand, and Robert N. Smith (hereinafter referred to as the
"Executive"), on the other hand.
WHEREAS, pursuant to an Asset Purchase Agreement (as hereinafter
defined) STC, has agreed to acquire (the "Acquisition") television broadcast
stations WEYI, Channel 25, in Saginaw, Michigan; WROC-TV, Channel 8, in
Rochester, New York; and KSBW, Channel 8, in Salinas, California (the foregoing
stations and such other stations as are owned, directly or indirectly, by the
Company, STC, or their Subsidiaries, from time to time, and including
television station WTOV-TV, Channel 9, Steubenville, Ohio, collectively, the
"Stations");
WHEREAS, the Company and STC desire to employ the Executive in an
executive capacity with the Company and STC, and the Executive desires to be
employed by the Company and STC in said capacity; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the
consummation of the Acquisition, the parties hereto hereby agree as follows:
1. Definitions.
(a) Accrued Benefits means (i) all salary earned
or accrued through the date the Executive's employment is terminated,
(ii) reimbursement for any and all monies advanced in connection with
the Executive's employment for reasonable and necessary expenses
incurred by the Executive through the date the Executive's employment
is terminated; and (iii) all other payments and benefits to which the
Executive may be entitled under the terms
<PAGE> 2
of any applicable compensation arrangement or benefit plan or program
of the Company or STC, including any earned and accrued, but unused
vacation pay.
(b) Act means the Securities Exchange Act of
1934, as amended.
(c) Affiliate has the meaning given such term in
Rule 12b-2 of the Act.
(d) Asset Purchase Agreement means that certain
Asset Purchase Agreement dated as of November 4, 1996, by and among
Smith Television of Michigan, L.P., Smith Television of Michigan
License, L.P., Smith Television of Rochester, L.P., Smith Television
of Rochester License, L.P., Smith Television of Salinas-Monterey,
L.P., Smith Television of Salinas-Monterey License, L.P., as Sellers,
and STC, formerly known as STV Acquisition Company, as Buyer.
(e) Board means, as long as the Company owns all
the capital stock of STC, the board of directors of the Company; in
all other cases, Board means the board of directors of STC.
(f) Cause means (i) the Executive's conviction of
any crime (other than minor traffic offenses and other similar minor
infractions), (ii) the Executive's breach of his obligations under
this Agreement, (iii) the Executive's insubordination or fraud or
dishonesty in connection with his employment, (iv) the Executive's
gross negligence or willful misconduct injurious to the Company, STC,
their Subsidiaries or the Stations, (v) the Executive's refusal to
perform his duties as an employee of the Company or STC for a reason
other than mental or physical disability, (vi) the breach by the
Company, STC, or their Subsidiaries of any financial covenant
contained in any agreement binding on the Company, STC, or their
Subsidiaries that is not waived prior to becoming a default or event
of default under such agreement, (vii) the breach by the Company, STC,
or their Subsidiaries of any covenant (other than a financial
covenant) in any agreement in respect of borrowed money that was
caused by the willful omission or commission of the Executive, or
(viii) the Stations' failure (taken as a group) to meet at least 90%
of their budget on a rolling two year basis, as such budget was
recommended by the Chief Executive Officer of the Company and approved
by the Board and the Partnership. Notwithstanding the above, the
occurrence of
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any of the events specified in clause (ii) above shall not constitute
Cause unless the Company or STC gives the Executive written notice
that such event constitutes Cause, and the Executive thereafter fails
to cure such event within 30 days after receipt of such notice.
(g) Change of Control shall have the meaning
given to such term in the Partnership Agreement.
(h) Class B Interests shall have the meaning
given to such term in the Partnership Agreement.
(i) COBRA means the Consolidated Omnibus
Reconciliation Act of 1985.
(j) DMA means a Designated Market Area as defined
by A.C. Nielson & Co.
(k) Employment Period means the period during
which the Executive is employed by the Company or STC
(l) Excluded Markets shall mean the following
DMAs: (i) Santa Barbara, California; (ii) Palm Springs, California;
(iii) Anchorage, Alaska; (iv) Fairbanks, Alaska, (v) Utica, New York,
(vi) Elmira, New York; (vii) Watertown, New York; and (ix) Binghamton,
New York.
(m) Excluded Stations means the acquisition,
ownership or investment, after the date hereof, by the Executive or
his Affiliate of up to three (3) television broadcast stations in DMAs
other than the Excluded Markets and those in which the Stations are
located, provided, however, that each opportunity to acquire or invest
in each such station by the Executive or his Affiliate (i) shall have
been presented to the Board in writing prior to such acquisition or
investment by the Executive or his Affiliate, and (ii) the Board shall
have declined in a reasonably prompt manner, in writing, to make such
acquisition or investment on behalf of the Company, STC or their
Subsidiaries.
(n) Good Reason means (i) any material breach by
the Company or STC of this Agreement, or (ii) any significant
reduction, approved by the Board without the Executive's written
consent, in the
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Executive's title, duties or responsibilities other than for Cause.
Notwithstanding the above, the occurrence of any of the events
described above will not constitute Good Reason unless the Executive
gives the Company and STC written notice within 30 days after the
occurrence of any of such events, that such event constitutes Good
Reason, and the Company or STC thereafter fails to cure the event
within 30 days after receipt of such notice.
(o) Hicks Muse means Hicks, Muse, Tate & Furst
Incorporated, a Delaware corporation, and its Affiliates and its and
their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such
family members).
(p) Partnership means Sunrise Television
Partners, L.P., a Delaware limited partnership.
(q) Partnership Agreement means the Limited
Partnership Agreement governing the Partnership, as the same may be
amended from time to time in accordance with its terms.
(r) Person means any "person", within the meaning
of Sections 13(d) and 14(d) of the Act, including a "group" as therein
defined.
(s) Subsidiary means, with respect to any Person,
any other Person of which such first Person owns the majority of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing a majority of the
votes ordinarily entitled to be cast for the election of directors or
other governing Persons.
2. Term of Employment. Unless earlier terminated in
accordance with the terms of this Agreement, the Executive's Employment Period
shall commence on the date of the consummation of the Acquisition (the
"Employment Date") and shall end upon the fifth anniversary of the Employment
Date; provided, however, that such Employment Period shall be extended for
successive terms of one year each unless either party advises the other, at
least 120 days prior to the end of the initial term or annual extension, as the
case may be, that it will not agree to extend this Agreement.
3. Duties. During the Employment Period, the Executive
(i) shall serve as President and Chief Executive Officer of the Company and
Chief Executive
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Officer of STC, (ii) shall report directly to the Board and to the Chairman of
the Board, (iii) shall, subject to and in accordance with the authority and
direction of the Board and the Chairman of the Board have such authority and
perform in a diligent and competent manner such duties as may be assigned to
him from time to time by the Board and the Chairman of the Board, and (iv)
shall devote his best efforts and such time, attention, knowledge and skill to
the operation of the Stations and to the other business and affairs of the
Company, STC, and their Subsidiaries as shall be necessary to manage and
supervise the Stations and the other business and affairs of the Company, STC
and their Subsidiaries. The Executive shall not, however, be required to
relocate his place of residence.
4. Compensation. During the Employment Period, the
Executive shall be compensated as follows:
(a) the Executive shall receive, at such
intervals and in accordance with such Company or STC policies as may
be in effect from time to time, an annual salary (pro rata for any
partial year) equal to $250,000.00, which salary shall be subject to
appropriate increase, as determined by the sole discretion of the
Board, as additional Stations are acquired by the Company, STC and
their Subsidiaries.
(b) the Executive shall be eligible to receive an
annual bonus for each fiscal year of the Company subsequent to 1996
calculated based upon criteria established by the Board at the
beginning of each fiscal year and adjusted from time to time;
(c) the Executive shall be reimbursed, at such
intervals and in accordance with such Company policies as may be in
effect from time to time, for any and all reasonable and necessary
business expenses incurred by him for the benefit of the Company, STC
and their Subsidiaries, including but not limited to travel expenses
and other expenses as reflected in budgets submitted and approved by
the Board from time to time; and
(d) the Executive shall be included, to the
extent eligible thereunder, in any and all plans providing general
benefits for the Company's or STC's employees (as approved by the
Board and in effect from time to time), including but not limited to,
group life insurance, accidental death and dismemberment insurance,
business travel accident insurance, disability, medical, dental,
pension/savings plans, and supplemental pension/savings
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<PAGE> 6
plans, and shall be provided any and all other benefits and
perquisites made available to other employees of comparable status and
position at the expense of the Company or STC on a comparable basis.
5. Termination of Employment.
(a) All Accrued Benefits to which the Executive
(or his estate or beneficiary) is entitled shall be payable in cash
promptly upon termination of his Employment Period, except as
otherwise specifically provided herein, or under the terms of any
applicable policy, plan or program.
(b) Any termination by the Company or STC, or by the
Executive, of the Employment Period shall be communicated by written
notice of such termination to the Executive, if such notice is
delivered by the Company or STC, and to the Company and STC if such
notice is delivered by the Executive, each in compliance with the
requirements of Paragraph 12 hereinbelow.
(c) If prior to the fourth anniversary of the
Employment Date, the Employment Period is terminated by the Executive
for Good Reason or by the Company or STC for any reason other than
Cause or the Executive's death, permanent disability (as defined in
the Company's or STC's Board-approved disability plan or policy, as in
effect from time to time) or retirement (as defined in the Company's
or STC's Board-approved retirement plan or policy, as in effect from
time to time), then, as his exclusive right and remedy in respect of
such termination:
(i) the Executive shall be entitled to
receive from the Company or STC his Accrued Benefits, except
that, for this purpose, Accrued Benefits shall not include any
entitlement to severance under any Company or STC severance
policy generally applicable to the Company's or STC's salaried
employees;
(ii) the Executive shall receive from the
Company or STC, as long as the Executive does not violate the
provisions of Paragraph 6 hereof and, if such termination is
as a result of a Change of Control pursuant to Paragraph 5(d)
hereof, as long as the Executive continues to abide by his
obligations pursuant to Paragraph 5(d), severance pay equal to
the Executive's then current monthly base
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salary, payable in accordance with the Company's or STC's
regular pay schedule, for 12 months from the date of
termination of employment or until the third anniversary of
the Employment Date, whichever is the longer period; and
(iii) the Executive shall continue to be
covered at the expense of the Company or STC by the same or
equivalent medical, dental, and life insurance coverages as in
effect for the Executive immediately prior to termination of
his employment, until the earlier of (A) the expiration of the
period for which he receives severance pay pursuant to clause
(ii) above or (B) the date the Executive has commenced new
employment and has thereby become eligible for comparable
benefits, subject to the Executive's rights under COBRA.
(d) In the event a Change of Control shall occur
prior to the fourth anniversary of the Employment Date, the Company
(or STC) or the Executive may, at either's option, terminate the
Executive's employment concurrently with such Change of Control, in
which case the Executive shall receive, as his exclusive right and
remedy in respect of such termination, the same benefits as stated in
clauses (i) through (iii) of Paragraph 5(c) hereinabove; provided that
the Executive agrees that he shall cooperate fully with any effort by
the Board to negotiate or enter into a transaction that would result
in a Change of Control, including, without limitation, participating
in meetings with prospective investors, acquirors or others, including
financing sources and legal and other advisors. In addition, the
Executive agrees that for a period of 6 months following a Change of
Control, the Executive will make himself reasonably available, upon
reasonable advance notice, to provide such reasonable transitional
assistance to the Person acquiring the Company or STC and its
Subsidiaries as a result of a Change of Control, as the Person whose
transaction has resulted in a Change of Control shall reasonably
request.
(e) Any amounts payable to the Executive in
installments pursuant to this Paragraph 5 may, at the option of
Company or STC, be paid in a lump sum rather than in installments as
provided above. In any event, all such amounts (whether paid in
installments or in a lump sum) shall be considered severance payments
and be in full and complete satisfaction of the obligations of the
Company or STC to the Executive in connection with the termination of
the Executive.
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<PAGE> 8
(f) Notwithstanding anything else contained
herein, if the Executive voluntarily terminates his employment without
Good Reason, or the Company or STC terminates the Executive for Cause
or the Executive is terminated by reason of death or disability, all
of his rights to severance from the Company or STC (including pursuant
to any plan or policy of the Company or STC) shall terminate
immediately, except the right to payment for Accrued Benefits (other
than severance) in respect of periods prior to such termination.
(g) Notwithstanding anything else contained
herein, the Partnership Agreement shall exclusively govern and control
the vesting and/or forfeiture of the Class B Interests held by
Executive or Executive's Affiliate in the Partnership.
6. Further Obligations of the Executive.
(a) During and following the Executive's employment
by the Company or STC, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, STC or
their Subsidiaries except to the extent authorized in writing by the
Board or required by any court or administrative agency, other than to
an employee of the Company, STC or their Subsidiaries or a Person to
whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of duties as an executive of the
Company or STC. Confidential information shall not include any
information known generally to the public. All records, files,
documents and materials, or copies thereof, relating to the Company's,
STC's or their Subsidiaries' business which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company, STC, or their Subsidiaries, as the case
may be, and shall be promptly returned by the Executive to the owner
upon termination of the Executive's employment with the Company and
STC.
(b) Except with the Board's prior written
approval, during the Employment Period and for two years (or one year,
if Hicks Muse and its Affiliates cease to own, directly or indirectly,
any of the Stations) after the termination of the Employment Period or
during any time the Executive is receiving severance payments under
this Agreement, the Executive shall not, directly or indirectly:
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(i) solicit, entice, persuade or induce
any employee of the Company, STC or their Subsidiaries to
terminate his employment by the Company, STC or their
Subsidiaries or to become employed by any Person other than
the Company, STC or their Subsidiaries; or
(ii) approach any such employee for any
of the foregoing purposes; or
(iii) authorize, solicit or assist in the
taking of such actions by any third party.
(c) During the Employment Period and for two
years (or one year, if Hicks Muse or its Affiliates cease to own,
directly or indirectly, any of the Stations after the termination of
the Employment Period and during any time the Executive is receiving
severance payments under this Agreement, the Executive shall not,
directly or indirectly, engage, participate, make any financial
investment in, or become employed by or render advisory or other
services to or for any Person or other business enterprise
(other than the Company, STC and their Subsidiaries and Affiliates)
having or operating a television station within the DMA of any of the
Stations, other than a television station in the Excluded Markets and
any Excluded Station (any of the foregoing activities being referred
to herein as "Competitive Activities"). The foregoing covenant
respecting Competitive Activities shall not be construed to preclude
the Executive from (i) making any investments (that are non-
attributable interests under the rules, regulations or policies of the
Federal Communications Commission) in the securities of any company,
whether or not engaged in competition with the Company, STC or their
Subsidiaries, to the extent that such securities are actively traded
on a national securities exchange or in the over-the-counter market in
the United States or any foreign securities exchange and such
investment does not exceed one percent of the issued and outstanding
shares of such company or give the Executive the right or power to
control or participate directly in making the policy decisions of such
company, or (ii) during the second year after the termination of the
Employment Period only (to the extent applicable in the event Hicks
Muse or its Affiliates continue to own directly or indirectly any of
the Stations), becoming employed by or rendering advisory or other
services to or for any Person or other business enterprise having or
operating a number of television broadcasting stations in a number of
different DMAs, one or more of which are located within the DMA of any
of the Stations, provided that (A) no more than 25% of the broadcast
cash flow generated by such Person or other
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business enterprise is derived from television broadcast stations
located with the DMAs of any of the Stations and (B) the Executive
does not work directly for the television broadcast stations located
within the DMA's of any of the Stations.
(d) If any court determines that any portion of
this Paragraph 6 is invalid or unenforceable, the remainder of this
Paragraph 6 shall not thereby be affected and shall be given full
effect without regard to the invalid provisions. If any court
construes any of the provisions of this Paragraph 6, or any part
thereof, to be unreasonable because of the duration or scope of such
provision, such court shall have the power to reduce the duration or
scope of such provision and to enforce such provision as so reduced.
(e) The Executive hereby acknowledges and agrees
that damages will not be an adequate remedy for the Executive's breach
of any of his covenants contained in this Paragraph 6, and further
agrees that the Company and STC and their Subsidiaries shall be
entitled to obtain appropriate injunctive and/or other equitable
relief for any such breach, without the posting of any bond or other
security.
7. Successors. The Company or STC may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company or STC, by merger or otherwise, and may assign or encumber this
Agreement and its rights hereunder as security for indebtedness of the Company
and STC and their Subsidiaries. Any such assignment by the Company or STC
shall remain subject to the Executive's rights under Paragraph 5 hereof. The
rights of Executive under this Agreement may not be assigned or encumbered by
the Executive, voluntarily or involuntarily, during his lifetime, and any such
purported assignment shall be void ab initio. However, all rights of the
Executive under this Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, estates, executors,
administrators, heirs and beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs or representatives.
8. Enforcement. The provisions of this Agreement shall
be regarded as divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
9. Amendment. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board,
consented to in writing by the
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Partnership, and executed by the Company and STC and the Executive; provided,
however, that any attempted amendment or modification without such approval,
consent and execution shall be null and void ab initio and of no effect.
10. Payments Due Under this Agreement. Any payments due
or required to be made pursuant to the terms of this Agreement may be made by
the Company, STC or its Subsidiaries as determined in the sole discretion of
the Board.
11. Withholding. The Company and STC shall be entitled
to withhold from any amounts to be paid to the Executive hereunder any federal,
state, local, or foreign withholding or other taxes or charges which it is from
time to time required to withhold. The Company and STC shall be entitled to
rely on an opinion of counsel if any question as to the amount or requirement
of any such withholding shall arise.
12. Controlling Provision. Notwithstanding any other
provision hereof, as long as STC continues to only own non-voting securities in
Smith Acquisition Company, the Board shall have no authority to direct or
control the management of Smith Acquisition Company or television broadcast
station WTOV-TV, Channel 9, Steubenville, Ohio.
13. Governing Law. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to principles of conflicts of law of
Texas or any other jurisdiction.
14. Notice. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and if mailed,
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid:
If to the Company:
Sunrise Television Corp.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
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If to STC:
STC Broadcasting, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
If to the Executive:
Robert N. Smith
127 El Paseo
Santa Barbara, California 93101
or to such other address as the party to be notified shall have given to the
other.
15. No Waiver. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
16. Headings. The headings herein contained are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
SUNRISE TELEVISION CORP.
By: /s/ FREDERICK W. BRAZELTON
---------------------------------------------------
Frederick W. Brazelton
Vice President
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
---------------------------------------------------
Frederick W. Brazelton
Vice President
EXECUTIVE:
/s/ ROBERT N. SMITH
------------------------------------------------------
Robert N. Smith
Signature Page to Executive Employment Agreement
<PAGE> 1
EXHIBIT 10.6
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of February 28, 1997 by and between Sunrise Television Corp., a
Delaware corporation (hereinafter, together with its successors, referred to as
the "Company"), and its Subsidiary, STC Broadcasting, Inc., a Delaware
corporation (hereinafter, together with its successors, referred to as "STC"),
on the one hand, and David A. Fitz (hereinafter referred to as the
"Executive"), on the other hand.
WHEREAS, pursuant to an Asset Purchase Agreement (as hereinafter
defined) STC, has agreed to acquire (the "Acquisition") television broadcast
stations WEYI, Channel 25, in Saginaw, Michigan; WROC-TV, Channel 8, in
Rochester, New York; and KSBW, Channel 8, in Salinas, California (the foregoing
stations and such other stations as are owned, directly or indirectly, by the
Company, STC, or their Subsidiaries, from time to time, and including
television station WTOV-TV, Channel 9, Steubenville, Ohio, collectively, the
"Stations");
WHEREAS, the Company and STC desire to employ the Executive in an
executive capacity with the Company and STC, and the Executive desires to be
employed by the Company and STC in said capacity; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the
consummation of the Acquisition, the parties hereto hereby agree as follows:
1. Definitions.
(a) Accrued Benefits means (i) all salary earned
or accrued through the date the Executive's employment is terminated,
(ii) reimbursement for any and all monies advanced in connection with
the Executive's employment for reasonable and necessary expenses
incurred by the Executive through the date the Executive's employment
is terminated; and (iii) all other payments and benefits to which the
Executive may be entitled under the terms
<PAGE> 2
of any applicable compensation arrangement or benefit plan or program
of the Company or STC, including any earned and accrued, but unused
vacation pay.
(b) Act means the Securities Exchange Act of
1934, as amended.
(c) Affiliate has the meaning given such term in
Rule 12b-2 of the Act.
(d) Asset Purchase Agreement means that certain
Asset Purchase Agreement dated as of November 4, 1996, by and among
Smith Television of Michigan, L.P., Smith Television of Michigan
License, L.P., Smith Television of Rochester, L.P., Smith Television
of Rochester License, L.P., Smith Television of Salinas-Monterey,
L.P., Smith Television of Salinas-Monterey License, L.P., as Sellers,
and STC, formerly known as STV Acquisition Company, as Buyer.
(e) Board means, as long as the Company owns all
the capital stock of STC, the board of directors of the Company; in
all other cases, Board means the board of directors of STC.
(f) Cause means (i) the Executive's conviction of
any crime (other than minor traffic offenses and other similar minor
infractions), (ii) the Executive's breach of his obligations under
this Agreement, (iii) the Executive's insubordination or fraud or
dishonesty in connection with his employment, (iv) the Executive's
gross negligence or willful misconduct injurious to the Company, STC,
their Subsidiaries or the Stations, (v) the Executive's refusal to
perform his duties as an employee of the Company or STC for a reason
other than mental or physical disability, (vi) the breach by the
Company, STC, or their Subsidiaries of any financial covenant
contained in any agreement binding on the Company, STC, or their
Subsidiaries that is not waived prior to becoming a default or event
of default under such agreement, (vii) the breach by the Company, STC,
or their Subsidiaries of any covenant (other than a financial
covenant) in any agreement in respect of borrowed money that was
caused by the willful omission or commission of the Executive, or
(viii) the Stations' failure (taken as a group) to meet at least 90%
of their budget on a rolling two year basis, as such budget was
recommended by the Chief Executive Officer of the Company and approved
by the Board and the Partnership. Notwithstanding the above, the
occurrence of
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any of the events specified in clause (ii) above shall not constitute
Cause unless the Company or STC gives the Executive written notice
that such event constitutes Cause, and the Executive thereafter fails
to cure such event within 30 days after receipt of such notice.
(g) Change of Control shall have the meaning
given to such term in the Partnership Agreement.
(h) Class B Interests shall have the meaning
given to such term in the Partnership Agreement.
(i) COBRA means the Consolidated Omnibus
Reconciliation Act of 1985.
(j) DMA means a Designated Market Area as defined
by A.C. Nielson & Co.
(k) Employment Period means the period during
which the Executive is employed by the Company or STC
(l) Excluded Markets shall mean the following
DMAs: (i) Santa Barbara, California; (ii) Palm Springs, California;
(iii) Anchorage, Alaska; (iv) Fairbanks, Alaska, (v) Utica, New York,
(vi) Elmira, New York; (vii) Watertown, New York; and (ix) Binghamton,
New York.
(m) Excluded Stations means the acquisition,
ownership or investment, after the date hereof, by Smith or his
Affiliate of up to three (3) television broadcast stations in DMAs
other than the Excluded Markets and those in which the Stations are
located, provided, however, that each opportunity to acquire or invest
in each such station by Robert N. Smith ("Smith") or his Affiliate (i)
shall have been presented to the Board in writing prior to such
acquisition or investment by Smith or his Affiliate, and (ii) the
Board shall have declined in a reasonably prompt manner, in writing,
to make such acquisition or investment on behalf of the Company, STC
or their Subsidiaries.
(n) Good Reason means (i) any material breach by
the Company or STC of this Agreement, or (ii) any significant
reduction, approved by the Board without the Executive's written
consent, in the
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Executive's title, duties or responsibilities other than for Cause.
Notwithstanding the above, the occurrence of any of the events
described above will not constitute Good Reason unless the Executive
gives the Company and STC written notice within 30 days after the
occurrence of any of such events, that such event constitutes Good
Reason, and the Company or STC thereafter fails to cure the event
within 30 days after receipt of such notice.
(o) Hicks Muse means Hicks, Muse, Tate & Furst
Incorporated, a Delaware corporation, and its Affiliates and its and
their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such
family members).
(p) Partnership means Sunrise Television
Partners, L.P., a Delaware limited partnership.
(q) Partnership Agreement means the Limited
Partnership Agreement governing the Partnership, as the same may be
amended from time to time in accordance with its terms.
(r) Person means any "person", within the meaning
of Sections 13(d) and 14(d) of the Act, including a "group" as therein
defined.
(s) Subsidiary means, with respect to any Person,
any other Person of which such first Person owns the majority of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing a majority of the
votes ordinarily entitled to be cast for the election of directors or
other governing Persons.
2. Term of Employment. Unless earlier terminated in
accordance with the terms of this Agreement, the Executive's Employment Period
shall commence on the date of the consummation of the Acquisition (the
"Employment Date") and shall end upon the fifth anniversary of the Employment
Date; provided, however, that such Employment Period shall be extended for
successive terms of one year each unless either party advises the other, at
least 120 days prior to the end of the initial term or annual extension, as the
case may be, that it will not agree to extend this Agreement.
3. Duties. During the Employment Period, the Executive
(i) shall serve as Senior Vice President and Chief Financial Officer of the
Company and STC,
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<PAGE> 5
(ii) shall report directly to the Chief Operating Officer of STC and the Chief
Executive Officer of the Company, (iii) shall, subject to and in accordance
with the authority and direction of the Board and the Chairman of the Board
have such authority and perform in a diligent and competent manner such duties
as may be assigned to him from time to time by the Chief Executive Officer of
the Company and the Chief Operating Officer of STC, and (iv) shall devote his
best efforts and his working time, attention, knowledge and skill solely to the
operation of the Stations and to the other business and affairs of the Company,
STC and their Subsidiaries; provided, however, that the Executive shall be
permitted to devote reasonable time to advisory services and oversight duties
in connection with Smith's investments in Excluded Markets and any acquisitions
or investments subsequent to the date hereof in Excluded Stations. The
Executive shall not, however, be required to relocate his place of residence.
4. Compensation. During the Employment Period, the
Executive shall be compensated as follows:
(a) the Executive shall receive, at such
intervals and in accordance with such Company or STC policies as may
be in effect from time to time, an annual salary (pro rata for any
partial year) equal to $250,000.00, which salary shall be subject to
appropriate increase, as determined by the sole discretion of the
Board, as additional Stations are acquired by the Company, STC and
their Subsidiaries.
(b) the Executive shall be eligible to receive an
annual bonus for each fiscal year of the Company subsequent to 1996
calculated based upon criteria established by the Board at the
beginning of each fiscal year and adjusted from time to time;
(c) the Executive shall be reimbursed, at such
intervals and in accordance with such Company policies as may be in
effect from time to time, for any and all reasonable and necessary
business expenses incurred by him for the benefit of the Company, STC
and their Subsidiaries, including but not limited to travel expenses
and other expenses as reflected in budgets submitted and approved by
the Board from time to time; and
(d) the Executive shall be included, to the
extent eligible thereunder, in any and all plans providing general
benefits for the Company's or STC's employees (as approved by the
Board and in effect from time to
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<PAGE> 6
time), including but not limited to, group life insurance, accidental
death and dismemberment insurance, business travel accident insurance,
disability, medical, dental, pension/savings plans, and supplemental
pension/savings plans, and shall be provided any and all other
benefits and perquisites made available to other employees of
comparable status and position at the expense of the Company or STC on
a comparable basis.
5. Termination of Employment.
(a) All Accrued Benefits to which the Executive
(or his estate or beneficiary) is entitled shall be payable in cash
promptly upon termination of his Employment Period, except as
otherwise specifically provided herein, or under the terms of any
applicable policy, plan or program.
(b) Any termination by the Company or STC, or by the
Executive, of the Employment Period shall be communicated by written
notice of such termination to the Executive, if such notice is
delivered by the Company or STC, and to the Company and STC if such
notice is delivered by the Executive, each in compliance with the
requirements of Paragraph 12 hereinbelow.
(c) If prior to the fourth anniversary of the
Employment Date, the Employment Period is terminated by the Executive
for Good Reason or by the Company or STC for any reason other than
Cause or the Executive's death, permanent disability (as defined in
the Company's or STC's Board-approved disability plan or policy, as in
effect from time to time) or retirement (as defined in the Company's
or STC's Board-approved retirement plan or policy, as in effect from
time to time), then, as his exclusive right and remedy in respect of
such termination:
(i) the Executive shall be entitled to
receive from the Company or STC his Accrued Benefits, except
that, for this purpose, Accrued Benefits shall not include any
entitlement to severance under any Company or STC severance
policy generally applicable to the Company's or STC's salaried
employees;
(ii) the Executive shall receive from the
Company or STC, as long as the Executive does not violate the
provisions of Paragraph 6 hereof and, if such termination is
as a result of a Change
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<PAGE> 7
of Control pursuant to Paragraph 5(d) hereof, as long as the
Executive continues to abide by his obligations pursuant to
Paragraph 5(d), severance pay equal to the Executive's then
current monthly base salary, payable in accordance with the
Company's or STC's regular pay schedule, for 12 months from
the date of termination of employment or until the third
anniversary of the Employment Date, whichever is the longer
period; and
(iii) the Executive shall continue to be
covered at the expense of the Company or STC by the same or
equivalent medical, dental, and life insurance coverages as in
effect for the Executive immediately prior to termination of
his employment, until the earlier of (A) the expiration of the
period for which he receives severance pay pursuant to clause
(ii) above or (B) the date the Executive has commenced new
employment and has thereby become eligible for comparable
benefits, subject to the Executive's rights under COBRA.
(d) In the event a Change of Control shall occur
prior to the fourth anniversary of the Employment Date, the Company
(or STC) or the Executive may, at either's option, terminate the
Executive's employment concurrently with such Change of Control, in
which case the Executive shall receive, as his exclusive right and
remedy in respect of such termination, the same benefits as stated in
clauses (i) through (iii) of Paragraph 5(c) hereinabove; provided that
the Executive agrees that he shall cooperate fully with any effort by
the Board to negotiate or enter into a transaction that would result
in a Change of Control, including, without limitation, participating
in meetings with prospective investors, acquirors or others, including
financing sources and legal and other advisors. In addition, the
Executive agrees that for a period of 6 months following a Change of
Control, the Executive will make himself reasonably available, upon
reasonable advance notice, to provide such reasonable transitional
assistance to the Person acquiring the Company or STC and its
Subsidiaries as a result of a Change of Control, as the Person whose
transaction has resulted in a Change of Control shall reasonably
request.
(e) Any amounts payable to the Executive in
installments pursuant to this Paragraph 5 may, at the option of
Company or STC, be paid in a lump sum rather than in installments as
provided above. In any event, all such amounts (whether paid in
installments or in a lump sum) shall be
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<PAGE> 8
considered severance payments and be in full and complete satisfaction
of the obligations of the Company or STC to the Executive in
connection with the termination of the Executive.
(f) Notwithstanding anything else contained
herein, if the Executive voluntarily terminates his employment without
Good Reason, or the Company or STC terminates the Executive for Cause
or the Executive is terminated by reason of death or disability, all
of his rights to severance from the Company or STC (including pursuant
to any plan or policy of the Company or STC) shall terminate
immediately, except the right to payment for Accrued Benefits (other
than severance) in respect of periods prior to such termination.
(g) Notwithstanding anything else contained
herein, the Partnership Agreement shall exclusively govern and control
the vesting and/or forfeiture of the Class B Interests held by
Executive or Executive's Affiliate in the Partnership.
6. Further Obligations of the Executive.
(a) During and following the Executive's employment
by the Company or STC, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, STC or
their Subsidiaries except to the extent authorized in writing by the
Board or required by any court or administrative agency, other than to
an employee of the Company, STC or their Subsidiaries or a Person to
whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of duties as an executive of the
Company or STC. Confidential information shall not include any
information known generally to the public. All records, files,
documents and materials, or copies thereof, relating to the Company's,
STC's or their Subsidiaries' business which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company, STC, or their Subsidiaries, as the case
may be, and shall be promptly returned by the Executive to the owner
upon termination of the Executive's employment with the Company and
STC.
(b) Except with the Board's prior written
approval, during the Employment Period and for two years (or one year,
if Hicks Muse and its
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<PAGE> 9
Affiliates cease to own, directly or indirectly, any of the Stations)
after the termination of the Employment Period or during any time the
Executive is receiving severance payments under this Agreement, the
Executive shall not, directly or indirectly:
(i) solicit, entice, persuade or induce
any employee of the Company, STC or their Subsidiaries to
terminate his employment by the Company, STC or their
Subsidiaries or to become employed by any Person other than
the Company, STC or their Subsidiaries; or
(ii) approach any such employee for any
of the foregoing purposes; or
(iii) authorize, solicit or assist in the
taking of such actions by any third party.
(c) During the Employment Period and for two
years (or one year, if Hicks Muse or its Affiliates cease to own,
directly or indirectly, any of the Stations after the termination of
the Employment Period and during any time the Executive is receiving
severance payments under this Agreement, the Executive shall not,
directly or indirectly, engage, participate, make any financial
investment in, or become employed by or render advisory or other
services to or for any Person or other business enterprise (other than
the Company, STC and their Subsidiaries and Affiliates) having or
operating a television station within the DMA of any of the Stations,
other than a television station in the Excluded Markets and any
Excluded Station (any of the foregoing activities being referred to
herein as "Competitive Activities"). The foregoing covenant
respecting Competitive Activities shall not be construed to preclude
the Executive from (i) making any investments (that are
non-attributable interests under the rules, regulations or policies of
the Federal Communications Commission) in the securities of any
company, whether or not engaged in competition with the Company, STC
or their Subsidiaries, to the extent that such securities are actively
traded on a national securities exchange or in the over-the-counter
market in the United States or any foreign securities exchange and
such investment does not exceed one percent of the issued and
outstanding shares of such company or give the Executive the right or
power to control or participate directly in making the policy
decisions of such company, or (ii) during the second year after the
termination of the Employment Period only (to the extent applicable in
the event Hicks Muse or
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<PAGE> 10
its Affiliates continue to own directly or indirectly any of the
Stations), becoming employed by or rendering advisory or other
services to or for any Person or other business enterprise having or
operating a number of television broadcasting stations in a number of
different DMAs, one or more of which are located within the DMA of any
of the Stations, provided that (A) no more than 25% of the broadcast
cash flow generated by such Person or other business enterprise is
derived from television broadcast stations located with the DMAs of
any of the Stations and (B) the Executive does not work directly for
the television broadcast stations located within the DMA's of any of
the Stations.
(d) If any court determines that any portion of
this Paragraph 6 is invalid or unenforceable, the remainder of this
Paragraph 6 shall not thereby be affected and shall be given full
effect without regard to the invalid provisions. If any court
construes any of the provisions of this Paragraph 6, or any part
thereof, to be unreasonable because of the duration or scope of such
provision, such court shall have the power to reduce the duration or
scope of such provision and to enforce such provision as so reduced.
(e) The Executive hereby acknowledges and agrees
that damages will not be an adequate remedy for the Executive's breach
of any of his covenants contained in this Paragraph 6, and further
agrees that the Company and STC and their Subsidiaries shall be
entitled to obtain appropriate injunctive and/or other equitable
relief for any such breach, without the posting of any bond or other
security.
7. Successors. The Company or STC may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company or STC, by merger or otherwise, and may assign or encumber this
Agreement and its rights hereunder as security for indebtedness of the Company
and STC and their Subsidiaries. Any such assignment by the Company or STC
shall remain subject to the Executive's rights under Paragraph 5 hereof. The
rights of Executive under this Agreement may not be assigned or encumbered by
the Executive, voluntarily or involuntarily, during his lifetime, and any such
purported assignment shall be void ab initio. However, all rights of the
Executive under this Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, estates, executors,
administrators, heirs and beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs or representatives.
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8. Enforcement. The provisions of this Agreement shall
be regarded as divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
9. Amendment. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board,
consented to in writing by the Partnership, and executed by the Company and STC
and the Executive; provided, however, that any attempted amendment or
modification without such approval, consent and execution shall be null and
void ab initio and of no effect.
10. Payments Due Under this Agreement. Any payments due
or required to be made pursuant to the terms of this Agreement may be made by
the Company, STC or its Subsidiaries as determined in the sole discretion of
the Board.
11. Withholding. The Company and STC shall be entitled
to withhold from any amounts to be paid to the Executive hereunder any federal,
state, local, or foreign withholding or other taxes or charges which it is from
time to time required to withhold. The Company and STC shall be entitled to
rely on an opinion of counsel if any question as to the amount or requirement
of any such withholding shall arise.
12. Controlling Provision. Notwithstanding any other
provision hereof, as long as STC continues to only own non-voting securities in
Smith Acquisition Company, the Board shall have no authority to direct or
control the management of Smith Acquisition Company or television broadcast
station WTOV-TV, Channel 9, Steubenville, Ohio.
13. Governing Law. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to principles of conflicts of law of
Texas or any other jurisdiction.
14. Notice. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and if mailed,
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid:
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If to the Company:
Sunrise Television Corp.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
If to STC:
STC Broadcasting, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
If to the Executive:
David A. Fitz
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
or to such other address as the party to be notified shall have given to the
other.
15. No Waiver. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
16. Headings. The headings herein contained are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
SUNRISE TELEVISION CORP.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton,
Vice President
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton,
Vice President
EXECUTIVE:
/s/ DAVID A. FITZ
----------------------------------------
David A. Fitz
<PAGE> 1
EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of February 28, 1997 by and between Sunrise Television Corp., a
Delaware corporation (hereinafter, together with its successors, referred to as
the "Company"), and its Subsidiary, STC Broadcasting, Inc., a Delaware
corporation (hereinafter, together with its successors, referred to as "STC"),
on the one hand, and Sandy DiPasquale (hereinafter referred to as the
"Executive"), on the other hand.
WHEREAS, pursuant to an Asset Purchase Agreement (as hereinafter
defined) STC, has agreed to acquire (the "Acquisition") television broadcast
stations WEYI, Channel 25, in Saginaw, Michigan; WROC-TV, Channel 8, in
Rochester, New York; and KSBW, Channel 8, in Salinas, California (the foregoing
stations and such other stations as are owned, directly or indirectly, by the
Company, STC, or their Subsidiaries, from time to time, and including
television station WTOV-TV, Channel 9, Steubenville, Ohio, collectively, the
"Stations");
WHEREAS, the Company and STC desire to employ the Executive in an
executive capacity with the Company and STC, and the Executive desires to be
employed by the Company and STC in said capacity; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the
consummation of the Acquisition, the parties hereto hereby agree as follows:
1. Definitions.
(a) Accrued Benefits means (i) all salary earned
or accrued through the date the Executive's employment is terminated,
(ii) reimbursement for any and all monies advanced in connection with
the Executive's employment for reasonable and necessary expenses
incurred by the Executive through the date the Executive's employment
is terminated; and (iii) all other payments and benefits to which the
Executive may be entitled under the terms
<PAGE> 2
of any applicable compensation arrangement or benefit plan or program
of the Company or STC, including any earned and accrued, but unused
vacation pay.
(b) Act means the Securities Exchange Act of
1934, as amended.
(c) Affiliate has the meaning given such term in
Rule 12b-2 of the Act.
(d) Asset Purchase Agreement means that certain
Asset Purchase Agreement dated as of November 4, 1996, by and among
Smith Television of Michigan, L.P., Smith Television of Michigan
License, L.P., Smith Television of Rochester, L.P., Smith Television
of Rochester License, L.P., Smith Television of Salinas-Monterey,
L.P., Smith Television of Salinas-Monterey License, L.P., as Sellers,
and STC, formerly known as STV Acquisition Company, as Buyer.
(e) Board means, as long as the Company owns all
the capital stock of STC, the board of directors of the Company; in
all other cases, Board means the board of directors of STC.
(f) Cause means (i) the Executive's conviction of
any crime (other than minor traffic offenses and other similar minor
infractions), (ii) the Executive's breach of his obligations under
this Agreement, (iii) the Executive's insubordination or fraud or
dishonesty in connection with his employment, (iv) the Executive's
gross negligence or willful misconduct injurious to the Company, STC,
their Subsidiaries or the Stations, (v) the Executive's refusal to
perform his duties as an employee of the Company or STC for a reason
other than mental or physical disability, (vi) the breach by the
Company, STC, or their Subsidiaries of any financial covenant
contained in any agreement binding on the Company, STC, or their
Subsidiaries that is not waived prior to becoming a default or event
of default under such agreement, (vii) the breach by the Company, STC,
or their Subsidiaries of any covenant (other than a financial
covenant) in any agreement in respect of borrowed money that was
caused by the willful omission or commission of the Executive, or
(viii) the Stations' failure (taken as a group) to meet at least 90%
of their budget on a rolling two year basis, as such budget was
recommended by the Chief Executive Officer of the Company and approved
by the Board and the Partnership. Notwithstanding the above, the
occurrence of
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any of the events specified in clause (ii) above shall not constitute
Cause unless the Company or STC gives the Executive written notice
that such event constitutes Cause, and the Executive thereafter fails
to cure such event within 30 days after receipt of such notice.
(g) Change of Control shall have the meaning
given to such term in the Partnership Agreement.
(h) Class B Interests shall have the meaning
given to such term in the Partnership Agreement.
(i) COBRA means the Consolidated Omnibus
Reconciliation Act of 1985.
(j) DMA means a Designated Market Area as defined
by A.C. Nielson & Co.
(k) Employment Period means the period during
which the Executive is employed by the Company or STC
(l) Good Reason means (i) any material breach by
the Company or STC of this Agreement, or (ii) any significant
reduction, approved by the Board without the Executive's written
consent, in the Executive's title, duties or responsibilities other
than for Cause. Notwithstanding the above, the occurrence of any of
the events described above will not constitute Good Reason unless the
Executive gives the Company and STC written notice within 30 days
after the occurrence of any of such events, that such event
constitutes Good Reason, and the Company or STC thereafter fails to
cure the event within 30 days after receipt of such notice.
(m) Hicks Muse means Hicks, Muse, Tate & Furst
Incorporated, a Delaware corporation, and its Affiliates and its and
their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such
family members).
(n) Partnership means Sunrise Television
Partners, L.P., a Delaware limited partnership.
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(o) Partnership Agreement means the Limited
Partnership Agreement governing the Partnership, as the same may be
amended from time to time in accordance with its terms.
(p) Person means any "person", within the meaning
of Sections 13(d) and 14(d) of the Act, including a "group" as therein
defined.
(q) Subsidiary means, with respect to any Person,
any other Person of which such first Person owns the majority of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing a majority of the
votes ordinarily entitled to be cast for the election of directors or
other governing Persons.
2. Term of Employment. Unless earlier terminated in
accordance with the terms of this Agreement, the Executive's Employment Period
shall commence on the date of the consummation of the Acquisition (the
"Employment Date") and shall end upon the fifth anniversary of the Employment
Date; provided, however, that such Employment Period shall be extended for
successive terms of one year each unless either party advises the other, at
least 120 days prior to the end of the initial term or annual extension, as the
case may be, that it will not agree to extend this Agreement.
3. Duties. During the Employment Period, the Executive
(i) shall serve as Executive Vice President and Chief Operating Officer of the
Company and the President and Chief Operating Officer of STC, (ii) shall report
directly, as long as Robert N. Smith ("Smith") remains the Chief Executive
Officer of the Company, to the Chief Executive Officer of the Company and at
any time thereafter, to the Board and the Chairman of the Board, (iii) shall,
subject to and in accordance with the authority and direction of the Board and
the Chairman of the Board have such authority and perform in a diligent and
competent manner such duties as may be assigned to him from time to time by the
Chief Executive Officer of the Company, as long as Smith remains the Chief
Executive Officer of the Company, and at any time thereafter, the Board and the
Chairman of the Board, and (iv) shall devote his best efforts and his working
time, attention, knowledge and skill solely to the operation of the Stations
and to the other business and affairs of the Company, STC and their
Subsidiaries. The Executive shall not, however, be required to relocate his
place of residence.
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<PAGE> 5
4. Compensation. During the Employment Period, the
Executive shall be compensated as follows:
(a) the Executive shall receive, at such
intervals and in accordance with such Company or STC policies as may
be in effect from time to time, an annual salary (pro rata for any
partial year) equal to $250,000.00, which salary shall be subject to
appropriate increase, as determined by the sole discretion of the
Board, as additional Stations are acquired by the Company, STC and
their Subsidiaries.
(b) the Executive shall be eligible to receive an
annual bonus for each fiscal year of the Company subsequent to 1996
calculated based upon criteria established by the Board at the
beginning of each fiscal year and adjusted from time to time;
(c) the Executive shall be reimbursed, at such
intervals and in accordance with such Company policies as may be in
effect from time to time, for any and all reasonable and necessary
business expenses incurred by him for the benefit of the Company, STC
and their Subsidiaries, including but not limited to travel expenses
and other expenses as reflected in budgets submitted and approved by
the Board from time to time; and
(d) the Executive shall be included, to the
extent eligible thereunder, in any and all plans providing general
benefits for the Company's or STC's employees (as approved by the
Board and in effect from time to time), including but not limited to,
group life insurance, accidental death and dismemberment insurance,
business travel accident insurance, disability, medical, dental,
pension/savings plans, and supplemental pension/savings plans, and
shall be provided any and all other benefits and perquisites made
available to other employees of comparable status and position at the
expense of the Company or STC on a comparable basis.
5. Termination of Employment.
(a) All Accrued Benefits to which the Executive
(or his estate or beneficiary) is entitled shall be payable in cash
promptly upon termination of his Employment Period, except as
otherwise specifically provided herein, or under the terms of any
applicable policy, plan or program.
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(b) Any termination by the Company or STC, or by the
Executive, of the Employment Period shall be communicated by written
notice of such termination to the Executive, if such notice is
delivered by the Company or STC, and to the Company and STC if such
notice is delivered by the Executive, each in compliance with the
requirements of Paragraph 12 hereinbelow.
(c) If prior to the fourth anniversary of the
Employment Date, the Employment Period is terminated by the Executive
for Good Reason or by the Company or STC for any reason other than
Cause or the Executive's death, permanent disability (as defined in
the Company's or STC's Board-approved disability plan or policy, as in
effect from time to time) or retirement (as defined in the Company's
or STC's Board-approved retirement plan or policy, as in effect from
time to time), then, as his exclusive right and remedy in respect of
such termination:
(i) the Executive shall be entitled to
receive from the Company or STC his Accrued Benefits, except
that, for this purpose, Accrued Benefits shall not include any
entitlement to severance under any Company or STC severance
policy generally applicable to the Company's or STC's salaried
employees;
(ii) the Executive shall receive from the
Company or STC, as long as the Executive does not violate the
provisions of Paragraph 6 hereof and, if such termination is
as a result of a Change of Control pursuant to Paragraph 5(d)
hereof, as long as the Executive continues to abide by his
obligations pursuant to Paragraph 5(d), severance pay equal to
the Executive's then current monthly base salary, payable in
accordance with the Company's or STC's regular pay schedule,
for 12 months from the date of termination of employment or
until the third anniversary of the Employment Date, whichever
is the longer period; and
(iii) the Executive shall continue to be
covered at the expense of the Company or STC by the same or
equivalent medical, dental, and life insurance coverages as in
effect for the Executive immediately prior to termination of
his employment, until the earlier of (A) the expiration of the
period for which he receives severance pay pursuant to clause
(ii) above or (B) the date the Executive has
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<PAGE> 7
commenced new employment and has thereby become eligible for
comparable benefits, subject to the Executive's rights under
COBRA.
(d) In the event a Change of Control shall occur
prior to the fourth anniversary of the Employment Date, the Company
(or STC) or the Executive may, at either's option, terminate the
Executive's employment concurrently with such Change of Control, in
which case the Executive shall receive, as his exclusive right and
remedy in respect of such termination, the same benefits as stated in
clauses (i) through (iii) of Paragraph 5(c) hereinabove; provided that
the Executive agrees that he shall cooperate fully with any effort by
the Board to negotiate or enter into a transaction that would result
in a Change of Control, including, without limitation, participating
in meetings with prospective investors, acquirors or others, including
financing sources and legal and other advisors. In addition, the
Executive agrees that for a period of 6 months following a Change of
Control, the Executive will make himself reasonably available, upon
reasonable advance notice, to provide such reasonable transitional
assistance to the Person acquiring the Company or STC and its
Subsidiaries as a result of a Change of Control, as the Person whose
transaction has resulted in a Change of Control shall reasonably
request.
(e) Any amounts payable to the Executive in
installments pursuant to this Paragraph 5 may, at the option of
Company or STC, be paid in a lump sum rather than in installments as
provided above. In any event, all such amounts (whether paid in
installments or in a lump sum) shall be considered severance payments
and be in full and complete satisfaction of the obligations of the
Company or STC to the Executive in connection with the termination of
the Executive.
(f) Notwithstanding anything else contained
herein, if the Executive voluntarily terminates his employment without
Good Reason, or the Company or STC terminates the Executive for Cause
or the Executive is terminated by reason of death or disability, all
of his rights to severance from the Company or STC (including pursuant
to any plan or policy of the Company or STC) shall terminate
immediately, except the right to payment for Accrued Benefits (other
than severance) in respect of periods prior to such termination.
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<PAGE> 8
(g) Notwithstanding anything else contained
herein, the Partnership Agreement shall exclusively govern and control
the vesting and/or forfeiture of the Class B Interests held by
Executive or Executive's Affiliate in the Partnership.
6. Further Obligations of the Executive.
(a) During and following the Executive's employment
by the Company or STC, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, STC or
their Subsidiaries except to the extent authorized in writing by the
Board or required by any court or administrative agency, other than to
an employee of the Company, STC or their Subsidiaries or a Person to
whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of duties as an executive of the
Company or STC. Confidential information shall not include any
information known generally to the public. All records, files,
documents and materials, or copies thereof, relating to the Company's,
STC's or their Subsidiaries' business which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company, STC, or their Subsidiaries, as the case
may be, and shall be promptly returned by the Executive to the owner
upon termination of the Executive's employment with the Company and
STC.
(b) Except with the Board's prior written
approval, during the Employment Period and for two years (or one year,
if Hicks Muse and its Affiliates cease to own, directly or indirectly,
any of the Stations) after the termination of the Employment Period or
during any time the Executive is receiving severance payments under
this Agreement, the Executive shall not, directly or indirectly:
(i) solicit, entice, persuade or induce
any employee of the Company, STC or their Subsidiaries to
terminate his employment by the Company, STC or their
Subsidiaries or to become employed by any Person other than
the Company, STC or their Subsidiaries; or
(ii) approach any such employee for any
of the foregoing purposes; or
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<PAGE> 9
(iii) authorize, solicit or assist in the
taking of such actions by any third party.
(c) During the Employment Period and for two
years (or one year, if Hicks Muse or its Affiliates cease to own,
directly or indirectly, any of the Stations after the termination of
the Employment Period and during any time the Executive is receiving
severance payments under this Agreement, the Executive shall not,
directly or indirectly, engage, participate, make any financial
investment in, or become employed by or render advisory or other
services to or for any Person or other business enterprise (other than
the Company, STC and their Subsidiaries and Affiliates) having or
operating a television station within the DMA of any of the Stations
(any of the foregoing activities being referred to herein as
"Competitive Activities"). The foregoing covenant respecting
Competitive Activities shall not be construed to preclude the
Executive from (i) making any investments (that are non-attributable
interests under the rules, regulations or policies of the Federal
Communications Commission) in the securities of any company, whether
or not engaged in competition with the Company, STC or their
Subsidiaries, to the extent that such securities are actively traded
on a national securities exchange or in the over-the- counter market
in the United States or any foreign securities exchange and such
investment does not exceed one percent of the issued and outstanding
shares of such company or give the Executive the right or power to
control or participate directly in making the policy decisions of such
company, or (ii) during the second year after the termination of the
Employment Period only (to the extent applicable in the event Hicks
Muse or its Affiliates continue to own directly or indirectly any of
the Stations), becoming employed by or rendering advisory or other
services to or for any Person or other business enterprise having or
operating a number of television broadcasting stations in a number of
different DMAs, one or more of which are located within the DMA of any
of the Stations, provided that (A) no more than 25% of the broadcast
cash flow generated by such Person or other business enterprise is
derived from television broadcast stations located with the DMAs of
any of the Stations and (B) the Executive does not work directly for
the television broadcast stations located within the DMA's of any of
the Stations.
(d) If any court determines that any portion of
this Paragraph 6 is invalid or unenforceable, the remainder of this
Paragraph 6 shall not thereby be affected and shall be given full
effect without regard to the invalid
9
<PAGE> 10
provisions. If any court construes any of the provisions of this
Paragraph 6, or any part thereof, to be unreasonable because of the
duration or scope of such provision, such court shall have the power
to reduce the duration or scope of such provision and to enforce such
provision as so reduced.
(e) The Executive hereby acknowledges and agrees
that damages will not be an adequate remedy for the Executive's breach
of any of his covenants contained in this Paragraph 6, and further
agrees that the Company and STC and their Subsidiaries shall be
entitled to obtain appropriate injunctive and/or other equitable
relief for any such breach, without the posting of any bond or other
security.
7. Successors. The Company or STC may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company or STC, by merger or otherwise, and may assign or encumber this
Agreement and its rights hereunder as security for indebtedness of the Company
and STC and their Subsidiaries. Any such assignment by the Company or STC
shall remain subject to the Executive's rights under Paragraph 5 hereof. The
rights of Executive under this Agreement may not be assigned or encumbered by
the Executive, voluntarily or involuntarily, during his lifetime, and any such
purported assignment shall be void ab initio. However, all rights of the
Executive under this Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, estates, executors,
administrators, heirs and beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs or representatives.
8. Enforcement. The provisions of this Agreement shall
be regarded as divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
9. Amendment. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board,
consented to in writing by the Partnership, and executed by the Company and STC
and the Executive; provided, however, that any attempted amendment or
modification without such approval, consent and execution shall be null and
void ab initio and of no effect.
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<PAGE> 11
10. Payments Due Under this Agreement. Any payments due
or required to be made pursuant to the terms of this Agreement may be made by
the Company, STC or its Subsidiaries as determined in the sole discretion of
the Board.
11. Withholding. The Company and STC shall be entitled
to withhold from any amounts to be paid to the Executive hereunder any federal,
state, local, or foreign withholding or other taxes or charges which it is from
time to time required to withhold. The Company and STC shall be entitled to
rely on an opinion of counsel if any question as to the amount or requirement
of any such withholding shall arise.
12. Controlling Provision. Notwithstanding any other
provision hereof, as long as STC continues to only own non-voting securities in
Smith Acquisition Company, the Board shall have no authority to direct or
control the management of Smith Acquisition Company or television broadcast
station WTOV-TV, Channel 9, Steubenville, Ohio.
13. Governing Law. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to principles of conflicts of law of
Texas or any other jurisdiction.
14. Notice. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and if mailed,
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid:
If to the Company:
Sunrise Television Corp.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
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<PAGE> 12
If to STC:
STC Broadcasting, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
If to the Executive:
Sandy DiPasquale
8202 East 21st Street North
Suite B
Wichita, Kansas 67206-2906
or to such other address as the party to be notified shall have given to the
other.
15. No Waiver. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
16. Headings. The headings herein contained are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
SUNRISE TELEVISION CORP.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton,
Vice President
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton,
Vice President
EXECUTIVE:
/s/ SANDY DIPASQUALE
-----------------------------------------
Sandy DiPasquale
Signature Page to Executive Employment Agreement
<PAGE> 1
EXHIBIT 10.8
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of February 28, 1997 by and between Sunrise Television Corp., a
Delaware corporation (hereinafter, together with its successors, referred to as
the "Company"), and its Subsidiary, STC Broadcasting, Inc., a Delaware
corporation (hereinafter, together with its successors, referred to as "STC"),
on the one hand, and John M. Purcell (hereinafter referred to as the
"Executive"), on the other hand.
WHEREAS, pursuant to an Asset Purchase Agreement (as hereinafter
defined) STC, has agreed to acquire (the "Acquisition") television broadcast
stations WEYI, Channel 25, in Saginaw, Michigan; WROC-TV, Channel 8, in
Rochester, New York; and KSBW, Channel 8, in Salinas, California (the foregoing
stations and such other stations as are owned, directly or indirectly, by the
Company, STC, or their Subsidiaries, from time to time, and including
television station WTOV-TV, Channel 9, Steubenville, Ohio, collectively, the
"Stations");
WHEREAS, the Company and STC desire to employ the Executive in an
executive capacity with the Company and STC, and the Executive desires to be
employed by the Company and STC in said capacity; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their understandings and agreements.
NOW THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the
consummation of the Acquisition, the parties hereto hereby agree as follows:
1. Definitions.
(a) Accrued Benefits means (i) all salary earned
or accrued through the date the Executive's employment is terminated,
(ii) reimbursement for any and all monies advanced in connection with
the Executive's employment for reasonable and necessary expenses
incurred by the Executive through the date the Executive's employment
is terminated; and (iii) all other payments and benefits to which the
Executive may be entitled under the terms
<PAGE> 2
of any applicable compensation arrangement or benefit plan or program
of the Company or STC, including any earned and accrued, but unused
vacation pay.
(b) Act means the Securities Exchange Act of
1934, as amended.
(c) Affiliate has the meaning given such term in
Rule 12b-2 of the Act.
(d) Asset Purchase Agreement means that certain
Asset Purchase Agreement dated as of November 4, 1996, by and among
Smith Television of Michigan, L.P., Smith Television of Michigan
License, L.P., Smith Television of Rochester, L.P., Smith Television
of Rochester License, L.P., Smith Television of Salinas-Monterey,
L.P., Smith Television of Salinas-Monterey License, L.P., as Sellers,
and STC, formerly known as STV Acquisition Company, as Buyer.
(e) Board means, as long as the Company owns all
the capital stock of STC, the board of directors of the Company; in
all other cases, Board means the board of directors of STC.
(f) Cause means (i) the Executive's conviction of
any crime (other than minor traffic offenses and other similar minor
infractions), (ii) the Executive's breach of his obligations under
this Agreement, (iii) the Executive's insubordination or fraud or
dishonesty in connection with his employment, (iv) the Executive's
gross negligence or willful misconduct injurious to the Company, STC,
their Subsidiaries or the Stations, (v) the Executive's refusal to
perform his duties as an employee of the Company or STC for a reason
other than mental or physical disability, (vi) the breach by the
Company, STC, or their Subsidiaries of any financial covenant
contained in any agreement binding on the Company, STC, or their
Subsidiaries that is not waived prior to becoming a default or event
of default under such agreement, (vii) the breach by the Company, STC,
or their Subsidiaries of any covenant (other than a financial
covenant) in any agreement in respect of borrowed money that was
caused by the willful omission or commission of the Executive, or
(viii) the Stations' failure (taken as a group) to meet at least 90%
of their budget on a rolling two year basis, as such budget was
recommended by the Chief Executive Officer of the Company and approved
by the Board and the Partnership. Notwithstanding the above, the
occurrence of
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<PAGE> 3
any of the events specified in clause (ii) above shall not constitute
Cause unless the Company or STC gives the Executive written notice
that such event constitutes Cause, and the Executive thereafter fails
to cure such event within 30 days after receipt of such notice.
(g) Change of Control shall have the meaning
given to such term in the Partnership Agreement.
(h) Class B Interests shall have the meaning
given to such term in the Partnership Agreement.
(i) COBRA means the Consolidated Omnibus
Reconciliation Act of 1985.
(j) DMA means a Designated Market Area as defined
by A.C. Nielson & Co.
(k) Employment Period means the period during
which the Executive is employed by the Company or STC
(l) Good Reason means (i) any material breach by
the Company or STC of this Agreement, or (ii) any significant
reduction, approved by the Board without the Executive's written
consent, in the Executive's title, duties or responsibilities other
than for Cause. Notwithstanding the above, the occurrence of any of
the events described above will not constitute Good Reason unless the
Executive gives the Company and STC written notice within 30 days
after the occurrence of any of such events, that such event
constitutes Good Reason, and the Company or STC thereafter fails to
cure the event within 30 days after receipt of such notice.
(m) Hicks Muse means Hicks, Muse, Tate & Furst
Incorporated, a Delaware corporation, and its Affiliates and its and
their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such
family members).
(n) Partnership means Sunrise Television
Partners, L.P., a Delaware limited partnership.
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<PAGE> 4
(o) Partnership Agreement means the Limited
Partnership Agreement governing the Partnership, as the same may be
amended from time to time in accordance with its terms.
(p) Person means any "person", within the meaning
of Sections 13(d) and 14(d) of the Act, including a "group" as therein
defined.
(q) Subsidiary means, with respect to any Person,
any other Person of which such first Person owns the majority of the
economic interest in such Person or owns or has the power to vote,
directly or indirectly, securities representing a majority of the
votes ordinarily entitled to be cast for the election of directors or
other governing Persons.
2. Term of Employment. Unless earlier terminated in
accordance with the terms of this Agreement, the Executive's Employment Period
shall commence on the date of the consummation of the Acquisition (the
"Employment Date") and shall end upon the fifth anniversary of the Employment
Date; provided, however, that such Employment Period shall be extended for
successive terms of one year each unless either party advises the other, at
least 120 days prior to the end of the initial term or annual extension, as the
case may be, that it will not agree to extend this Agreement.
3. Duties. During the Employment Period, the Executive
(i) shall serve as Regional Vice President of STC, (ii) shall report directly
to the Chief Executive Officer of the Company and the Chief Operating Officer
of STC, (iii) shall, subject to and in accordance with the authority and
direction of the Board and the Chairman of the Board have such authority and
perform in a diligent and competent manner such duties as may be assigned to
him from time to time by the Chief Operating Officer of STC and the Chief
Executive Officer of the Company, and (iv) shall devote his best efforts and
his working time, attention, knowledge and skill solely to the operation of the
Stations and to the other business and affairs of the Company, STC and their
Subsidiaries. The Executive shall not, however, be required to relocate his
place of residence.
4. Compensation. During the Employment Period, the
Executive shall be compensated as follows:
(a) the Executive shall receive, at such
intervals and in accordance with such Company or STC policies as may
be in effect from time
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<PAGE> 5
to time, an annual salary (pro rata for any partial year) equal to
$250,000.00 provided that $220,000 of such salary shall be paid
directly by television broadcast station WROC-TV, for so long as the
Executive shall remain general manager thereof, which salary shall be
subject to appropriate increase, as determined by the sole discretion
of the Board, as additional Stations are acquired by the Company, STC
and their Subsidiaries.
(b) the Executive shall be eligible to receive an
annual bonus for each fiscal year of the Company subsequent to 1996
calculated based upon criteria established by the Board at the
beginning of each fiscal year and adjusted from time to time;
(c) the Executive shall be reimbursed, at such
intervals and in accordance with such Company policies as may be in
effect from time to time, for any and all reasonable and necessary
business expenses incurred by him for the benefit of the Company, STC
and their Subsidiaries, including but not limited to travel expenses
and other expenses as reflected in budgets submitted and approved by
the Board from time to time; and
(d) the Executive shall be included, to the
extent eligible thereunder, in any and all plans providing general
benefits for the Company's or STC's employees (as approved by the
Board and in effect from time to time), including but not limited to,
group life insurance, accidental death and dismemberment insurance,
business travel accident insurance, disability, medical, dental,
pension/savings plans, and supplemental pension/savings plans, and
shall be provided any and all other benefits and perquisites made
available to other employees of comparable status and position at the
expense of the Company or STC on a comparable basis.
5. Termination of Employment.
(a) All Accrued Benefits to which the Executive
(or his estate or beneficiary) is entitled shall be payable in cash
promptly upon termination of his Employment Period, except as
otherwise specifically provided herein, or under the terms of any
applicable policy, plan or program.
(b) Any termination by the Company or STC, or by the
Executive, of the Employment Period shall be communicated by written
notice of such termination to the Executive, if such notice is
delivered by the
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<PAGE> 6
Company or STC, and to the Company and STC if such notice is delivered
by the Executive, each in compliance with the requirements of
Paragraph 12 hereinbelow.
(c) If prior to the fourth anniversary of the
Employment Date, the Employment Period is terminated by the Executive
for Good Reason or by the Company or STC for any reason other than
Cause or the Executive's death, permanent disability (as defined in
the Company's or STC's Board-approved disability plan or policy, as in
effect from time to time) or retirement (as defined in the Company's
or STC's Board-approved retirement plan or policy, as in effect from
time to time), then, as his exclusive right and remedy in respect of
such termination:
(i) the Executive shall be entitled to
receive from the Company or STC his Accrued Benefits, except
that, for this purpose, Accrued Benefits shall not include any
entitlement to severance under any Company or STC severance
policy generally applicable to the Company's or STC's salaried
employees;
(ii) the Executive shall receive from the
Company or STC, as long as the Executive does not violate the
provisions of Paragraph 6 hereof and, if such termination is
as a result of a Change of Control pursuant to Paragraph 5(d)
hereof, as long as the Executive continues to abide by his
obligations pursuant to Paragraph 5(d), severance pay equal to
the Executive's then current monthly base salary, payable in
accordance with the Company's or STC's regular pay schedule,
for 12 months from the date of termination of employment or
until the third anniversary of the Employment Date, whichever
is the longer period; and
(iii) the Executive shall continue to be
covered at the expense of the Company or STC by the same or
equivalent medical, dental, and life insurance coverages as in
effect for the Executive immediately prior to termination of
his employment, until the earlier of (A) the expiration of the
period for which he receives severance pay pursuant to clause
(ii) above or (B) the date the Executive has commenced new
employment and has thereby become eligible for comparable
benefits, subject to the Executive's rights under COBRA.
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<PAGE> 7
(d) In the event a Change of Control shall occur
prior to the fourth anniversary of the Employment Date, the Company
(or STC) or the Executive may, at either's option, terminate the
Executive's employment concurrently with such Change of Control, in
which case the Executive shall receive, as his exclusive right and
remedy in respect of such termination, the same benefits as stated in
clauses (i) through (iii) of Paragraph 5(c) hereinabove; provided that
the Executive agrees that he shall cooperate fully with any effort by
the Board to negotiate or enter into a transaction that would result
in a Change of Control, including, without limitation, participating
in meetings with prospective investors, acquirors or others, including
financing sources and legal and other advisors. In addition, the
Executive agrees that for a period of 6 months following a Change of
Control, the Executive will make himself reasonably available, upon
reasonable advance notice, to provide such reasonable transitional
assistance to the Person acquiring the Company or STC and its
Subsidiaries as a result of a Change of Control, as the Person whose
transaction has resulted in a Change of Control shall reasonably
request.
(e) Any amounts payable to the Executive in
installments pursuant to this Paragraph 5 may, at the option of
Company or STC, be paid in a lump sum rather than in installments as
provided above. In any event, all such amounts (whether paid in
installments or in a lump sum) shall be considered severance payments
and be in full and complete satisfaction of the obligations of the
Company or STC to the Executive in connection with the termination of
the Executive.
(f) Notwithstanding anything else contained
herein, if the Executive voluntarily terminates his employment without
Good Reason, or the Company or STC terminates the Executive for Cause
or the Executive is terminated by reason of death or disability, all
of his rights to severance from the Company or STC (including pursuant
to any plan or policy of the Company or STC) shall terminate
immediately, except the right to payment for Accrued Benefits (other
than severance) in respect of periods prior to such termination.
(g) Notwithstanding anything else contained
herein, the Partnership Agreement shall exclusively govern and control
the vesting and/or forfeiture of the Class B Interests held by
Executive or Executive's Affiliate in the Partnership.
7
<PAGE> 8
6. Further Obligations of the Executive.
(a) During and following the Executive's employment
by the Company or STC, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any
confidential information or proprietary data of the Company, STC or
their Subsidiaries except to the extent authorized in writing by the
Board or required by any court or administrative agency, other than to
an employee of the Company, STC or their Subsidiaries or a Person to
whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of duties as an executive of the
Company or STC. Confidential information shall not include any
information known generally to the public. All records, files,
documents and materials, or copies thereof, relating to the Company's,
STC's or their Subsidiaries' business which the Executive shall
prepare, or use, or come into contact with, shall be and remain the
sole property of the Company, STC, or their Subsidiaries, as the case
may be, and shall be promptly returned by the Executive to the owner
upon termination of the Executive's employment with the Company and
STC.
(b) Except with the Board's prior written
approval, during the Employment Period and for two years (or one year,
if Hicks Muse and its Affiliates cease to own, directly or indirectly,
any of the Stations) after the termination of the Employment Period or
during any time the Executive is receiving severance payments under
this Agreement, the Executive shall not, directly or indirectly:
(i) solicit, entice, persuade or induce
any employee of the Company, STC or their Subsidiaries to
terminate his employment by the Company, STC or their
Subsidiaries or to become employed by any Person other than
the Company, STC or their Subsidiaries; or
(ii) approach any such employee for any
of the foregoing purposes; or
(iii) authorize, solicit or assist in the
taking of such actions by any third party.
(c) During the Employment Period and for two
years (or one year, if Hicks Muse or its Affiliates cease to own,
directly or indirectly,
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<PAGE> 9
any of the Stations after the termination of the Employment Period and
during any time the Executive is receiving severance payments under
this Agreement, the Executive shall not, directly or indirectly,
engage, participate, make any financial investment in, or become
employed by or render advisory or other services to or for any Person
or other business enterprise (other than the Company, STC and their
Subsidiaries and Affiliates) having or operating a television station
within the DMA of any of the Stations (any of the foregoing activities
being referred to herein as "Competitive Activities"). The foregoing
covenant respecting Competitive Activities shall not be construed to
preclude the Executive from (i) making any investments (that are non-
attributable interests under the rules, regulations or policies of the
Federal Communications Commission) in the securities of any company,
whether or not engaged in competition with the Company, STC or their
Subsidiaries, to the extent that such securities are actively traded
on a national securities exchange or in the over-the-counter market in
the United States or any foreign securities exchange and such
investment does not exceed one percent of the issued and outstanding
shares of such company or give the Executive the right or power to
control or participate directly in making the policy decisions of such
company, or (ii) during the second year after the termination of the
Employment Period only (to the extent applicable in the event Hicks
Muse or its Affiliates continue to own directly or indirectly any of
the Stations), becoming employed by or rendering advisory or other
services to or for any Person or other business enterprise having or
operating a number of television broadcasting stations in a number of
different DMAs, one or more of which are located within the DMA of any
of the Stations, provided that (A) no more than 25% of the broadcast
cash flow generated by such Person or other business enterprise is
derived from television broadcast stations located with the DMAs of
any of the Stations and (B) the Executive does not work directly for
the television broadcast stations located within the DMA's of any of
the Stations.
(d) If any court determines that any portion of
this Paragraph 6 is invalid or unenforceable, the remainder of this
Paragraph 6 shall not thereby be affected and shall be given full
effect without regard to the invalid provisions. If any court
construes any of the provisions of this Paragraph 6, or any part
thereof, to be unreasonable because of the duration or scope of such
provision, such court shall have the power to reduce the duration or
scope of such provision and to enforce such provision as so reduced.
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<PAGE> 10
(e) The Executive hereby acknowledges and agrees
that damages will not be an adequate remedy for the Executive's breach
of any of his covenants contained in this Paragraph 6, and further
agrees that the Company and STC and their Subsidiaries shall be
entitled to obtain appropriate injunctive and/or other equitable
relief for any such breach, without the posting of any bond or other
security.
7. Successors. The Company or STC may assign its rights
under this Agreement to any successor to all or substantially all the assets of
the Company or STC, by merger or otherwise, and may assign or encumber this
Agreement and its rights hereunder as security for indebtedness of the Company
and STC and their Subsidiaries. Any such assignment by the Company or STC
shall remain subject to the Executive's rights under Paragraph 5 hereof. The
rights of Executive under this Agreement may not be assigned or encumbered by
the Executive, voluntarily or involuntarily, during his lifetime, and any such
purported assignment shall be void ab initio. However, all rights of the
Executive under this Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, estates, executors,
administrators, heirs and beneficiaries. All amounts payable to the Executive
hereunder shall be paid, in the event of the Executive's death, to the
Executive's estate, heirs or representatives.
8. Enforcement. The provisions of this Agreement shall
be regarded as divisible, and if any of said provisions or any part thereof are
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remainder of such provisions or parts hereof
and the applicability thereof shall not be affected thereby.
9. Amendment. This Agreement may not be amended or
modified at any time except by a written instrument approved by the Board,
consented to in writing by the Partnership, and executed by the Company and STC
and the Executive; provided, however, that any attempted amendment or
modification without such approval, consent and execution shall be null and
void ab initio and of no effect.
10. Payments Due Under this Agreement. Any payments due
or required to be made pursuant to the terms of this Agreement may be made by
the Company, STC or its Subsidiaries as determined in the sole discretion of
the Board.
11. Withholding. The Company and STC shall be entitled
to withhold from any amounts to be paid to the Executive hereunder any federal,
state,
10
<PAGE> 11
local, or foreign withholding or other taxes or charges which it is from time
to time required to withhold. The Company and STC shall be entitled to rely on
an opinion of counsel if any question as to the amount or requirement of any
such withholding shall arise.
12. Controlling Provision. Notwithstanding any other
provision hereof, as long as STC continues to only own non-voting securities in
Smith Acquisition Company, the Board shall have no authority to direct or
control the management of Smith Acquisition Company or television broadcast
station WTOV-TV, Channel 9, Steubenville, Ohio.
13. Governing Law. This Agreement and the rights and
obligations hereunder shall be governed by and construed in accordance with the
laws of the State of Texas, without regard to principles of conflicts of law of
Texas or any other jurisdiction.
14. Notice. Notices given pursuant to this Agreement
shall be in writing and shall be deemed given when received and if mailed,
shall be mailed by United States registered or certified mail, return receipt
requested, addressee only, postage prepaid:
If to the Company:
Sunrise Television Corp.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
If to STC:
STC Broadcasting, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr.
11
<PAGE> 12
If to the Executive:
John M. Purcell
201 Humboldt Street
Rochester, New York 14610-0997
or to such other address as the party to be notified shall have given to the
other.
15. No Waiver. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at any time.
16. Headings. The headings herein contained are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
12
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement
in one or more counterparts, each of which shall be deemed one and the same
instrument, as of the day and year first written above.
SUNRISE TELEVISION CORP.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton
Vice President
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Frederick W. Brazelton
Vice President
EXECUTIVE:
/s/ JOHN M. PURCELL
----------------------------------------
John M. Purcell
Signature Page to Executive Employment Agreement
<PAGE> 1
EXHIBIT 10.9
MONITORING AND OVERSIGHT AGREEMENT
THIS MONITORING AND OVERSIGHT AGREEMENT (this "Agreement") is made and
entered into effective as of February 28, 1997, among Sunrise Television Corp.,
a Delaware corporation ("Holdings"), STC Broadcasting, Inc., a Delaware
corporation (the "Company"), and Hicks, Muse & Co. Partners, L.P., a Texas
limited partnership (together with its successors, "HMCo").
1. Retention. Holdings and the Company hereby acknowledge that
they have retained HMCo, and HMCo acknowledges that, subject to reasonable
advance notice in order to accommodate scheduling, HMCo will provide financial
oversight and monitoring services to Holdings and the Company as requested by
the board of directors of Holdings during the term of this Agreement.
2. Term. The term of this Agreement shall continue until the
earlier of (i) the tenth anniversary of the date hereof, or (ii) the date on
which Hicks, Muse, Tate & Furst Equity Fund III, L.P. and its affiliates cease
to own beneficially, directly or indirectly, any securities of Holdings or its
successors.
3. Compensation.
(a) As compensation for HMCo's services to Holdings and
the Company under this Agreement, Holdings and the Company hereby irrevocably
agrees to pay to HMCo, and Holdings agrees to cause the Company to pay, an
annual fee (the "Monitoring Fee") of $75,000 (the "Base Fee"), subject to
adjustment pursuant to paragraphs (b) and (c) below and prorated on a daily
basis for any partial calendar year during the term of this Agreement. The
Monitoring Fee shall be payable in equal quarterly installments on each January
1, April 1, July 1 and October 1 during the term of this Agreement (each a
"Payment Date"), beginning with the first Payment Date following the date
hereof. All payments shall be made by wire transfer of immediately available
funds to the account described on Exhibit A hereto (or such other account as
HMCo may hereafter designate in writing).
(b) On January 1 of each calendar year during the term of
this Agreement, the Monitoring Fee shall be adjusted to an annual amount equal
to (i) the budgeted consolidated annual net sales of the Company and its
subsidiaries for the then-current fiscal year, multiplied by (ii) 0.2% (the
"Percentage"); provided, however, that in no event shall the annual Monitoring
Fee be less than the Base Fee.
<PAGE> 2
(c) On each occasion that the Company or any of its
subsidiaries shall acquire another entity or business during the term of this
Agreement, the annual Monitoring Fee for the calendar year in which such
acquisition occurs shall be adjusted prospectively (i.e., for periods
subsequent to such acquisition until the next adjustment pursuant to clause (b)
above), as of the closing of such acquisition, to an annual amount equal to (i)
the proforma combined budgeted consolidated annual net sales of the Company and
its subsidiaries for the entire then-current fiscal year of the Company
(including the sales of the acquired entity or business for such entire fiscal
year, on a pro forma basis), multiplied by (ii) the Percentage; provided,
however, that in no event shall the annual Monitoring Fee be less than the Base
Fee.
(d) All past due payments in respect of the Monitoring
Fee shall bear interest at the lesser of the highest rate of interest which may
be charged under applicable law or the prime commercial lending rate per annum
of Chemical Bank, N.A. or its successors (which rate is a reference rate and is
not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus five percent
(5%), from the due date of such payment to and including the date on which
payment is made to HMCo in full, including such interest accrued thereon.
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and the Company agree to pay or
reimburse HMCo for all "Reimbursable Expenses," which shall consist of (i) all
reasonable disbursement and out-of-pocket expenses (including without
limitation, costs of travel, postage, deliveries, communications, etc.)
incurred by HMCo or its affiliates for the account of Holdings or the Company
or in connection with the performance by HMCo of the services contemplated by
Section 1 hereof and (ii) Holdings' Pro Rata Share of Allocable Expenditures as
defined in Exhibit B hereto. Promptly (but not more than 10 days) after
request by or notice from HMCo, Holdings and the Company shall, and Holdings
shall cause the Company to, pay HMCo, by wire transfer of immediately available
funds to the account described on Exhibit A hereto (or such other account as
HMCo may hereafter designate in writing), the Reimbursable Expenses for which
HMCo has provided Holdings and the Company invoices or reasonably detailed
descriptions. All past due payments in respect of the Reimbursable Expenses
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the Prime Rate plus 5% from the Payment Date to
and including the date on which such Reimbursable Expenses plus accrued
interest thereon are fully paid to HMCo.
5. Indemnification. Holdings and the Company jointly and
severally shall indemnify and hold harmless each of HMCo, its affiliates, and
their respective directors, officers, controlling persons (within the meaning
of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934), if any, agents and employees
2
<PAGE> 3
(HMCo, its affiliates, and such other specified persons being collectively
referred to as "Indemnified Persons", and individually as an "Indemnified
Person") from and against any and all claims, liabilities, losses, damages and
expenses incurred by any Indemnified Person (including those arising out of an
Indemnified Person's negligence and fees and disbursements of the respective
Indemnified Person's counsel) which (A) are related to or arise out of (i)
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by Holdings and/or the Company or (ii)
actions taken or omitted to be taken by an Indemnified Person with Holdings' or
the Company's consent or in conformity with Holdings' or the Company's
instructions or Holdings' or the Company's actions or omissions or (B) are
otherwise related to or arise out of HMCo's engagement, and will reimburse each
Indemnified Person for all costs and expenses, including fees and disbursements
of any Indemnified Person's counsel, as they are incurred, in connection with
investigating, preparing for, defending, or appealing any action, formal or
informal claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of
or in connection with HMCo's acting pursuant to HMCo's engagement, whether or
not any Indemnified Person is named as a party thereto and whether or not any
liability results therefrom. Neither Holdings nor the Company will, however,
be responsible for any claims, liabilities, losses, damages or expenses
pursuant to clause (B) of the preceding sentence that have resulted primarily
from HMCo's bad faith, gross negligence or willful misconduct. Holdings and
the Company also agree that neither HMCo nor any other Indemnified Person shall
have any liability to Holdings or the Company for or in connection with such
engagement except for any such liability for claims, liabilities, losses,
damages or expenses incurred by Holdings and/or the Company that have resulted
primarily from HMCo's bad faith, gross negligence or willful misconduct.
Holdings and the Company further agree that neither of them will, without the
prior written consent of HMCo, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. HOLDINGS
AND THE COMPANY HEREBY ACKNOWLEDGE THAT THE FOREGOING INDEMNITY SHALL BE
APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE
SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED
PERSON.
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Holdings and the Company hereby consent to
personal jurisdiction and to service and venue in any
3
<PAGE> 4
court in which any claim which is subject to this Agreement is brought against
HMCo or any other Indemnified Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for Holdings and/or the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement(s) may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.
Holdings and the Company further understand and agree that if HMCo is
asked to furnish Holdings and/or the Company a financial opinion letter or act
for Holdings and/or the Company in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms
to be mutually agreed upon.
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company to it solely in its capacity as a financial advisor, unless Holdings
and the Company consent to the divulging thereof or such information, secret
processes or trade secrets are publicly available or otherwise available to
HMCo without restriction or breach of any confidentiality agreement or unless
required by any governmental authority or in response to any valid legal
process.
7. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Texas, excluding any
choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo, which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
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<PAGE> 5
10. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive.
[The remainder of this page is intentionally blank.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ ERIC C. NEUMAN
-------------------------------
Eric C. Neuman,
Vice President
SUNRISE TELEVISION CORP.
By: /s/ ROBERT N. SMITH
-------------------------------
Robert N. Smith,
President and
Chief Executive Officer
STC BROADCASTING, INC.
By: /s/ ROBERT N. SMITH
-------------------------------
Robert N. Smith,
President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.10
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into as of February 28, 1997 among Sunrise Television Corp., a Delaware
corporation ("Holdings"), STC Broadcasting, Inc., a Delaware corporation (the
"Company"), and Hicks, Muse & Co. Partners, L.P., a Texas limited partnership
(together with its successors, "HMCo").
WHEREAS, certain affiliates of HMCo, including Sunrise Television
Partners, L.P. ("STP"), are simultaneously with the execution of this
Agreement, purchasing certain commercial television broadcast station assets
(the "Acquisition") and as a result of the Acquisition, the debt and equity
financing thereof and certain other transactions related thereto (collectively
with the Acquisition, the "Transaction") STP will own 100% of the outstanding
shares of common stock of Holdings;
WHEREAS, Holdings and the Company have requested that HMCo render, and
HMCo has rendered, financial advisory services to Holdings and the Company in
connection with the negotiation of the Transaction; and
WHEREAS, Holdings and the Company have requested that HMCo render
financial advisory, investment banking and other similar services to them with
respect to any future proposals for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring or other similar transaction
directly involving the Company or any of its subsidiaries and any other person
or entity (collectively, "Add-on Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to Holdings and the Company, and to evidence the obligations
of Holdings and the Company to HMCo and the mutual covenants herein contained,
Holdings and the Company hereby jointly and severally agree with HMCo as
follows:
1. Retention.
(a) Holdings and the Company hereby acknowledge that they
have retained HMCo, and HMCo acknowledges that it has acted, as financial
advisor to Holdings and the Company in connection with the Transaction.
(b) Each of Holdings and the Company acknowledges that it
has retained HMCo as its exclusive financial advisor in connection with any
Add-on Transactions that may be consummated during the term of this Agreement,
and that Holdings and the Company
<PAGE> 2
will not retain any other person or entity to provide such services in
connection with any such Add-on Transaction without the prior written consent
of HMCo. HMCO agrees that it shall provide such financial advisory, investment
banking and other similar services in connection with any such Add-on
Transaction as may be requested from time to time by the board of directors of
Holdings.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
date on which STP and its affiliates cease to own beneficially, directly or
indirectly, any securities of Holdings, the Company or their successors.
3. Compensation.
(a) As compensation for HMCo's services as financial
advisor to Holdings and the Company in connection with the Transaction, the
Company hereby irrevocably agrees to pay, and Holdings hereby agrees to cause
the Company to pay, to HMCo a cash fee of $2,462,000 to be paid at the closing
of the Transaction, which will occur substantially simultaneously with the
execution of this Agreement. The parties hereto agree that the compensation
due pursuant to this Section 3(a) shall be allocated among the segments of the
financing for the Transaction in proportion to the dollar amount of each such
segment.
(b) As compensation for HMCo's financial advisory,
investment banking and other similar services rendered in connection with any
Add-on Transaction pursuant to Section 1(b) hereof, Holdings and the Company
shall, and Holdings shall cause the Company to, pay to HMCo, at the closing of
any such Add-on Transaction, a cash fee in the amount of 1.5% of the
Transaction Value of such Add-on Transaction. As used herein, the term
"Transaction Value" means the total value of the Add-on Transaction, including,
without limitation, the aggregate amount of the funds required to complete the
Add-on Transaction (excluding any fees payable pursuant to this Section 3(b))
including the amount of any indebtedness, preferred stock or similar items
assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and the Company agree to, and
Holdings shall cause the Company to, reimburse HMCo, promptly following demand
thereof, together with invoices or reasonably detailed descriptions thereof,
for all reasonable disbursements and out-of-pocket expenses (including fees and
disbursements of counsel) incurred by HMCo (i) as financial advisor to Holdings
and the Company in connection with the Transaction or (ii) in connection with
the performance by it of the services contemplated by Section 1(b) hereof.
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<PAGE> 3
5. Indemnification. Holdings and the Company jointly and
severally shall indemnify and hold harmless each of HMCo, its affiliates and
their respective directors, officers, controlling persons (within the meaning
of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934), if any, agents and employees (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons" and individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages and expenses incurred by any
Indemnified Person (including those arising out of an Indemnified Person's
negligence and fees and disbursements of the respective Indemnified Person's
counsel) which (A) are related to or arise out of (i) actions taken or omitted
to be taken (including any untrue statements made or any statements omitted to
be made) by Holdings and/or the Company or (ii) actions taken or omitted to be
taken by an Indemnified Person with Holdings' or the Company's consent or in
conformity with Holdings' or the Company's instructions or Holdings' or the
Company's actions or omissions or (B) are otherwise related to or arise out of
HMCo's engagement, and will reimburse each Indemnified Person for all costs and
expenses, including fees and disbursements of any Indemnified Person's counsel,
as they are incurred, in connection with investigating, preparing for,
defending, or appealing any action, formal or informal claim, investigation,
inquiry or other proceeding, whether or not in connection with pending or
threatened litigation, caused by or arising out of or in connection with HMCo's
acting pursuant to the engagement, whether or not any Indemnified Person is
named as a party thereto and whether or not any liability results therefrom.
Neither Holdings nor the Company will, however, be responsible for any claims,
liabilities, losses, damages or expenses pursuant to clause (B) of the
preceding sentence that have resulted primarily from HMCo's bad faith, gross
negligence or willful misconduct. Holdings and the Company also agree that
neither HMCo nor any other Indemnified Person shall have any liability to
Holdings or the Company for or in connection with such engagement except for
any such liability for claims, liabilities, losses, damages, or expenses
incurred by Holdings and/or the Company that have resulted primarily from
HMCo's bad faith, gross negligence or willful misconduct. Holdings and the
Company further agree that neither of them will, without the prior written
consent of HMCo, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not any Indemnified
Person is an actual or potential party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. HOLDINGS
AND THE COMPANY EACH HEREBY ACKNOWLEDGE THAT THE FOREGOING INDEMNITY SHALL BE
APPLICABLE TO ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE
SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED
PERSON.
3
<PAGE> 4
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Holdings and the Company hereby consent to
personal jurisdiction and to service and venue in any court in which any claim
which is subject to this Agreement is brought against HMCo or any other
Indemnified Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for Holdings and/or the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagements may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.
Holdings and the Company further understand and agree that if HMCo is
asked to furnish Holdings and/or the Company a financial opinion letter or act
for Holdings and/or the Company in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms
to be mutually agreed upon.
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company to it solely in its capacity as a financial advisor, unless Holdings
and the Company consent to the divulging thereof or such information, secret
processes or trade secrets are publicly available or otherwise available to
HMCo without restriction or breach of any confidentiality agreement or unless
required by any governmental authority or in response to any valid legal
process.
7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HMCo, which
may be assigned to any one or more of its principals or affiliates) by any of
the parties without the prior written consent of the other parties.
4
<PAGE> 5
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
10. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto.
[The remainder of this page is intentionally blank.]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.,
By: HM PARTNERS INC., its General
Partner
By: /s/ ERIC C. NEUMAN
------------------------------
Eric C. Neuman,
Vice President
SUNRISE TELEVISION CORP.
By: /s/ ROBERT N. SMITH
------------------------------
Robert N. Smith,
President and
Chief Executive Officer
STC BROADCASTING, INC.
By: /s/ ROBERT N. SMITH
------------------------------
Robert N. Smith,
President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10.11
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as
of February 28, 1997, is entered into among SUNRISE TELEVISION CORP., a
Delaware corporation ("Holdings"), STC BROADCASTING, INC., a Delaware
corporation ("STC") and the Purchasers listed on the signature pages hereof.
WHEREAS, Holdings is the parent company of STC Broadcasting,
Inc. ("Broadcasting");
WHEREAS, STC and its Subsidiary, Smith Acquisition Company,
are acquiring certain commercial television broadcast station assets (the
"Acquisition");
WHEREAS, in order to finance a portion of the purchase price
for the Acquisition, STC is willing to issue and sell up to $30 million
liquidation preference of its 14% Redeemable Preferred Stock, par value $.01
per share, ("Redeemable Preferred Stock"), upon the terms and conditions set
forth herein;
WHEREAS, each Purchaser is willing to purchase the number of
shares of Redeemable Preferred Stock set forth on the signature pages hereof
upon the terms and conditions set forth herein; and
WHEREAS, upon consummation of the transactions contemplated
hereby, there will be issued and outstanding 300,000 shares of Redeemable
Preferred Stock, having an aggregate liquidation preference of $30 million, and
in connection therewith Holdings will have issued certain warrants (the
"Warrants") to purchase shares of its common stock, par value $0.01 per share
(the "Common Stock") to the Purchasers as described in Section 1.1(b) below.
NOW, THEREFORE, in consideration of the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
<PAGE> 2
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1. Commitments to Purchase.
(a) STC agrees to sell and, subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties of STC contained herein, each Purchaser agrees to purchase the
number of shares of Redeemable Preferred Stock set forth below such Purchaser's
name on the signature pages hereto, for the cash purchase price of $96.50 per
share.
(b) As an inducement to the Purchasers to enter into this
Agreement, Holdings agrees that, concurrently with the consummation of the
transactions contemplated hereby, it shall issue to each Purchaser, for no
additional consideration, Warrants to purchase Common Stock in accordance with
Schedule I hereto (it being agreed by the parties hereto that of the cash
purchase price being paid for the Redeemable Preferred Stock, an amount equal
to $.01 per Warrant will be deemed to have been paid to Holdings in
consideration for the Warrants to be issued hereunder). The Purchasers
acknowledge and agree that at no time will any Warrant be exercisable for
shares of Common Stock that are not Vested Warrant Shares, as defined in the
Warrant.
(c) STC and Holdings, jointly and severally, agree to pay
to the Purchasers, in such proportions as they agree among themselves, a
funding fee in the amount of $450,000 payable at Closing.
1.2. Closing.
(a) The purchase and sale of the Redeemable Preferred
Stock will take place at a closing (the "Closing") at the offices of Simpson
Thacher & Bartlett at 425 Lexington Avenue, New York, New York 10017, at 9:00
a.m., New York City time, on February 28, 1997, or on such other date, or at
such other place and time as the parties shall agree.
(b) At the Closing, (i) STC shall deliver to each
Purchaser, against payment of the purchase price therefor in cash by wire
transfer to an account designated by STC, certificates for the shares of
Redeemable Preferred Stock to be purchased by the Purchaser, registered in the
name of the Purchaser or in such other name as the Purchaser may
2
<PAGE> 3
designate and (ii) Holdings shall deliver to the Purchaser certificates for the
Warrants being issued pursuant to Section 1.1(b), registered in the name of the
Purchaser or in such other name as the Purchaser may designate.
1.3. Definitions. As used in this Agreement, and
unless the context otherwise requires a different meaning, the following terms
have the meanings indicated:
"Account Manager" means each Purchaser, if any, duly
authorized to act as attorney-in-fact on behalf of any Person in purchasing, in
the name of and using funds provided by such Person, the number of shares of
Redeemable Preferred Stock set forth below such Account Manager's name on the
signature pages hereof.
"Acquisition Agreements" mean the Asset Purchase Agreements,
each dated as of November 4, 1996, between STC and the parties thereto and
between Smith Acquisition Company (a subsidiary of STC) and the parties
thereto, each as may be amended to the Closing Date.
"Agreement" means this Agreement, as the same may be amended
prior to the Closing Date.
"Acquisition" has the meaning given such term in the recitals
to this Agreement.
"Charter Amendments" means, collectively, (i) the Amended and
Restated Certificate of Incorporation of STC, to be filed with the Secretary of
State of Delaware on or prior to the Closing Date in substantially the form
attached hereto as Exhibit A, and (ii) the Certificate of Designation of the
Redeemable Preferred Stock of STC to be filed with the Secretary of State of
the State of Delaware in substantially the form attached hereto as Exhibit B.
"Closing" has the meaning set forth in Section 1.2 of this
Agreement.
"Closing Date" means the date on which the Closing occurs.
"Commission" means the Securities and Exchange Commission or
any successor thereof.
"Common Stock" means, collectively, Holdings' common stock,
par value $.01 per share.
3
<PAGE> 4
"Credit Agreement" means the Credit Agreement to be entered
into as of the Closing Date, among Broadcasting, the banks or other lending
institutions which are named therein, NationsBank of Texas, N.A., as
documentation agent, and The Chase Manhattan Bank, as administrative agent.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures" means STC's 14% Subordinated Exchange
Debentures due 2008 to be issued pursuant to the Exchange Indenture.
"Exchange Indenture" means the indenture to be entered into
between STC and a trustee to be determined prior to the issuance of the
Exchange Debentures, in substantially the form attached hereto as Exhibit C.
"Holdings" has the meaning given such term in the recitals to
this Agreement.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Purchaser" means (i) each Person indicated as such on the
signature pages of this Agreement and (ii) each Person, if any, on whose behalf
a Purchaser executes this Agreement and on whose behalf funds are used for any
purchase hereunder.
"Redeemable Preferred Stock" means the 14% Redeemable
Preferred Stock, par value $.01 per share, of STC.
"Securities" means the shares of Redeemable Preferred Stock
and Warrants being issued and sold pursuant to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"STC" has the meaning given such term in the recitals to this
Agreement.
4
<PAGE> 5
"Warrants" have the meaning given such term in the recitals to
this Agreement. Each Warrant shall be substantially in the form attached
hereto as Exhibit D.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND STC
To induce the Purchasers to purchase the Redeemable Preferred
Stock as herein provided, Holdings and STC, jointly and severally, make the
following representations and warranties to the Purchasers, each and all of
which shall be true and correct as of the date of execution and delivery of
this Agreement and shall survive the execution and delivery of this Agreement:
2.1. Corporate Existence. Each of Holdings and STC is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to own its assets and carry on its business as now being conducted.
2.2. Issuance of Securities. (a) Upon filing of the
Charter Amendments with the Secretary of State of the State of Delaware, and
immediately after the consummation of the transactions contemplated hereby,
there will be 600,000 shares of Redeemable Preferred Stock authorized, of which
300,000 shares initially will be issued and outstanding. The shares of
Redeemable Preferred Stock to be issued and sold pursuant to this Agreement,
upon payment of the purchase price therefor in accordance with this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable and will
not have been issued in violation of any preemptive rights. The Redeemable
Preferred Stock will be exchangeable, at STC's option, for the Exchange
Debentures.
(b) The Warrants have been duly authorized and, when
issued and delivered against payment therefor as provided in this Agreement,
will be duly executed, legal and binding obligations of Holdings. The shares
of Common Stock issuable upon exercise of the Warrants have been duly reserved
for issuance, and upon exercise of the Warrants in accordance with their terms,
upon payment of the purchase price therefor in accordance with this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable and will
not have been issued in violation of any preemptive rights.
5
<PAGE> 6
2.3. Authorization. Each of Holdings and STC has all
requisite corporate power and authority to enter into this Agreement, to issue
and sell the Securities to be sold by it to the Purchasers and to perform its
obligations hereunder. The execution and delivery of this Agreement has been
duly authorized by all necessary corporate action on the part of each of
Holdings and STC, and this Agreement has been duly executed and delivered by
Holdings.
2.4. No Conflict. The execution and delivery by Holdings
and STC of this Agreement will not (i) violate or conflict with the provisions
of their respective certificates of incorporation or bylaws as the same will be
in effect upon the consummation of the transactions contemplated hereby or (ii)
result in the breach of, or constitute a default under any applicable law or
any order applicable to or binding upon Holdings or STC or any material
contract to which either of them is a party or by which any of their respective
assets or properties are bound.
2.5. No Consents. No consent, approval, authorization or
order of any court or governmental agency or body is required for the
performance by Holdings and STC of their obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
To induce Holdings and STC to enter into the transactions
contemplated hereby, each Purchaser, severally and not jointly, makes the
following representations and warranties to Holdings and STC, each and all of
which shall be true and correct as of the date of execution and delivery of
this Agreement and shall survive the execution and delivery of this Agreement.
3.1. Investment Intent. Each Purchaser represents that it
is purchasing the Securities solely for its own account (or, if such Purchaser
is an Account Manager, on behalf of managed accounts which are purchasing
solely for their own accounts), not as nominee or agent for any other person,
and with no present intention of distributing or reselling such Securities or
any part thereof in any transaction that would be in violation of the
securities laws of the United States of America or any State thereof. The
Purchaser is not a "broker" or a "dealer" as those terms
6
<PAGE> 7
are defined in the Securities Exchange Act of 1934, as amended.
3.2. Investigation. Each Purchaser (for itself and, if
such Purchaser is purchasing as an Account Manager, on behalf of its managed
accounts) acknowledges that it has been afforded the opportunity to ask such
questions as it has deemed necessary of, and to receive answers from,
representatives of Holdings concerning the terms and conditions of the offering
of the Securities and the merits and risks of investing in the Securities.
Each Purchaser (for itself and, if such Purchaser is purchasing as an Account
Manager, on behalf of its managed accounts) further represents and warrants to
Holdings that it or its agents have received all documents and information
relating to an investment in the Securities requested by or on behalf of such
Purchaser.
3.3. Private Placement. Each Purchaser represents and
warrants that it is aware that:
(i) the Securities have not been registered under
the Securities Act or any securities or "Blue Sky" laws of any state
in reliance on applicable exemptions;
(ii) the offering of the Securities is intended to
be exempt from registration under the Securities Act by virtue of the
provisions of either Section 4(2) of the Securities Act or Rule 506 of
Regulation D;
(iii) none of the Securities may be offered, sold,
transferred, pledged, hypothecated, or otherwise assigned unless they
are registered under the Securities Act or an exemption from such
registration is available, in each case in accordance with any
applicable securities or "Blue Sky" laws of any state;
(iv) the certificates representing the Securities
and each certificate issued to any subsequent transferee of the
Securities shall bear a legend in substantially the following form
(unless transferred in the manner described in the following legend):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS
7
<PAGE> 8
OF ANY STATE. THIS SECURITY MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED,
EXCEPT PURSUANT TO (A) A REGISTRATION STATEMENT THAT IS
EFFECTIVE UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.
; and
(v) each Purchaser must bear the economic risk of
the investment in the Securities for an indefinite period of time.
3.4. Authority of Account Managers. Each Purchaser, if it
is an Account Manager, represents that it is duly authorized by the Purchaser
on whose behalf it is acting to execute this Agreement and purchase the
Securities listed on the signature pages hereof.
3.5. Authorization. Each Purchaser represents that the
execution, delivery and performance of this Agreement are within its powers
(corporate or otherwise) and have been duly authorized by all requisite action
(corporate or otherwise) on the part of such Purchaser, and this Agreement has
been duly executed and delivered by it.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Conditions Precedent to Obligation of the Purchasers.
The obligation of the Purchasers to purchase, at the Closing, the Securities to
be purchased hereunder is subject to the satisfaction of the following
conditions at or before the Closing:
(a) Credit Agreement. The Credit Agreement shall have
been duly executed and delivered by the parties thereto and the conditions
precedent to the initial loans under the Credit Agreement shall have been
satisfied or waived.
(b) Charter Amendments. The Charter Amendments shall
have been validly authorized and executed by STC and duly filed with the
Secretary of State of the State of Delaware.
8
<PAGE> 9
(c) Acquisition. The conditions precedent to the
Acquisition pursuant to the Acquisition Agreement shall have been satisfied or
waived and concurrently with the purchase of the Securities the Acquisition
shall be consummated.
(d) Representations and Warranties. The representations
and warranties of Holdings and STC contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date as if made
at and as of such time.
4.2. Conditions Precedent to Obligation of Holdings and
STC. The obligations of Holdings and STC to issue and sell the Securities to
be sold by them pursuant to this Agreement are subject to the satisfaction of
the following conditions at or before the Closing:
(a) Credit Agreement. The Credit Agreement shall have
been duly executed and delivered by the parties thereto and the conditions
precedent to the initial loans under the Credit Agreement shall have been
satisfied or waived.
(b) Acquisition. The conditions precedent to the closing
of the Acquisition pursuant to the Acquisition Agreement shall have been
satisfied or waived.
(c) Representations and Warranties. The representations
and warranties of each Purchaser contained in this Agreement shall be true and
correct in all material respects at and as of the Closing Date as if made at
and as of such time.
ARTICLE V
REPURCHASE RIGHT
5.1. Repurchase of Redeemable Preferred Stock. At any
time and from time to time after the date hereof but prior to March 1, 1998,
STC shall have the option, upon not less than three Business Days' prior
written notice to the Purchasers, to repurchase, pro rata between the
Purchasers, all the issued and outstanding shares of Redeemable Preferred Stock
at the time held by the Purchasers for a purchase price in cash equal to $96.50
per share of Redeemable Preferred Stock, plus an amount in cash equal to all
accrued and unpaid dividends on the Redeemable Preferred Stock to the
repurchase date. To implement the foregoing,
9
<PAGE> 10
each certificate for the Redeemable Preferred Stock shall bear a legend
substantially to the following effect:
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A REPURCHASE OPTION
IN FAVOR OF THE ISSUER GRANTED PURSUANT TO A SECURITIES
PURCHASE AGREEMENT DATED AS OF FEBRUARY 28, 1997, A COPY OF
WHICH IS AVAILABLE AT THE EXECUTIVE OFFICES OF THE ISSUER.
No transfer or purported transfer of the Redeemable Preferred Stock shall be
valid unless the proposed transferee shall have acknowledged in writing that
the shares of Redeemable Preferred Stock to be acquired by it will be acquired
subject to the foregoing repurchase option.
ARTICLE VI
REGISTRATION RIGHTS
Holdings and STC hereby grant the Purchasers the registration
rights set forth on Exhibit E hereto, which are made a part hereof for all
purposes.
ARTICLE VII
COSTS AND EXPENSES
Holdings and STC agree to pay all reasonable costs and
expenses incurred by them in connection with negotiation, preparation,
execution and delivery of this Agreement, any amendment or supplement or
modification hereof and any and all other documents furnished pursuant hereto
or in connection herewith or therewith, and all reasonable costs and expenses
incurred by it in connection with the administration of this Agreement. STC
and Holdings agree to pay all reasonable fees (not to exceed $50,000) and
out-of-pocket expenses of one firm of attorneys chosen by the Purchasers, as a
group, to represent them in connection with the purchase of the Securities and
any waiver, amendment or modification of any provision of this Agreement with
respect to an obligation of, or requested by, Holdings and STC.
10
<PAGE> 11
ARTICLE VIII
MISCELLANEOUS
8.1. Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to Holdings or STC:
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attention: Chief Financial Officer
Telecopier No.: 813/821-8092
Copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Jeremy W. Dickens
Telecopier No.: 214/746-7777
If to any Purchaser, at its address listed on the signature
pages hereof or such other address as such Purchaser may
provide by notice to Holdings.
Any notice or communication hereunder shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
receipt is acknowledged, if telecopied; and five calendar days after mailing if
sent by registered or certified mail (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Failure to mail a notice or communication to any Purchaser or
any defect in it shall not affect its sufficiency with respect to other
Purchasers.
8.2. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE
A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN CHOICE OF LAW RULES) OF
SAID STATE.
11
<PAGE> 12
8.3. Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns.
8.4. Duplicate Originals. All parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
8.5. Severability. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and the remaining provisions shall not in any way be
affected or impaired thereby.
8.6. No Waivers. No failure or delay on the part of any
party hereto in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be available to
the parties hereto at law or in equity or otherwise.
[Remainder of Page Left Blank Intentionally].
12
<PAGE> 13
SIGNATURES TO AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
SUNRISE TELEVISION CORP.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Name: Frederick W. Brazelton,
---------------------------------
Title: Vice President and
---------------------------------
Assistant Secretary
---------------------------------
STC BROADCASTING, INC.
By: /s/ FREDERICK W. BRAZELTON
-------------------------------------
Name: Frederick W. Brazelton,
---------------------------------
Title: Vice President and
---------------------------------
Assistant Secretary
---------------------------------
<PAGE> 14
SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE
ACCEPTED AND AGREED:
HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.
By: HM3/GP Partners III, L.P.,
its general partner
By: Hicks Muse GP Partners III, L.P.,
its general partner
By: Hicks, Muse Fund III, Incorporated,
its General Partner
By: /s/ LAWRENCE D. STUART, JR.
-----------------------------------------------
Lawrence D. Stuart, Jr.,
-----------------------------------------------
Executive Vice President
-----------------------------------------------
Number of Shares of Redeemable Preferred Stock: 250,000
Cash Purchase Price/Share: $96.50
Aggregate Cash Purchase Price: $24,125,000
Date: February 28, 1997
Address: c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 720-7888
<PAGE> 15
SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE
ACCEPTED AND AGREED:
CHASE EQUITY ASSOCIATES, L.P.
By:
It: General Partner
By: /s/ MICHAEL R. HANNON
--------------------------------------------
Name: Michael R. Hannon
----------------------------------------
Title: General Partner
---------------------------------------
Number of Shares of Redeemable Preferred Stock: 50,000
Cash Purchase Price/Share: $96.50
Aggregate Cash Purchase Price: $4,825,000
Date: February 28, 1997
Address:
------------------------------------------
------------------------------------------
------------------------------------------
Attention:
------------------------------
Telephone:
---------------------
Telecopy:
---------------------
<PAGE> 1
EXHIBIT 10.12
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT (this "Escrow Agreement") is
made and entered into as of this 4th day of November, 1996, by and among STV
Acquisition Company, a Delaware corporation (the "Three-Station Buyer"), Smith
Acquisition Company, a Delaware corporation (the "WTOV Buyer," and together
with the Three-Station Buyer, "Buyers"), Hicks, Muse, Tate & Furst Equity Fund
III, L.P., a Delaware limited partnership ("Fund III"), Smith Television of
Michigan, L.P., a Delaware limited partnership, Smith Television of Michigan
License, L.P., a Delaware limited partnership, Smith Television of Rochester,
L.P., a Delaware limited partnership, Smith Television of Rochester License,
L.P., a Delaware limited partnership, Smith Television of Salinas-Monterey,
L.P., a Delaware limited partnership, and Smith Television of Salinas-Monterey
License, L.P., a Delaware limited partnership (the foregoing entities shall be
referred to herein collectively as the "Three-Station Sellers"), Smith
Television-WTOV, L.P., a Delaware limited partnership, Smith Television-WTOV
License, L.P., a Delaware limited partnership (the foregoing entities shall be
referred to herein collectively as the "WTOV Sellers," and together with the
"Three Station Sellers," as "Sellers," and together with Buyers and Fund III,
the "Undersigned"), and Citibank, N.A., a national banking association with its
headquarters in New York City, New York ("Escrow Agent").
RECITALS
A. The Three-Station Buyer and the Three-Station Sellers have
entered into an Asset Purchase Agreement dated as of November 4, 1996 (the
"Three-Station Agreement") pursuant to which the Three-Station Sellers have
agreed to sell, assign, transfer, convey and deliver to the Three-Station
Buyer, and the Three-Station Buyer has agreed to purchase from the
Three-Station Sellers, the Assets with respect to television broadcast stations
WEYI, Saginaw, Michigan, WROC, Rochester, New York, and KSBW, Salinas,
California, all in accordance with and subject to the terms and conditions set
forth in the Three-Station Agreement and subject to the prior approval of the
Federal Communications Commission;
B. The WTOV Buyer and the WTOV Sellers have entered into an Asset
Purchase Agreement dated as of November 4, 1996 (the "WTOV Agreement," and
together with the Three-Station Agreement, the "Purchase Agreements") pursuant
to which the WTOV Sellers have agreed to sell, assign, transfer, convey and
deliver to the WTOV Buyer, and the WTOV Buyer has agreed to purchase from the
WTOV Sellers, the Assets with respect to television broadcast station WTOV,
Steubenville, Ohio, all in accordance with and subject to the terms and
conditions set forth in the
<PAGE> 2
WTOV Agreement and subject to the prior approval of the Federal Communications
Commission;
C. Pursuant to the Purchase Agreements, the Buyers are required
to deliver to the Escrow Agent an original, irrevocable letter of credit (the
"Letter of Credit") issued for the benefit of Sellers (and for the purposes of
Section 1.5 of this Escrow Agreement, Escrow Agent) in the amount of $7,850,000
in the form attached hereto as Appendix A;
D. As a condition to the execution of the Purchase Agreements,
the Undersigned have agreed to execute and deliver this Escrow Agreement; and
E. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to them in the Purchase Agreements.
AGREEMENTS
Accordingly, in consideration of the recitals and of the respective
agreements and covenants contained herein and in the Purchase Agreements, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
Section 1.1 Letter of Credit Escrow.
(a) Contemporaneously with the execution of this Escrow
Agreement, Buyers have delivered the Letter of Credit to Escrow Agent, pursuant
to the provisions of the Purchase Agreements.
(b) The Letter of Credit, any proceeds from the Letter of
Credit payable by its terms to the Escrow Agent and any interest or income
accrued thereon (the "Funds") are referred to herein as the "Escrowed
Property". The Escrowed Property shall be held, administered and disposed of
by the Escrow Agent in accordance with the terms and conditions hereinafter set
forth.
Section 1.2 Acceptance of Appointment as Escrow Agent. Escrow Agent,
by signing this Escrow Agreement, accepts its appointment as escrow agent with
respect to the Escrowed Property and agrees to hold and deliver the Escrowed
Property in accordance with the terms of this Escrow Agreement.
Section 1.3 Delivery of Letter of Credit to Sellers. Not more than
three (3) business days after (a) the delivery to Escrow Agent of written
instructions signed by Sellers, Fund III and Buyers stating that the Letter of
Credit is to be delivered to Sellers, or (b) the delivery to Escrow Agent of a
copy of a Final Determination (as defined below) establishing Sellers' right to
the Letter of Credit, Escrow Agent shall
-2-
<PAGE> 3
deliver the Letter of Credit to Sellers as provided in such instructions or
Final Determination. A "Final Determination" shall mean a final non-appealable
judgment of a court of competent jurisdiction. The Escrow Agent, at its
option, shall be entitled to seek and, if received, rely conclusively upon a
written opinion of legal counsel to the effect that a Final Determination
delivered to the Escrow Agent pursuant to this Escrow Agreement satisfies the
requirements hereof.
Section 1.4 Delivery of Letter of Credit to Buyers. Except as
otherwise provided in the last sentence of this Section 1.4, not more than
three (3) business days after (a) the delivery to Escrow Agent of written
instructions signed by Buyers and Sellers stating that the Letter of Credit is
to be delivered to Buyers, or (b) the delivery to Escrow Agent of a copy of a
Final Determination establishing Buyers' right to the Letter of Credit, Escrow
Agent shall deliver the Letter of Credit to Buyers. At the Closing,
simultaneously upon receipt by Escrow Agent of written instructions signed by
Buyers and Sellers stating that the Letter of Credit is to be delivered to
Buyers, the Escrow Agent shall deliver the Letter of Credit to Buyers or its
representative.
Section 1.5 Replacement of Letter of Credit.
(a) Buyers may provide to Sellers for their approval at least
forty-five (45) calendar days before the expiration of the Letter of Credit a
form of (i) an extension of the original Letter of Credit issued by the issuer
of the then expiring Letter of Credit (with no modifications to the original
Letter of Credit other than extending the expiration date for at least an
additional ninety (90) days after the then expiration date of the Letter of
Credit), or (ii) a substitute Letter of Credit in a form identical to Appendix
A (with an expiration date of not less than ninety (90) days after the
expiration date set forth in the then expiring Letter of Credit) issued by the
issuer of the original Letter of Credit or by a United States bank having
assets and a net worth (as established by the most recent public financial
information of such bank, copies of which shall be provided by Buyers or Fund
III to Sellers) equal to or greater than the bank which issued the then
expiring Letter of Credit, together with a statement signed by an officer of
Buyers or Fund III, in each case, certifying that such substitute Letter of
Credit or extension will comply with the foregoing requirements. If Sellers
approve such form of substitute Letter of Credit or extension in writing (such
approval not to be unreasonably withheld, conditioned or delayed) and Buyers or
Fund III delivers to Escrow Agent an original of such substitute Letter of
Credit or extension (duly executed by the issuing bank) and Sellers' written
approval, at least thirty (30) calendar days before the expiration of the
Letter of Credit, such substitute Letter of Credit (or such then expiring
Letter of Credit as extended by the extension) shall thereafter be deemed the
"Letter of Credit" for all purposes hereunder; and if a substitute Letter of
Credit is being provided, the Escrow Agent shall simultaneously exchange the
prior Letter of Credit for the substituted Letter of Credit and give receipts,
if requested by Buyers, for the same.
- 3 -
<PAGE> 4
(b) In the event that (i) Buyers or Fund III deliver a form
of substitute Letter of Credit and Sellers do not approve the form thereof, or
(ii) Buyers or Fund III do not deliver an original substitute Letter of Credit
to Escrow Agent (or an extension of the expiring Letter of Credit) at least
thirty (30) calendar days before the expiration of the then expiring Letter of
Credit, Buyers may not replace the Letter of Credit, and upon written
instructions signed by Sellers, Escrow Agent shall immediately present the
Letter of Credit for payment (with a drawing certificate signed by one of the
Sellers) and hold the funds drawn pursuant thereto in accordance with the terms
of this Escrow Agreement notwithstanding any actual or alleged default
hereunder or under the Purchase Agreements by any party or any instruction to
the contrary by Buyers, Fund III or any other person, and notwithstanding any
other state of facts.
Section 1.6 Investment of Proceeds of Letter of Credit.
(a) If the Letter of Credit is drawn by the Escrow Agent
or Sellers because it will expire and Buyers or Fund III have not replaced it
pursuant to and in accordance with Section 1.5, upon receipt of the Funds of
such drawing pursuant to the terms of the Letter of Credit, Escrow Agent shall
hold the Funds in escrow in lieu of the Letter of Credit, and shall invest the
Funds in Permitted Investments (as defined in (b) below). Escrow Agent shall
hold and release the Funds in accordance with the terms of this Escrow
Agreement (all references herein to the Letter of Credit being deemed to be
references to the Funds for such purpose).
(b) "Permitted Investments" shall mean direct obligations
of the U.S. government having maturities of 90 days or less, money market funds
that invest solely in direct obligations of the U.S. government, and such other
investments as may be specified from time to time by joint written instructions
from Buyers and Sellers to the Escrow Agent; provided, such other investments
are consistent with the Escrow Agent's investment criteria. Escrow Agent will
act upon investment instructions the day that such instructions are received,
provided the requests are communicated within a sufficient amount of time to
allow Escrow Agent to make the specified investment. Instructions received
after an applicable investment cutoff deadline will be treated as being
received by Escrow Agent on the next business day, and Escrow Agent shall not
be liable for any loss arising directly or indirectly, in whole or in part,
from the inability to invest funds on the day the instructions are received.
The Escrow Agent shall not be liable for any loss incurred by the actions of
third parties or by any loss arising by error, failure or delay in making of an
investment or reinvestment, and the Escrow Agent shall not be liable for any
loss of principal or income in connection
- 4 -
<PAGE> 5
therewith, unless such error, failure or delay results from the Escrow Agent's
gross negligence or willful misconduct. As and when the Funds are to be
released under this Escrow Agreement, Escrow Agent shall cause the Permitted
Investments to be converted into cash and shall not be liable for any loss of
principal or income in connection therewith. None of Sellers, Buyers or Escrow
Agent shall be liable for any loss of principal or income due to the choice of
Permitted Investments in which the Funds are invested or the choice of
Permitted Investments converted into cash pursuant to this paragraph (b).
(c) All interest or other income on the Funds shall be
the property of Fund III and shall be distributed by Escrow Agent to Fund III
by check on a monthly basis less the amount payable by Escrow Agent to Sellers
under Section 1.6(d), if any. The parties acknowledge that payment of any
interest earned on the funds invested in this escrow will be subject to backup
withholding penalties unless a properly completed Internal Revenue Service form
W8 or W9 certification is submitted to Escrow Agent.
(d) For tax purposes, the Funds shall be property of Fund
III and all interest and other income earned on the Funds shall be the income
of the Fund III. Fund III and Sellers shall file Tax Returns and the Escrow
Agent shall file a Form 1099 consistent with such treatment. In the event that
the Internal Revenue Service or any other governmental authority successfully
claims that the interest and other income earned on the Funds is taxable to
Sellers for any taxable period, Fund III shall promptly pay to Sellers cash
equal to the product of the Effective Tax Rate times all amounts paid by Escrow
Agent to Fund III pursuant to Section 1.6(c) for such taxable period, plus
interest on such amount at the rate specified by section 6621(a)(2) of the Code
and corresponding provisions of applicable state and local laws, and the Escrow
Agent shall thereafter make monthly distributions to Sellers of cash equal to
the product of the Effective Tax Rate times the income distributable pursuant
to Section 1.6(c) for such period. The term "Effective Tax Rate" shall mean
the highest marginal effective combined federal, state and local income tax
rate applicable with respect to Sellers or the partners of Sellers, as the case
may be, as reasonably computed and provided to the Escrow Agent by Sellers.
ARTICLE II
ESCROW AGENT
Section 2.1 Language Concerning the Escrow Agent. To induce the
Escrow Agent to act hereunder, it is further agreed by the Undersigned that:
(a) The Escrow Agent shall not be under any duty to give
the Escrowed Property any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Escrow Agreement. Uninvested funds held hereunder shall not
earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied
- 5 -
<PAGE> 6
duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the Undersigned except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its
own gross negligence or willful misconduct and, except with respect to claims
based upon such gross negligence or willful misconduct that are successfully
asserted against the Escrow Agent, the Undersigned shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out
of and in connection with this Escrow Agreement. Without limiting the
foregoing, the Escrow Agent shall in no event be liable in connection with its
investment or reinvestment of any cash held by it hereunder in good faith, in
accordance with the terms hereof, including without limitation, any liability
for any delays (not resulting from its gross negligence or willful misconduct)
in the investment or reinvestment of the Funds or any loss of interest incident
to any such delays.
(d) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so. Without limiting the generality of the foregoing, Escrow Agent may rely
on any extension or Letter of Credit delivered to it as constituting the Letter
of Credit hereunder for all purposes unless notified in writing by Sellers to
the contrary prior to its substitution.
(e) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in accordance with such advice.
(f) The Escrow Agent does not have any interest in the
Escrowed Property deposited hereunder but is serving as escrow holder only and
having only possession thereof. Fund III shall pay or reimburse the Escrow
Agent upon request for any transfer taxes or other taxes relating to the
Escrowed Property incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent from any amounts that it is obligated to pay in the
way of such taxes. Any payments of income from this Escrow Account shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will promptly provide the Escrow Agent with
appropriate W-9 forms for Tax I.D. number certifications, or W-8 forms for
non-resident alien certifications. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to
- 6 -
<PAGE> 7
income earned on investment of the Funds and is not responsible for any other
reporting. This paragraph and Section 2.1(c) shall survive notwithstanding any
termination of this Escrow Agreement or the resignation of the Escrow Agent.
(g) The Escrow Agent makes no representations as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise
any party as to the wisdom in selling or retaining or taking or refraining from
any action with respect to any securities or other property deposited
hereunder.
(i) The Escrow Agent (and any successor Escrow Agent) may
at any time resign as such by delivering the Escrowed Property to any successor
Escrow Agent jointly designated by each of the Undersigned in writing or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be discharged
of and from any and all further obligations arising in connection with this
Escrow Agreement. The resignation of the Escrow Agent will take effect on the
earlier of (i) the appointment of a successor (including a court of competent
jurisdiction) or (ii) the day which is thirty (30) days after the date of
delivery of its written notice of resignation to each of the Undersigned. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be
to safekeep the Escrowed Property until receipt of a designation of successor
Escrow Agent or a joint written disposition instruction by each of the
Undersigned or a final order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of the arbitrators or any third party contemplated
herein as a means to resolve disputes and may rely without any liability upon
the contents thereof.
(k) In the event of any disagreement between the
Undersigned resulting in adverse claims or demands being made in connection
with the Escrowed Property, or in the event that the Escrow Agent in good faith
is in doubt as to what action it should take hereunder, the Escrow Agent shall
retain the Escrowed Property until the Escrow Agent shall have received (i) a
Final Determination directing delivery of the Escrowed Property or (ii) a
written agreement executed by Sellers, Buyers and Fund III directing delivery
of the Escrowed Property, in which event the Escrow Agent shall disburse the
Escrowed Property in accordance with such order or agreement. The Escrow
Agent, at its option, shall be entitled to seek and, if obtained, rely
conclusively upon an opinion of independent counsel to the effect that any
court order delivered to Escrow Agent is a Final Determination. The Escrow
Agent shall act on such court order and legal opinion without further question.
- 7 -
<PAGE> 8
(l) The compensation of the Escrow Agent (as payment in
full) for the services to be rendered by the Escrow Agent hereunder shall be
paid by Fund III in the amount of $_____, plus an additional $_____ for legal
fees, at the time of execution of this Escrow Agreement and $_____ annually
thereafter, together with reimbursement for all reasonable expenses,
disbursements and advances incurred or made by the Escrow Agent in performance
of its duties hereunder (including reasonable fees, expenses and disbursements
of its counsel). All fees and expenses of the Escrow Agent hereunder, other
than initial fee paid upon the execution hereof, shall be paid first out of
interest, dividends, and other income earned on the Funds, if any, and then, to
the extent of any shortfall, by Fund III. Any fees or expenses of the Escrow
Agent or its counsel which are not paid as provided for herein may be taken
from any property held by the Escrow Agent hereunder. It is understood that
the Escrow Agent's fees may be adjusted from time to time to conform to its
then current guidelines.
(m) The Undersigned hereby irrevocably submit to the
jurisdiction of any New York State or federal court sitting in the Borough of
Manhattan in New York City in any action or proceeding arising out of or
relating to this Escrow Agreement, and the parties hereby irrevocably agree
that all claims in respect of such action or proceeding, shall be heard and
determined in such a New York State or federal court. The Undersigned hereby
consent to and grant to any such court jurisdiction over the persons of such
parties and over the subject matter of any such dispute and agree that delivery
or mailing of any process or other papers in the manner provided hereinabove,
or in such other manners as may be permitted by law, shall be valid and
sufficient service thereof.
(n) No printed or other matter in any language (including
without limitation, prospectuses, notices, reports and promotional material)
which mentions the Escrow Agent shall be issued by the other parties hereto or
on such parties' behalf unless the Escrow Agent shall first have given its
specific written consent thereto, or is otherwise required by statute, law or
court order.
(o) The other parties hereto authorize the Escrow Agent,
for any securities held hereunder, to use the services of any United States
central securities depository it deems appropriate, including, but not limited
to, the Depository Trust Company and the Federal Reserve Book Entry System.
- 8 -
<PAGE> 9
ARTICLE III
MISCELLANEOUS
Section 3.1 Notices. All notices, requests, consents or other
communications required or permitted under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given or delivered by any party
(a) when received by such party if delivered by hand, (b) upon confirmation
when delivered by telecopy (any communication delivered by telecopy shall be
followed promptly with an original thereof), (c) within one day after being
sent by recognized overnight delivery service, or (d) within three business
days after being mailed by first-class mail, postage prepaid, and in each case
addressed as follows:
(i) if to Fund III:
Hicks, Muse, Tate & Furst Equity Fund III, L.P.
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy No.: (214) 740-7313
(ii) if to Buyers:
STV Acquisition Company
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy No.: (214) 740-7313
and to:
Smith Acquisition Company
3839 4th Street North, Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy No.: (813) 821-8092
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: Glenn D. West, Esq.
Telecopy No.: (214) 746-7777
- 9 -
<PAGE> 10
(ii) if to Sellers, to:
Jupiter/Smith TV Holdings, L.P.
30 Rockefeller Plaza
Suite 4525
New York, NY 10112
Attention: John Sprague
Telecopy No.: (212) 332-2828
with copies (which shall not constitute notice) to:
Smith Broadcasting Partners, L.P.
3839 4th Street North, Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy No.: (813) 821-8092
and to:
Hogan & Hartson L.L.P.
8300 Greensboro Drive
Suite 1100
McLean, VA 22102
Attention: Richard T. Horan, Jr., Esq.
Telecopy No.: (703) 448-7650
(iii) if to Escrow Agent, to
Citibank, N.A.
Corporate Trust/Escrow Administration
120 Wall Street, 13th Floor
New York, New York 10043
Telecopy No.: (212) 480-1614
Telex Numbers:
Foreign - 420392 FNC UI
Domestic - 127001 Citibank NYKB
Reference in Telex "Citiswitch - NYCTA"
Federal Reserve Fund Transfers:
Citibank, N.A.
111 Wall Street
New York, New York 10043
- 10 -
<PAGE> 11
For credit to A/C 36855852
Escrow Administration Concentration Account
for further credit to _________________________
Attention: Jeff Zeiler
ABA Number: 0210-0008-9
Any party by written notice to the other parties pursuant to this Section 3.1
may change the address or the persons to whom notices or copies thereof are to
be sent to it by giving written notice of a change of address in the manner
provided in this Escrow Agreement for giving notice.
Section 3.2 Assignment. This Escrow Agreement and the rights and
duties hereunder shall be binding upon and inure to the benefit of the parties
hereto and the successors and assigns of each of the parties to this Escrow
Agreement. No rights, obligations or liabilities hereunder shall be assignable
by any party without the prior written consent of the other parties, except
that Buyers may assign its rights under this Escrow Agreement without obtaining
the prior written consent of the other parties hereto to any person or entity
to whom, pursuant to the Purchase Agreements, Buyers are permitted to assign
all or any portion of its rights under the Purchase Agreements, provided that
any such assignee duly executes and delivers an agreement to assume Buyers'
obligations under this Escrow Agreement.
Section 3.3 Amendment. This Escrow Agreement may be amended or
modified only by an instrument in writing duly executed by the parties to this
Escrow Agreement.
Section 3.4 Waivers. Any waiver by any party hereto of any breach of
or failure to comply with any provision of this Escrow Agreement by any other
party hereto shall be in writing and shall not be construed as, or constitute,
a continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Escrow Agreement.
Section 3.5 Construction. This Escrow Agreement shall be construed
and enforced in accordance with and governed by the internal substantive laws
of the State of New York without regard to conflicts of laws principles. The
headings in this Escrow Agreement are solely for convenience of reference shall
unto be given any effect in the construction or interpretation of this Escrow
Agreement. Unless otherwise stated, references to Sections and Exhibits are
references to Sections and Exhibits of this Escrow Agreement.
Section 3.6 Third Parties. Nothing expressed or implied in this
Escrow Agreement is intended, or shall be construed, to confer upon or give any
person or entity other than Buyers, Sellers and Escrow Agent any rights or
remedies under, or by reason or, this Escrow Agreement.
- 11 -
<PAGE> 12
Section 3.7 Termination. This Escrow Agreement shall terminate at
the time of the delivery by Escrow Agent of the Letter of Credit or the Funds,
if any, to Sellers or Buyers, as the case may be, in accordance with the
provisions of this Escrow Agreement.
Section 3.8 Counterparts. This Escrow Agreement may be executed in
one or more counterparts, each of which shall be deemed any original and all of
which together shall constitute a single instrument.
Section 3.9 Waiver of Offset Rights. Escrow Agent hereby waives any
and all rights to offset that it may have against the Letter of Credit
including, without limitation, claims arising as a result of any claims,
amounts, liabilities, costs, expenses, damages, or other losses (collectively,
"Claims") that Escrow Agent may be otherwise entitled to collect from any party
to this Escrow Agreement, other than Claims arising under this Escrow
Agreement.
[The remainder of this page is intentionally left blank.]
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
BUYERS:
STV ACQUISITION COMPANY
By:/s/ DANIEL S. DROSS
---------------------------
Name: Daniel S. Dross
---------------------------
Title: Vice President
---------------------------
SMITH ACQUISITION COMPANY
By:/s/ DANIEL S. DROSS
---------------------------
Name: Daniel S. Dross
-------------------------
Title: Vice President
------------------------
SELLERS:
SMITH TELEVISION OF MICHIGAN, L.P.
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By:/s/ DAVID A. FITZ
---------------------------
Name: David A. Fitz
Title: Executive Vice President
- 13 -
<PAGE> 14
SMITH TELEVISION OF ROCHESTER, L.P.
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A. FRITZ
---------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION-WTOV, L.P.
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A. FITZ
---------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF SALINAS-MONTEREY, L.P.
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By:/s/ DAVID A. FITZ
---------------------------
Name: David A. Fitz
Title: Executive Vice President
- 14 -
<PAGE> 15
SMITH TELEVISION OF MICHIGAN LICENSE, L.P.
By: Smith Television of Michigan,
L.P., its general partner
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A/ FITZ
------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF ROCHESTER LICENSE, L.P
By: Smith Television of Rochester,
L.P., its general partner
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A. FITZ
------------------------------
Name: David A. Fitz
Title: Executive Vice President
- 15 -
<PAGE> 16
SMITH TELEVISION-WTOV LICENSE, L.P.
By: Smith Television-WTOV, L.P.,
its general partner
By: Smith Broadcasting Partners,
L.P., its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A. FITZ
---------------------------------
Name: David A. Fitz
Title: Executive Vice President
SMITH TELEVISION OF SALINAS-
MONTEREY LICENSE, L.P.
By: Smith Television of Salinas-Monterey,
L.P., its general partner
By: Smith Broadcasting Partners, L.P.,
its general partner
By: Smith Broadcasting Group, Inc.,
its general partner
By: /s/ DAVID A FITZ
---------------------------------
Name: David A. Fitz
Title: Executive Vice President
- 16 -
<PAGE> 17
FUND III:
HICKS, MUSE, TATE & FURST
EQUITY FUND III, L.P.
By: HM3/GP PARTNERS III, L.P.,
its general partner
By: HICKS MUSE GP PARTNERS III, L.P.,
its general partner
By: HICKS, MUSE FUND III, INCORPORATED,
its general partner
By: /s/ DANIEL S. DROSS
---------------------------------
Title: Vice President
ESCROW AGENT:
CITIBANK, N.A.
By: /s/ ROBERT A. MASSIMILLO
---------------------------------
Name: Robert A. Massimillo
-------------------------------
Title: Senior Trust Officer
------------------------------
- 17 -
<PAGE> 1
EXHIBIT 10.13
PROMISSORY NOTE
$28,500,000 FEBRUARY 28, 1997
NEW YORK, NEW YORK
FOR VALUE RECEIVED, the undersigned, Smith Acquisition
Company, a Delaware corporation ("Subsidiary"), does hereby promise to pay to
the order of STC Broadcasting, Inc., a Delaware corporation ("Parent"), at its
offices located at 546 15th Ave., N.E., St. Petersburg, Florida 33704, in
lawful money of the United States, the original principal sum of Twenty-Eight
Million Five Hundred Thousand and No/100 Dollars ($28,500,000), together with
interest on the principal balance from time to time remaining unpaid, at the
rate herein provided. The obligations of payment of principal and interest
hereunder are hereinafter referred to as the "Indebtedness" and this Promissory
Note is hereinafter referred to as this "Note".
1. Payment of Interest. (a) Subsidiary promises to pay
interest on the unpaid principal amount of this Note at an interest rate per
annum equal to the same rate of interest specified for Term Loans made pursuant
to Section 2.12 of that certain Credit Agreement dated as of February 28, 1997
(the "Credit Agreement"), among STC Broadcasting, Inc., the Lenders party
thereto from time to time, NationsBank of Texas, N.A., as Documentation Agent,
and the Chase Manhattan Bank, as Administrative Agent (capitalized terms used
herein and not defined are used herein as defined in the Credit Agreement).
(b) Interest shall be due and payable at the end of each
calendar month occurring during the term of this Note.
(c) If any payment of Indebtedness on this Note shall
become due on a Saturday, Sunday or other day on which banks in New York, New
York are legally closed, such payment shall be made on the next succeeding
business day.
2. Payment of Principal. Principal on this Note,
together with all accrued but unpaid interest thereon, shall be due and payable
on the demand of Parent.
3. Prepayment. Subsidiary shall be entitled to prepay,
in full or in part, without penalty, all sums due under this Note.
<PAGE> 2
4. Remedies. Upon default in the payment of the amounts
due hereunder which has not been remedied within 10 days of notice given by
Parent to Subsidiary, then Parent may, at its sole discretion, declare the
principal of this Note, together with all accrued and unpaid interest thereon,
to be immediately due and payable, and the same shall become and be due and
payable, without presentment, demand, protest, notice of intent to accelerate
or other notice of any kind, all of which are hereby expressly waived, and
Parent may exercise all other remedies available, at law, in equity or
hereunder.
5. Governing Law. This Note shall be construed in
accordance with and governed by the laws of the State of New York.
2
<PAGE> 3
EXECUTED as of the date set forth on the first page of this
Note.
Smith Acquisition Company, a Delaware
corporation
By: /s/ DAVID A. FITZ
-------------------------------------
Name: David A. Fitz
-----------------------------------
Title: Senior Vice President
----------------------------------
STC BROADCASTING, INC.
By: /s/ DAVID A. FITZ
-----------------------------------
Name: David A. Fitz
---------------------------------
Title: Senior Vice President
--------------------------------
Pay to the order of
- --------------------------------------
3
<PAGE> 1
EXHIBIT 10.14
STV ACQUISITION COMPANY
SMITH ACQUISITION COMPANY
200 CRESCENT COURT
SUITE 1600
DALLAS, TEXAS 75201
November 4, 1996
Mr. Robert N. Smith
Smith Broadcasting Partners, L.P.
c/o 3839 4th Street North
Suite 420
St. Petersburg, FL 33703
Gentlemen:
In reliance upon, among other things, this Letter Agreement, (a) STV
Acquisition Company, a Delaware corporation ("STV") and a wholly-owned
subsidiary of Hicks, Muse, Tate & Furst Equity Fund III, L.P. ("Hicks Muse"),
entered into an Asset Purchase Agreement (the "WEYI/WROC/KSBW Asset Purchase
Agreement") of even date herewith, pursuant to which STV agreed to, among other
things, (i) acquire certain assets and assume certain liabilities related to
the Stations (other than WTOV-TV) and (ii) deposit in escrow an Irrevocable
Letter of Credit in an amount of $7.85 million (the "Earnest Money Deposit")
and (b) Smith Acquisition Company, a wholly-owned subsidiary of STV ("SAC"),
entered into an Asset Purchase Agreement (the "WTOV Asset Purchase Agreement"
and, together with the WEYI/WROC/KSBW Asset Purchase Agreement, the "Asset
Purchase Agreements") of even date herewith, pursuant to which SAC agreed to
acquire certain assets and assume certain liabilities related to WTOV.
Capitalized terms used herein and not otherwise defined shall have the meanings
given same in the Asset Purchase Agreements.
In consideration of the foregoing and the agreements herein set forth,
the parties hereto agree as follows:
1. Guarantee. To the extent the Sellers fail to pay any amount
owed to STV and SAC under Section 2.6.2 of each of the Asset Purchase
Agreements,
<PAGE> 2
Robert N. Smith hereby agrees to pay STV and SAC the lesser of (a) the amount
owed to STV and SAC as an overpayment of the Net Working Capital Amount
pursuant to Section 2.6.2 of each of the Asset Purchase Agreements, or (b) the
sum of $200,000.
2. Assignability. No party hereto shall have the right or the
power to assign or delegate this Letter Agreement or any interest herein, in
whole or in part, without the prior written consent of the other party hereto,
and any purported assignment or delegation without such prior written consent
shall be null and void; provided, however, that STV and SAC may assign or
delegate this Letter Agreement or any interest herein to any affiliate of Hicks
Muse or Robert N. Smith.
3. Amendments. The terms of this Letter Agreement cannot be
changed, waived, released or discharged otherwise than by a writing signed by
each party hereto.
4. Nonwaiver. Failure to insist in any instance upon strict
performance of any provision of this Letter Agreement or to enforce any right
hereunder shall not be construed as a waiver of any such provision or the
relinquishment of any such right but the same shall continue in full force and
effect.
5. Governing Law. This Letter Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without giving
effect to the principles of conflict of laws thereof.
6. Counterparts. This Letter Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; such counterparts shall together constitute but one agreement.
Very truly yours,
STV ACQUISITION COMPANY
By: /s/ DANIEL S. DROSS
------------------------------------
Name: Daniel S. Dross
-------------------------------
Title: Vice President
------------------------------
2
<PAGE> 3
SMITH ACQUISITION COMPANY
By: /s/ ROBERT N. SMITH
-----------------------------------
Name: Robert N. Smith
------------------------------
Title: President
-----------------------------
Acknowledged and Agreed
to as of the date
first entered above:
/s/ ROBERT N. SMITH
- -----------------------
Robert N. Smith
3
<PAGE> 1
EXHIBIT 10.15
February 28, 1997
Sunrise Television Partners, L.P. (the "Partnership")
Sunrise Television Corp.
STC Broadcasting, Inc. ("STC")
200 Crescent Court, Suite 1600
Dallas, Texas 75202
Re: Smith Acquisition Company, a Delaware corporation
(the "Company")
Gentlemen:
This letter will confirm that at such time, if ever, as the
990 shares of Convertible Nonvoting Stock issued by the Company to STC
Broadcasting, Inc. ("STC") are converted, in accordance with the applicable
provisions of the Company's Articles, into 990 shares of Voting Stock of the
Company, the undersigned shall cooperate fully to cause (i) the 10 shares of
Voting Stock held by the undersigned in the Company, which shares would then
represent only 1% of the total outstanding Voting Stock of the Company to be
redeemed or extinguished (through merger with STC), with any amounts received
therefor to be netted out of distributions otherwise payable to SBP II, L.P. as
a holder of Class A Interests in the Partnership; and (ii) the merger of the
Company with and into STC. The undersigned further agrees that it shall not
take any action to amend the Articles to affect adversely the Convertible
Nonvoting Stock without the consent of the holders of the Convertible Nonvoting
Stock.
Capitalized terms used herein and not otherwise defined shall
have the meaning given to same in the Articles of Incorporation of the Company,
as amended by Certificate of Amendment, dated February 25, 1997 (the
"Articles").
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The undersigned acknowledges that you are relying on this
letter in making your investment in the Company and the addressees of this
letter.
Very truly yours,
SMITH BROADCASTING PARTNERS, L.P.
By: Smith Broadcasting Group, Inc.
By: /s/ DAVID A. FITZ
--------------------------------
David A. Fitz
Vice President
SBP II, L.P.
By: Smith Broadcasting Group, Inc.
By: /s/ DAVID A. FITZ
-------------------------------
David A. Fitz
Vice President
SMITH ACQUISITION COMPANY
By: /s/ DAVID A. FITZ
-------------------------------
David A. Fitz
Vice President
2
<PAGE> 1
EXHIBIT 10.16
[NBC LETTERHEAD]
July 10, 1995
WEYI Associates c/o WEYI-TV
2225 West Willard Road
Clio, Michigan 48420
RE: WEYI-TV (Saginaw, Michigan)
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station WEYI-TV (you and WEYI-TV
collectively herein called "Station") with the NBC Television Network (herein
called "NBC").
1. Term. This Agreement shall be deemed effective as of
January 16, 1995 (the "Effective Time"), and, unless sooner terminated as
provided in this Agreement, it shall remain in effect for a period of seven (7)
years thereafter. It shall then be renewed on the same terms and conditions for
a further period of three (3) years and for successive further periods of three
(3) years each, unless and until either party shall, at least twelve (12)
months prior to the expiration of the then current term, give the other party
written notice that it does not desire to have this Agreement renewed for a
further period. Station represents and warrants that its affiliation agreement
with the CBS Television Network ("CBS") and any and all related commitments,
agreements and understandings are terminated and of no further force or effect
as of the Effective Time.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air
television broadcasting all programming which NBC makes available for
broadcasting in the community to which Station is presently licensed by the
FCC, except as otherwise expressly provided herein.
(b) NBC commits to supply sufficient programming
throughout the term of this Agreement for the hours presently programmed by it
(the "Programmed Time Periods"), which Programmed Time Periods are as follows
(the specified times are all local time in Station's community of license):
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Prime Time: Monday thru Saturday - 7:00-10:00 P.M.
Sunday - 6:00-10:00 P.M.
Late Night: Monday thru Thursday - 10:35 P.M.-1:05 A.M.
Friday - 10:35 P.M.-1:35 A.M.
Saturday - 10:30 P.M.-12:00 Midnight
News: Monday thru Friday - 6:30-7:00 A.M.,
7:00-9:00 A.M. and 6:30-7:00 P.M.
Saturday - 7:00-9:00 A.M. and 6:30-7:00 P.M.
Sunday - 9:00-10:00 A.M., 11:00 A.M.-12:00
Noon and 6:30-7:00 P.M.
Daytime: Monday thru Friday - 10:00-11:00 A.M. and
1:00-3:00 P.M.
Saturday - 10:00 A.M.-12:30 P.M.
The selection, scheduling, substitution and withdrawal of any
program or portion thereof delivered to Station during the Programmed Time
Periods shall at all times remain within the sole discretion and control of
NBC. The parties acknowledge that local and network programming needs may
change during the term of this Agreement, and each party agrees throughout the
term to negotiate in good faith with the other party any proposed modification
of the Programmed Time Periods.
(c) In addition to the programming supplied pursuant to
Paragraph 2(b) above, NBC shall offer Station throughout the term of this
Agreement a variety of sports, special events and overnight news programming
for television broadcast at times other than the Programmed Time Periods.
Station shall have the right of first refusal with respect to any such
programming good for seventy-two (72) hours as against any other television
station located in Station's community of license or any television program
transmission service furnishing a television signal to Station's community of
license, including, but not limited to, any community antennae television
system, subscription television service, multipoint distribution system, video
distribution system operated by a common carrier and satellite transmission
service. Station shall notify NBC of its acceptance or rejection of NBC's offer
of such programming as promptly as possible. Station's acceptance of NBC's
offer shall constitute Station's agreement to broadcast such programming in
accordance with the terms of such offer and this Agreement. Notwithstanding any
other provision in this Agreement, no preexisting acceptance of NBC programming
shall be superseded or otherwise affected by this Agreement, and those
acceptances shall remain in full force and effect. With respect to NBC programs
outside the Programmed Time Periods (either offered or already contracted for
pursuant to this Agreement), nothing herein contained shall prevent or hinder
NBC from (i) substituting one
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or more sponsored or sustaining programs, in which event NBC shall offer such
substituted program or programs to Station in accordance with the provisions of
this Paragraph 2(c), or (ii) canceling one or more such NBC programs; provided,
however, that NBC shall exercise all reasonable efforts to give Station at
least three (3) weeks prior written notice of such substitution or
cancellation. Station shall not be obligated to broadcast, and NBC shall not be
obligated to continue to deliver, subsequent to the termination of this
Agreement, any programs which NBC may have offered and which Station may have
accepted during the term hereof.
3. Station Carriage in Programmed Time Periods.
(a) Station agrees -that, subject only to the preemption
rights set forth herein, including Station's unqualified right to preempt for
local live coverage of news events, Station shall broadcast over Station's
facilities all NBC programming supplied to Station for broadcast in the
Programmed Time Periods on the dates and at the times the programs are
scheduled by NBC, except to the extent that Station is actually broadcasting
programming pursuant to (and within the specified limits of) a commitment
contemplated by Paragraph 3(b) below.
(b) As an inducement for NBC to enter into this
Agreement, Station covenants, represents and warrants to NBC that during any
Broadcast Year (as hereinafter defined) during the term hereof, Station shall
preempt no more than twenty (20) hours in the aggregate of NBC programs during
the Prime Time Programmed Time Period for any reason other than for the live
coverage of news events (the "Prime Time Preemption Amount"). For the purposes
of this Agreement, a "Broadcast Year,, shall mean a twelve (12) month period
during the term hereof which commences on any September 1 during the term
hereof and which ends on August 31 of the immediately following year. Station
hereby confirms that its rights and obligations under this Paragraph 3(b) are
consistent with its rights and obligations referred to in Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all
sports programming offered to the Station by NBC outside the Programmed Time
Periods ("NBC Sports Programming"), except for NBC sports programming which
directly conflicts with Station's coverage of sports events and special events
of particular local interest (collectively, such coverage of such sports events
and special events are referred to below as "Special Programs"). Station agrees
not to broadcast more than ten (10) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods (the "Sports Preemption Amount").
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(d) Notwithstanding the foregoing provisions of
subparagraphs (b) and (c) above and without limiting the provisions thereof,
Station agrees that, in any one (1) month period during a Broadcast Year,
Station's preemptions of NBC Prime Time programs and NBC Sports Programming
shall not exceed 20% of, respectively, the Prime Time Preemption Amount and the
Sports Preemption Amount, unless otherwise consistent with Station's
programming practice.
(e) In the event that NBC replaces "The Other Side,"
Station shall clear such replacement NBC programming upon the expiration or
termination (without giving effect to any renewal term) of any of Station's
existing contractual commitments for non-NBC programming broadcast by Station
Monday through Friday during the hours of 9:00 A.M - 3:00 P.M. Such additional
one (1) hour shall then become part of the Daytime Programmed Time Period for
purposes of Paragraphs 2(b) and 3(a) hereof.
4. Preemptions.
(a) In the event that Station, for any reason, fails to
broadcast or advises NBC that it will not broadcast any NBC programming as
provided herein, then, in each case, Station, upon notice from NBC to Station,
shall broadcast such omitted programming and the commercial announcements
contained therein (or any replacement programming and the commercial
announcements contained therein) during a time period or periods which the
parties shall promptly and mutually agree upon and which shall, to the extent
possible, be of a quality and rating value comparable to that of the time
period or periods at which such omitted programming was not broadcast as
provided herein. In the event that the parties do not promptly agree upon a
time period or periods as provided in the preceding sentence, then, without
limitation to any other rights of NBC under this Agreement or otherwise, NBC
shall have the right to license the broadcast rights to the applicable omitted
programming (or replacement programming) to another television station located
in Station's community of license.
(b) In the event that Station preempts or fails to clear
or broadcast any NBC programming as provided herein for any reason other than:
(i) the live coverage of local news events, (ii) as permitted by Paragraphs
3(b), 3(c) or 3(d) above, (iii) force majeure as provided for in Paragraph 11
below, or (iv) because: (A) the programming is delivered in a form which does
not meet accepted standards of good engineering practice; (B) the programming
does not comply with the rules and regulations of the FCC; or (C) Station
reasonably believes that such programming would not meet prevailing
contemporary standards of good taste in its community of license, then, without
limiting any other rights of NBC under this Agreement or otherwise, upon NBC's
request, Station shall pay NBC, or NBC may deduct or offset from any amounts
payable to Station hereunder or under any other agreement
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<PAGE> 5
between Station and NBC (or an entity controlling, controlled by or under
common control with NBC), an amount equivalent to NBC's loss in net advertising
revenues attributable to the failure of Station to broadcast such program in
Station's market as scheduled by NBC, which amount shall be calculated in
accordance with Exhibit A hereto. Without limiting or affecting any other
determination of a material breach hereunder, any failure by Station to pay any
amount due under this Paragraph 4(b) shall be deemed a material breach of this
Agreement, and NBC shall have the option, exercisable in its sole discretion
upon thirty (30) days, written notice to Station, to either (x) terminate
Station's right to broadcast any one or more series or other NBC programs, as
NBC shall elect, and, to the extent and for the period(s) that NBC elects,
thereafter license the broadcast rights to such series or other NBC program(s)
to any other television station or stations located in Station's community of
license or (y) unless the breach is cured within such thirty (30) day period,
terminate this Agreement. Station acknowledges that NBC programming previously
broadcast by Station has been consistent with the standards set forth in the
foregoing clause (C); Station also agrees that Station's reasonable belief that
an NBC program does not meet such standards will be based on a substantial
difference in such program's style and content from NBC programs previously
broadcast by Station, unless the relevant standards in the Station's community
of license have changed.
(c) With respect to programs offered or already
contracted for pursuant to this Agreement, nothing herein contained shall be
construed to prevent or hinder Licensee from: (i) rejecting or refusing any NBC
program which Station reasonably believes to be unsatisfactory or unsuitable or
contrary to the public interest, or (ii) substituting a program which, in
Station's opinion, is of greater local or national importance; provided,
however, that Station shall give NBC written notice of each such rejection,
refusal or substitution, and the reason therefor, at least three (3) weeks in
advance of the scheduled broadcast, or as soon thereafter as possible
(including an explanation of the cause for any lesser notice). Station confirms
that its determination that a substitute program is of greater local or
national importance shall be based on Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of Station's
performance of its obligations under this Agreement NBC shall compensate
Station as follows:
(a) (i) NBC shall pay Station for Station's broadcast of
each network sponsored program or portion thereof (excellent those
specified in Paragraph 5(b) below) which is broadcast during the Live
Time Period therefor the amount resulting from multiplying the
following:
(A) Station's Network Station Rate, which is $680; by
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<PAGE> 6
(B) The percentage set forth in the compensation matrix
table attached hereto as Exhibit 3 (the "Compensation
Table") opposite the applicable time period; by
(C) The fraction of an hour substantially occupied by
such program or portion thereof; by
(D) The fraction of the aggregate length of all
Commercial Availabilities during such program or
portion thereof occupied by Network Commercial
Announcements.
As used herein, "Live Time Period" shall mean the time period
or periods as specified by NBC for the broadcast of a program by
Station; "Commercial Availability" shall mean a period of time made
available by NBC during a network sponsored program for one or more
Network Commercial Announcements; and "Network Commercial
Announcement" shall mean a commercial announcement broadcast over
Station during a Commercial Availability and paid for by or on behalf
of one or more of NBC's network advertisers, not including, however,
announcements consisting of billboards, credits, public service
announcements, promotional announcements and announcements required by
law.
(ii) For each network sponsored program or portion
thereof (except those specified in Paragraph 5(b) below) which is
broadcast by Station during a time period other than the Live Time
Period therefor, NBC reserves the right, in its sole discretion, to
withhold payment of compensation for such program. If NBC does not
withhold payment of compensation for such program, NBC shall pay
Station as if Station had broadcast the program or portion thereof
during such Live Time Period, except that if the percentage set forth
in the Compensation Table opposite the time period during which
Station broadcasts the program or portion thereof is less than that
set forth opposite such Live Time Period, NBC shall pay Station on the
basis of the time period during which Station broadcasts the program
or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station
shall agree upon for all network sponsored programs broadcast by Station
consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time
Period which straddles any of the time period categories in the
Compensation Table.
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<PAGE> 7
(c) (i) On or about the fifteenth day of the last
month of each calendar quarter during the term hereof, subject to the
timely receipt of reports requested under Paragraph 9 below, NBC shall
pay Station, by electronic transfer or such other means as NBC shall
determine, an estimate of the amounts due hereunder for such calendar
quarter. NBC shall make the appropriate adjustment for the payment
actually due for such calendar quarter in the payment of the estimated
amount due for the next calendar quarter. NBC shall calculate the
amounts due hereunder on a weekly basis and shall report such amounts
to Station within a reasonable period of time after the close of each
month during the term.
(ii) From the amounts otherwise payable to Station
hereunder, NBC shall deduct for each week during each calendar quarter
of the term hereof a sum equal to 217% of Station's Network Station
Rate provided in subparagraph 5(a)(i)(A) above (the "Waiver
Percentage"). This deduction shall be calculated on a weekly basis,
with 4.2857 as the agreed number of weeks per month, and shall be
reported to Station with the reports due under subparagraph 5(c)(i)
above. NBC shall make other deductions from the amounts otherwise
payable to Station hereunder for additional services made available by
NBC and utilized by Station such as, but not limited to, NBC News
Channel.
(d) (i) As part of NBC's customary annual performance
evaluation of the NBC affiliated broadcast television stations
(collectively, the "NBC Affiliates"), NBC may decrease or increase the
Pool (as defined below) only by a percentage amount which is equal to
or less than the corresponding percentage decrease or increase, as
applicable, in the Adult Audience Delivery (as defined below) during
the prior Broadcast Year as compared to the Adult Audience Delivery
during the Broadcast Year immediately preceding such prior Broadcast
Year. Notwithstanding the foregoing, (A) any such adjustment in the
amount of the Pool for any calendar year during the term of this
Agreement shall not exceed five percent (5%) of the amount of the Pool
for the prior calendar year, and (B) the 1994 Pool amount shall remain
in effect during calendar years 1995 and 1996. As used herein, "Pool"
shall mean, with respect to any calendar year, the aggregate of the
Network Station Rates for all NBC Affiliates during such calendar
year, and "Adult Audience Delivery," with respect to any Broadcast
Year, shall mean the Adult 18-49 audience delivery of all NBC
Affiliates as measured by the average of the NSI Sweeps in November,
February and May during such Broadcast Year or such other demographic
that becomes the primary selling demographic for Prime Time by the NBC
Television Network; provided that in the event NBC changes its Primary
Selling Demographic with respect to a Broadcast
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Year during the term hereof, NBC shall announce such change during
July preceding the commencement of such Broadcast Year.
Subject to the limitations set forth below, NBC reserves the
right as part of a general rate revision to reevaluate and change at
any time: (A) the Network Station Rate set forth in subparagraph
5(a)(i)(A) above, (B) the percentages set forth in the Compensation
Table, or (C) the waiver Percentage set forth in subparagraph 5(c)(ii)
above, by giving written notice to Station at least thirty (30) days
prior to the effective date of such change. Notwithstanding the
foregoing, NBC agrees that:
(X) In no event during the term of this Agreement shall
the percentage of the Pool represented by Station's Network
Station Rate (the "Station's Pool Percentage") be reduced to
an amount which will result in (aa) if Station's Rate Index
(as defined below) is less than 1 as of the date hereof, a
Rate Index less than Station's Rate Index as of the date
hereof or (bb) if Station's Rate Index is 1 or more as of the
date hereof, a Rate Index of less than 1; and provided
further, that NBC shall be permitted to reduce Station's
Network Station Rate pursuant to subparagraph 5(d)(ii) below.
As used herein, "Rate Index" shall mean the number obtained by
dividing (cc) Station's Pool Percentage by (dd) Station's "NBC
Percent" (i.e. the relative contribution to NBC (expressed as
a percentage) as determined in NBC's customary annual
performance evaluation of all NBC Affiliates);
(Y) the Compensation Table attached hereto as Exhibit B
shall be modified during the term of this Agreement only as
mutually agreed to by NBC and Station or as may be recommended
by the NBC Affiliate Board; and
(Z) NBC may increase the Waiver Percentage only by reason
of an increase in NBC's technical costs of delivering
programming to the NBC Television Network; provided that any
such increase in the waiver Percentage shall be subject to
review by the NBC Affiliate Board.
(ii) Notwithstanding the foregoing provisions of
subparagraph 5(d)(i), Station's Network Station Rate shall remain at
$680 with respect to calendar years 1995 and 1996, subject to the
provisions of subparagraph 5(d)(iii) below. Commencing in 1997 and for
each subsequent calendar year during the initial term of the
Agreement, the Station's Network Station Rate shall be adjusted on an
annual basis based on the Station's average of the consecutive
November, February and May average A.C. Nielsen Co. Prime Time Ratings
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for Adult 18-49 viewers in thousands ("Prime Time Audience Delivery")
for the preceding full Broadcast Year ended prior to the date of such
adjustment. Accordingly, subject to the provisions of subparagraph
5(d)(iii) below and subject to Station's compliance with each of its
commitments regarding clearance and preemption of NBC programming as
set forth in this Agreement and notwithstanding the foregoing
provisions of subparagraph 5(d)(i), commencing in calendar year 1997,
NBC shall increase the Station's Network Station Rate by the
appropriate amount (if any) so that the resulting increased Network
Station Rate exceeds $680 by a percentage which equals the difference
of (A) Station's Prime Time Audience Delivery for the preceding full
Broadcast Year minus (B) either (1) with respect to the adjustment
which may be made in calendar year 1997, Station's Prime Time Audience
Delivery as a CBS affiliate for the 1993-1994 Broadcast Year or (2)
with respect to the adjustments which may be made in each subsequent
calendar year during the initial term of this Agreement, the higher of
(x) Station's Prime Time Audience Delivery as a CBS affiliate for the
1993-1994 Broadcast Year or (y) the Station's Prime Time Audience
Delivery as an NBC affiliate for the 1995-96 Broadcast Year.
(iii) Notwithstanding anything contained in
subparagraph 5(d)(i) to the contrary, the parties acknowledge that the
payment of compensation to Station hereunder is in consideration of
certain commitments by Station, including commitments regarding
Station's local news program schedule and promotion of NBC programming
as respectively set forth in Exhibits C and D attached hereto, which
Exhibits are incorporated herein by this reference. In the event that
Station (A) materially reduces its local news program schedule as set
forth in Exhibit C or (B) does not fulfill such commitments as are set
forth in Exhibit D in all years during the term of this Agreement, NBC
reserves the right to decrease Station's Network Station Rate by
notifying Station in writing at least ninety (90) days prior to the
effective date of such change.
6. Local Commercial Announcements. Subject to the following
sentence, NBC agrees that during each quarter during the term of this
Agreement, the average weekly number of minutes available for Station's local
commercial announcements in and adjacent to regularly scheduled NBC programming
in each daypart (with pro-rated adjustments for national sports programming,
special news coverage or other special events) shall not be less than
ninety-five percent (95%) of the average weekly number of minutes for the
applicable daypart during the 1993-94 Broadcast Year as set forth in Exhibit E
attached hereto (except if the reduction is due to a change in applicable
government regulations). In the event of a reduction in the average weekly
number of minutes available for Station's local commercial
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announcements in and adjacent to regularly scheduled NBC programming which
causes NBC not to be in compliance with the foregoing provision, NBC agrees to
offset the effects of such reduction by providing Station with a comparable
economic benefit, which benefit may take the form of local coverage of NBC
promotional announcements, an increase in the amount of Station's preemptions
permitted under Paragraphs 3(b), 3(c) or 3(d) hereof, or other form of benefit.
The foregoing provisions of this Paragraph 6 are not intended to facilitate any
disproportionate change by NBC in the allocation of the number of minutes
available for Station's local commercial announcements in and adjacent to
regularly scheduled NBC programming among different time periods in any
daypart, if such change is solely for NBC's economic benefit.
7. Delivery. NBC shall transmit the programming hereunder by
satellite and shall notify Station as to both the satellite and transponder
being used for such transmission, and the programming shall be deemed delivered
to Station when transmitted to the satellite. Where, in the opinion of NBC, it
is impractical or undesirable to furnish a program over satellite facilities,
NBC may deliver the program to Station in any other manner, including but not
limited to, in the form of motion picture film, video tape or other recorded
version, postage prepaid, in sufficient time for Station to broadcast the
program at the time scheduled. Such recordings shall be used only for a single
television broadcast over Station, and Station shall comply with all NBC
instructions concerning the disposition to be made of each such recording
received by Station hereunder.
8. Conditions of Station's Broadcast. Station's broadcast of NBC
programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or
additions or modifications to, any NBC program furnished to Station hereunder
or any commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor broadcast
any commercial or other announcements (except emergency bulletins) during any
such program, without NBC's prior written authorization. Station may, however,
delete announcements promoting any NBC program which is not to be broadcast by
Station, provided that such deletion shall be permitted only in any the event
and to the extent that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be broadcast by
Station.
(b) For purposes of identification of Station with the
NBC programs, and until written notice to the contrary is given by NBC, Station
may superimpose on various Entertainment programs, where designated by NBC, a
single line of type, not to exceed fifty (50) video lines in height and
situated in the lower
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eighth raster of the video screen, which single line shall include (and be
limited to) Station's call letters, community of license or home market,
channel number, and the NBC logo. No ocher addition to any Entertainment
program is contemplated by this consent, and the authorization contained herein
specifically excludes and prohibits any addition whatsoever to News and Sports
programs, except identification of Station as provided in the preceding
sentence as required by the FCC.
(c) The placement and duration of station-break periods
provided for locally originated announcements between NBC programs or segments
thereof shall be designated by NBC. Station shall broadcast each NBC program
delivered to Station hereunder from the commencement of network origination
until the commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any
violation by Station of any of the provisions of this Paragraph 8, NBC may, in
its reasonable discretion, withhold an amount of compensation otherwise due
Station under Paragraph 5 above which is appropriate in view of the nature of
the specific violation, it being understood that the amount withheld for any
violation shall not exceed the total compensation due Station for the week in
which such violation occurs. Nothing herein contained shall limit the rights of
Station under Paragraph 4(c) above.
9. Station Reports. Station shall submit to NBC in writing, upon
forms provided by NBC, such reports as NBC may request covering the broadcast
by Station of programs furnished to Station hereunder.
10. Music Performance Rights. All programs delivered to Station
pursuant to this Agreement shall be furnished with all music performance rights
necessary for broadcast by Station included. Station shall have no
responsibility for obtaining such rights from ASCAP, BMI or other music
licensing societies insofar as the programs delivered by NBC to Station for
broadcasting are concerned. As used in this paragraph, "programs" shall
include, but shall not be limited to, program and promotional material and
commercial and public service announcements furnished by NBC. Station shall be
responsible for all music license requirements for any commercial and public
service announcements or other material inserted by Station within or adjacent
to the programs as permitted under the terms of this Agreement, except for
cut-ins produced by or on behalf of NBC and inserted by Station at NBC's
direction.
11. Force Majeure. Neither Station nor NBC shall incur any
liability hereunder because of NBC's failure to deliver, or the failure of
Station to broadcast, any or all programs due to failure of facilities, labor
disputes, government regulations or causes beyond the reasonable control of the
party so failing to deliver or to broadcast. Without limiting the generality
of the
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foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
12. Indemnification. NBC shall indemnify, defend and hold Station,
its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless from and against all claims,
damages, liabilities, costs and expenses (including reasonable attorneys fees)
arising out of the use by Station, in accordance with this Agreement, of any
program or other material as furnished by NBC hereunder, provided that Station
promptly notifies NBC of any claim or litigation to which this indemnity shall
apply, and that Station cooperates fully with NBC in the defense or settlement
of such claim or litigation. Similarly, Station shall indemnify, defend and
hold NBC, its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless with respect to material added to
or deleted from any program by Station, except for cut-ins produced by or on
behalf of NBC and inserted by Station at NBC's direction. These indemnities
shall not apply to litigation expenses, including attorneys' fees, which the
indemnified party elects to incur on its own behalf. Except as otherwise
provided herein, neither Station nor NBC shall have any rights against the
other for claims by third persons, or for the non-operation of facilities or
the non-furnishing of programs for broadcasting, if such non-operation or
non-furnishing is due to failure of equipment, actions or claims by any third
person, labor disputes, or any cause beyond such party's reasonable control.
13. Station's Right of First Negotiation. Throughout the term of
this Agreement, NBC shall give Station prompt notice of any determination by
NBC to engage in new over-the-air broadcast ventures within Station's community
of license (whether or not involving the transmission of television programs,
but excluding any acquisition of an ownership interest in any broadcast
television station) (a "Broadcast Venture"). NBC shall negotiate exclusively
with Station in good faith, for a period of time following such notice to
Station as shall be determined by NBC to be appropriate to the circumstances
and as shall be specified in such notice, with respect to Station's
participation on a financial and/or operational basis in any such Broadcast
Venture within Station's community of license before NBC may enter into any
such negotiations with a Third Party (as defined below)
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<PAGE> 13
within such community of license. "Third Party" shall mean any person or entity
other than an NBC Party; "NBC Party" shall mean any of NBC, National
Broadcasting Company, Inc. or their respective parent, subsidiary, affiliated,
related or successor entities.
14. Change in Operations. Station represents and warrants that it
holds a valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format (e.g. changing to a
"home shopping" channel format) or hours of operation are materially changed at
any time so that Station is of less value to NBC as a broadcaster of NBC
programming than at the date of this Agreement, then NBC shall have the right
to terminate this Agreement upon thirty (30) days prior written notice to
Station.
15. Assignment.
(a) This Agreement shall not be assigned without the
prior written consent of NBC, and any permitted assignment shall not relieve
Station of its obligations hereunder. Any purported assignment by Station
without such consent shall be null and void and not enforceable against NBC.
(b) Station agrees to include as a condition of any
proposed assignment, sale or transfer of Station (including any assignment or
transfer referred to in Paragraph 15(c) below) a contractually binding
provision that the assignee or transferee shall assume and become bound by this
Agreement for (i) the remainder of the then-current term of this Agreement or
(ii) three (3) years from the date of said assignment or transfer, whichever
period is greater. Station acknowledges that any such assignment, sale or
transfer which does not so provide for such assumption and for NBC's right to
extend the term of this Agreement will cause NBC irreparable injury for which
damages are not an adequate remedy. Therefore, Station agrees that NBC shall be
entitled to seek an injunction or similar relief from any court of competent
jurisdiction restraining Station from committing any violation of this
Paragraph 15(b).
(c) Station agrees that if any application is made to the
FCC pertaining to an assignment or a transfer of control of Station's license,
or any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the FCC Rules, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees, except in the case of "short form" assignments or
transfers of control, that promptly following Station's notice to NBC, Station
(i) shall arrange for a meeting between NBC and the proposed assignee or
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<PAGE> 14
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form satisfactory
to NBC, the agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of the Station's license,
the assignee or transferee will assume and perform this Agreement in its
entirety without limitation of any kind. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of
all or substantially all of the assets or business of NBC (whether structured
as a sale or transfer of equity or assets of NBC), NBC agrees to assign this
Agreement to the purchaser or transferee and to cause such purchaser or
transferee to assume NBC's obligations hereunder; provided that the foregoing
agreement shall not apply in the event that this Agreement becomes an
obligation of such purchaser or transferee by operation of law. Upon such
assignment and assumption, NBC shall have no liability to Station under this
Agreement with respect to obligations arising after the effective date of such
assignment and assumption.
16. Unauthorized Copying and Transmission. Station shall not
authorize, cause, or permit, without NBC's consent, any program or other
material furnished to Station hereunder to be recorded, duplicated, rebroadcast
or otherwise transmitted or used for any purpose other than broadcasting by
Station as provided herein. Notwithstanding the foregoing, Station shall not be
restricted in the exercise of its signal carriage rights pursuant to any
applicable rule or regulation of the FCC with respect to retransmission of its
broadcast signal by any cable system or multichannel video program distributor
("MVPD"), as defined in Section 76.64(d) of the FCC Rules, which (a) is located
within the Area of Dominant Influence ("ADI"), as defined by Arbitron, in which
Station is located, or (b) was actually carrying Station's signal as of April
1, 1993, or (c) with respect to cable systems, serving an area in which Station
is "significantly viewed" (as determined by the FCC) as of April 1, 1993;
provided, however, that any such exercise pursuant to FCC Rules with respect to
NBC programs shall not be deemed to constitute a license by NBC; and provided,
further, that at such time as NBC adopts a term in substitution for the term
"ADI" by reason of any similar action by the FCC or other appropriate
authority, such substitute term shall replace the references to "ADI" herein.
NBC reserves the right to restrict such signal carriage with respect to NBC
programming in the event of a change in applicable law, rule or regulation.
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<PAGE> 15
17. Limitations on Retransmission Consent. In consideration of the
grant by NBC to Station of the non-duplication protection provided in the
amendment to this Agreement, of even date herewith (the "Non-Duplication
Agreement") Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission
of its broadcast signal by any cable television system, or, except as provided
in Paragraph 17(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located
outside the ADI to which Station is assigned, unless Station's signal was
actually carried by such cable system or MVPD as of April 1, 1993, or, with
respect to such cable system, is "significantly viewed" (as determined by the
FCC) as of April 1, 1993; provided, however, that at each renewal of the
Agreement, in the event Station can demonstrate to NBC that it is
"significantly viewed" (as determined by the FCC) in areas in addition to those
in which it was "significantly viewed" as of April 1, 1993 ("Additional Viewing
Areas"), NBC agrees that it will negotiate in good faith with Station regarding
a possible extension of Station's grant of the right to retransmit its
broadcast signal to cable systems in the Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission
of its broadcast signal by any MVPD that provides such signal to any home
satellite dish user, unless such user is located within Station's own ADI or is
an "unserved household" as defined in Section 119(d) or any successor provision
of Title 17 of the United States Code.
18. Remedies for Unauthorized Copying and Transmission. If Station
violates any of the provisions set forth in Paragraphs 16 and 17 above, NBC
may, in addition to any other of its rights or remedies at law or in equity
under this Agreement or any amendment thereto, terminate this Agreement by
written notice to Station given at least ninety (90) days prior to the
effective date of such termination.
19. Applicable Law. The obligations of Station and NBC 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 and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
20. Waiver. A waiver by either of the parties hereto of a breach of
any provision of this Agreement shall not be deemed to
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<PAGE> 16
constitute a waiver of any preceding or subsequent breach of the same provision
or any other provision hereof.
21. Notices. Any notices hereunder shall be in writing and shall
be given by personal delivery, overnight courier service, or registered or
certified mail, addressed to the respective addresses set forth on the first
page of this Agreement or at such other address or addresses as may be
specified in writing by the party to whom the notice is given. Such notices
shall be deemed given when personally delivered, delivered to an overnight
courier service or mailed, except that notice of change of address shall be
effective only from the date of its receipt.
22. Captions. The captions of the paragraphs in this Agreement are
for convenience only and shall not in any way affect the interpretation hereof.
23. Entire Agreement. The foregoing constitutes the entire
agreement between Station and NBC with respect to the subject matter hereof,
all prior understandings being merged herein, except for the Non-Duplication
Amendment under FCC Rules Section 76.92. This Agreement may not be changed,
modified, renewed, extended or discharged, except as specifically provided
herein or by an agreement in writing signed by the parties hereto.
24. Confidentiality. The parties agree to use their best efforts
to preserve the confidentiality of this Agreement and of the terms and
conditions set forth herein, and the exhibits annexed hereto, to the fullest
extent permissible by law. The parties recognize that Section 73.3613 of the
FCC's Rules and Regulations requires the filing with the FCC of television
network affiliation agreements by each affiliate, but are unaware of any
requirement for the filing of exhibits annexed to such affiliation agreements.
In the event that the FCC should request either party to file said exhibits,
that party shall give prompt notice to the other, and shall submit said
exhibits to the FCC with a request that said exhibits be withheld from public
inspection pursuant to Section 0.459 of the FCC's Rules and Regulations on the
grounds that said exhibits contain confidential commercial or financial
information that would customarily be guarded from competitors and not be
released to the public.
25. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
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<PAGE> 17
If the foregoing is in accordance with your understanding,
please indicate your acceptance on the copy of this Agreement enclosed for that
purpose and return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: [ILLEGIBLE]
------------------------------------
AGREED:
WEYI ASSOCIATE
By: [ILLEGIBLE]
-----------------------------------
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<PAGE> 1
EXHIBIT 10.17
[NBC LETTERHEAD]
December 15, 1995
Smith Broadcasting Group, Inc.
127 El Paseo
Santa Barbara, California 93101
Attention: Robert N. Smith
Dear Bob:
This letter agreement sets forth our mutual agreements with
respect to the affiliation with the NBC Television Network ("NBC") of WEYI-TV
(Flint-Saginaw), a broadcast television station to be licensed to Smith
Television of Michigan License, L.P. ("Smith"), an entity controlled by Smith
Broadcasting Group, Inc. Smith and NBC hereby agree as follows:
1. Smith will complete its purchase of WEYI on January
3, 1996 and, accordingly, as of such date Smith will be party to the
Affiliation Agreement dated July 10, 1995 between NBC and WEYI Associates
(predecessor-in-interest to Smith) (the "Flint Agreement"). NBC grants its
consent to the assignment of the Flint Agreement to Smith, and Smith agrees to
assume the Flint Agreement concurrent with its purchase of the licensee of
WEYI-TV. NBC and Smith agree to the following amendments to the Flint
Agreement:
- The initial term of the Flint Agreement will be
extended to December 31, 2005. NBC agrees to increase WEYI's Network Station
Rate from $680 to $750 as of January 1, 2000.
- On a one-time basis, NBC will reimburse WEYI for 50%
of the cost of upgrading WEYI's transmitter antenna up to a maximum aggregate
reimbursement obligation by NBC of $275,000.
- NBC will consider in good faith agreeing to pay WEYI
additional consideration of up to $40,000 per year in the event that WEYI
clears a fourth hour of NBC Daytime Programming earlier than the date required
pursuant to the terms of the Flint Agreement; NBC will make such determination
based on the date as of which WEYI can first commence clearance of such fourth
NBC Daytime hour.
2. This letter agreement is a valid, binding and
enforceable agreement. We agree to work together diligently to prepare final
documentation with respect to Section 1 above. The benefits of this letter
agreement are personal to Smith and
<PAGE> 2
therefore may not be assigned or transferred to any other entity. Each of us
agrees to keep the terms of this letter agreement confidential.
Please indicate your agreement to the foregoing by signing in
the space indicated below:
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ JOHN DAMIANO
--------------------------------
Name: John Damiano
Title: SR VP AFFILIATE RELATIONS
AGREED AND ACCEPTED:
SMITH BROADCASTING GROUP, INC.,
On behalf of Smith Television of
Michigan, License, L.P.
By: /s/ ROBERT N. SMITH
- --------------------------------
Name: Robert N. Smith
Title: President
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<PAGE> 1
EXHIBIT 10.18
CBS TELEVISION NETWORK
A Division of CBS Inc.
AFFILIATION AGREEMENT
CBS TELEVISION NETWORK, A Division of CBS Inc., 51 West 52 Street, New York,
New York 10019 ("CBS"), and TELEVISION STATION PARTNERS, L.P., 201 Humboldt
Street, Rochester, New York 14610 ("Broadcaster"), licensed to operate
television station WROC-TV at Rochester, New York on channel number 8
("Affiliated Station"), hereby mutually covenant and agree, as of the 12th day
of January, 1995, as follows:
1. Offer, Acceptance and Delivery of Network Programs.
Broadcaster shall have a "first call" on CBS network television programs
("Network Programs") as follows.
(a) Offer of Network Programs.
CBS shall offer to Broadcaster for broadcasting by Affiliated Station
those Network Programs which are to be broadcast on a network basis by any
television broadcast station licensed to operate in Affiliated Station's
community of license.
(b) Acceptance of Network Programs.
As to any offer described in Paragraph 1(a) of this Agreement,
Broadcaster may accept such offer only by notifying CBS, by means of CBS's
computer-based communications system, of such acceptance within 72 hours
(exclusive of Saturdays, Sundays and holidays), or such longer period as CBS
may specify therein, after such offer; provided, however, that, if the first
broadcast referred to in such offer is scheduled to occur less than 72 hours
after the making of the offer, Broadcaster shall notify CBS of the acceptance
or rejection of such offer as promptly as possible and in any event prior to
the first broadcast time specified in such offer. Such acceptance shall
constitute Broadcaster's agreement that Affiliated Station will broadcast such
Network Program or Programs in accordance with the terms of this Agreement and
of such offer, and so long as Affiliated Station so broadcasts such Network
Program or Programs, CBS will not, subject to its rights in the program
material, authorize the broadcast thereof on a network basis by any other
television, broadcast station licensed to operate in Affiliated Station's
community of license; provided, however, that CBS shah have the right to
authorize any television broadcast station, wherever licensed to operate, to
broadcast any Network Program consisting of an address by the President of the
United States of America on a subject of public importance or consisting of
coverage of a Matter of immediate national concern. If, as to any Network
Program offered hereunder, Broadcaster does not notify CBS as provided for in
this Paragraph l(b), Broadcaster shall have no rights with respect to such
Network Program, and CBS may offer such Network Program on the same or
different terms to any other television broadcast station or stations licensed
to operate in Affiliated Station's community of license;
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<PAGE> 2
provided, however, that, if any Network Program offered hereunder is accepted,
by Affiliated Station, upon any other terms or conditions to which CBS agrees
in writing, then the provisions of this Agreement shall apply to the broadcast
of such Network Program except to the extent such provisions are expressly
varied by the terms and conditions of such acceptance as so agreed to by CBS.
(c) Delivery of Network Programs.
Any obligation of CBS to furnish Network Programs for broadcasting by
Affiliated Station is subject to CBS's making of arrangements satisfactory to
it for the delivery of Network Programs to Affiliated Station.
2. Payment to Broadcasters.
(a) Definitions.
(i) "Live Time Period" means the time period or periods
specified by CBS in its initial offer of a Network
Program to Broadcaster for the broadcast of such
Network Program over Affiliated Station; (ii)
"Affiliated Station's Network Rate" shall be $1,440
and is used herein solely for purposes of computing
payments by CBS to Broadcaster; (iii) "Commercial
Availability" means a period of time made available
by CBS during a Network Commercial Program for one or
more Network Commercial Announcements or local
cooperative commercial announcements; and (iv)
"Network Commercial Announcements" means a commercial
announcement broadcast over Affiliated Station during
a Commercial Availability and paid for by or on
behalf of one or more CBS advertisers, but does not
include announcements consisting of billboards,
credits, public service announcements, promotional
announcements and announcements required by law.
(b) Payment for Broadcast of Programs.
For each Network Commercial Program or portion thereof, except those
specified in Paragraph 2(c) hereof, which is broadcast over Affiliated Station
during the Live Time Period therefor and the Live Time Period for which is set
forth in the table below, CBS shall pay Broadcaster the amount resulting from
multiplying the following:
(i) Affiliated Station's Network Rate; by
(ii) the percentage set forth below opposite such time
period (which, unless otherwise specified, is
expressed in Affiliated Station's then-current local
time); by
(iii) the fraction of an hour substantially occupied by
such program or portion thereof; by
(iv) the fraction Of the aggregate length of all
Commercial Availabilities during such program or
portion thereof occupied by Network Commercial
Announcements.
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<PAGE> 3
Table
Monday through Friday
7:00 a.m. - 10:00 a.m. . . . . . . . . . . . . . . 11.2%
10:00 a.m. - 12:00 p.m. . . . . . . . . . . . . . . 15%
12:00 p.m. - 4:00 p.m. . . . . . . . . . . . . . . . 6%
4:00 p.m. - 5:00 p.m. . . . . . . . . . . . . . . . 12%
5:00 p.m. - 8:00 p.m. . . . . . . . . . . . . . . . 15%
8:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . 30%
11:00 p.m. - 12:00 a.m. . . . . . . . . . . . . . . 15%
Saturday
8:00 a.m. - 9:00 a.m. . . . . . . . . . . . . . . . 7%
9:00 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . 12%
5:00 p.m. - 8:00 p.m. . . . . . . . . . . . . . . . 15%
8:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . 30%
11:00 p.m. - 12:00 a.m. . . . . . . . . . . . . . . 15%
Sunday
11:30 a.m. - 5:00 p.m. . . . . . . . . . . . . . . . 12%
5:00 p.m. - 7:00 p.m. . . . . . . . . . . . . . . . 15%
7:00 p.m. - 11:00 p.m. . . . . . . . . . . . . . . . 30%
11:00 p.m. - 12:00 a.m. . . . . . . . . . . . . . . 15%
For each Network Program or portion thereof, except those specified in
Paragraph 2(c) hereof, which is broadcast by Affiliated Station during a time
period other than the Live Time Period therefor and the Live Time Period for
which is set forth in the table above, CBS shall pay Broadcaster as if
Affiliated Station had broadcast such program or portion thereof during such
Live Time Period, except that:
(i) if the percentage set forth above opposite the time
period during which Affiliated Station broadcast such
program or portion thereof is less than that set
forth opposite such Live Time Period, then CBS shall
pay Broadcaster on the basis of the time period
during which Affiliated Station broadcast such
program or portion thereof; and
(ii) if the time period or any portion thereof during
which Affiliated Station broadcast such program is
not set forth in the table above, then CBS shall pay
Broadcaster in accordance with Paragraph 2(c) hereof.
(c) Payment for Broadcast of Other Programs.
For the following programs, the percentages listed below (rather than
those daypart percentages set forth in the table in Paragraph 2(b) hereinabove)
shall be used in computing payment to Affiliated Station:
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<PAGE> 4
Monday-Friday Daytime Game shows . . . . . . . . . . . . . . . . . 15%
Monday-Friday Continuing Dramas . . . . . . . . . . . . . . . . . 6%
Monday-Friday Late Night Daypart . . . . . . . 20.0% per telecast for
live clearance or 15.0%
per telecast for
delayed clearance
Monday - Friday CBS EVENING NEWS . . . . . . . . . . . . . . . . . 5%
CBS Sports programs . . . . . . . . . . . . . . . . . . . . . . . 0%
CBS SUNDAY MORNING and FACE THE NATION . . . . . . . . . . . . . . 8%
Notwithstanding the payment obligations set forth in Paragraph 2(b)
above, CBS shall pay Broadcaster such amounts as specified in CBS's program
offer for Network Programs broadcast by Affiliated Station consisting of (i)
special event programs (including, but not limited to, such programs as awards
programs, mini-series, movie specials, entertainment specials,
special-time-period broadcasts of regularly-scheduled series, and news specials
such as political conventions, election coverage, presidential inaugurations
and related events), (ii) programs for which CBS specified a Live Time Period,
or which Affiliated Station broadcast during a time period, any portion of
which is not set forth in the table above.
(d) Deduction.
From the amounts otherwise payable to Broadcaster hereunder, there
shall be deducted, for each week of the term of this Agreement, a sum equal to
168% of Affiliated Station's Network Rate.
(e) Changes in Rate.
CBS may reduce Affiliated Station's Network Rate in connection with 2
re-evaluation and reduction of the Affiliated Station Network Rate of CBS's
affiliated stations in general, by giving Affiliated Station at least thirty-
days' prior notice of such reduction in Affiliated Station's Network Rate in
which event Broadcaster may terminate this Agreement, effective as of the
effective date of any such reduction, on not less than fifteen-days' prior
notice to CBS. In order to reflect differences in the importance of
compensation payments to Stations in markets of varying size, the size of any
general reduction of the Network Rate of CBS's affiliated Stations pursuant to
this Paragraph 2(e) may vary to a reasonable degree according to each station's
market-size category (i.e., 1-50, 51-100, 101-150 or 151 +). Further, CBS
agrees that in the event of such an across-the-border rate reduction,
Affiliated Station's Network Rate shall be reduced accordingly until thirty
days after the effective date of the reduction, at which time; unless
additional corresponding benefit of equal value has accrued to the station, the
Network Rate shall be restored to the previous level and a retroactive
adjustment shall be made to make up the compensation difference.
(f) Time of Payment.
CBS shall make the payments hereunder reasonably promptly after the
end of each four-week or five-week accounting period of CBS for Network
Commercial Programs broadcast during such accounting period.
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<PAGE> 5
(g) Reports.
Broadcaster shall submit to CBS in the manner requested by CBS such
reports as CBS may reasonably request concerning the broadcasting of Network
Programs by Affiliated Station.
3. Term and Termination.
(a) Term.
The term of this Agreement shall be the period commencing on February
1, 1995 and expiring on January 31, 2005; provided, however, that, unless
Broadcaster or CBS shall notify the other at least six months prior to the
expiration of the original period or any subsequent five-year period that the
party giving such notice does not wish to have the term extended beyond such
period, the term of this Agreement shall be automatically extended upon the
expiration of the original period and each subsequent extension thereof for an
additional period of five years. Notwithstanding any provision of any offer or
acceptance under Paragraph I hereof, upon the expiration or any termination of
the term of this Agreement, Broadcaster shall have no right whatsoever to
broadcast over Affiliated Station any Network Program.
(b) Termination on Transfer of License or Interest in Broadcaster.
Broadcaster shall notify CBS forthwith if any application is made to
the Federal Communications Commission relating to a transfer either of any
interest in Broadcaster or of Broadcaster's license for Affiliated Station. In
the event that CBS shall reasonably disapprove of the proposed transferee, CBS
shall have the right to terminate this Agreement effective as of the effective
date of any such transfer (except a transfer within the provisions of Section
73.3540(f) of the Federal Communications Commission's present Rules and
Regulations) by giving Broadcaster notice thereof, and of its reasons for
disapproving of the proposed transferee, within thirty days after the date on
which Broadcaster gives CBS notice of the making of such application. If CBS
does not so terminate this Agreement, Broadcaster shall, prior to the effective
date of any such transfer of any interest in Broadcaster or of Broadcaster's
license for Affiliated Station, and as a condition precedent to such transfer,
procure and deliver to CBS, in form reasonably satisfactory to CBS, the
agreement of the proposed transferee that, upon consummation of the transfer,
the transferee will unconditionally assume and perform all obligations of
Broadcaster under this Agreement. Upon delivery of said agreement to CBS, in
form satisfactory to it, the provisions of this Agreement applicable to
Broadcaster shall, effective upon the date of such transfer, be applicable to
such transferee.
Broadcaster's obligations to procure the assumption of this Agreement
by any transferee of Affiliated Station as a condition precedent to such
transfer shall be deemed to be of the essence of this Agreement; further,
Broadcaster expressly recognizes that money damages will be inadequate to
Compensate CBS for the breach of such obligation, and chat CBS shall
accordingly be entitled to equitable relief to enforce the same.
(c) Termination on Change of Transmitter Location, Power,
Frequency or Hours of Operation of Affiliated Station.
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<PAGE> 6
Broadcaster shall notify CBS forthwith if application is made to the
Federal Communications Commission to modify the transmitter location, power or
frequency of Affiliated Station or Broadcaster plans to modify the hours of
operation of Affiliated Station. CBS shall have the right to terminate this
Agreement, effective upon the effective date of such modification, by giving,
Broadcaster notice thereof within thirty (30) days after the date on which
Broadcaster gives CBS notice of the application or plan for such modification.
If Broadcaster falls to notify CBS required herein, then CBS shall have the
right to terminate this Agreement by giving Broadcaster thirty (30) days'
notice thereof within thirty (30) days of the date on which CBS first learns of
such application.
(d) Termination in the Event of Bankruptcy.
Upon one (1) month's notice, CBS may terminate this Agreement if a
petition in bankruptcy is filed by or on behalf of Broadcaster, or Broadcaster
otherwise takes advantage of any insolvency law, or an involuntary petition in
bankruptcy is filed against Broadcaster and not discussed within thirty (30)
days thereafter, or if a receiver or trustee of any of Broadcaster's property
is appointed at any time and such appointment is not vacated within thirty (30)
days thereafter (it being understood that Broadcaster will have a similar right
of termination upon the occurrence of any such event with respect to CBS).
(e) Termination in the Event of Breach.
Each party, effective upon notice to the other, may, in addition to
its other rights, terminate this Agreement if any material representation,
warranty or agreement of the other party contained in this Agreement has been
breached.
4. Use of Network Programs.
(a) General.
Broadcaster shall not broadcast any Network Program over Affiliated
Station unless such Network Program has first been offered by CBS to
Broadcaster for broadcasting over Affiliated Station and has been accepted by
Broadcaster in accordance with this Agreement. Except with the prior written
consent of CBS, Broadcaster shall neither sell any Network Program, in whole or
in part, or any time therein, for sponsorship, nor otherwise use Network
Programs except as specially authorized in this Agreement. Affiliated Station
shall not. broadcast any commercial announcement or announcements during any
interval, within a Network Program, which is designated by CBS to Affiliated
Station as being for the sole purpose of making a station identification
announcement. Broadcaster shall, with respect to each Network Program broadcast
over Affiliated Station, broadcast such Network Program in its entirety
(including but not limited Lo commercial announcements, billboards, credits,
public service announcements, promotional announcements and network
identification), without interruption, alteration, compression, deletion or
addition of any kind, from the beginning of the Network Program to the final
system cue at the conclusion of the Network Program. Nothing herein shall be
construed as preventing Broadcaster's deletion of (i) part of a Network Program
in order to broadcast an emergency announcement or
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<PAGE> 7
news bulletin; (ii) a promotional announcement for a Network Program not to be
broadcast over Affiliated Station (provided that Affiliated Station shall
broadcast an alternative promotional announcement for CBS network programming
in place of the deleted promotional announcement); (iii) such words, phrases or
scenes as Broadcaster, in the reasonable exercise of its judgment, determines
it would not be in the public interest to broadcast over Affiliated Station;
provided, however, that Broadcaster shall not substitute for any material
deleted pursuant to this clause (iii) any commercial or promotional
announcement of any kind whatsoever; and provided further that Broadcaster
shall notify CBS of every such deletion within 72 hours thereof. Broadcaster
shall not, without CBS's prior written consent, authorize or permit any Network
Program, recording, or other material Furnished by CBS to Broadcaster or
Affiliated Station hereunder to be recorded, duplicated, rebroadcast,
retransmitted or otherwise used for any purpose whatsoever other than
broadcasting by Affiliated Station as provided herein; except that Broadcaster
may assert a right to carriage of Affiliated Station's signal by a cable system
pursuant to the provisions of Section 4 of the Cable Consumer Protection and
Competition Act of 1992 ("the 1992 Cable Act") and may, to the extent permitted
by paragraph 4(b) hereof, grant consent to the retransmission of such signal by
a cable system or other multichannel video programming distributor, as defined
by said Act, pursuant to the provisions of Section 6 thereof.
(b) Retransmission Consent.
Broadcaster may grant consent to the retransmission of Affiliated
Station's signal by a cable system or other multichannel video programming
distributor pursuant to the provisions of Section 6 of the 1992 Cable Act
(hereafter "retransmission consent"), provided that one of the following
conditions applies at the time retransmission consent is granted:
(i) The cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
serves television homes within Affiliated Station's television
market;
(ii) the majority of television homes served by the Cable system or
other multichannel program service on which Affiliated
Station's signal is to be retransmitted are within a county,
or community in which Affiliated Station's signal is, and has
been since October 5, 1992, "significantly viewed" as defined
in Section 76.54 of the FCC's rules; or
(iii) the cable system or other multichannel program service on
which Affiliated Station's signal is to be retransmitted
carried such signal on October 5, 1992, and does not receive
such signal by satellite delivery.
Notwithstanding anything to the contrary in the foregoing, in no case
shall retransmission consent be granted to a television receive-only Satellite
service, or a direct broadcast satellite service, if Affiliated Station's
signal is to be retransmitted by such service to television homes outside of
Affiliated Station's television market other than "unserved household(s)," as
that term is defined in
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Section 119(d) of Title 17, United States Code, as in effect on October 5,
1992. For purposes of this paragraph, a station's "television market" shall be
defined in the same manner as set forth in Sections 76.55(e) and 76.59 of the
FCC's rules.
(c) Taped Recordings of Network Programs.
When authorized to make a taped delayed broadcast of a Network Program,
Broadcaster shall use Broadcaster-owned tape to record the Network Program when
transmitted by CBS only for a thin single broadcast by Affiliated Station and
shall erase the Program recorded on the tape with 24 hours of broadcasting the
Network Program and observe any limitations which CBS may place on the
exploitation of the Network Program so recorded and erased.
5. Rejection, Refusal, Substitution and Cancellation of Network Programs.
(a) Rights of Broadcaster and CBS.
With respect to Network Programs offered to or already accepted
hereunder by Broadcaster, nothing in this Agreement Shall be construed to
prevent or hinder:
(i) Broadcaster from rejecting or refusing any such
Network Program which Broadcaster reasonably believes
to be unsatisfactory or unsuitable or contrary to the
public interest, or from substituting a program
which, in Broadcaster's opinion, is of greater local
or national importance; or
(ii) CBS from substituting one or more other Network
Programs, in which event CBS shall offer such
substituted program or programs to Broadcaster
pursuant to the provisions of Paragraph 1 hereof; or
(iii) CBS from canceling one or more Network Programs.
(b) Notice.
In the event of any such rejection, refusal, substitution or
cancellation by either party hereto, such party shall notify the other thereof
as soon as practicable by telex or by such computer-based communications system
as CBS may develop for notifications of this kind. Notice given to CBS shall be
addressed to CBS Affiliate Relations.
6. Disclosure of Information.
CBS shall endeavor in good faith, before furnishing any Network Program, to
disclose to Broadcaster information of which CBS has knowledge concerning the
inclusion of any matter in such Network Program for which any money, service or
other valuable consideration is directly or indirectly paid or promised to, or
charged or accepted by, CBS or any employee of CBS or any other person with
whom CBS deals in connection with the production or preparation of such Network
Program. As aimed in this Paragraph 6, the term "service or other valuable
consideration" shall not include any service or property, furnished without
charge or at a normal charge for use in, or in connection
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<PAGE> 9
with, any Network Program "unless it is so furnished in consideration for an
identification in a broadcast of any person, product, service, trademark, or
brand name beyond an identification which is reasonably related to the use of
such service or property on the broadcast," as such words are used in Section
317 of the Communications Act of 1934 as amended. The provisions of this
Paragraph 6 requiring the disclosure of information shall not apply in any case
where, because of a waiver granted by the Federal Communications Commission, an
announcement is not required to be made under said Section 317. The inclusion
in any such Network Program of an announcement required by said Section 317
shall constitute the disclosure to Broadcaster required by this Paragraph 6.
7. Indemnification.
CBS will indemnify Broadcaster from and against any and all claims, damages,
liabilities, costs and expenses arising out of the broadcasting, pursuant to
this Agreement, of Network Programs furnished by CBS to the extent that such
claims, damages, liabilities, costs and expenses are (i) based upon alleged
libel, slander, defamation, invasion of the right of privacy, or violation or
infringement of copyright or literary or dramatic rights; (ii) based upon the
broadcasting of Network Programs as furnished by CBS, without any deletions by
Broadcaster; and (iii) not based upon any material added by Broadcaster to such
Network Programs (as to which deletions and added material Broadcaster shall,
to the like extent, indemnify CBS, all network advertisers, if any, on such
Network Program, and the advertising agencies of such advertisers).
Furthermore, each party will so indemnify the other only if such other party
gives the indemnifying party prompt notice of any claim or litigation to which
its Indemnity applies; it being agreed that the indemnifying party shall have
the right to assume the defense of any or ill claims or litigation to which its
indemnity applies and that the indemnified party will cooperate fully with the
indemnifying parry in such defense and in the settlement of such claim or
litigation. Except as herein provided to the contrary, neither Broadcaster nor
CBS shall have any rights against the Other party hereto for claims by third
persons or for the non-operation of facilities or the non-furnishing of Network
Programs for broadcasting if such non-operation or non-furnishing is due to
failure of equipment, action or claims by any third person, labor dispute or
any cause beyond such party's reasonable control.
8. News Reports Included in Affiliated Station's Local News Broadcasts.
As provided in the agreements pertaining to CBS Newsnet and CBS
regional news cooperatives (but as a separate obligation of this Affiliation
Agreement as well), Broadcaster shall make available, on request by CBS News,
coverage produced by Affiliated Station of news stories and breaking news
events of national and/or regional interest, to CBS News and to regional news
cooperatives operated by CBS News. Affiliated Station shall be compensated at
CBS News' then-prevailing rates for material broadcast by CBS News or included
in the national Newsnet service.
9. Non-Duplication of Network Programs.
(a) For purposes of this paragraph, a television station's
"Network Exclusivity Zone" shall mean the zone within thirty-five (35) miles of
the station's reference points, or, in the case of a
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"small market television station," as defined in Section 76.92 of the FCC
rules, the zone within 55 miles of said reference points; provided, however,
that in no case shall the "Network Exclusivity Zone" include an area within the
Area of Dominant Influence (ADI), as determined by Arbitron and published in the
then-current edition of its Television ADI Market Guide, of another CBS
Television Network Affiliate. A station's "reference points" for purposes of
this paragraph shall be as defined in Section 73.658(m) of the FCC rules, and
shall be deemed to include, with respect to a station in a hyphenated market,
the reference points of each named community in that market.
(b) Broadcaster shall be entitled to exercise, within Affiliated
Station's Network Exclusivity Zone, the protection against duplication of
network programming, as provided by Sections 76.92 through 76.97 of the FCC
rules, with respect to a Network Program during the period beginning one (1)
day before and ending seven (7) days after the delivery of such Network Program
by CBS to Broadcaster; provided, however, that such right shall apply only to
Network Programs broadcast in the live time period as offered or on no more
than a one day delay as accepted by CBS; and provided further that nothing
herein shall be deemed to preclude CBS from granting to any other broadcast
television station licensed to any other community similar network
non-duplication rights within that station's Network Exclusivity Zone, and
Broadcaster's aforesaid right of network non-duplication shall not apply with
respect to the transmission of the programs of another CBS affiliate (current
or future) by a "community unit," as that term is defined by the rules of the
FCC, located (wholly or partially) within the area in which Broadcaster's
Network Exclusivity Zone overlaps the Network Exclusivity Zone of that Other
CBS affiliate.
(c) Broadcaster's network non-duplication rights under this
paragraph shall be subject to cancellation by CBS on six (6) months written
notice to Broadcaster. Any such cancellation by CBS shall not affect any of the
other rights and obligations of the parties under this Agreement.
10. Assignment, Conveyance and Conditions for Use of Descramblers.
(a) For value received, CBS hereby conveys, transfers, and assigns
to Broadcaster, all of its rights, title and interest in and to the tangible
personal property consisting of two (2) Videocipher 1B Descramblers (the
"Descramblers") subject to the following conditions:
(i) Broadcaster may not assign its rights in the
Descramblers to any party without CBS's written
approval.
(ii) At the termination or expiration of this Agreement,
Broadcaster's rights in the Descramblers shall cease
and Broadcaster shall take appropriate steps to
assign the Descramblers to CBS.
(b) Broadcaster shall use the Descramblers solely in connection
with the broadcast rights granted and specified in the Agreement.
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<PAGE> 11
(c) CBS makes no warranties whatsoever, either express or implied,
in respect of the equipment including, but not limited to, any warranties of
merchantability or fitness for a particular purpose.
(d) Broadcaster shall be solely responsible for any and all
installation and other related costs or charges in connection with the use and
installation of the Descramblers. Broadcaster shall at all times use and
maintain the Descramblers as instructed by CBS and the manufacturer and shall
use its best efforts to assure that the Descramblers are kept in good condition
and that no tampering with the Descramblers or other breach of security, as
defined in subparagraph (g) below, occurs. Broadcaster shall promptly notify
the CBS Satellite Management Center by telephone of any defect or failure in
the operation of the Descramblers and shall follow such procedures as are
established by CBS for the replacement or repair of the Descramblers. CBS shall
be responsible for the cost of correcting any defect or of rectifying any
failure of the Descramblers to operate during the Term of the Agreement,
provided that Broadcaster shall be responsible for any costs associated with
its failure to follow the prescribed procedures.
(e) In addition to its rights under paragraph 7 of the Agreement,
CBS will not be liable for any damages resulting from the operation of the
Descramblers or from the failure of the Descramblers to function properly or,
any loss, cost or damage to Broadcaster or others arising from defects or
non-performance of the Descramblers.
(f) If Broadcaster makes any use of the Descramblers in violation
of the terms and conditions of this Agreement, said use shall be a material
breach of this Agreement.
(g) Should Broadcaster's willful acts or negligence result in any
breach in the security of the two Descramblers covered by this Agreement, such
breach of security shall be a material breach of this Agreement. Breach of
security shall include but not be limited to any theft of all or part of the
Descramblers, any unauthorized reproduction of all or part of the Descramblers,
any unauthorized reproduction of the code involved in descrambling the network
feed from CBS to Broadcaster, or any related misappropriation of the physical
property or intellectual property contained in the Descramblers.
11. General.
(a) As of the beginning of the term hereof, this Agreement takes
the place of, and is substituted for, any and all television affiliation
agreements heretofore existing between Broadcaster and CBS concerning
Affiliated Station, subject only to the fulfillment of any obligations
thereunder relating to events occurring prior to the beginning of the term
hereof. This Agreement cannot be changed or terminated orally and no waiver by
either Broadcaster or CBS of any breach of any provision hereof shall be or be
deemed to be a waiver of any preceding or subsequent breach of the same or any
other provision of this Agreement.
(b) The obligations of Broadcaster and CBS under this Agreement
are subject to all applicable federal, state and local law, rules and
regulations (including but not limited to the Communications Act of 1934 as
amended and the Rules and Regulations of the Federal Communications Commission)
and this Agreement and all matters or issues collateral thereto shall
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<PAGE> 12
be governed by the law of the State of New York applicable to contracts
performed entirely therein.
(c) Neither Broadcaster nor CBS shall be or be deemed to be or
hold itself out as the agent of the other under this Agreement.
(d) Unless specified otherwise, all notices given hereunder shall
be given in writing, by personal delivery, mail, telegram, telex system or
private wire at the respective addresses of Broadcaster and CBS set forth
above, unless either party at any time or times designates another address for
itself by notifying the other party thereof by certified mail, in which case
all notices to such party shall thereafter be given at its most recently so
designated address. Notice given by mail shall be deemed given on the date of
mailing thereof with postage prepaid. Notice given by telegram shall be deemed
given on delivery of such telegram to a telegraph office with charges therefor
prepaid or to be billed to the sender thereof. Notice given by private wire
shall be deemed given on the sending thereof.
(e) The titles of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
TELEVISION STATION PARTNERS, L.P. CBS TELEVISION NETWORK
A Division of CBS Inc.
By: [ILLEGIBLE] By: [ILLEGIBLE]
----------------------------- -----------------------------
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<PAGE> 1
EXHIBIT 10.19
[NBC LETTERHEAD]
December 20, 1995
Television Station Partners, L.P.
and
WTOV Associates
c/o WTOV-TV
Box 9999
Steubenville, Ohio 43952
RE: WTOV-TV (Steubenville, Ohio)
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of television broadcasting station WTOV-TV (WTOV Associates, as
licensee, and WTOV-TV collectively herein called "Station") with the NBC
Television Network (herein called "NBC") and shall supersede and replace our
prior agreement dated July 1, 1989 except for the most recent amendment with
respect to network non-duplication protection under Federal Communications
Commission ("FCC") Rules Section 76.92.
1. Term. This Agreement shall be deemed effective as of 3:00
A.M., New York City time on the 1st day of January, 1995, and, unless sooner
terminated as provided in this Agreement, it shall remain in effect for a
period of seven (7) years thereafter. It shall then be renewed on the same
terms and conditions for a further period of three (3) years and for successive
further periods of three (3) years each, unless and until either party shall,
at least twelve (12) months prior to the expiration of the then current term,
give the other party written notice that it does not desire to have this
Agreement renewed for a further period. Television Station Partners, L.P.
represents that it has entered into an agreement with Smith Television, L.P.
for the sale of WTOV-TV to Smith Television, L.P. or an affiliated entity and
pursuant to such agreement, Smith Television, L.P. has agreed to assume and
perform Station's obligations under this Agreement.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air
television broadcasting all programming which NBC makes available for
broadcasting in the community to which Station is presently licensed by the
FCC, except as otherwise expressly provided herein.
<PAGE> 2
(b) NBC commits to supply sufficient programming
throughout the term of this Agreement for the hours presently programmed by it
(the "Programmed Time Periods"), which Programmed Time Periods are as follows
(the specified times are all local time in Station's community of license):
Prime Time: Monday thru Saturday - 8:00-11:00 P.M.
Sunday - 7:00-11:00 P.M.
Late Night: Monday thru Thursday - 11:35 P.M.-2:05 A.M.
Friday - 11:35 P.M.-2:35 A.M.
Saturday - 11:30 P.M.-1:00 A.M.
News: Monday thru Friday - 5:00-5:30 A.M.,
7:00-9:00 A.M. and 6:30-7:00 P.M.
Saturday - 8:00-10:00 A.M. and 6:30-7:00 P.M.
Sunday - 10:00 A.M.-12:00 Noon and 6:30-7:00
P.M.
Daytime: Monday thru Friday - 10:00 A.M.-12:00 Noon
and 1:00-3:00 P.M.
Saturday - 10:00 A.M.-12:30 P.M.
The selection, scheduling, substitution and withdrawal of any
program or portion thereof delivered to Station during the Programmed Time
Periods shall at all times remain within the sole discretion and control of
NBC. The parties acknowledge that local and network programming needs may
change during the term of this Agreement, and each party agrees throughout the
term to negotiate in good faith with the other party any proposed modification
of the Programmed Time Periods..
(c) In addition to the programming supplied pursuant to
Paragraph 2(b) above, NBC shall offer Station throughout the term of this
Agreement a variety of sports, special events and overnight news programming
for television broadcast at times other than the Programmed Time Periods.
Station shall have the right of first refusal with respect to any such
programming good for seventy-two (72) hours as against any other television
station located in Station's community of license or any television program
transmission service furnishing a television signal to Station's community of
license, including, but not limited to, any community antennae television
system, subscription television service, multipoint distribution system and
satellite transmission service. Station shall notify NBC of its acceptance or
rejection of NBC's offer of such programming as promptly as possible. Station's
acceptance of NBC,s offer shall constitute Station's agreement to broadcast
such programming in accordance with the terms of such offer and this Agreement.
Notwithstanding any other provision in this Agreement, no preexisting
acceptance of NBC programming shall be superseded or
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<PAGE> 3
otherwise affected by this Agreement, and those acceptances shall remain in
full force and effect. With respect to NBC programs outside the Programmed Time
Periods (either offered or already contracted for pursuant to this Agreement),
nothing herein contained shall prevent or hinder NBC from (i) substituting one
or more sponsored or sustaining programs, in which event NBC shall offer such
substituted program or programs to Station in accordance with the provisions of
this Paragraph 2(c), or (ii) canceling one or more such NBC programs; provided,
however, that NBC shall exercise all reasonable efforts to give Station at
least three (3) weeks prior written notice of such substitution or
cancellation. Station shall not be obligated to broadcast, and NBC shall not
be obligated to continue to deliver, subsequent to the termination of this
Agreement, any programs which NBC may have offered and which Station may have
accepted during the term hereof.
3. Station Carriage in Programmed Time Periods.
(a) Station agrees that, subject only to the preemption
rights set forth herein, including Station's unqualified right to preempt for
Station's coverage of breaking news (including live coverage of news events),
Station shall broadcast over Station's facilities all NBC programming supplied
to Station for broadcast in the Programmed Time Periods on the dates and at the
times the programs are scheduled by NBC, except to the extent that Station is
actually broadcasting programming pursuant to (and within the specified limits
of) a commitment contemplated by Paragraph 3(b) below. As used herein, the
"live coverage of news events" with respect to Station's preemption rights
shall in no event refer to the addition of scheduled news programs as part of
Station's regular continuing program schedule.
(b) As an inducement for NBC to enter into this
Agreement, Station covenants, represents and warrants to NBC that during any
Broadcast Year (as hereinafter defined) during the term hereof, Station shall
preempt no more than:
(i) up to twenty (20) hours in the aggregate of
NBC programs during the Prime Time Programmed Time Period for any
reason other than for the local live coverage of news events;
provided, however, that with respect to each Broadcast Year during the
term of this Agreement, Station shall be permitted to preempt up to an
additional fifty (50) hours of NBC programs during the Prime Time
Programmed Time Period for the broadcast of local sports events (the
"Prime Time Preemption Amount"); and
(ii) up to sixty (60) hours in the aggregate of
NBC programs during the Late Night Programmed Time Period for the
broadcast of local sports events in addition to preemptions for the
local live coverage of news events. For
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<PAGE> 4
the purposes of this Agreement, a "Broadcast Year" shall mean a
twelve (12) month period during the term hereof which commences on any
September 1 during the term hereof and which ends on August 31 of the
immediately following year. Station hereby confirms that its rights
and obligations under this Paragraph 3(b) are consistent with the
provisions of Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all
sports programming offered to the Station by NBC outside the Programmed Time
Periods ("NBC Sports Programming"), except for NBC sports programming which
directly conflicts with Station's coverage of sports events and special events
of particular local interest (collectively, such coverage of such sports events
and special events are referred to below as "Special Programs"). Station agrees
not to broadcast more than twenty (20) hours of Special Programs outside the
Programmed Time Periods in the aggregate during any Broadcast Year during the
term of this Agreement which would conflict with NBC Sports Programming outside
the Programmed Time Periods; provided, however, that with respect to each
Broadcast Year during the term of this Agreement, Station shall be permitted
to preempt up to an additional sixty (60) hours of NBC Sports Programming for
the broadcast of Station's coverage of local sports events (the "Sports
Preemption Amount").
(d) Notwithstanding the foregoing provisions of
subparagraphs (b) and (c) above and without limiting the provisions thereof,
Station agrees that, in any one (1) month period during a Broadcast Year,
Station's preemptions of NBC Prime Time programs and NBC Sports Programming
shall not exceed 20% of, respectively, the Prime Time Preemption Amount and the
Sports Preemption Amount, unless otherwise consistent with Station's
programming practice. In addition, Station agrees that in no event shall
Station preempt NBC programming for any programming offered or syndicated by
any other broadcast television network or any entity controlling, controlled
by, or under common control with a broadcast television network; provided that
such agreement by Station shall only be deemed in effect to the extent
consistent with applicable law; provided, further, notwithstanding the
foregoing, Station shall be permitted to preempt NBC programming for another
network's sports programming to the extent consistent with Station's historical
practices.
4. Preemptions.
(a) In the event that Station, for any reason, fails to
broadcast or advises NBC that it will not broadcast any NBC programming as
provided herein, then, in each case, Station, upon notice from NBC to Station,
shall broadcast such omitted programming and the commercial announcements
contained therein (or any replacement programming and the commercial
announcements
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<PAGE> 5
contained therein) during a time period or periods which the parties shall
promptly and mutually agree upon and which shall, to the extent possible, be of
a quality and rating value comparable to that of the time period or periods at
which such omitted programming was not broadcast as provided herein. In the
event that the parties do not promptly agree upon a time period or periods as
provided in the preceding sentence, then, without limitation to any other
rights of NBC under this Agreement or otherwise, NBC shall have the right to
license the broadcast rights to the applicable omitted programming (or
replacement programming) to another television station located in Station's
community of license.
(b) In the event that Station preempts or fails to clear
or broadcast any NBC programming as provided herein for any reason other than:
(i) the coverage of breaking news (including live coverage of news events),
(ii) as permitted by Paragraphs 3(b) or 3(c) above (subject to Paragraph 3(d)),
(iii) force majeure as provided for in Paragraph 12 below, or (iv) because: (A)
the programming is delivered in a form which does not meet accepted standards
of good engineering practice; (B) the programming does not comply with the
rules and regulations of the FCC; or (C) Station reasonably believes that such
programming would not meet prevailing contemporary standards of good taste in
its community of license, then, without limiting any other rights of NBC under
this Agreement or otherwise, upon NBC's request, Station shall pay NBC, or NBC
may deduct or offset from any amounts payable to Station hereunder or under any
other agreement between Station and NBC (or an entity controlling, controlled
by or under common control with NBC), an amount equivalent to NBC's loss in net
advertising revenues attributable to the failure of Station to broadcast such
program in Station's market as scheduled by NBC, which amount shall be
calculated in accordance with Exhibit A hereto. Without limiting or affecting
any other determination of a material breach hereunder, any failure by Station
to pay any amount due under this Paragraph 4(b) shall be deemed a material
breach of this Agreement. In the event of Station's material breach of this
Agreement, without limiting any other of NBC's rights of NBC under this
Agreement or otherwise, NBC shall have the option, exercisable in its sole
discretion upon thirty (30) days' written notice to Station, to either (x)
terminate Station's right to broadcast any one or more series or other NBC
programs, as NBC shall elect, and, to the extent and for the period(s) that NBC
elects, thereafter license the broadcast rights to such series or other NBC
program(s) to any other television station or stations located in Station's
community of license or (y) unless the breach is cured within such thirty (30)
day period, terminate this Agreement. Station acknowledges that NBC programming
previously broadcast by Station has been consistent with the standards set
forth in the foregoing clause (C); Station also agrees that Station's
reasonable belief that an NBC program does not meet such standards will be
based on a substantial difference in such program's style and content from
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<PAGE> 6
NBC programs previously broadcast by Station, unless the relevant standards in
the Station's community of license have changed.
(c) With respect to programs offered or already
contracted for pursuant to this Agreement, nothing herein contained shall be
construed to prevent or hinder Station from: (i) rejecting or refusing any NBC
program which Station reasonably believes to be unsatisfactory or unsuitable or
contrary to the public interest, or (ii) substituting a program which, in
Station's opinion, is of greater local or national importance; provided,
however, that Station shall give NBC written notice of each such rejection,
refusal or substitution, and the reason therefor, at least three (3) weeks in
advance of the scheduled broadcast, or as soon thereafter as possible
(including an explanation of the cause for any lesser notice). Station confirms
that its determination that a substitute program is of greater local or
national importance shall be based on Station's reasonable good faith judgment.
5. Station Compensation. In further consideration of Station's
performance of its obligations under this Agreement NBC shall compensate
Station as follows:
(a) (i) NBC shall pay Station for Station's broadcast of
each network sponsored program or portion thereof (except those
specified in Paragraph 5(b) below) which is broadcast during the Live
Time Period therefor the amount resulting from multiplying the
following:
(A) Station's Network Station Rate, which is $1,665; by
(B) The percentage set forth in the compensation matrix
table attached hereto as Exhibit B (the "Compensation
Table") opposite the applicable time period; by
(C) The fraction of an hour substantially occupied by
such program or portion thereof; by
(D) The fraction of the aggregate length of all
Commercial Availabilities during such program or
portion thereof occupied by Network Commercial
Announcements.
As used herein, "Live Time Period" shall mean the time period
or periods as specified by NBC for the broadcast of a program by
Station; "Commercial Availability" shall mean a period of time made
available by NBC during a network sponsored program for one or more
Network Commercial Announcements; and "Network Commercial
Announcement" shall mean a commercial announcement broadcast over
Station during a Commercial Availability and paid for by or on behalf
of
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<PAGE> 7
one or more of NBC's network advertisers, not including, however,
announcements consisting of billboards, credits, public service
announcements, promotional announcements and announcements required by
law.
(ii) For each network sponsored program or portion
thereof (except those specified in Paragraph 5(b) below) which is
broadcast by Station during a time period other than the Live Time
Period therefor, NBC reserves the right, in its sole discretion, to
withhold payment of compensation for such program. If NBC does not
withhold payment of compensation for such program, NBC shall pay
Station as if Station had broadcast the program or portion thereof
during such Live Time Period, except that if the percentage set forth
in the Compensation Table opposite the time period during which
Station broadcasts the program or portion thereof is less than that
set forth opposite such Live Time Period, NBC shall pay Station on the
basis of the time period during which Station broadcasts the program
or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station
shall agree upon for all network sponsored programs broadcast by Station
consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time
Period which straddles any of the time period categories in the
Compensation Table.
(c) (i) on or about the fifteenth day of the last
month of each calendar quarter during the term hereof, subject to the
timely receipt of reports requested under Paragraph 10 below, NBC
shall pay Station, by electronic transfer or such other means as NBC
shall determine, an estimate of the amounts due hereunder for such
calendar quarter. NBC shall make the appropriate adjustment for the
payment actually due for such calendar quarter in the payment of the
estimated amount due for the next calendar quarter. NBC shall
calculate the amounts due hereunder on a weekly basis and shall report
such amounts to Station within a reasonable period of time after the
close of each month during the term.
(ii) From the amounts otherwise payable to Station
hereunder, NBC shall deduct for each week during each calendar quarter
of the term hereof a sum equal to 217% of Station's Network Station
Rate provided in subparagraph 5(a)(i)(A) above (the "Waiver
Percentage"). This deduction shall be calculated on a weekly basis,
with 4.2857 as the
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<PAGE> 8
agreed number of weeks per month, and shall be reported to Station
with the reports due under subparagraph 5(c)(i) above. NBC shall make
other deductions from the amounts otherwise payable to Station
hereunder for additional services made available by NBC and utilized
by Station such as, but not limited to, NBC News Channel.
(d) (i) Subject to the limitations set forth below,
NBC reserves the right as part of a general rate revision to
reevaluate and change at any time (A) the percentages set forth in the
Compensation Table., or (B) the Waiver Percentage set forth in
subparagraph 5(c)(ii) above, by giving written notice to Station at
least thirty (30) days prior to the effective date of such change.
Notwithstanding the foregoing, NBC agrees that: (X) the Compensation
Table attached hereto as Exhibit B shall be modified during the term
of this Agreement only as mutually agreed to by NBC and Station or as
may be recommended by the NBC Affiliate Board; and (Y) NBC may
increase the Waiver Percentage only by reason of an increase in NBC's
technical costs of delivering programming to the NBC Television
Network; provided that any such increase in the Waiver Percentage
shall be subject to review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in
subparagraph 5(d)(i) to the contrary, the parties acknowledge that the
payment of compensation to Station hereunder is in consideration of
certain commitments by Station, including commitments regarding
Station's local news program schedule and promotion of NBC programming
as respectively set forth in Exhibits C and D attached hereto, which
Exhibits are incorporated herein by this reference. In the event that
Station (A) materially reduces its local news program schedule as set
forth in Exhibit C or (B) does not fulfill such commitments as are set
forth in Exhibit D in all years during the term of this Agreement, NBC
reserves the right to decrease Station's Network Station Rate by
notifying Station in writing at least ninety (90) days prior to the
effective date of such change.
6. Additional Consideration. In consideration of Station entering
into this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay to Station the additional amounts (the "Additional
Payments") set forth on Exhibit E hereto, subject to the provisions thereof.
7. Local commercial Announcements. Subject to the following
sentence, NBC agrees that during each quarter during the term of this
Agreement, the average weekly number of minutes available for Station's local
commercial announcements in and adjacent to regularly scheduled NBC programming
in each daypart (with pro-rated adjustments for national sports programming,
special news coverage or other special events) shall not be less
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than ninety-five percent (95%) of the average weekly number of minutes for the
applicable daypart during the 1993-94 Broadcast Year as set forth in Exhibit F
attached hereto (except if the reduction is due to a change in applicable
government regulations). In the event of a reduction in the average weekly
number of minutes available for Station's local commercial announcements in and
adjacent to regularly scheduled NBC programming which causes NBC not to be in
compliance with the foregoing provision, NBC agrees to offset the effects of
such reduction by providing Station with a comparable economic benefit, which
benefit may take the form of local coverage of NBC promotional announcements,
an increase in the amount of Station's preemptions permitted under Paragraphs
3(b), 3(c) or 3(d) hereof, or other form of benefit. The foregoing provisions
of this Paragraph 7 are not intended to facilitate any disproportionate change
by NBC in the allocation of the number of minutes available for Station's local
commercial announcements in and adjacent to regularly scheduled NBC programming
among different time periods in any daypart, if such change is solely for NBC's
economic benefit.
8. Delivery. NBC shall transmit the programming hereunder by
satellite and shall notify Station as to both the satellite and transponder
being used for such transmission, and the programming shall be deemed delivered
to Station when transmitted to the satellite. Where, in the opinion of NBC, it
is impractical or undesirable to furnish a program over satellite facilities,
NBC may deliver the program to Station in any other manner, including but not
limited to, in the form of motion picture film, video tape or other recorded
version, postage prepaid, in sufficient time for Station to broadcast the
program at the time scheduled. Such recordings shall be used only for a single
television broadcast over Station, and Station shall comply with all NBC
instructions concerning the disposition to be made of each such recording
received by Station hereunder.
9. Conditions of Station's Broadcast. Station's broadcast of NBC
programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or
additions or modifications to, any NBC program furnished to Station hereunder
or any commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor broadcast
any commercial or other announcements (except emergency bulletins) during any
such program, without NBC's prior written authorization. Station may, however,
delete announcements promoting any NBC program which is not to be broadcast by
Station, provided that such deletion shall be permitted only in the event and
to the extent that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be broadcast by
Station.
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<PAGE> 10
(b) For purposes of identification of Station with the
NBC programs, and until written notice to the contrary is given by NBC, Station
may superimpose on various Entertainment programs, where designated by NBC, a
single line of type, not to exceed fifty (50) video lines in height and
situated in the lower eighth raster of the video screen, which single line
shall include (and be limited to) Station's call letters, community of license
or home market, channel number, and the NBC logo. No other addition to any
Entertainment program is contemplated by this consent, and the authorization
contained herein specifically excludes and prohibits any addition whatsoever to
News and Sports programs, except identification of Station as provided in the
preceding sentence as required by the FCC.
(c) The placement and duration of station-break periods
provided for locally originated announcements between NBC programs or segments
thereof shall be designated by NBC. Station shall broadcast each NBC program
delivered to Station hereunder from the commencement of network origination
until the commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any
violation by Station of any of the provisions of this Paragraph 9, NBC may, in
its reasonable discretion, withhold an amount of compensation otherwise due
Station under Paragraph 5 above which is appropriate in view of the nature of
the specific violation, it being understood that the amount withheld for any
violation shall not exceed the total compensation due Station for the week in
which such violation occurs. Nothing contained in this Paragraph 9(d) shall
limit the rights of Station under Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon
forms provided by NBC, such reports as NBC may request covering the broadcast
by Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station
pursuant to this Agreement shall be furnished with all music performance rights
necessary for broadcast by Station included. Station shall have no
responsibility for obtaining such rights from ASCAP, BMI or other music
licensing societies insofar as the programs delivered by NBC to Station for
broadcasting are concerned. As used in this paragraph, "programs" shall
include, but shall not be limited to, program and promotional material and
commercial and public service announcements furnished by NBC. Station shall be
responsible for all music license requirements for any commercial and public
service announcements or other material inserted by Station within or adjacent
to the programs as permitted under the terms of this Agreement, except for
cut-ins produced by or on behalf of NBC and inserted by Station at NBC's
direction.
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12. Force Majeure. Neither Station nor NBC shall incur any
liability hereunder because of NBC's failure to deliver, or the failure of
Station to broadcast, any or all programs due to failure of facilities, labor
disputes, government regulations or causes beyond the reasonable control of the
party so failing to deliver or to broadcast. Without limiting the generality
of the foregoing, NBC's failure to deliver a program for any of the following
reasons shall be deemed to be for causes beyond NBC's reasonable control:
cancellation of a program because of the death, illness or refusal to appear or
perform of a star or principal performer thereon, or because of such person's
failure to conduct himself or herself with due regard to social conventions and
public morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule, or tending to shock, insult or offend the community, or tending to
reflect unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station,
its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless from and against all claims,
damages, liabilities, costs and expenses (including reasonable attorneys, fees)
arising out of the use by Station, in accordance with this Agreement, of any
program or other material as furnished by NBC hereunder, provided that Station
promptly notifies NBC of any claim or litigation to which this indemnity shall
apply, and that Station cooperates fully with NBC in the defense or settlement
of such claim or litigation. Similarly, Station shall indemnify, defend and
hold NBC, its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless with respect to material added to
or deleted from any program by Station, except for cut-ins produced by or on
behalf of NBC and inserted by Station at NBC's direction. These indemnities
shall not apply to litigation expenses, including attorneys, fees, which the
indemnified party elects to incur on its own behalf. Except as otherwise
provided herein, neither Station nor NBC shall have any rights against the
other for claims by third persons, or for the non-operation of facilities or
the non-furnishing of programs for broadcasting, if such non-operation or
non-furnishing is due to failure of equipment, actions or claims by any third
person, labor disputes, or any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of
this Agreement, NBC shall give Station prompt notice of any determination by
NBC to engage in new over-the-air broadcast ventures within Station's community
of license (whether or not involving the transmission of television programs,
but excluding any acquisition of an ownership interest in any broadcast
television station) (a "Broadcast Venture"). NBC shall negotiate exclusively
with Station in good faith, for a period of time
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following such notice to Station as shall be determined by NBC to be
appropriate to the circumstances and as shall be specified in such notice, with
respect to Station's participation on a financial and/or operational basis in
any such Broadcast Venture within Station's community of license before NBC may
enter into any such negotiations with a Third Party (as defined below) within
such community of license. "Third Party" shall mean any person or entity other
than an NBC Party; "NBC Party" shall mean any of NBC, National Broadcasting
Company, Inc. or their respective parent, subsidiary, affiliated, related or
successor entities.
15. Change in Operations. Station represents and warrants that it
holds a valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and warranty by Station. In the event that Station's
transmitter location, power, frequency, programming format or hours of
operation are materially changed at any time so that Station is of less value
to NBC as a broadcaster of NBC programming than at the date of this Agreement
t, then NBC shall have the right to terminate this Agreement upon thirty (30)
days prior written notice to Station.
16. Assignment.
(a) This Agreement shall not be assigned without the
prior written consent of NBC, and any permitted assignment shall not relieve
Station of its obligations hereunder. Any purported assignment by Station
without such consent shall be null and void and not enforceable against NBC.
Notwithstanding the foregoing, NBC agrees that it shall consent to an
assignment of this Agreement to Smith Television, L.P. or entity affiliated
with Smith Television, L.P.
(b) Station agrees to include as a condition of any
proposed assignment, sale or transfer of ownership or control of Station
(including any assignment or transfer referred to in Paragraph 16(c) below
other than a "short form" assignment) a contractually binding provision that
the assignee or transferee shall assume and become bound by this Agreement for
(i) the remainder of the then-current term of this Agreement or (ii) three (3)
years from the date of said assignment or transfer, whichever period is
greater. Station acknowledges that any such assignment, sale or transfer which
does not so provide for such assumption and for NBC's right to extend the term
of this Agreement will cause NBC irreparable injury for which damages are not
an adequate remedy. Therefore, Station agrees that NBC shall be entitled to
seek an injunction or similar relief from any court of competent jurisdiction
restraining Station from committing any violation of this Paragraph 16(b).
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<PAGE> 13
(c) Station agrees that if any application is made to the
FCC pertaining to an assignment or a transfer of control of Station's license,
or any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the FCC Rules, NBC shall have
the right to terminate this Agreement in the event of any assignment or
transfer. Station agrees, except in the case of "short form" assignments or
transfers of control, that promptly following Station's notice to NBC, Station
(i) shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form satisfactory
to NBC, the agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of the Station's license,
the assignee or transferee will assume and perform this Agreement in its
entirety without limitation of any kind. If Station complies with its
obligations set forth in the preceding sentence and NBC does not terminate this
Agreement upon written notice to Station within the thirty (30) day period
following the later of the meeting with the proposed assignee or transferee or
the delivery to NBC of a satisfactory assumption agreement, NBC shall be deemed
to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of
all or substantially all of the assets or business of NBC (whether structured
as a sale or transfer of equity or assets of NBC), NBC agrees to assign this
Agreement to the purchaser or transferee and to cause such purchaser or
transferee to assume NBC's obligations hereunder; provided that the foregoing
agreement shall not apply in the event that this Agreement becomes an
obligation of such purchaser or transferee by operation of law. Upon such
assignment and assumption, NBC shall have no liability to Station under this
Agreement with respect to obligations arising after the effective date of such
assignment and assumption.
17. Unauthorized Copying and Transmission. Station shall not
authorize, cause, or permit, without NBC's consent, any program or other
material furnished to Station hereunder to be recorded, duplicated, rebroadcast
or otherwise transmitted or used for any purpose other than broadcasting by
Station as provided herein. Notwithstanding the foregoing, Station shall not be
restricted in the exercise of its signal carriage rights pursuant to any
applicable rule or regulation of the FCC with respect to retransmission of its
broadcast signal by any cable system or multichannel video program distributor
("MVPD"), as defined in Section 76.64(d) of the FCC Rules, which (a) is located
within the Area of Dominant Influence ("ADI"), as defined by Arbitron, in which
Station is located, or (b) was actually carrying Station's signal as of April
1, 1993, or (c) with
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<PAGE> 14
respect to cable systems, serving an area in which Station is "significantly
viewed" (as determined by the FCC) as of April 1, 1993; provided, however,
that any such exercise pursuant to FCC Rules with respect to NBC programs shall
not be deemed to constitute a license by NBC; and provided, further, that at
such time as NBC adopts a term in substitution for the term "AD", by reason of
any similar action by the FCC or other appropriate authority, such substitute
term shall replace the references to "AD" herein. NBC reserves the right to
restrict such signal carriage with respect to NBC programming in the event of a
change in applicable law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the
grant by NBC to Station of the non-duplication protection provided in the most
recent amendment to this Agreement, Station hereby agrees as follows:
(a) Station shall not grant consent to the retransmission
of its broadcast signal by any cable television system, or, except as provided
in Paragraph 18(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located
outside the ADI to which Station is assigned, unless Station's signal was
actually carried by such cable system or MVPD as of April 1, 1993, or, with
respect to such cable system, is "significantly viewed" (as determined by the
FCC) as of April 1, 1993; provided, however, that at each renewal of this
Agreement, in the event Station can demonstrate to NBC that it is
"significantly viewed" (as determined by the FCC) in areas in addition to those
in which it was "significantly viewed" as of April 1, 1993 ("Additional viewing
Areas"), NBC agrees that it will negotiate in good faith with Station regarding
a possible extension of Station's grant of the right to retransmit its
broadcast signal to cable systems in the Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission
of its broadcast signal by any MVPD that provides such signal to any home
satellite dish user, unless such user is located within Station's own ADI or is
an "unserved household" as defined in Section 119(d) or any successor provision
of Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station
violates any of the provisions set forth in Paragraphs 17 and 18 above, NBC
may, in addition to any other of its rights or remedies at law or in equity
under this Agreement or any amendment thereto, terminate this Agreement by
written notice to Station given at least ninety (90) days prior to the
effective date of such termination.
20. Applicable Law. The obligations of Station and NBC under this
Agreement are subject to all applicable federal,
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<PAGE> 15
state, and local laws, rules and regulations (including, but not limited to,
the Communications Act of 1934, as amended, and the rules and regulations of
the FCC), and this Agreement and all matters or issues collateral thereto shall
be governed by the law of the State of New York applicable to contracts
negotiated, executed and performed entirely therein (without regard to
principles of conflicts of laws).
21. Waiver. A waiver by either of the parties hereto of a breach
of any provision of this Agreement shall not be deemed to constitute a waiver
of any preceding or subsequent breach of the same provision or any other
provision hereof.
22. Notices. Any notices hereunder shall be in writing and shall
be given by personal delivery, overnight courier service, or registered or
certified mail, addressed to the respective addresses set forth on the first
page of this Agreement or at such other address or addresses as may be
specified in writing by the party to whom the notice is given. Such notices
shall be deemed given when personally delivered, delivered to an overnight
courier service or mailed, except that notice of change of address shall be
effective only from the date of its receipt.
23. Captions. The captions of the paragraphs in this Agreement are
for convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing constitutes the entire
agreement between Station and NBC with respect to the subject matter hereof,
all prior understandings being merged herein, except for the most recent
amendment with respect to network non-duplication protection under FCC Rules
Section 76.92. This Agreement may not be changed, modified, renewed, extended
or discharged, except as specifically provided herein or by an agreement in
writing signed by the parties hereto.
25. Confidentiality. The parties agree to use their best efforts
to preserve the confidentiality of this Agreement and of the terms and
conditions set forth herein, and the exhibits annexed hereto, to the fullest
extent permissible by law. The parties recognize that Section 73.3613 of the
FCC's Rules and Regulations requires the filing with the FCC of television
network affiliation agreements by each affiliate, but are unaware of any
requirement for the filing of exhibits annexed to such affiliation agreements.
In the event that the FCC should request either party to file said exhibits,
that party shall give prompt notice to the other, and shall submit said
exhibits to the FCC with a request that said exhibits be withheld from public
inspection pursuant to Section 0.459 of the FCC's Rules and Regulations on the
grounds that said exhibits contain confidential commercial or financial
information that would customarily be guarded from competitors and not be
released to the public.
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<PAGE> 16
26. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
If the foregoing is in accordance with your understanding, please
indicate your acceptance on the copy of this Agreement enclosed for that
purpose and return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ [ILLEGIBLE]
----------------------------
AGREED:
WTOV ASSOCIATES
By: /s/ I. MARTIN POMADUR
----------------------------
TELEVISION STATION PARTNERS, L.P.
By /s/ I. MARTIN POMADUR General Partner
----------------------------
By: /s/ I. MARTIN POMADUR
----------------------------
Name: I. Martin Pomadur
Title: CEO
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<PAGE> 1
EXHIBIT 10.20
[CAPITAL CITIES/ABC, INC. LETTERHEAD]
March 8, 1995
TELEVISION AFFILIATION AGREEMENT
WTOV Associates
Steubenville, Ohio
TELEVISION STATION WTOV
Gentlemen:
In order that your station may continue to serve the public interest,
convenience and necessity, this Company and your Television Station WTOV-TV
hereby mutually agree upon the following plan of network cooperation.
1. NETWORK AFFILIATION AND PROGRAM SERVICE
A.
From time to time, we may, but shall be under no obligation to offer
you, for television broadcasting by your station, certain of our
network television programs. Notwithstanding the foregoing, ABC shall
have the right to authorize any television broadcasting station
regardless of the community to which it is licensed by the FCC, to
broadcast any network presentation of a subject we deem to be of
immediate national significance including, but not limited to, a
Presidential address.
B. PROGRAM SERVICE
The program service we may offer may be as follows:
1. Network Sponsored Programs
"Network sponsored programs", as used in this agreement, shall
mean those television network programs which contain one or
more commercial announcements paid for by or on behalf of one
or more ABC Network advertisers.
a) We may offer you certain ABC television network
sponsored programs.
b) You agree to broadcast any such network sponsored
programs in their entirety, including but not limited to the
network commercial announcements, network identifications,
program promotional material or credit announcements contained
in such programs which you accept, without interruption or
deletion or addition of any kind. Notwithstanding the
foregoing, you may substitute other ABC-TV promotional
announcements in lieu of program promotional material which is
inaccurate as it pertains to your station. It is also
understood that no commercial announcement, promotional
announcement or public service announcement will be broadcast
by you during any interval within a network program designated
by ABC as being for the sole purpose of making a station
identification announcement.
<PAGE> 2
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2. Network Sustaining, Cooperative and Spot Carrier Programs
a) We may from time to time offer you live or recorded network
programs identified as sustaining programs, cooperative
programs of spot carrier programs. Except as set forth below
in sub-paragraphs (b) and (c), you agree to broadcast such
programs which you accept in their entirety without
interruption or deletion or addition of any kind.
b) The network sustaining programs which we may offer to you may
not, without our prior written consent, be sold by your
station for commercial sponsorship or interrupted for
commercial announcements or used for any purpose other than
sustaining broadcasting. The charges to you for recorded
sustaining programs will be as follows:
$100. per clock hour for film or taped programs
(black and white)
$200. per clock hour for film or taped programs
(color)
c) You may carry the cooperative or spot carrier programs on the
same basis as regular sustaining programs or you may offer
them for commercial sponsorship on terms and conditions
specified by us at the time such programs are offered to you.
C. PROGRAM ACCEPTANCE
You agree that you will advise us within 15 days of the date
of our offer of your acceptance or rejection of any offer by
us relating to a regularly scheduled network program. With
respect to any network program not regularly scheduled, you
will advise us of your acceptance or rejection of our offer
within 72 hours (exclusive of Saturdays, Sundays and holidays)
after such offer has been received at your station. However,
if the first broadcast referred to in our offer is scheduled
to occur within less than 15 days after the date of our offer
with respect to regularly scheduled network programs or less
than 72 hours after our offer has been received at your
station with respect to network programs not regularly
scheduled, you shall notify us of your acceptance or rejection
of such offer as promptly as possible, but in no event after
the first broadcast time specified in such offer. Acceptance
by you of our offer of a network program(s) shall constitute
your agreement to broadcast such network program(s) in
accordance with the terms of this agreement and of our offer
to you.
D. PROGRAM DELIVERY
By means satisfactory to us, we will arrange, at our own
expense, for programs to be delivered to the nearest
convenient point where ABC maintains regular service.
II. NETWORK STATION RATE
1. The network station rate for your station shall be $00.00 and
shall be used by us in determining your station compensation
in accordance with the formula set forth in Schedule A
hereto.
2. We reserve the right to reevaluate and change at any time
your network station rate from that set forth in Subparagraph
1 above by notice to you in writing to such effect. Any
increase in your station rate will become effective at the
date specified in our notice to you. Should we decrease your
network station rate below that
<PAGE> 3
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set forth in Subparagraph 1 above, we will notify you in
writing at least three months prior to the effective date of
such reduction, and you may, if you so elect, terminate this
affiliation agreement as of the effective date of such
reduction in your station rate by giving us prior written
notification within 45 days after the date of our notice to
you of such reduction.
III. NETWORK STATION COMPENSATION
1. We agree to pay you, and you agree to accept, compensation in
accordance with the provisions set forth in Schedule A
attached hereto and hereby made a part hereof.
2. If you should be unable, for any reason to broadcast any
sponsored program(s), or any portion thereof, your
compensation hereunder from us for that period shall be
reduced accordingly.
3. We may at any time, upon notice to you, substitute for any
scheduled network program another network program, except that
if such other network program in our judgment involves a
special event of public interest or importance, no such notice
is required. No compensation will be paid to you for the
scheduled program or for the substitute program unless such
substitute program is a "network sponsored program," in which
event you shall be compensated in accordance with the terms or
formula, whichever is applicable, set forth in Schedule A
hereof.
4. Nothing contained in this agreement shall be construed to
prevent or hinder us, at any time upon notice to you as soon
as practicable, from cancelling one or more network programs,
whether sponsored or sustaining, in which event you shall
receive no compensation for any such cancelled network
sponsored program(s).
5. With respect to network programs offered or already contracted
for pursuant to this affiliation agreement, nothing herein
contained shall be construed to prevent or hinder you from (a)
rejecting or refusing network programs which you reasonably
believe to be unsatisfactory, unsuitable or contrary to the
public interest, or (b) substituting a program, which in your
opinion, is of greater local or national importance. You
shall give us prompt telegraphic notification of any such
refusal, rejection or substitution, and we shall be under no
obligation to compensate you for any such program you have
refused or rejected or for which you have substituted a
program which is of greater local or national importance.
IV. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS
"Cut In Announcements", as used herein, shall mean the substitution of
a special commercial in place of a regularly scheduled network
commercial.
1. Upon at least twenty-four (24) hours' notice, you shall, at
our request, furnish such personnel and equipment as may be
necessary to (a) broadcast cut-in announcements from your
station alone, or (b) originate from your station cut-in
announcements to one or more other stations, without regard to
whether or not your station is requested to broadcast said
cut-in announcement(s). Notwithstanding anything contained in
this agreement, you may refuse to broadcast any such cut-in
announcement in the community to which your station is
licensed by the FCC if, in your opinion, it is not in the
public interest, convenience or necessity, but you shall
nevertheless furnish such personnel and equipment as may be
necessary to originate such cut-in announcement(s) from your
station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized
by us and then, only in accordance with the instructions
furnished to you. You will be supplied, as promptly as
possible, with the material and instructions for these
announcements.
3. We may cancel any order for cut-in announcements without
liability on our part, provided we do so upon not less than
twenty-four (24) hours' notice to you, failing which, we will
pay you the compensation you would have received if the
announcement(s) had continued as scheduled for twenty-four
(24) hours following receipt by you of such notice of
cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the applicable
table set forth in Schedule B hereto.
<PAGE> 4
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B. LOCAL TAG SERVICES
"Local Tag Announcements", as used herein, shall mean a visual
commercial announcement, made by you on behalf of a local
dealer of a network advertiser, not exceeding 10 seconds of a
one-minute network commercial announcement projected by means
of a slide and not utilizing more than two (2) slides.
1. Upon at least twenty-four (24) hours' notice, you
shall, at our request, furnish such personnel and
equipment as may be necessary to broadcast "local tag
announcements".
2. Local tag announcements shall be broadcast in
accordance with our instructions. The network
advertiser shall supply to you or purchase from you,
as promptly as possible, the slide(s) for each local
tag announcement. Local tag announcements shall not
be accompanied by oral announcements unless the
network advertiser shall make direct requests of you
therefor and shall have assumed sole responsibility
for payment of such oral announcements.
3. We may cancel any order for local tag announcements
without liability on our part provided we do so upon
not less than twenty-four (24) hours' notice to you,
failing which we will pay you the compensation you
would have received if the local tag announcement(s)
had continued as scheduled for twenty-four (24) hours
following receipt by you of such notice of
cancellation.
4. For each local tag announcement which you broadcast,
we shall compensate you in accordance with the
applicable table set forth in Schedule B hereto.
V. GENERAL
1. You will submit to us in writing, upon forms provided by us
for that purpose, such reports covering network programs
broadcast by your station as ABC may request from time to
time.
2. Subject to the provisions of subparagraph 2 of Section III of
this agreement, neither you nor ourselves shall incur any
liability hereunder because of our failure to deliver, or your
failure to broadcast, any or all network programs due to:
a) failure of facilities
b) labor disputes, or
c) causes beyond the control of the party so
failing to broadcast.
3. In the event that the transmitter location, power, frequency
or hours of operation of your station are changed at any time
so that your station is of less value to us as a network
outlet than it is as of the date of this agreement, we will
have the right to terminate this agreement upon thirty (30)
day's advance written notice.
4. You agree not to assign or to transfer any of the rights or
privileges granted to you under this agreement without our
prior consent in writing. You also agree that if any
application is made to the Federal Communications Commission
pertaining to an assignment or a transfer of control of your
license, or any interest therein, you shall notify us in
writing immediately of the filing of such application. Except
as to assignments or transfers of control comprehended by
Section 73.3540(e) of the Rules and Regulations of the Federal
Communications Commission, we shall have the right to
terminate this agreement effective as of the effective date of
any assignment or transfer of control (voluntary or
involuntary) of your license or any interest therein, provided
ABC shall have given you notice in writing of such termination
within thirty (30) days after we have been advised that such
application for assignment or transfer has been filed with the
Federal Communications Commission. If we do not so terminate
this agreement, you agree, prior to the effective date of any
such assignment or transfer of control of your stations
to procure and deliver to us, in form satisfactory to us, the
agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of your
station's authorization, the assignee or transferee will assume
and perform this agreement in its entirety without limitation
of any kind. If you fail to notify us of the proposed
assignment or transfer of control of your station's
authorization, or fail to procure the agreement of the proposed
assignee or transferee in accordance with the preceding
sentence, we shall have the right to terminate this agreement
upon thirty (30) days notice in writing to you and the
transferee or assignee, after the effective date of such
assignment or transfer or the date on which we learn of such
assignment or transfer, whichever is later.
<PAGE> 5
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5. You agree not to authorize, cause, permit or enable anything
to be done whereby any program which we supply to you herein
may be used for any purpose other than broadcasting by your
station in the community to which it is licensed, which
broadcast is intended for reception by the general public in
places to which no admission is charged. You agree when you
are authorized to tape a program for subsequent broadcast that
the recording will be broadcast not more than once in its
entirety and will be erased within six (6) hours of use.
6. Except with our prior written consent and except upon such
terms and conditions as we may impose, you agree not to
authorize, cause, permit or enable anything to be done whereby
a recording on film, tape or otherwise is made or a recording
is broadcast, of a program which has been, or is being,
broadcast on our network.
7. With respect to any and all promotional material issued by you
or under your direction or control, you agree to abide by any
and all restrictions of which we advise you pertaining to the
promotion of a network program(s) scheduled to be broadcast by
you in your community, including, but without limitation,
on-the-air promotion, billboards, and newspaper or other
printed advertisements, announcements or promotions.
8. You agree to maintain for your television station such
licenses, including performing rights licenses as now are or
hereafter may be in general use by television broadcasting
stations and necessary for you to broadcast the television
programs which we furnish to you hereunder. We will clear at
the source all music in the repertory of ASCAP and of BMI used
on our network programs, thereby licensing the broadcasting of
such music on such programs over your station.
9. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory
to us for the film or tape recordings necessary to deliver
the programs to you. Such film or tape recorded programs
shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs
are to be shipped by us, shipping charges prepaid, and you
agree to return to us or to forward to such television station
as we designate, shipping charges prepaid, each print or copy
of said film or tape recording received by you hereunder,
together with the original reels and containers furnished
therewith. You will return or forward all prints in the same
condition as received by you, ordinary wear and tear excepted,
immediately after a single TV broadcast over your station. In
the event you damage a print of any film or tape recorded
program which is delivered to you, or fail to return or
forward the original reels and containers furnished therewith,
as aforesaid, you agree to pay the cost of replacing the
complete print, original reels and/or containers as and when
billed by us.
10. No inducements, representations or warranties except as
specifically set forth herein have been made by any of the
parties to this agreement. This agreement constitutes the
entire contract between the parties hereto and no provision
thereof shall be changed or modified, nor shall this agreement
be discharged in whole or in part, except by an agreement in
writing, signed by the party against whom the change,
modification or discharge is claimed or sought to be enforced;
nor shall any waiver of any of the conditions or provisions of
this agreement be effective and binding unless such waiver
shall be in writing and signed by the party against whom the
waiver is asserted; and no waiver of any provision of this
agreement shall be deemed to be a waiver of any preceding or
succeeding breach of the same or of any other provision.
11. This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12. Upon termination of this agreement, the consent theretofore
granted to broadcast our Network programs shall be deemed
immediately withdrawn and you shall have no further rights of
any nature whatsoever in such programs.
13. Not withstanding anything to the contrary contained herein, it
is understood and agreed that any continuing program series
confirmed to you during the term of this agreement will not be
recaptured prior to the expiration of 13 weeks. ABC shall give
you four (4) weeks advance written notice of the recapture of
any series confirmed to your stations.
14. We agree to indemnify, defend and hold you harmless against
and from all claims, damages, liabilities, costs and expenses
arising out of the use or exercise by you, in accordance with
this agreement, of any rights or material furnished by us
hereunder, provided that you promptly notify us of any claim
or litigation to which this indemnity shall apply, and that you
cooperate fully with us in the defense at our request. You
similarly agree to indemnify, defend and hold us harmless with
respect to material furnished by you.
<PAGE> 6
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VI. TERM
This agreement shall become effective at 3:00 AM, NYT, on the 1st day of
May, 1995, and it shall continue until 3:00 AM, NYT, on the 1st day of May,
1997. It is understood and agreed, however, that this agreement may be
terminated by either party upon giving the other party twenty-eight (28)
days advance written notice of its intention so to do.
If, after examination, you find that the arrangement herein proposed is
satisfactory to you, please indicate your acceptance on the copy of this
letter enclosed for that purpose and return that copy to us.
Very sincerely yours,
AMERICAN BROADCASTING COMPANIES, INC.
By /s/ [ILLEGIBLE]
----------------------------
Senior Vice President
Affiliate Relations
Accepted this 17th day of
March, 1995
_________________________
Television Station WTOV-TV
By /s/ [ILLEGIBLE]
----------------------
<PAGE> 1
EXHIBIT 10.21
[NBC TV NETWORK LETTERHEAD]
March 20, 1996
Smith Television of Salinas
Monterey License, L.P.
and
c/o KSBW
238 John Street
Salinas, California 93901
RE: KSBW (Salinas, California)
Gentlemen:
The following shall comprise the agreement between us for the
affiliation of your television broadcasting station Smith Television of
Salinas-Monterey License, L.P. and KSBW collectively (herein called "Station")
with the NBC Television Network (herein called "NBC").
1. Term. This Agreement shall be deemed effective as of 3:00 A.M., New
York City time on the 17th day of January, 1996 (the "Effective Date"), and,
unless sooner terminated as provided in this Agreement, it shall remain in
effect through December 31, 2005. it shall then be renewed on the same terms
and conditions for a further period of five (5) years and for successive
further periods of five (5) years each, unless and until either party shall, at
least twelve (12) months prior to the expiration of the then current term, give
the other party written notice that it does not desire to have this Agreement
renewed for a further period.
2. NBC Programming.
(a) NBC shall deliver to Station for free, over-the-air television
broadcasting all programming which NBC makes available for broadcasting in the
community to which Station is presently licensed by the FCC, except as
otherwise expressly provided herein.
(b) NBC commits to supply sufficient programming throughout the term of
this Agreement for the hours presently programmed by it (the "Programmed Time
Periods"), which Programmed Time Periods are as follows (the specified times
are all local time in Station's community of license):
Prime Time: Monday thru Saturday - 8:00-11:00 P.M.
<PAGE> 2
Sunday - 7:00-11:00 P.M.
Late Night: Monday thru Thursday - 11:35 P.M.-2:05 A.M.
Friday - 11:35 P.M.-2:35 A.M.
Saturday - 11:30 P.M.-1:00 A.M.
News: Monday thru Friday - 5:30-6:00 A.M.,
7:00-9:00 A.M. and 5:30-6:00 P.M.
Saturday - 7:00-9:00 A.M. and 5:30-6:00 P.M.
Sunday - 7:30-9:30 A.M. and 5:30-6:00 P.M.
Daytime: Monday thru Friday - 10:00-11:00 A.M.
and 12:00 Noon-2:00 P.M.
Saturday - 9:00-9:30 A.M. and 10:00-11:30 A.M.
The selection, scheduling, substitution and withdrawal of any program
or portion thereof delivered to Station during the Programmed Time Periods
shall at all times remain within the sole discretion and control of NBC. The
parties acknowledge that local and network programming needs may change during
the term of this Agreement, and each party agrees throughout the term to
negotiate in good faith with the other party any proposed modification of the
Programmed Time Periods.
(c) In addition to the programming supplied pursuant to Paragraph 2(b)
above, NBC shall offer Station throughout the term of this Agreement a variety
of sports, special events and overnight news programming for television
broadcast at times other than the Programmed Time Periods. Station shall have
the right of first refusal with respect to any such programming good for
seventy-two (72) hours as against any other television station located in
Station's community of license or any television program transmission service
furnishing a television signal to Station's community of license, including,
but not limited to, any community antennae television system, subscription
television service, multipoint distribution system and satellite transmission
service. Station shall notify NBC of its acceptance or rejection of NBC's offer
of such programming as promptly as possible. Station's acceptance of NBC's
offer shall constitute Station's agreement to broadcast such programming in
accordance with the terms of such offer and this Agreement. Notwithstanding any
other provision in this Agreement, no pre-existing acceptance of NBC
programming shall be superseded or otherwise affected by this Agreement, and
those acceptances shall remain in full force and effect. With respect to NBC
programs outside the Programmed Time Periods (either offered or already
contracted for pursuant to this Agreement), nothing herein contained shall
prevent or hinder NBC from (i) substituting one
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<PAGE> 3
or more sponsored or sustaining programs, in which event NBC shall offer such
substituted program or programs to Station in accordance with the provisions of
this Paragraph 2(c), or (ii) canceling one or more such NBC programs; provided,
however, that NBC shall exercise all reasonable efforts to give Station at
least three (3) weeks prior written notice of such substitution or
cancellation. Station shall not be obligated to broadcast, and NBC shall not be
obligated to continue to deliver, subsequent to the termination of this
Agreement, any programs which NBC may have offered and which Station may have
accepted during the term hereof.
3. Station Carriage in Programmed Time Periods.
(a) Station agrees that, subject only to the preemption rights
contained in Paragraph 4(c) below, including Station's unqualified right to
preempt for local live coverage of news events, Station shall broadcast over
Station's facilities all NBC programming supplied to Station for broadcast in
the Programmed Time Periods on the dates and at the times the programs are
scheduled by NBC, except to the extent that Station is actually broadcasting
programming pursuant to (and within the specified limits of) a commitment
contemplated by Paragraph 3(b) below. As used herein, the "live coverage of
local news events" with respect to Station's preemption rights shall in no
event refer to the addition of scheduled local news programs as part of
Station's regular continuing program schedule.
(b) As an inducement for NBC to enter into this Agreement, Station
covenants, represents and warrants to NBC that during any Broadcast Year (as
hereinafter defined) during the term hereof, Station shall preempt no more than
fifteen (15) hours in the aggregate of NBC programs during the Prime Time
Programmed Time Period for any reason other than for the live coverage of news
events (the "Prime Time Preemption Amount"). For the purposes of this
Agreement, a "Broadcast Year" shall mean a twelve (12) month period during the
term hereof which commences on any September 1 during the term hereof and which
ends on August 31 of the immediately following year. Station hereby confirms
that its rights and obligations under this Paragraph 3(b) are consistent with
its rights and obligations referred to in Paragraph 4(c) below.
(c) The Station hereby agrees to accept and clear all sports
programming offered to the Station by NBC outside the Programmed Time Periods
("NBC Sports Programming"), except for NBC sports programming which directly
conflicts with Station's coverage of sports events and special events of
particular local interest (collectively, such coverage of such sports events
and special events are referred to below as "Special Programs"). Station
acknowledges the substantial investment in network sports programming to be
incurred during the term of this Agreement in order to provide Station with
network-quality sports programming.
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<PAGE> 4
Station further acknowledges that in view of NBC's substantial investment in
network sports programming and Station's rights under this Paragraph 3(c),
Station does not foresee any need to substitute programming of any kind for NBC
Sports Programming, except as follows with respect to Special Programs. Station
agrees not to broadcast more than three (3) hours of Special Programs outside
the Programmed Time Periods in the aggregate during any Broadcast Year during
the term of this Agreement which would conflict with NBC Sports Programming
outside the Programmed Time Periods (the "Sports Preemption Amount"); provided,
however, that in the event that, in any Broadcast Year during the term of this
Agreement, NBC schedules a substantially greater number of hours of NBC Sports
Programming than scheduled during the 1993-1994 Broadcast Year, NBC agrees that
the Sports Preemption Amount shall be increased proportionately for such
Broadcast Year to reflect such increase in the aggregate number of hours of NBC
Sports Programming in such Broadcast Year.
(d) Notwithstanding the foregoing provisions of subparagraphs (b) and
(c) above and without limiting the provisions thereof, Station agrees that, in
any three (3) month period during a Broadcast Year, Station's preemptions of
NBC Prime Time programs and NBC Sports Programming shall not exceed 50% of,
respectively, the Prime Time Preemption Amount and the Sports Preemption
Amount, unless otherwise consistent with Station's programming practice.
(e) Commencing as of the earlier of (i) September 15, 1996 or (ii) the
expiration or termination (without giving effect to any renewal term) of any of
Station's existing contractual commitments for non-NBC programming currently
broadcast by Station Monday through Friday during the hours 9:00 A.M.-2:00 P.M.
and which were in existence as of September 15, 1995, Station shall clear one
(1) additional hour of NBC programming Monday through Friday, during the hours
of 9:00 A.M. - 2:00 P.M. (the "Fourth Daytime Hour"); provided, that Station
shall broadcast such additional NBC programming in the same sequence as
scheduled by NBC. The Fourth Daytime Hour shall then become part of the Daytime
Programmed Time Period for purposes of Paragraphs 2(b) and 3(a) hereof.
(f) It is expressly understood that commencing with the Effective Date,
Station will, subject to the next sentence, be compensated on the basis that
Station is clearing the Fourth Daytime Hour notwithstanding that such clearance
may be deferred as provided for in Paragraph 3(e) hereof. In the event that
Station fails to comply with its obligation to clear the Fourth Daytime Hour as
of September 15, 1996, NBC shall deduct $35,000, on an annualized basis, from
the compensation payable to Station hereunder, which amount represents the
approximate net amount of NBC's lost advertising revenues by reason of
Station's non-clearance of four hours of NBC Daytime programming; such
deduction shall continue until such clearance by Station. A
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<PAGE> 5
prorated portion of such amount shall be deducted on a quarterly basis from
Station's quarterly compensation payments payable pursuant to Paragraph 5
hereof.
(g) Upon the expiration or termination (without giving effect to any
renewal) of any of Station's existing contractual commitments for non-NBC
programming currently broadcast by Station on Saturday mornings and for the
remaining term of this Agreement, Station agrees to consider in good faith,
prior to entering into any new or renewed commitments for the broadcast of
non-NBC programming on Saturday mornings, the clearance of additional NBC
daytime programming on Saturdays (the "Additional Saturday Daytime
Programming") so that Station would clear up to a maximum of two and one-half
(2 1/2) hours of Saturday NBC Daytime programming. In the event that Station
clears any Additional Saturday Daytime Programming, such programming shall then
become part of the Saturday Daytime Programmed Time Period for purposes of
Paragraphs 2(b) and 3(a) hereof.
4. Preemptions.
(a) In the event that Station, for any reason, fails to broadcast or
advises NBC that it will not broadcast any NBC programming as provided herein,
then, in each case, Station, upon notice from NBC to Station, shall broadcast
such omitted programming and the commercial announcements contained therein (or
any replacement programming and the commercial announcements contained therein)
during a time period or periods which the parties shall promptly and mutually
agree upon and which shall, to the extent possible, be of a quality and rating
value comparable to that of the time period or periods at which such omitted
programming was not broadcast as provided herein. In the event that the parties
do not promptly agree upon a time period or periods as provided in the
preceding sentence, then, without limitation to any other rights of NBC under
this Agreement or otherwise, NBC shall have the right to license the broadcast
rights to the applicable omitted programming (or replacement programming) to
another television station located in Station's community of license.
(b) For the purposes of this Agreement, an "Authorized Preemption"
shall mean: any failure to broadcast due to force majeure as provided for in
Paragraph 12 below, any preemption permitted by Paragraphs 3(b), 3(c) or 3(d)
above, and any preemption permitted by Paragraph 4(c) below. Any other
preemption or failure to broadcast any NBC programming shall be deemed an
"Unauthorized Preemption" and, without limiting any other rights of NBC under
this Agreement or otherwise, upon NBC's request, Station shall pay NBC, or NBC
may deduct or offset from any amounts payable to Station hereunder or under any
other agreement between Station and NBC (or an entity controlling, controlled
by or under common control with NBC), an amount equivalent to NBC's loss in net
advertising revenues attributable
-5-
<PAGE> 6
to the failure of Station to broadcast such program in Station's market as
scheduled by NBC, which amount shall be calculated in accordance with Exhibit A
hereto; provided, however, NBC agrees that in the event Station broadcasts such
preempted NBC program in another time period as NBC and Station may agree upon
pursuant to Paragraph 4(a) hereof, a portion of such amount equivalent to NBC's
loss in net advertising revenues may be offset by any increase in NBC's net
advertising revenues attributable to such broadcast by Station. Any failure by
Station to pay any amount due under this Paragraph 4(b) shall be deemed a
material breach of this Agreement, and NBC shall have the option, exercisable
in its sole discretion upon thirty (30) days' written notice to Station, to
either (i) terminate Station's right to broadcast any one or more series or
other NBC programs, as NBC shall elect, and, to the extent and for the
period(s) that NBC elects, thereafter license the broadcast rights to such
series or other NBC program(s) to any other television station or stations
located in Station's community of license or (ii) unless the breach is cured
within such thirty (30) day period, terminate this Agreement.
(c) With respect to programs offered or already contracted for pursuant
to this Agreement, nothing herein contained shall be construed to prevent or
hinder Station from: (i) rejecting or refusing any NBC program which Station
reasonably believes to be unsatisfactory or unsuitable or contrary to the
public interest, or (ii) substituting a program in Station's opinion, is of
greater local or national importance; provided, however, that Station shall
give NBC written notice of each such rejection, refusal or substitution, and
the justification therefor at least three (3) weeks in advance of the scheduled
broadcasts or, if such notice is not possible, as soon thereafter as possible
(including an explanation of the cause for any lesser notice). Programming
shall be deemed to be unsatisfactory or unsuitable or contrary to the public
interest only if it: (A) is delivered in a form which does not meet accepted
standards of good engineering practice; (B) does not comply with the rules and
regulations of the FCC; or (C) differs substantially in style and content from
NBC programming which Station has broadcast previously and which Station
reasonably believes would not meet prevailing contemporary standards of good
taste in its community of license. Station confirms that no NBC programming
shall be deemed to be unsatisfactory, unsuitable or contrary to the public
interest based on programming performance or ratings, advertiser reaction or
the availability of alternative programming (including, but not limited to,
sporting events, program length commercials and infomercials, and other paid
programming) which Station believes to be more profitable or more attractive.
Station acknowledges the substantial investment in network programming to be
incurred during the term of this Agreement in order to provide Station with
network-quality news, public affairs, entertainment, sports, children's and
other programming during the Programmed Time
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<PAGE> 7
Periods. Station further acknowledges that in view of NBC's substantial
investment in network programming, the amount of broadcast time available to
Station outside the Programmed Time Periods and Station's rights under
Paragraph 3(b) above, Station does not foresee any need to substitute
programming of any kind for NBC programming, except in those circumstances
requiring local live coverage of news events.
5. Station Compensation. In further consideration of Station's performance
of its obligations under this Agreement NBC shall compensate Station as
follows:
(a) (i) NBC shall pay Station for Station's broadcast of each network
sponsored program or portion thereof (except those specified in Paragraph
5(b) below) which is broadcast during the Live Time Period therefor the
amount resulting from multiplying the following:
(A) Station's Network Station Rate, which is $1,210 by
(B) The percentage set forth in the compensation matrix table
attached hereto as Exhibit B (the "Compensation Table") opposite
the applicable time period; by
(C) The fraction of an hour substantially occupied by such program
or portion thereof; by
(D) The fraction of the aggregate length of all Commercial
Availabilities during such program or portion thereof occupied
by Network Commercial Announcements.
As used herein, "Live Time Period" shall mean the time period or
periods as specified by NBC for the broadcast of a program by Station;
"Commercial Availability" shall mean a period of time made available by
NBC during a network sponsored program for one or more Network Commercial
Announcements; and "Network Commercial Announcement" shall mean a
commercial announcement broadcast over Station during a Commercial
Availability and paid for by or on behalf of one or more of NBC's network
advertisers, not including, however, announcements consisting of
billboards, credits, public service announcements, promotional
announcements and announcements required by law.
(ii) For each network sponsored program or portion thereof (except
those specified in Paragraph 5(b) below) which is broadcast by Station
during a time period other than the Live Time Period therefor, NBC
reserves the right, in its sole discretion, to withhold payment of
compensation for such program. If NBC does not withhold payment of
compensation for such program, NBC shall pay Station as if
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<PAGE> 8
Station had broadcast the program or portion thereof during such Live Time
Period, except that if the percentage set forth in the Compensation Table
opposite the time period during which Station broadcasts the program or
portion thereof is less than that set forth opposite such Live Time
Period, NBC shall pay Station on the basis of the time period during which
Station broadcasts the program or portion thereof.
(b) NBC shall pay Station such amounts as NBC and Station shall agree
upon for all network sponsored programs broadcast by Station consisting of:
(i) Sports programs;
(ii) Special events programs, and
(iii) Programs for which NBC specifies a Live Time Period which
straddles any of the time period categories in the Compensation Table.
(c) (i) On or about the fifteenth day of the last month of each
calendar quarter during the term hereof, subject to the timely receipt of
reports requested under Paragraph 10 below, NBC shall pay Station, by
electronic transfer or such other means as NBC shall determine, an
estimate of the amounts due hereunder for such calendar quarter. NBC shall
make the appropriate adjustment for the payment actually due for such
calendar quarter in the payment of the estimated amount due for the next
calendar quarter. NBC shall calculate the amounts due hereunder on a
weekly basis and shall report such amounts to Station within a reasonable
period of time after the close of each month during the term.
(ii) From the amounts otherwise payable to Station hereunder, NBC
shall deduct for each week during each calendar quarter of the term hereof
a sum equal to 217% of Station's Network Station Rate provided in
subparagraph 5(a)(i)(A) above (the "Waiver Percentage"). This deduction
shall be calculated on a weekly basis, with 4.2857 as the agreed number of
weeks per month, and shall be reported to Station with the reports due
under subparagraph 5(c)(i) above. NBC shall make other deductions from the
amounts otherwise payable to Station hereunder for additional services
made available by NBC and utilized by Station such as, but not limited to,
NBC News Channel.
(d) (i) NBC reserves the right as part of a general rate revision to
reevaluate and change at any time the Waiver Percentage set forth in
subparagraph 5(c)(ii) above, by giving written notice to Station at least
thirty (30) days prior to the effective date of such change; provided
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<PAGE> 9
that NBC may increase the Waiver Percentage only by reason of an increase
in NBC's technical costs of delivering programming to the NBC Television
Network; provided further that any such increase in the Waiver Percentage
shall be subject to review by the NBC Affiliate Board.
(ii) Notwithstanding anything contained in subparagraph 5(d)(i) to
the contrary, the parties acknowledge that the payment of compensation to
Station hereunder is in consideration of certain commitments by Station,
including commitments regarding Station's local news program schedule and
promotion of NBC programming as respectively set forth in Exhibits C and D
attached hereto, which Exhibits are incorporated herein by this reference.
In the event that Station does not fulfill (A) the commitments set forth
in Exhibit C or (B) such commitments as are set forth in Exhibit D in all
years during the term of this Agreement, NBC reserves the right to
decrease Station's Network Station Rate by notifying Station in writing at
least ninety (90) days prior to the effective date of such change;
provided that NBC acknowledges that it shall act in a reasonable manner
consistent with its evaluation of NBC affiliated broadcast stations
generally.
6. Additional Consideration. In consideration of Station entering into
this Agreement and Station's performance of its obligations under this
Agreement, NBC agrees to pay to Station the additional amounts (the "Additional
Payments") set forth on Exhibit E hereto, subject to the provisions thereof.
7. Local Commercial Announcements. Subject to the following sentence, NBC
agrees that during each quarter during the term of this Agreement, the average
weekly number of minutes available for Station's local commercial announcements
in and adjacent to regularly scheduled NBC programming in each daypart (with
pro-rated adjustments for national sports programming, special news coverage or
other special events) shall not be less than ninety-five percent (95%) of the
average weekly number of minutes for the applicable daypart during the 1993-94
Broadcast Year as set forth in Exhibit F attached hereto (except if the
reduction is due to a change in applicable government regulations). In the
event of a reduction in the average weekly number of minutes available for
Station's local commercial announcements in and adjacent to regularly scheduled
NBC programming which causes NBC not to be in compliance with the foregoing
provision, NBC agrees to offset the effects of such reduction by providing
Station with a comparable economic benefit, which benefit may take the form of
local coverage of NBC promotional announcements, an increase in the amount of
Station's Authorized Preemptions, or other form of benefit. The foregoing
provisions of this Paragraph 7 are not intended to facilitate any
disproportionate change by NBC in the allocation of the number of minutes
available for Station's local commercial announcements in
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and adjacent to regularly scheduled NBC programming among different time
periods in any daypart, if such change is solely for NBC's economic benefit.
8. Delivery. NBC shall transmit the programming hereunder by satellite and
shall notify Station as to both the satellite and transponder being used for
such transmission, and the programming shall be deemed delivered to Station
when transmitted to the satellite. Where, in the opinion of NBC, it is
impractical or undesirable to furnish a program over satellite facilities, NBC
may deliver the program to Station in any other manner, including but not
limited to, in the form of motion picture film, video tape or other recorded
version, postage prepaid, in sufficient time for Station to broadcast the
program at the time scheduled. Such recordings shall be used only for a single
television broadcast over Station, and Station shall comply with all NBC
instructions concerning the disposition to be made of each such recording
received by Station hereunder.
9. Conditions of Station's Broadcast. Station's broadcast of NBC
programming shall be subject to the following terms and conditions:
(a) Station shall not make any deletions from, or additions or
modifications to, any NBC program furnished to Station hereunder or any
commercial, NBC identification, program promotional or production credit
announcements or other interstitial material contained therein, nor broadcast
any commercial or other announcements (except emergency bulletins) during any
such program, without NBC's prior written authorization. Station may, however,
delete announcements promoting any NBC program which is not to be broadcast by
Station, provided that such deletion shall be permitted only in the event and
to the extent that Station substitutes for any such deleted promotional
announcements other announcements promoting NBC programs to be broadcast by
Station.
(b) For purposes of identification of Station with the NBC programs,
and until written notice to the contrary is given by NBC, Station may
superimpose on various Entertainment programs, where designated by NBC, a
single line of type, not to exceed fifty (50) video lines in height and
situated in the lower eighth raster of the video screen, which single line
shall include (and be limited to) Station's call letters, community of license
or home market, channel number, and the NBC logo. No other addition to any
Entertainment program is contemplated by this consent, and the authorization
contained herein specifically excludes and prohibits any addition whatsoever to
News and Sports programs, except identification of Station as provided in the
preceding sentence as required by the FCC.
(c) The placement and duration of station-break periods provided for
locally originated announcements between NBC
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<PAGE> 11
programs or segments thereof shall be designated by NBC. Station shall
broadcast each NBC program delivered to Station hereunder from the commencement
of network origination until the commencement of the terminal station break.
(d) In the event of the confirmation by NBC of any violation by
Station of any of the provisions of this Paragraph 9, NBC may, in its
reasonable discretion, withhold an amount of compensation otherwise due Station
under Paragraph 5 above which is appropriate in view of the nature of the
specific violation, it being understood that the amount withheld for any
violation shall not exceed the total compensation due Station for the week in
which such violation occurs. Nothing herein contained shall limit the rights of
Station under Paragraph 4(c) above.
10. Station Reports. Station shall submit to NBC in writing, upon forms
provided by NBC, such reports as NBC may request covering the broadcast by
Station of programs furnished to Station hereunder.
11. Music Performance Rights. All programs delivered to Station pursuant
to this Agreement shall be furnished with all music performance rights
necessary for broadcast by Station included. Station shall have no
responsibility for obtaining such rights from ASCAP, BMI or other music
licensing societies insofar as the programs delivered by NBC to Station for
broadcasting are concerned. As used in this paragraph, "programs" shall
include, but shall not be limited to, program and promotional material and
commercial and public service announcements furnished by NBC. Station shall be
responsible for all music license requirements for any commercial and public
service announcements or other material inserted by Station within or adjacent
to the programs as permitted under the terms of this Agreement, except for
cut-ins produced by or on behalf of NBC and inserted by Station at NBC's
direction.
12. Force Majeure. Neither Station nor NBC shall incur any liability
hereunder because of NBC's failure to deliver, or the failure of Station to
broadcast, any or all programs due to failure of facilities, labor disputes,
government regulations or causes beyond the reasonable control of the party so
failing to deliver or to broadcast. Without limiting the generality of the
foregoing, NBC's failure to deliver a program for any of the following reasons
shall be deemed to be for causes beyond NBC's reasonable control: cancellation
of a program because of the death, illness or refusal to appear or perform of a
star or principal performer thereon, or because of such person's failure to
conduct himself or herself with due regard to social conventions and public
morals and decency, or because of such person's commission of any act or
involvement in any situation or occurrence tending to degrade him or her in
society, or bringing him or her into public disrepute, contempt, scandal or
ridicule,
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<PAGE> 12
or tending to shock, insult or offend the community, or tending to reflect
unfavorably upon NBC or the program sponsor.
13. Indemnification. NBC shall indemnify, defend and hold Station, its
parent, subsidiary and affiliated companies, and their respective directors,
officers and employees, harmless from and against all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of the use by Station, in accordance with this Agreement, of any program or
other material as furnished by NBC hereunder, provided that Station promptly
notifies NBC of any claim or litigation to which this indemnity shall apply,
and that Station cooperates fully with NBC in the defense or settlement of such
claim or litigation. Similarly, Station shall indemnify, defend and hold NBC,
its parent, subsidiary and affiliated companies, and their respective
directors, officers and employees, harmless with respect to material added to
or deleted from any program by Station, except for cut-ins produced by or on
behalf of NBC and inserted by Station at NBC's direction. These indemnities
shall not apply to litigation expenses, including attorneys' fees, which the
indemnified party elects to incur on its own behalf. Except as otherwise
provided herein, neither Station nor NBC shall have any rights against the
other for claims by third persons, or for the non-operation of facilities or
the non-furnishing of programs for broadcasting, if such non-operation or
non-furnishing is due to failure of equipment, actions or claims by any third
person, labor disputes, or any cause beyond such party's reasonable control.
14. Station's Right of First Negotiation. Throughout the term of this
Agreement, NBC shall give Station prompt notice of any determination by NBC to
engage in new over-the-air broadcast ventures within Station's community of
license (whether or not involving the transmission of television programs, but
excluding any acquisition of an ownership interest in any broadcast television
station) (a "Broadcast Venture"). NBC shall negotiate exclusively with Station
in good faith, for a period of time following such notice to Station as shall
be determined by NBC to be appropriate to the circumstances and as shall be
specified in such notice, with respect to Station's participation on a
financial and/or operational basis in any such Broadcast Venture within
Station's community of license before NBC may enter into any such negotiations
with a Third Party (as defined below) within such community of license. "Third
Party" shall mean any person or entity other than an NBC Party; "NBC Party"
shall mean any of NBC, National Broadcasting Company, Inc. or their respective
parent, subsidiary, affiliated, related or successor entities.
15. Change in Operations. Station represents and warrants that it holds a
valid license granted by the FCC to operate the Station as a television
broadcast station; such representation and warranty shall constitute a
continuing representation and
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<PAGE> 13
warranty by Station. In the event that Station's transmitter location, power,
frequency, programming format or hours of operation are materially changed at
any time so that Station is of less value to NBC as a broadcaster of NBC
programming than at the date of this Agreement, then NBC shall have the right
to terminate this Agreement upon thirty (30) days' prior written notice to
Station.
16. Assignment.
(a) This Agreement shall not be assigned without the prior written
consent of NBC, and any permitted assignment shall not relieve Station of its
obligations hereunder; provided, however, NBC agrees that it shall not
unreasonably withhold its consent to an assignment by Station. Any purported
assignment by Station without such consent shall be null and void and not
enforceable against NBC.
(b) Station agrees to include as a condition of any proposed
assignment, sale or transfer of ownership or control of Station (including,
without limitation, any assignment or transfer referred to in Paragraph 16(c)
below other than a "short-form" assignment) a contractually binding provision
that the assignee or transferee shall assume and become bound by this Agreement
for (i) the remainder of the then-current term of this Agreement or (ii) three
(3) years from the date of said assignment or transfer, whichever period is
greater. Station acknowledges that any such assignment, sale or transfer which
does not so provide for such assumption and for NBC's right to extend the term
of this Agreement will cause NBC irreparable injury for which damages are not
an adequate remedy. Therefore, Station agrees that NBC shall be entitled to
seek an injunction or similar relief from any court of competent jurisdiction
restraining Station from committing any violation of this Paragraph 16(b).
(c) Station agrees that if any application is made to the FCC
pertaining to an assignment or a transfer of control of Station's license, or
any interest therein, Station shall immediately notify NBC in writing of the
filing of such application. Except as to "short form" assignments or transfers
of control made pursuant to Section 73.3540(f) of the current FCC Rules, NBC
shall have the right to terminate this Agreement in the event of any assignment
or transfer; provided that NBC agrees not to unreasonably exercise such right
of termination. Station agrees that promptly following Station's notice to NBC,
Station (i) except in the case of "short form" assignments or transfers of
control, shall arrange for a meeting between NBC and the proposed assignee or
transferee to review the financial and operating plans of the proposed assignee
or transferee, and (ii) shall procure and deliver to NBC, in form satisfactory
to NBC, the agreement of the proposed assignee or transferee that, upon
consummation of the assignment or transfer of control of the
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<PAGE> 14
Station's license, the assignee or transferee will assume and perform this
Agreement in its entirety without limitation of any kind. If Station complies
with its obligations set forth in the preceding sentence and NBC does not
terminate this Agreement upon written notice to Station within the thirty (30)
day period following the later of the meeting with the proposed assignee or
transferee or the delivery to NBC of a satisfactory assumption agreement, NBC
shall be deemed to have consented to the assignment or transfer of control.
(d) NBC agrees that in the event of a sale or transfer of all or
substantially all of the assets or business of NBC (whether structured as a
sale or transfer of equity or assets of NBC), NBC agrees to assign this
Agreement to the purchaser or transferee and to cause such purchaser or
transferee to assume NBC's obligations hereunder; provided that the foregoing
agreement shall not apply in the event that this Agreement becomes an
obligation of such purchaser or transferee by operation of law. Upon such
assignment and assumption, NBC shall have no liability under this Agreement
with respect to obligations arising after the effective date of such assignment
and assumption.
17. Unauthorized Copying and Transmission. Station shall not authorize,
cause, or permit, without NBC's consent, any program or other material
furnished to Station hereunder to be recorded, duplicated, rebroadcast or
otherwise transmitted or used for any purpose other than broadcasting by
Station as provided herein. Notwithstanding the foregoing, Station shall not be
restricted in the exercise of its signal carriage rights pursuant to any
applicable rule or regulation of the FCC with respect to retransmission of its
broadcast signal by any cable system or multichannel video program distributor
("MVPD"), as defined in Section 76.64(d) of the FCC Rules, which (a) is located
within the Area of Dominant Influence ("ADI"), as defined by Arbitron, in which
Station is located, or (b) was actually carrying Station's signal as of April 1,
1993, or (c) with respect to cable systems, serving an area in which Station
is "significantly viewed" (as determined by the FCC) as of April 1, 1993;
provided, however, that any such exercise pursuant to FCC Rules with respect to
NBC programs shall not be deemed to constitute a license by NBC; and provided,
further, that at such time as NBC adopts a term in substitution for the term
"ADI" by reason of any similar action by the FCC or other appropriate authority,
such substitute term shall replace the references to "ADI" herein. NBC reserves
the right to restrict such signal carriage with respect to NBC programming in
the event of a change in applicable law, rule or regulation.
18. Limitations on Retransmission Consent. In consideration of the grant
by NBC to Station of the non-duplication protection provided in the amendment
to this
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<PAGE> 15
Agreement of even date herewith (the "Non-Dupe Amendment"), Station hereby
agrees as follows:
(a) Station shall not grant consent to the retransmission of its
broadcast signal by any cable television system, or, except as provided in
Paragraph 18(b) below, to any other MVPD whose carriage of broadcast signals
requires retransmission consent, if such cable system or MVPD is located
outside the ADI to which Station is assigned, unless Station's signal was
actually carried by such cable system or MVPD as of April 1, 1993, or, with
respect to such cable system, is "significantly viewed" (as determined by the
FCC) as of April 1, 1993; provided, however, that at each renewal of the
Agreement, in the event Station can demonstrate to NBC that it is
"significantly viewed" (as determined by the FCC) in areas in addition to those
in which it was "significantly viewed" as of April 1, 1993 ("Additional Viewing
Areas"), NBC agrees that it will negotiate in good faith with Station regarding
a possible extension of Station's grant of the right to retransmit its
broadcast signal to cable systems in the Additional Viewing Areas.
(b) Station shall not grant consent to the retransmission of its
broadcast signal by any MVPD that provides such signal to any home satellite
dish user, unless such user is located within Station's own ADI or is an
"unserved household" as defined in Section 119(d) or any successor provision of
Title 17 of the United States Code.
19. Remedies for Unauthorized Copying and Transmission. If Station
violates any of the provisions set forth in Paragraphs 17 and 18 above, NBC
may, in addition to any other of its rights or remedies at law or in equity
under this Agreement or any amendment thereto, terminate this Agreement by
written notice to Station given at least ninety (90) days prior to the
effective date of such termination.
20. Applicable Law. The obligations of Station and NBC 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 and regulations of the FCC), and this Agreement and
all matters or issues collateral thereto shall be governed by the law of the
State of New York applicable to contracts negotiated, executed and performed
entirely therein (without regard to principles of conflicts of laws).
21. Waiver. A waiver by either of the parties hereto of a breach of any
provision of this Agreement shall not be deemed to constitute a waiver of any
preceding or subsequent breach of the same provision or any other provision
hereof.
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<PAGE> 16
22. Notices. Any notices hereunder shall be in writing and shall be given
by personal delivery, overnight courier service, or registered or certified
mail, addressed to the respective addresses set forth on the first page of this
Agreement (and, with respect to Station, with a copy to Hogan & Hartson, 5.55
13th Street, N.W., Washington, DC 20004, Attention: William S. Reyner, Jr.) or
at such other address or addresses as may be specified in writing by the party
to whom the notice is given. Such notices shall be deemed given when personally
delivered, delivered to an overnight courier service or mailed, except that
notice of change of address shall be effective only from the date of its
receipt.
23. Captions. The captions of the paragraphs in this Agreement are for
convenience only and shall not in any way affect the interpretation hereof.
24. Entire Agreement. The foregoing constitutes the entire agreement
between Station and NBC with respect to the subject matter hereof, all prior
understandings being merged herein, except for the Non-Dupe Amendment. This
Agreement shall supersede the provisions of the Agreement dated June 13, 1995
between NBC and EP Communications, Inc. (as the prior owner of KSBW), which
Agreement was assigned to and assumed by Smith Television of Salinas-Monterey
License, L.P. This Agreement may not be changed, modified, renewed, extended or
discharged, except as specifically provided herein or by an agreement in
writing signed by the parties hereto.
25. Confidentiality. The parties agree to use their best efforts to
preserve the confidentiality of this Agreement and of the terms and conditions
set forth herein, and the exhibits annexed hereto, to the fullest extent
permissible by law. The parties recognize that Section 73.3613 of the FCC's
Rules and Regulations requires the filing with the FCC of television network
affiliation agreements by each affiliate, but are unaware of any requirement
for the filing of exhibits annexed to such affiliation agreements. In the event
that the FCC should request either party to file said exhibits, that party
shall give prompt notice to the other, and shall submit said exhibits to the
FCC with a request that said exhibits be withheld from public inspection
pursuant to Section 0.459 of the FCC's Rules and Regulations on the grounds
that said exhibits contain confidential commercial or financial information
that would customarily be guarded from competitors and not be released to the
public.
26. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature to each such counterpart
were upon the same instrument.
If the foregoing is in accordance with your understanding, please
indicate your acceptance on the copy of
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<PAGE> 17
this Agreement enclosed for that purpose and return that copy to NBC.
Very truly yours,
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ [ILLEGIBLE]
----------------------------
AGREED:
By: Smith Broadcasting Partners, L. P.
Its General Partner
/s/ DAVID A. FITZ
----------------------------------
By: Smith Broadcasting Group, Inc.
Its General Partner
/s/ DAVID A. FITZ
----------------------------------
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<PAGE> 1
EXHIBIT 10.22
COLLECTIVE BARGAINING AGREEMENT
between
WEYI-TV
and
INTERNATIONAL UNION, UNITED
AUTOMOBILE,
AEROSPACE AND AGRICULTURAL
IMPLEMENT
WORKERS OF AMERICA (UAW)
For the Period
August 8, 1994
through
August 7, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
Agreement ........................................................... 1
Purpose and Intent .................................................. 1
Discrimination ...................................................... 1
I Section 1 Recognition ............................................... 2
Section 2 Definition ................................................ 2
Section 3 New Facility or Relocation ................................ 3
II Section 1 Union Shop ................................................ 3
Section 2 Dues check-off ............................................ 4
Section 3 V-CAP check-off ........................................... 4
Section 4 Indemnification ........................................... 5
Section 5 Credit Union .............................................. 6
III Representation
Section 1 Grievance Committee ....................................... 6
Section 2 Bargaining Committee ...................................... 6
Section 3 Right to Representation ................................... 6
IV Grievance Procedure
Section 1 Time Limits ............................................... 7
Step 1 A&B ................................................ 7
Step 2 .................................................... 8
Step 3 A, B, C ............................................ 8
Section 2 Arbitration ............................................... 9
Steps A, B, C, D, E, F, G, H ..............................
Section 3 Special Meetings .......................................... 11
V Section 1 Management Rights ......................................... 11
Section 2 Individual Agreements ..................................... 12
Section 3 Performance of Bargaining Unit Work ....................... 12
VI Seniority ........................................................... 12
Section 1 Definition ................................................ 12
Section 2 Full-Time/Part-Time ....................................... 13
Section 3 Probationary Period ....................................... 13
Section 4 Seniority Lists ........................................... 13
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
VII Part-Time Employees ................................................. 14
Section 1 Definition ................................................ 14
VIII Temporary Employees ................................................. 14
IX Interns ............................................................. 15
X Layoff and Recall ................................................... 16
Section 1 ........................................................... 16
Section 2 Loss of Seniority ......................................... 17
Section 3 Special Seniority for Grievance Committee ................. 18
Section 4 Promotions Outside of the Bargaining Unit ................. 18
XI Section 1 Job Classifications ....................................... 18
Section 2 New Jobs .................................................. 18
XII Job Posting ......................................................... 20
XIII Technological Changes ............................................... 22
XIV Temporary Work force Reduction ...................................... 22
XV Bulletin Board ...................................................... 23
XVI Safety and Sanitation Rules ......................................... 23
XVII Discipline and Discharge ............................................ 24
XVIII Payroll Period ...................................................... 26
XIX Work Hours .......................................................... 26
Section 1 ........................................................... 26
Section 2 Normal Work Week .......................................... 27
Section 3 Overtime .................................................. 28
XX Premium Pay - Guaranteed Hours ...................................... 28
Section 1 Overtime Pay .............................................. 29
Section 2 Compensatory Time Off ..................................... 28
Section 3 Reporting Pay ............................................. 28
Section 4 Call-In Pay ............................................... 29
Section 5 Injured on the Job ........................................ 29
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
Section 6 Pay for Meetings .......................................... 30
Section 7 Shift Premium ............................................. 30
Section 8 Turnaround Pay ............................................ 30
Section 9 Pyramiding of Overtime Pay ................................ 30
Section 10 Overtime Pay for Part-Time Employees ..................... 30
XXI Shift Preference .................................................... 30
XXII Job Descriptions .................................................... 31
XXIII Temporary Assignment ................................................ 31
XXIV Leaves of Absence ................................................... 32
Military Leave ...................................................... 32
Personal Leave ...................................................... 33
Funeral Leave ....................................................... 33
Educational Leave ................................................... 34
Adoption Leave ...................................................... 34
Union Leaves ........................................................ 34
Jury Duty Leave ..................................................... 35
Medical Leave ....................................................... 35
Employment Rights ................................................... 36
XXV Holidays ............................................................ 37
Section 1 ........................................................... 37
Section 2 Compensation: Holiday Work ................................ 37
Section 3 Holiday Entitlements ...................................... 38
XXVI Section 1 Vacation .................................................. 39
Section 2 Pro Rate a Vacation Benefits .............................. 39
Section 3 Vacation Leave of Absence/Termination ..................... 40
Section 4 Vacation Scheduling ....................................... 40
XXVII Section 1 Job Function Limitation ................................... 41
Section 2 High Risk Area Assignments ................................ 41
XXVII Part-time Employees Benefits ........................................ 42
Section 1 Holidays .................................................. 42
Section 2 Vacations ................................................. 42
Section 3 Bereavement ............................................... 42
Section 4 Jury Duty ................................................. 42
Section 5 Health Insurance .......................................... 42
Section 6 Pension Benefits .......................................... 42
</TABLE>
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C>
XXIX Section 1 Substance Abuse ........................................... 43
Section 2 Disciplinary Procedures for substance Abuse ............... 43
XXX Sick Days/Personal Time ............................................. 44
XXXI Lunch Break & Rest Periods .......................................... 44
XXXII Insurance ........................................................... 45
XXXIII Short and Long Term Disability ..................................... 45
XXXIV Pension ............................................................. 46
XXXV Compensation ........................................................ 46
XXXVI Subcontracting ...................................................... 47
XXXVII No Strike or Lockout ............................................... 47
XXXVIII Successor Clause .................................................. 48
XXXIX Term of Agreement ................................................... 48
XXXX Duration of Agreement ............................................... 49
Attachment "A" Job Classifications .................................. 50
Attachment "B" Job Rates ............................................ 51
Attachment "C" Company Expense Policy ............................... 52
</TABLE>
<PAGE> 6
AGREEMENT
This agreement is made and entered into this 8th day of August, 1994
between Television Station Partners, Limited Partnership owner and operator of
television station WEYI-TV, located at 2225 West Willard Road, Clio, Michigan,
the Employer (hereinafter called "the Company") and the International Union,
United Automobile, Aerospace and Agricultural Implement Workers of America
(UAW) and its Local 1811 (hereinafter referred to as "the Union").
PURPOSE AND INTENT
The general purpose of this Agreement is to set forth the wages, hours and
other conditions of employment of the employees covered by this Agreement, and
to promote an orderly and peaceful labor-management relationship between, and
in the mutual interest of, the employees, the Union and the Company.
DISCRIMINATION
Both the Company and the Union subscribe to the principle that there
should be no discrimination against any person because of race, creed, color,
national origin, religion, sex, age or disability, to the extent prohibited by
applicable federal, state and local law.
The Company and the Union recognize their respective responsibilities
under federal, state, local laws and regulations relating to fair employment
practices. The Company and the Union also recognize the moral principles
involved in the area of civil rights and have affirmed their commitment not to
discriminate with respect to bargaining-unit employees because of race,
religion, color, sex, national origin, or disability, and to administer this
Agreement in accordance with applicable fair employment Practices, laws, and
regulations.
Grievances involving alleged noncompliance with these provisions may be
filed by the Union at Step 2 of the Grievance Procedure. Wherever the masculine
or feminine gender is used in this Agreement, it shall be deemed to mean both
male and female employees.
Page # 1
<PAGE> 7
The parties agree that where an employee of the Union alleges violation of
this Article and where the Union processes such alleged violation under the
grievance and arbitration provisions, such process shall be the Union's
exclusive remedy for such alleged violations.
Should the employee choose to pursue the alleged discrimination under
State or Federal law, the Union and the Company mutually agree to hold in
abeyance any grievance filed alleging violation of this Article, based on the
same facts, pending the ruling on said violation.
ARTICLE I
SECTION 1. RECOGNITION.
The Company recognizes the Union as the exclusive collective bargaining
agent for all full-time and all regular part-time employees of the Company
employed in the classifications list in Attachment "A" and employed at its 2225
West Willard, Clio, Michigan facility; but excluding all other employees,
student interns, all account executives, department heads, the assistant chief
engineer, the program assistant, managers, confidential employees, and guards
and supervisors as defined in the National Labor Relations Act (See NLRB Case
No. 7-RC-18485 for reference).
SECTION 2. DEFINITION.
Hereinafter in this Agreement, the term "employed" or "employees" shall
refer only to employees represented by the Union and covered by this Agreement
as set forth under Recognition.
The term "Company" applies to all television operations of the Company
transmitted from its building located at 2225 West Willard Road, Clio, Michigan,
and includes all remote field broadcasts produced by WEYI-TV except in cases
where remote equipment is leased and crew is required by the lessor. The
employees performing the work described herein will be automatically included
under the jurisdiction of this Agreement. The provisions of this paragraph shall
not apply to:
(a) Programs originated in the studios of other stations or other
production facilities.
Page # 2
<PAGE> 8
(b) Programs broadcast jointly with any other station or stations.
(c) Programming, including news or features, purchased from
independent contractors, stringers or other outside sources.
SECTION 3. NEW FACILITY OR RELOCATION OF EXISTING FACILITY.
If the Company relocates the station or parts thereof within the same
broadcast area, the employees covered by this Agreement will, subject to the
other provisions of this Agreement, be transferred to the new location and this
Agreement will apply at the new location.
ARTICLE II
SECTION 1. UNION SHOP.
The Company will not interfere with, restrain or coerce the employees
covered by this Agreement because of membership in the Union or lawful activity
on behalf of the Union not violate of any term or provision of this Agreement.
The Company will not discriminate in respect to hiring, tenure of employment or
any term or conditions of employment against any employee activity on behalf of
the Union not violative of any term or provision of this Agreement, nor will it
discourage or attempt to discourage membership in the Union, or attempt to
encourage membership in any Union, provided that such activity does not
interfere with the normal operations of the Company.
An employee who is a member of the Union at the time this Agreement
becomes effective shall continue membership in the Union for the duration of
this Agreement to the extent of paying the membership dues uniformly required
as a condition of acquiring or retaining membership in the Union.
An employee who is not a member of the Union at the time this Agreement
becomes effective shall become a member of the Union on or before the thirtieth
(30th) day following the effective date of this Agreement, or on or before the
thirtieth (30th) day following employment, whichever is later, and shall remain
a member of the Union to the extent of paying an initiation fee and the
membership dues uniformly required as
Page # 3
<PAGE> 9
a condition of acquiring or retaining membership in the Union for the duration
of this Agreement.
The Union shall accept into membership each employee covered by this
Agreement who tenders to the Union the periodic dues and initiation fee
uniformly required as a condition of acquiring or retaining membership in the
Union.
Initiation fees and dues for membership in the Union shall not exceed the
maximum prescribed by the Constitution of the International Union at the time
the employee becomes a member.
An employee whose membership in the Union is terminated by reason of the
failure of the employee to tender such initiation fee or dues as required
herein shall not be retained as an employee within the job classifications
covered by this Agreement for more than five (5) working days following written
notification to the Company of such termination of membership.
SECTION 2. DUES CHECK-OFF
The Company shall provide to all current employees, new or rehired
employees an "authorization for check-off of dues card". A copy of such card
will be provided to the appropriate union Financial Secretary and the payroll
department.
The Company agrees to deduct from the pay of members of the Union, who
individually authorize such deductions in writing to the Company by the
submission of a valid authorization card, the regular monthly Union dues and
initiation fees. The monthly dues shall be deducted, together with a list of
names of the employees for whom such deductions have been made, shall be
forwarded to the Financial Secretary of the Local Union not later than the
twenty-fifth (25th) day of each month in which such deductions are made. The
Union shall furnish to the Company authorization cards for deductions referred
to previously.
The Union shall give the Company written notice of any variations in dues
and initiation fee deductions at least thirty (30) days prior to the calendar
date on which deductions are to be made. At the end of each calendar year, the
final check stub will show the total amount of dues deducted for the year.
Page # 4
<PAGE> 10
SECTION 3. UAW V-CAP CHECK-OFF.
During the life of this Agreement, the Company agrees to deduct from the
pay of each employee voluntary contributions to UAW V-CAP, provided that each
such employee executes or has executed the following "Authorization for
Assignment and Check-off of Contributions to UAW V-CAP" form; provided further
however, that the Company will continue to deduct the voluntary contributions
to UAW V-CAP from the pay of each employee for whom it has on file an unrevoked
"Authorization for Assignment and Check-off of Contributions to UAW V-CAP"
form.
Deductions shall be made only in accordance with the provisions of and in
the amounts designated in said "Authorization for Assignment and Check-off of
Contributions to UAW V-CAP form, together with the provisions of this section
of the Agreement.
A property executed copy of the "Authorization for Assignment and
Check-off of Contributions to UAW V-CAP" form for each employee for whom
voluntary contributions to UAW V-CAP are to be deducted hereunder, shall be
delivered to the Company before any such deductions are made, except as to
employees whose authorizations have heretofore been delivered. Deductions shall
be made thereafter, only under the applicable "Authorization for Assignment and
Check-off of Contributions to UAW V-CAP" forms which have been properly
executed and are in effect.
Deductions shall be made, pursuant to the forms received by the Company,
from the employees first union dues period in the first month following receipt
of the check-off authorization card and shall continue until the check-off
authorization is revoked in writing.
The Company agrees to remit said deductions promptly to UAW V-CAP, care of
the International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW). The Company further agrees to furnish UAW
V-CAP with the names and addresses of those employees for whom deductions have
been made. The Company further agrees to furnish UAW V-CAP with a monthly and
year-to-date report of each employee's deductions. This information shall be
furnished along with each remittance. The Union will reimburse the Company for
administrative expenses in
Page # 5
<PAGE> 11
connection with the UAW V-CAP deductions as mutually agreed upon or if no
agreement is reached as ordered by an arbitrator.
SECTION 4. INDEMNIFICATION.
The Union agrees to hold the Company harmless from any action or actions
arising out of this Article commenced by any employee against the Company, and
further, the Union agrees to defend the Company and/or to pay all costs of such
defense in any action brought against the Company by an employee arising out of
or in connection with this Article.
SECTION 5. PARTICIPATION IN CREDIT UNION
The Company agrees to honor check-off authorizations from employees for
the purpose of their participating in a Credit Union mutually agreed upon by
the Company and the Union. The Company shall follow the direction of the
employees as indicated by their duly authorized deduction cards and the
periodic transmission of such deducted funds to such Credit Union.
ARTICLE III
REPRESENTATION
SECTION 1. GRIEVANCE COMMITTEE.
For the disposition of grievances, the Union shall be represented by (4)
committee persons, one of whom shall be designated as chairperson. All shall
have alternates. Committee Persons shall be designated from the following
departments:
News
Technicians
Production
Clerical/traffic
One additional Committee Person shall be elected to represent the night
shift should 11:00 p.m. News be established.
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SECTION 2. BARGAINING COMMITTEE.
For the purpose of negotiating a subsequent collective bargaining
agreement, the four (4) committee persons shall serve as the Bargaining
Committee.
SECTION 3. RIGHT TO REPRESENTATION.
The Chairperson, Committee person or the Designated Alternate, as the case
may be, shall be allowed time during normal working hours for the purpose of
handling matters pertaining to the contract. Request for such time shall be
granted subject to operational requirements. In the event of any employee's
discharge, the committee person shall advise their immediate supervisor of
their need to attend the meeting and be released for such purpose. For purposes
of this Section, the committee person may leave the work station after
receiving permission to do so from their supervisor. Such permission shall not
be unreasonably withheld or delayed. The right of the committee person to leave
their work station for the purpose of this section shall not be abused and
shall be subject to operational requirements. Any employee will be notified of
his/her rights to representation when being interviewed for discipline
including verbal, written, probation, suspension or discharge. When the grieved
employee requests representation by the committee person all conversation will
cease until the committee person is present. At that point, the supervisor will
advise the employee and the committee person of the discipline contemplated and
the reason for it. The committee person shall, upon request, be granted a
reasonable opportunity to caucus privately with the grievant prior to the
actual imposition of discipline. In the event an employee is suspended or
discharged, any challenge of such discipline shall be initiated within two (2)
working days following the suspension or discharge. The Union will initiate the
Grievance Procedure set forth below beginning at Step 1 (b)) in writing. Any
such challenge not meeting this time requirement shall be disallowed.
ARTICLE IV
GRIEVANCE/ARBITRATION PROCEDURE
SECTION 1. TIME LIMITS.
A grievance is a complaint by an individual employee, by a group of
employees having the same immediate supervisor, or by the Union, concerning the
application, interpretation, or alleged violation of the provisions of this
Agreement. No grievance may be more than seven (7) working days following the
date of occurrence(s) complained of, or when the affected employee(s) should
reasonably have first become aware of such occurrence(s). Such grievances shall
be processed as follows:
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Step 1 (a). ORAL DISCUSSION.
Any employee or a group of employees, as defined above, having a complaint
first take up the same with the immediate Supervisor, who will attempt to
resolve it. The Supervisor shall answer orally within two (2) working days of
such meeting or may refer the matter to the appropriate Department Head. If the
issue cannot be resolved by the employee(s) and the Supervisor, the employee(s)
may request the presence of the committee person in an attempt to resolve the
issue. The committee person shall be excused for such a meeting based on
operational requirements.
(b). WRITTEN GRIEVANCE.
In the event a complaint is not resolved and the affected employee or
group of employees wish to pursue it further, the complaint shall be reduced to
a written grievance. The Grievance shall be signed by the affected employee or
group of employees, and by the committee person, and shall state the article
and section of this Agreement allegedly violated, and the relief being sought.
Such grievances must be presented to the appropriate Department Head or
designated alternate within five (5) working days of the Supervisor's previous
answer. The Department Head shall schedule a meeting within five (5) working
days thereafter with the grievant(s)) and committee person. Within five (5)
working days following the meeting on a written grievance the Department Head
shall respond in writing to the committee person.
Step 2. The chairperson may appeal the answer of the department Head to
the General Manager or, in the absence thereof, to his/her designated alternate
within Department Head's answer. The General Manager or designated alternate
shall schedule a meeting within five (5) working days of receipt with the
chairperson to discuss and attempt to resolve the grievance. If mutually
agreeable, the grievant(s), committee and/or Department Head may also attend
any such meeting. The General Manager or designated alternate, shall respond in
writing to the chairperson within five (5) working days following any such
meeting.
Step 3-(a). Within ten (10) working days following the Step 2 response,
the chairperson may again appeal the grievance in writing to the General
Manager. Within five (5) working days of receipt of the appeal, the General
Manager shall schedule a meeting to discuss and attempt to resolve the
grievance. The Union shall be represented at any such meetings by the
chairperson of that office, and by the International Union Servicing
Representative, or their designees. The Company shall
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be represented at any such meetings by its General Manager and/or the designee.
Other persons may from time to time be allowed to attend and/or participate in
any such meetings.
(b). The General Manager and/or the designee shall respond in writing to
the grievance within ten (10) working days following any such meeting. The
response shall be made to the International Servicing Representative, with a
copy to the Local Union President and the Office Chairperson.
(c). Should conditions warrant, processing of grievances may bypass Steps
1 and/or 2 by mutual agreement. It is further understood grievances may be
withdrawn without prejudice at any one of the above steps of the grievance
procedure. Any time limit set forth in the above grievance procedure may be
extended by mutual agreement in writing between the Company and the Union. Any
complaint or grievance not property made or appealed within the specified time
limit shall be disallowed or otherwise understood as finally resolved on the
basis of the Company's last answer. If the Company fails to respond to a
specific complaint or grievance within the specified time limit, then the
grievance will be settled based on the Union's last request.
Section 2. ARBITRATION.
(a) Within fifteen (15) days following the Company's Step 3 written
response, the Union through its Local Union President and International
Servicing Representative shall notify the Company of its intent to appeal same
to arbitration by serving a written request or demand therefore on the General
Manager. Within ten (10) working days thereafter, the Union shall prepare and
submit an appropriate demand for labor arbitration to the American Arbitration
Association, a copy of which shall be forwarded to the General Manager by
certified or registered mail. Notwithstanding anything herein to the contrary,
a formal demand for arbitration, filed and served within the aforesaid ten (10)
working day period, shall likewise constitute a written request for
arbitration. The Arbitration shall be governed by the American Arbitration
Association's Rules for Labor Arbitrations.
(b) APPEAL TO ARBITRATION.
If notice of appeal to arbitration is given the arbitrator shall be
appointed in the following manner:
Immediately after the filing or Submission, the AAA shall submit
simultaneously to each party an identical list of nine (9) names of persons
chosen from
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the National Panel of Labor Arbitrators. Each party shall have seven (7) days
from the mailing date in which to cross off any names to which it objects,
number the remaining names to indicate the order of preference, and return the
list to the AAA. If a party does not return the list within the time
specified, all persons named therein shall be deemed acceptable. From among the
persons who have been approved on both lists, and in accordance with the
designated order of mutual preference the AAA shall invite the acceptance of an
arbitrator to serve. If the parties fail to agree upon any of the persons
named, if those named decline or are unable to act, or if for any other reason
the appointment cannot be made from the submitted list, the AAA will notify the
parties and submit simultaneously to each party an identical second list of
nine (9) arbitrators. Each party shall have seven (7) days from the mailing
date to repeat the selection process and return the list to the AAA. If the
parties fail to select an arbitrator from the second panel, the AAA will send
the parties the names of three (3) arbitrators. The parties must respond to the
three (3) names to the AAA within seven (7) days of the mailing date giving
objective reasons why they feel any of the arbitrators should not serve. The
AAA will review the responses and select one of the arbitrators to hear the
case.
(c) Except to the extent otherwise limited by this Agreement, the
arbitrator shall have the authority to hear and determine any grievance
involving an alleged violation of this Agreement, provided, however, that the
grievance first proceeded through the applicable steps of the grievance
procedure set forth above. The arbitrator shall have no authority, however, to
add or to subtract from, modify or limit the provisions of this Agreement,
expressly or by implication. The arbitrator shall have no authority to rule
on health and safety rules or wage rates except as specified elsewhere in this
Agreement.
(d) The decision of the Arbitrator shall be final and binding upon the
employee(s) involved, the Union and the Company.
(e) The charges of the Arbitrator for his fees and expenses shall be borne
by the loser for any arbitration hearings held.
(f) Grievances involving the same or closely related issues and facts may,
in accordance with the Labor Arbitration Rules and Regulations of the American
Arbitration Association, be consolidated before a single arbitrator for hearing
and decision purposes. Grievances may otherwise be consolidated only by mutual
consent of the parties.
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(g) WITNESS COMPENSATION. Where the presence of an employee is requested
by the Company at Step Three (3) meeting pursuant to the Grievance Procedure,
the employee shall be paid by the Company for time spent in such meeting at
this regular hourly rate. Where the presence of an employee is requested by the
Union at a Step Three (3) meeting pursuant to the grievance procedure, such
employee will be allowed to attend such Meeting without Pay.
(h) Any claim or award for back wages under this Agreement shall be less
any unemployment or other compensation for personal services received from any
other source during the period in question.
SECTION 3. SPECIAL MEETINGS.
A special meeting may be called at any time by the Committee Chairperson
or designee and necessary committee members or by Management when any situation
of a serious nature arises which required immediate attention. An agenda of the
issues to be discussed will be given to Management or Union at the time of
notification. Such meeting shall be scheduled subject to operational needs.
ARTICLE V
SECTION 1. MANAGEMENT RIGHT/RULES REGULATIONS.
Except as expressly abridged by a specific provision of this Agreement,
the Company reserves and retains exclusively all of its normal and inherent
rights with respect to the management of the business, including but not
limited to the right to determine and from time to time re-determine, the
number, location and types of its stations' facilities and operations; to select
and direct the working forces in accordance with the requirements determined by
management; to establish and change work schedules and assignments; to
transfer, promote or demote employees, or to lay off, terminate or otherwise
relieve employees from duty for lack of work or other legitimate reason; to
make and enforce reasonable rules for the maintenance of discipline to suspend,
discharge or otherwise discipline employees; the right to determine the means,
methods, and processes of work; to alter, rearrange, change, extend, curtail,
or discontinue its operations, partially or completely; to determine the size
and assignment
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of the work force; to determine the equipment to be used, and the number and
kind of programs to be produced or aired or services to be rendered; and
otherwise to take such measures as management may determine to be necessary to
the orderly, efficient, and economical operation of the business. Any of the
rights, powers, authority, and functions the Company had prior to the
negotiations of this Agreement are retained by the Company, except as expressly
abridged by a specific provision of this Agreement. The Company's not
exercising rights, powers, authority and functions reserved to it or its
exercising them in a particular way shall not be deemed a waiver of said
rights, powers, authority, and functions or of its right to exercise them in
some other way not in direct violation of a specific provision of this
Agreement.
SECTION 2. INDIVIDUAL AGREEMENTS.
The Employer shall have the right to bargain for and execute individual
employment agreements with covered news reporters, on-the-air talent, the
assignment editor, news photographers, and hosts, provided the Union will be
given a copy of any such agreements. It is agreed that the news reporters, the
assignment editor, and news photographers will not be required to execute such
contracts. Employees who were in the positions of news, sports or weather
anchors as of August 8, 1991 will not be required to execute individual
agreements.
This section does not apply to regular bargaining unit employees filling
in on a temporary basis. Such agreements shall not provide for wages and
benefit less favorable than those provided for in this Agreement, but such
agreements may provide for restrictive covenants and suitability clauses. In
the event the Company terminates a contract employee for non-suitability, the
Company will notify the Union and discuss with the Union the Company's
determination. The Company's decision may be submitted as a grievance but it
may not be appealed to arbitration. Such individuals shall be compensated as
salaried exempt employees.
SECTION 3. PERFORMANCE OF BARGAINING UNIT WORK.
Nothing in this Agreement shall prohibit non-bargaining unit personnel
from performing work normally assigned to employees covered by this Agreement,
provided that it does not result in the lay-off or displacement of an employee
employed in the bargaining unit as of the execution date of this Agreement or
to avoid paying overtime provided that there are qualified bargaining unit
employees available to perform such work. Notwithstanding the foregoing, this
restriction shall not prevent non-bargaining unit personnel from performing
bargaining unit work in the case of an emergency or for instructional or
training purposes, nor shall it prevent the Company from temporarily
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assigning bargaining unit employees to non-bargaining positions or promoting
same to non-bargaining unit positions.
ARTICLE VI SENIORITY
SECTION 1. DEFINITION.
Except as may be provided elsewhere in this Agreement, seniority shall be
based on a full time employee's most recent hire date into the bargaining unit
as a full-time employee. Seniority shall be based on a part-time employee's
most recent hire date into the bargaining unit as a part-time employee.
SECTION 2. FULL-TIME/PART-TIME SENIORITY.
There shall be two separate seniority lists: one for regular full-time
employees and one for regular part-time employees. Part-time employees shall
not have seniority over full-time employees with respect to full-time jobs, nor
shall full-time employees have seniority over part-time employees with respect
to part-time jobs, except that any full-time seniority employee who is laid off
may replace part-time employees, provided the full-time employee has greater
company seniority and the senior employee has the skill and ability to do the
work of the junior part-time employee.
Full-time employees who, through established bidding procedures become
part-time employees, shall retain their previous full-time seniority for the
purpose of future consideration for full-time employment status. Part-time
employees, who through established bidding procedures become full-time
employees, shall retain their previous part-time seniority for the purpose of
future consideration for part-time employment status. If any full-time employee
accepts a part-time position instead of layoff as provided above, the employee,
for the purpose of recall, shall be considered on layoff from a full-time
position. Any part-time employee laid off shall be recalled to part-time
positions only.
SECTION 3. PROBATIONARY PERIOD.
During the first ninety (90) calendar days from the employee's initial
date of employment, a newly hired employee shall be considered as probationary
and during
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such time shall have no seniority. This probationary period may be extended by
mutual agreement in writing between the Company and the Union. Upon successful
completion of the probationary period the employee's seniority date shall be
the employee's most recent date of hire. Termination or other forms of
discipline as provided under normal disciplinary procedures of any employee who
has not successfully completed his/her probationary period shall not be subject
to grievance or arbitration provisions of this Agreement, provided this does
not abridge the employee's right to the grievance or arbitration provisions of
this Agreement for other reasons, as provided, during his/her employment.
SECTION 4. SENIORITY LISTS.
Management will post the current seniority list of employees by job
classification in seniority order on a quarterly basis. The list shall include
the Employee Name, Job Title, Job Date, Service Date, and Seniority Date. The
chairperson will be provided with a copy of the list. Should the Union have any
objection to said seniority list, such objection must be filed with the General
Manager within ten (10) working days of the date the list is posted. The
failure of the Union or any individual employee to object to the posted
seniority list within ten (10) working days shall be deemed an acceptance of
the posted seniority list.
If more than one (1) employee's seniority date is the same, the seniority
will be in alphabetical order of their surmame, with "A" being the most senior.
If the employee's surname changes, the seniority date will remain the same.
ARTICLE VII
PART-TIME EMPLOYEES
SECTION 1. DEFINITION.
For the purposes of this Agreement, regular part-time employees are those
regularly scheduled to work at least ten (10) but not more than thirty (30)
hours a week. This limitation will not apply during formal training programs,
which will not exceed a four (4) week period. The normal complement of regular
part-time employees will be no more than twenty percent (20%) of the total
number of employees. covered by this Agreement. Generally, the Company uses
regular part-time employees to fill work schedule needs on peak work load days;
to reduce work load build-ups; to provide
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special skills where full time employment is unavailable or where there is an
insufficient need for such skills on a full-time basis; to provide for
short-term peaks in the daily work load; and where business requirements
dictate the use of part-time employees. Nothing herein shall prevent the
Company from using regular part-time employees, on a temporary basis, to fill
in for full-time employees for the purposes of vacations, leaves of absence,
filling of vacancies during the job posting period and until a position is
filled by a full-time employee who has satisfied his/her probationary period,
or to meet temporary business needs. Part-time employees filling full-time
positions for periods in excess of thirty (30) calendar days shall have accrued
full-time seniority equal to the time spent in the full-time position.
ARTICLE VIII
TEMPORARY EMPLOYEES
A temporary employee is one hired by the Company to accommodate temporary
openings resulting from promotions, terminations, vacations, leaves of absence
or significant or unexpected fluctuations in the work load. In situations
requiring a temporary employee, the Company intends to hire a temporary
employee for a period not to exceed ninety (90) calendar days except in the
cases of promotions or leaves of absence, where the assignment may extend for
the duration of the probationary period or the duration of the leave of
absence. Temporary employees hired by the Company, who subsequently are hired
as permanent employees shall begin to accrue seniority as of the date of
permanent hire. Should a temporary employee be retained beyond sixty (60)
calendar days, and be hired as a permanent employee, the employee shall
complete a probationary period of up to thirty (30) days beginning on the date
of permanent hire.
During the temporary assignment, temporary employees are exempt from the
provision of this Agreement. Regular break periods and lunch periods shall be
provided to such temporary employees.
Temporary employees shall not be hired to permanently replace regular
bargaining unit employees. All temporaries will be laid off before any regular
seniority employees in the same classification can be laid off.
Overtime will be offered to regular seniority employees in the same
classification before any temporaries. Regular seniority employees who are
qualified will have the first choice of jobs.
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Part-time employees are offered the promotion to fill full-time opening;
temporaries may fill in for the open part-time positions in the departments
where part-time positions exist.
ARTICLE IX
INTERNS
The following rules shall cover the use of Interns:
1. The Intern must be a student at a vocational school, high school,
college or university who will receive credit from his/her school on the
successful completion of the program. The Company will not have an
employer/employee relationship with the Intern. The purpose of the program is
to give the student experience in Broadcasting to fulfill his / her college
curriculum and to give the Company the opportunity to locate and observe
potential new employees.
2. The Interns would be assigned with an employee to observe the function
of the regular full-time unit members. Interns may perform unit work, but will
not be used to replace a unit member except on a temporary basis not to exceed
five (5) consecutive working days.
3. Management will be responsible for Intern training. Unit members may be
requested to assist in such training.
ARTICLE X
LAYOFF AND RECALL
Section 1. In the event that the Company determines the need to reduce the
work force, to consolidate positions, eliminate classification, or positions
are altered as a result of technological change, the Company will designate the
job classifications), department, and number of employees affected. The Company
will provide two (2) weeks notice of layoff or two (2) weeks pay in lieu of
notice to regular full-time employees. The Union will also concurrently receive
written notice.
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The affected employee(s) shall first exercise their seniority to displace
the least senior employee within their job classifications), provided the
remaining employees have the skill and ability to perform the available work in
an efficient manner. They may then bump the least senior employee who is on an
equal or next lower rated position, provided the bumping employee is qualified
to perform the work and has previously demonstrated the ability to perform the
work. As used above, the term "ability' means the ability to substantially
perform the required work.
An employee, who is laid off as a result of a layoff notice or has bumped
a lesser senior employee, is eligible for recall to the job classification held
in his or her department at the time of layoff. Such employee shall remain
eligible for recall for a period commensurate with their seniority at the time
of layoff. but not more than two (2) years. Employees will be recalled in
seniority order, provided that the recalled employee has the skill and ability
to perform the available work.
All displaced employees will be eligible for recall to the classification
from which they were displaced for a period as defined above. An employee who
displaced a lesser seniority employee and subsequently refuses a recall to
his/her former title/classification shall be deemed to have waived recall
rights to that classification.
The least senior employee affected shall be placed on layoff, subject to
recall to any equal or lower level job for which he/she has the skill and
ability to perform the available work for a period commensurate with his/her
seniority at the time of layoff, but not more than two (2) years. Employees
will be recalled in seniority order.
A laid-off employee who refuses a recall to his/her prior class
classification or to another classification for which the employee is qualified
shall be deemed to have waived recall rights. An employee's acceptance of any
position completes the recall process in that office. This does not preclude
the employee's right to recall to his/her former classification.
During the period of recall eligibility, the employee shall be entitled to
bid for any open position in the bargaining unit, for which he/she is
qualified, provided no other employee in the department where the opening
occurs is selected. Openings will be filled on a seniority basis among the
qualified applicants.
Section 2. Loss of Seniority. Seniority and status as an employee shall be
lost in the following manner:
(a) By voluntarily quitting.
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(b) Failure to report after expiration of leave of absence.
(c) Failure to report to work after a layoff within three (3) working
days of receipt, or seven (7) calendar days after mailing, whichever
is later, of a certified letter containing proper notification recall
by the Company, mailed to the employee's last known address. A
simultaneous copy will be given to the chairperson.
(d) Discharge for just cause.
(e) Layoff for a period equal to an employee's length of service or
twenty-four (24) months, whichever is less.
(f) An employee is absent three (3) consecutive workdays without
notification to the Company, unless justifiable reasons can be
afforded.
(g) An employee works on gainful employment while on leave of absence.
(h) An employee is determined to have falsified his/her application for
employment, or other Company records.
(i) Except as otherwise provided in the contract, failure to perform any
bargaining unit work for the Company for a period of one (1) year.
Section 3. Special seniority for Grievance Committee. The chairperson and
the committee person in that order, shall, for the purposes of layoff and
recall only, head the seniority list in their respective classification during
their term of office as long as they have people to represent.
Section 4. Seniority of Employees Promoted Outside of the Bargaining Unit.
Employees promoted outside the bargaining unit shall have their bargaining unit
seniority frozen as of the date of their promotion and shall retain their
seniority until the successful completion of their probationary period into
non-bargaining unit position, or 90 days, whichever comes first.
ARTICLE XI
JOB CLASSIFICATIONS
Section 1. JOB CLASSIFICATIONS
The job classifications in effect on the date of this Agreement shall
continue in effect subject to the Company's right to change classifications as
set forth below. The work assigned to job classifications in effect on the date
of this Agreement shall continue in substantial accord with the current
classification descriptions. The Company shall have the right to create new job
classifications or change job
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classifications as necessary and place them in appropriate salary grades so as
to classify all positions and work in the bargaining unit. For the purpose of
this Agreement, the term "job-classification" shall include job title, job
description, job specifications, i.e., the qualifications for the position, and
the salary grade.
Section 2. NEW JOBS.
When new bargaining unit positions are created and cannot be properly
placed in existing classifications by mutual agreement, the Company will
establish a new classification and a rate covering the job in question, and
will designate it as temporary. A copy of the temporary rate and job title will
be furnished to the unit chairperson. As soon as possible after the
implementation of the new job classification and in any event, within 30
calendar days after an employee has been placed in the job, the Company and the
Union shall negotiate the rate and classification, and when negotiations are
completed, such classification and rate shall become a part of the wage
agreement, and the negotiated rate, on the date of agreement by the parties to
the rate, except as otherwise mutually agreed upon. In the event that the
Company modifies an existing job classification by materially changing the job
content thereof, the initial determination of the rate of pay applicable to
such modified job classification shall be made by the Company on the basis of
the relation between the job content of the modified classification and the job
content of the classification for which rates of pay are established by this
Agreement. The Company shall give the Union thirty (30) calendar days advance
notice of the modification of a job classification and shall afford the Union a
reasonable opportunity to discuss the same with the Company. Such notification
to the Union shall include the new job description, old job description, new
job posting, old job posting and the identification of significant changes in
the job that resulted in creation or modification of the job classification.
If, during the term of this Agreement, a significant change in job content
has been effected the Company to the extent that the assigned rate of pay for
the job classification in question has become inappropriate but has not been
adjusted by the Company, the Union may, in writing, request a review of the job
in question and discussions with the Company relative thereto. If the Union
disagrees with a change in job content or a modified job classification
established by the Company, or if the Union disagrees with the Company's
response to a Union requested job classification review, the Union may within
thirty (30) calendar days following implementation of the new job or modified
job classification, file a grievance at Step 3 of the Grievance Procedure.
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As soon as possible, but not more than fifteen (15) calendar days after
the grievance has been filed, the Company will meet with the Collective
Bargaining Committee to determine whether or not an agreement can be reached on
the appropriate salary grade and classification. If the Collective Bargaining
Committee cannot reach an agreement the Union may proceed to arbitration.
In the event of an arbitration proceeding involving new or modified job
classification, the sole issue before the arbitrator shall be the
reasonableness of the salary grade, job description and/or job specifications.
The arbitrator shall have no authority to establish a salary grade, job
description and/or job specifications different from those established by the
Company.
The arbitrator shall have no right to accept evidence which is new and was
not submitted in Steps 1, 2, 3 or 4 of the Grievance Procedure.
In the event an arbitrator decides that the Company's determination with
respect to the salary grade, job description and/or job specifications for a
new or modified job classification is unreasonable, and in the event the
Company and the Union are unable to satisfactorily settle the dispute within
thirty (30) calendar days thereafter, the Union may hold said grievance until
negotiations commence for the subsequent Collective Bargaining Agreement at
which time the rate shall be negotiated. The effective date of the pay rate
shall also be subject to negotiations at this time.
ARTICLE XII
JOB POSTING
Unless a job has been eliminated, the Company shall post any opening
within the bargaining unit within two (2) days (Saturdays, Sundays and Holidays
excluded) and filled (30) calendar days after posting. The Company shall post
any job opening within the bargaining unit. The Company shall post the
bargaining unit position for five (5) consecutive working days. Interested
bargaining unit employees during this period may apply for the posted job by
completing an application furnished by the Company. Employees may not apply for
more than one (1) posted opening at any one (1) time. An employee may, however,
withdraw a pending application in writing in order to apply for a subsequent
job posting.
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Jobs will not be posted for entry level positions but will be filled in
the following manner:
(a) The Company will offer recall to any eligible employee on lay-off who
has the skill and ability to perform the available work.
(b) Any interested employee may apply for a future or current position by
submitting a job application to the General Manager denoting the department or
area of preference. The Company shall send the employee a notification that the
application has been received and shall maintain the application on file.
Filling of the opening shall be based on qualifications, skill, ability and
prior work history and, where such factors are equal, seniority will prevail.
(c) The Company will accept any applications from part-time employees
seeking full-time employment.
(d) Part-time employees who have the qualifications, skill and ability, to
perform the available work encompassed by the vacant position and an acceptable
work record (i.e. disciplinary problem) will be offered full time employment
before any new hires.
A job posting shall include:
(a) the date of the posting;
(b) the date the posting expires;
(c) the department in which the job exists;
(d) the classification and salary grade of the job;
(e) a summary description of the duties and responsibilities of the
position;
(f) the job specifications; and
(g) the shift and whether the job is regular full-time or regular
part-time.
After the close of the posting period, selection shall be made in the
following sequence
(a) the most senior qualified applicant in the department in which the job
exists;
(b) the most senior qualified applicant in the bargaining unit. Where
qualifications are equal preference will be given to the most senior qualified
applicant in the department and, if none, to the most senior qualified
applicant in the bargaining unit. The Company will notify job applicants of the
results within twenty five (25) calendar days of the posting expiration.
Furthermore, when the employee is notified by
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the supervisor of his/her selection, the employee must accept or decline the
position and so advise the supervisor. If the position is accepted, such
acceptance cannot be subsequently withdrawn. For the purpose of this Article,
the Company will be the sole judge of qualifications. In determining the most
qualified employee, such determination will be based on the qualifications for
the position, and the skill, ability and work history of the employees in
question. When two or more employees possess equal qualifications, skill,
ability and work history, the employee with the greatest length of service
within the department and, if appropriate, within the Company will be selected.
In the event the Company determines none of the employees who bid for the job
opening possesses the necessary qualifications for the job in question, the
Company may hire from outside the bargaining unit.
Employees shall be limited to one (1) successful bid in any four (4) month
period. In the event that no employee with more than three (3) months
seniority applies, then probationary employees, not on disciplinary process
shall be eligible to bid on a posted position. Probationary employees under
disciplinary process as specified in the U.A.W. Contract (Discipline and
Discharge XVII) shall not be eligible to bid until the day following the
expiration of any probationary period. The job vacated by the employee chosen
will not be posted for bid until the employee chosen has passed the appropriate
probationary period for the position. Employees selected for a posted position
shall be on probation for up to ninety (90) calendar days. At the successful
conclusion of the probationary period, an employee who has been promoted into a
higher rated classification shall receive a wage increase to the job rate,
retroactive to the date of the promotion, or retain his/her prior rate of pay if
it is higher than the job rate for the job into which he/she was promoted.
ARTICLE XIII
TECHNOLOGICAL CHANGES
When work performed by employees covered by this Agreement is altered as a
result of technological change, the Company will give employees the opportunity
to progress with advanced technology. The Company will provide employees with
on-the-job training to the best of its ability and may make available to
employees, designated by the Company, technological training provided by the
manufacturer as part of the purchase of the equipment. Such training will be
provided during working time, based upon operational requirements. If such
training is outside of the station facility, employees will be compensated
based on their regular hourly raw for up to eight (8) hours per day and forty
(40) hours per week as well as compensated for
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expenses in connection with same as per the Company's reimbursement policy
which is described in Attachment "C". After receiving proper on-the-job
training or other training as determined by the Company, employees who fail to
qualify for positions altered as a result of technology shall be subject to
layoff as provided in this Agreement.
ARTICLE XIV
TEMPORARY WORK FORCE REDUCTION
Temporary work force reductions for fixed, short-term periods of not more
than fourteen (14) consecutive calendar days shall be made in order of
seniority (least senior first) within an affected job classification in an
affected department, provided the remaining employees are qualified to perform
the work in question. Written notice will be given concurrently to the affected
employees, and the Union except in emergency situations. The Company and the
Union will meet and discuss the reductions within twenty-four (24) hours of
notification but prior to the reductions, except in emergency situations where
the notice may be verbal and the discussion may occur after the reduction. The
notice shall set forth a date certain within fourteen (14) days on which the
affected employees are to return to work. The Company shall on behalf of
employees affected by such a reduction, file a timely waiver with the Michigan
employment Security commission (MESC) of any registration or "seeking work"
requirements.
Temporary workforce reductions for contemplated short-term periods for
which a fixed date of return to work is not given shall be processed in the
same manner. Written notice will be given concurrently to the affected
employees and the Union, and the Company shall likewise file a waiver with
(MESC) on behalf of such employees.
Should a temporary reduction extend beyond fourteen (14) consecutive
calendar days, the layoff and recall provisions of this Agreement shall be
invoked, however the two (2) week notice provision of that Article shall be
waived.
ARTICLE XV
BULLETIN BOARD
The Company will provide space on a Bulletin Board which may be used by
the Union for posting.
A. Notice of Local Union recreational sociable affairs.
B. Notices of Local Union elections.
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C. Notices of Local Union appointments and results of Local Union
elections.
D. Notices of Local Union meetings.
Notices, other than (A)-(D), must be submitted to the General Manager and
approved by the General Manager prior to being posted.
ARTICLE XVI
SAFETY AND SANITATION RULES
It is hereby agreed that the Company and the Union recognize the
importance of adequate provisions in the station for the protection of the
health, life, and limb of employees and will mutually make every reasonable
effort to improve hazardous working conditions as they become apparent. The
Union agrees that it will encourage its members to promptly report conditions
that might be dangerous to employees and to the public and to do all in their
power to make the Company's property and equipment safe, sanitary, and
dependable. Safety devices required by the Company for employees must be used.
Failure of an employee to comply with safety regulations shall be just cause
for disciplinary action.
The Company shall have the right to establish reasonable safety, health
and sanitation rules. Any changes, modifications or additions to the safety,
health and sanitation rules shall be submitted to the Union for informational
purposes only. Such rules shall not be subject to the grievance and arbitration
procedures of this Agreement, except that the Union may grieve and arbitrate
the reasonableness of a particular rule as it is applied in a particular case.
ARTICLE XVII
DISCIPLINE AND DISCHARGE
Employees with seniority shall not be disciplined or discharged except for
just cause. The Company shall have the right to establish, enforce, and
maintain reasonable ruin of employee conduct, which, when published or posted,
shall be observed. In establishing and enforcing such rules, the Company shall
give due consideration to the principles of progressive discipline, where
applicable. The establishment or amendment of such rules and regulations shall
not be subject to the grievance and arbitration provisions of this Agreement.
However, the Union shall have the right to challenge the reasonableness of any
such rule in the event an employee is disciplined or discharged but not limited
to, the right to challenge the
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severity of the penalty imposed on an individual disciplined or discharged
employees shall be entitled to union representation as set forth in this
Agreement.
For the purpose of discipline and discharge, the Company recognized the
following progressive discipline steps:
Documented Verbal Warning; Written Warning; Probation or Disciplinary
Suspension; and Discharge.
For progressive discipline and discharge purposes, the Company shall not
consider prior verbal or written warnings for more than twelve (12) months,
provided no other discipline was given within the twelve (12) month period.
All employees in the bargaining unit shall be required to conform to the
rules and regulations of the FCC or any other administrative agency having
jurisdiction. In addition, each employee shall be required to maintain FCC
operator's license pertinent to the broadcasting industry, which he or she held
on the date of this Agreement or that was subsequently required and acquired by
such employee.
Finally, bargaining unit employees will not engage in any outside
employment that is in direct competition with the Employer or the Employees
operations and will not accept outside employment which would adversely affect
the performance of his or her duties for the Employer or the public image of
the Employer.
The Company's policy of Corrective Discipline regards as correctable most
cases of improper conduct. HOWEVER, CERTAIN OFFENSES OF A SERIOUS NATURE ARE
CAUSE FOR IMMEDIATE DISMISSAL SUCH AS:
a. reporting for work under the influence of, or possession on Company
property with demonstrated intent to consume, any intoxicant, illegal drug or
substance, except as prescribed by a licensed physician.
b. during scheduled work-time or on Company property of an intoxicant,
illegal drug or substance, except as prescribed by a licensed physician.
c. willful destruction of Company property.
d. assault or battery, or physical altercation.
e. on air obscenity or impropriety; oral or visual.
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f. conviction of a felony.
g. conduct jeopardizing the Company's license to operate the station.
h. insubordination.
i. falsification of employment application, reasons for a leave of
absence, release of Company records or falsification of expense reports.
j. fraud or theft.
k. Any falsification of time records, including but not limited to
punching someone elses time card or facilitating such falsification.
The Company and the Union recognize their mutual interest in investigation
of matters arising under this Section. To that end, both parties agree to
reasonably cooperate in the investigation of alleged employee misconduct
matters. In an effort to fairly balance the respective interests of all
concerned, the Company and the Union agree that with respect to a discharge
matter involving fraud or theft in the above respects, the amount involved shall
be entitled to no weight or consideration whatsoever.
ARTICLE XVIII
PAYROLL PERIOD
The payroll period shall consist of fourteen (14) consecutive calendar
days at 12:01 A.M. Monday and ending at twelve midnight on the second Sunday.
The starting time of the shift shall determine the payroll period within which
the hours worked that shift fall.
ARTICLE XIX
WORK HOURS
Section 1. The provisions of this Article are intended only to provide a
basis for determining the number of hours of work for which employees shall be
entitled to be
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paid and shall not be construed as a guarantee to employees of any number of
hours of work, either per day or per week, or limiting the right of the Company
to fix the number of hours of work (including overtime) either per day or per
week for such employees.
A day is defined as a twenty-four (24) hour period beginning with the
start of the employee's shift. Forty (40) hours shall constitute a normal
week's work. For payroll purposes only, the standard work week shall commence
at 12:01 A.M. on Monday and conclude at 12:00 Midnight the following Sunday.
Employees will be required to punch time clocks.
The Company, from time to time as business conditions deem necessary, may
add additional shifts or eliminate such shifts or change working schedules and
may reduce the work week to less than the normal forty (40) hours for
bargaining unit employees. However, a reduction in the normal work week will
not take place in a department where the Company is utilizing interns,
temporary employees or part-time employees, without the Union's consent.
SCHEDULING
Working hours, breaks, and lunch periods are scheduled according to each
department and Company operational needs. There are three (3) types of work
schedules:
STANDARDIZED HOURS: Is a schedule of predetermined start time for all
employees in a work unit.
STAGGERED HOURS: Schedule in which segments of a work unit begin the work
day at different but prearranged times.
FLEXTIME: Schedule which includes flexible starting and quitting times
with the basic core hours which allows employees upon the consent of
supervisors to determine when an employee will work the necessary eight (8)
hours required. Flextime may be implemented by department, by individual upon
the consent of the supervisor subject to operational requirements. Individual
requests for flextime scheduling shall not be denied without a legitimate
reason.
Section 2. NORMAL WORK WEEK
The normal work week as scheduled by the Company for regular full-time
employees shall consist of five (5) consecutive days of eight (8) hours each
or, with respect to individual employees, four (4) consecutive days of ten (10)
hours each, and
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shall normally end with a rest period of at least forty eight (48) hours (2
full consecutive days) before beginning the next work week.
All work schedules shall be prepared and posted by Management by 4:00 P.M.
the Thursday prior to the start of the regular work week. However, the Company
retains the right to change work schedules without notice upon a request of an
employee or in the case of an emergency. The Company agrees to designate a
specific area in each department for the posting of schedules. It shall be the
employee's responsibility to check the posted schedules for changes prior to
leaving at the conclusion of the work day. If schedule changes are made after
an employee's work day is concluded, it shall be the responsibility of the
Company to notify the Employee in person or by telephone or telegraph.
Section 3. OVERTIME
When requested, employees are required to work overtime. Employees
required to work overtime will be excused by the Company for good and
sufficient reasons. The Company shall have the right to assign overtime to the
available junior seniority employee(s), provided the junior employee has the
skill and ability to perform the available work. The Company will attempt to
give advance notice of overtime, if possible, under the circumstances. Prior to
requiring overtime, the Company will seek volunteers from among available
qualified employees within the affected job classification. Such volunteers
will be selected on the basis of seniority (the most senior available qualified
employee first). The Company in cooperation with the appropriate department
union representative will attempt to equalize overtime opportunities and
required work.
ARTICLE XX
PREMIUM PAY - GUARANTEED HOURS
Section 1. OVERTIME PAY
Time and one-half shall be paid for all hours or parts of hours worked in
excess of eight (8) hours in a day (ten (10) hours in the case of an employee
regularly
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scheduled to work four (4) ten (10) hour days per week). Further, all Saturday
and Sunday work not part of the employee's normal schedule shall be paid at
time and one-half. For the purposes of overtime, the work week shall commence
at 12:01 A.M. on Monday and end at 12:00 Midnight the following Sunday. When an
employee works overtime, he or she will be paid time and one-half (1 1/2)
his/her regular hourly rate in units of not less than fifteen (15) minutes.
Section 2. COMPENSATORY TIME-OFF
The Company may offer compensatory time-off in lieu of overtime. Employees
have the right to accept compensatory time-off or overtime pay. Compensatory
time shall be compensated at straight-time rates. Management shall be
reasonable in granting employees' requests for compensatory time. Employees
shall give the Company as much notice as possible when requesting compensatory
time-off. Compensatory time-off must be taken in same payroll period as the
payroll period in which the overtime was worked.
Section 3. REPORTING PAY
Full-time employees who are regularly scheduled and who report for work
without previous, reasonable notification by the Company that there is no work
available, or full-time employees who start work but are released before
working a minimum of four (4) hours, shall be paid four (4) hours pay at their
base hourly rate, provided the conditions preventing working are within the
Company's control.
Section 4. CALL IN PAY
A full-time employee recalled to work to perform a specific task after
having worked his or her shift will be paid double time at his/her base hourly
rate for all time worked, with a minimum of one (1) hour at double time pay.
Section 5. INJURED ON THE JOB
In the event an employee is injured on the job and is treated at the plant
or by medical authorities and returns to work, he or she will be paid for any
time lost due to the injury. In the event an employee is instructed by the
Company or by medical authorities to go home, such employee will be paid for
any time lost due to the injury during the scheduled hours of the day that the
accident occurred.
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Section 6. PAY FOR MEETINGS
All mandatory Company meetings outside the employee's normal work shift
shall be considered time worked for all purposes under this Agreement.
Section 7. SHIFT PREMIUM
All employees will be paid a premium of ten cents (10 cents) per hour for
all hours worked between midnight (12:00 A.M.) and 6:00 A.M.
Section 8. TURN AROUND PAY
Bargaining employees shall normally have a rest period of at least ten
(10) hours from the end of their individual shift and the beginning of their
next shift, except in emergency situations. If an invasion of the ten (10) hour
turnaround period occurs, such hours will be paid for at the rate of one and
one-half (1 1/2) times the employee's regular rate.
Section 9. PYRAMIDING OF OVERTIME PAY
There shall be no pyramiding or duplication of overtime or penalty
payments.
Section 10. OVERTIME FOR PART-TIME EMPLOYEES
Part-time employees regularly scheduled to work less than five (5) days
per week shall be subject to Overtime Pay provisions after ten, (10) hours
worked on a per day basis.
ARTICLE XXI
SHIFT PREFERENCE
Technical and News Personnel. The employees in the Engineering and
Production, as well as News Photographers, only shall have shift preference
over a junior seniority employee in the same classification on another shift as
set forth in this Article. In the event of an opening or vacancy in a job
classification on another shift schedule, a senior qualified employee in the
same classification may exercise his or her seniority for such vacancy.
Further, a senior qualified employee may exercise their seniority to bump a
more junior seniority employee in the same classification on
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another shift, the junior employee will move to the senior employee's shift,
provided that the junior employee has demonstrated the skill and ability to
perform the work performed by the senior employee. An employee exercising
seniority for a shift preference shall not again exercise seniority for a shift
preference for a period of one (1) year. Employees requesting in writing by any
Wednesday a different shift under the above provisions, shall be transferred as
soon as practical but no later than the second Monday following the date of the
request. Employees with individual temporary emergency situations require a
change of shift, may for up to two (2) weeks switch shifts with an employee of
equal qualifications in the same job classification, with written approval of
the appropriate department head. In the event operating conditions require that
additional employees are needed on any shift, the Company will first give
consideration to those qualified seniority employees who have indicated a
preference to change shifts. If no qualified employees have indicated such
preference, the employer shall hire additional employees to fill the newly
created positions within the classification or the vacancies created by
employees exercising shift preference.
ARTICLE XXII
JOB DESCRIPTIONS
Covered employees shall be assigned to the classifications listed in
Attachment A herein. The Union will be provided with copies of applicable job
descriptions and changes prior to their implementation.
ARTICLE XXII
TEMPORARY ASSIGNMENT
Each covered Employee will be assigned to a job classification. Such
regular assignments may be changed to accommodate production or work-related
requirements, at the employee's request or as a result of demonstrated
temporary inability to continue to perform the work duties of his
classification. It is understood and agreed that an Employee may be temporarily
assigned outside his or her classification to perform work for which he or she
has the necessary qualifications and abilities in
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order to maintain the efficiency of operations. When such temporary assignments
occur, it is agreed
(a) An Employee who performs the duties of a lower rated classification
will not suffer a reduction in his rate of pay during such temporary
assignment; and :
(b) An Employee who performs the duties of a higher classification for a
minimum of one-half (1/2) hour will be paid at a premium equal to the
difference between his /her job rate and the job rate for such higher
classification for all time worked in such higher classification.
ARTICLE XXIV
LEAVES OF ABSENCE
MILITARY LEAVE.
Any employee entering the military service of the United States Government
will be protected by the Re-Employment Right portion of the Universal Military
and Service Act (Public Law No. 51, 82 Congress) or other applicable law.
Seniority employees will be granted a paid military service training leave
of absence for required annual training, cruises or other special training duty
with the Military Reserves or National Guard. Payment will be made on the basis
of the difference between the employee's regular base salary and any military
base pay received, exclusive of military travel allowance or other pay
allowances for reimbursement of expenses for a period not to exceed ten (10)
working days. Seniority employees under military orders requiring training
leave time for an unusual or special military assignment beyond the customary
ten (10) days per year for which payment is received may receive an extended
leave of absence without pay.
In order to receive Military Leave Pay employees must supply the General
Manager or their department head with a copy of their military pay voucher upon
their return to work. Employees will then receive their reimbursement as soon
as is administratively possible.
Employees will be paid for regular working hours lost due to reporting for
a military induction physical examination.
Employees returning from active military service will have thirty (30)
days in which to return to work following the date of military discharge.
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PERSONAL LEAVE
Employees with one (1) or more years of seniority may request an unpaid
personal leave of absence for periods of not less than thirty (30) days nor
more than twelve (12) months. Such leaves shall not be granted for the purposes
of employment elsewhere.
A leave request requiring an absence of seven (7) to thirty (30) days for
defined extenuating circumstances is to be treated as unpaid lost time, If the
unpaid lost time is approved by the Department Manager in advance of the leave
of absence, the occurrence of lost time will not be counted for disciplinary
purposes. Seniority shall accumulate during such leaves of absence.
FUNERAL LEAVE
Should a death occur in an eligible employee's immediate family, an
employee on request will be excused from work with pay for up to three (3)
consecutive work days. Immediate family for the purposes of this Section shall
mean:
Parents, spouse, step parent, parent or step parent of spouse, child or
step child, brother, step brother, brother-in-law, sister, step sister,
sister-in-law, son-in-law, daughter-in-law, grandparents, grandparents of
spouse and grandchildren of employee or spouse, great grandparents and step
grandparents of employee or spouse.
Further, an eligible employee may request to be excused for (1) work day
to attend the funeral of a member of his or her immediate household who is not
part of the employee's immediate family. The Company will pay the employee at
his or her straight time hourly rate of pay for those hours lost from his or
her assigned work schedule during the regular work week. The Company may
require written verification of death and the relationship of the deceased
before being required to make payment under this Section. Funeral pay will not
be paid for non-scheduled workdays. To be eligible for Funeral Pay employees
must meet all of the following eligibility rules:
(A) The employee must be a regular full-time employee prior to the request
for funeral leave.
(B) Employees must be scheduled to work during the week the death occurs
unless their absence is due to paid vacation.
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EDUCATIONAL LEAVE
Full-time and part-time employees with one (1) or more years of
seniority may request an unpaid educational leave of absence for periods of up
to one (1) year for the purpose of attending an accredited college, university,
vocational or technical school on a full-time basis in a course of study that
will further the employee's job opportunities with the Company. An employee may
be granted more than one (1) such leave, provided a reasonable period of time
(i.e. one year) year of employment) lapses between expiration of one leave and
the start of a subsequent educational leave. The Company will require proof of
attendance in order to validate the continued approval of any such leaves.
ADOPTION LEAVE
Employees with one (1) or more years of seniority may request unpaid
adoption leave of absence for a period of up to one (1) year.
UNION LEAVES - (Temporary Leave)
A reasonable number of employees not to exceed four (4) full-time
employees and not more than one (1) employee in any one (1) department or any
one (1) shift, may be granted a leave of absence to attend to official Union
business such as conventions and training sessions. Approval of such leaves
will be based on operational requirements. The Union shall give five (5) days
advance notice whenever possible of any such intended leaves. Such requests
shall be submitted to the General Manager of the Station. Time spent by
employees on temporary leave, two (2) weeks or less, on Union business shall be
considered as time worked and accredited when computing pension, vacations and
holidays. Written notice of such leaves giving the length of the leave shall be
given to management at least 5 days in advance whenever possible, and signed by
the Local Union President, UAW international Servicing Representative or their
designee.
UNION LEAVE - (Elected Union Office or Appointment)
An employee elected to a permanent Union Office which necessitates
their absence from work shall upon application to the Company, be granted a
leave of absence for a period not to exceed two (2) years. The leave of absence
shall be extended providing the request for extension is submitted to the
Company in writing prior to the end of the two (2) year period. Such employees
shall accumulate seniority
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during such absence. Upon their return to the Company, they shall be returned
to their regular standing on the seniority list and shall be returned to their
previous job at the rate in effect at the time of their return.
Written notice of such Union leaves giving the length of the leave,
shall be given to management as far in advance as possible and signed by the
International Union (UAW).
UNION LEAVES - CONTRACT NEGOTIATIONS
The bargaining committee may be excused from work subject to
operational needs to prepare for and attend all negotiations sessions. Such
request shall not be unreasonably withheld. It is understood that the Union
will give the Company as much advanced notice as possible. However, it may not
always be possible to give a five (5) calendar day advance notice. Therefore,
the Company and the Union agree to cooperate to the fullest in this regard.
All Union leaves of absence shall be without pay.
JURY DUTY
A seniority employee who is summoned and reports for jury duty as
prescribed by applicable law shall be paid by the company the difference
between the amount of wages the employee otherwise would have earned by working
straight-time hours for the Company on that day and the daily jury fee by the
court (not including travel allowance or reimbursement expenses) for each day
on which the employee reports for or performs jury duty and on which the
employee otherwise would have been scheduled to work for the Company. Such
payments shall not exceed ten (10) working days. Employees excused from jury
duty prior to 1:00 P.M. on a regular scheduled day must report for work for the
remainder of their shift.
MEDICAL LEAVE
An Employee, who has successfully completed the probationary period,
may be granted an unpaid medical leave of absence for a period of his or her
disability or twelve (12) months, whichever is less. Such leave of absence for
medical reasons shall be approved on the submission of sufficient proof of the
employee's attending physician.
The employee shall immediately notify the Company when he or she is
able to return to work.
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An Employee who is granted a medical leave of absence for thirty (30)
calendar days or more shall notify and submit to the Company, at least five (5)
working days prior to the date he or she is able to return to work, a written
certification from the attending physician permitting the Employee to return to
his or her prior position with the Company.
It is understood that an employee returning from a medical leave of
absence shall, at the discretion of the Company and at the Company's expense,
be required to take a physical examination by a licensed medical physician. An
employee who, in such doctor's opinion, is physically unfit to perform the
normal function of his or her position or is physically unfit to perform his or
her work without creating a hazard to his or her health or the safety of others
shall not be permitted to return to work until certified by that physician that
such physical disability no longer exists. Should the employee's personal
physician certify that the employee is able to return to his or her normal
duties and the physician selected by the Company disagrees with that
conclusion, then the issue shall be resolved by the decision of a third
physician mutually agreed to by the two physicians. The costs of such third
physician's services shall be paid by the Company.
An employee shall accrue seniority while on medical leave of absence
for a period of twelve (12) months from the date the employee began the medical
leave of absence.
EMPLOYMENT RIGHTS
An employee shall not accumulate vacation time or holiday pay while on
any leave of absence. However, an employee will accrue seniority during an
approved leave of absence.
An employee shall be reinstated to the position held by him or her
prior to the leave of absence upon the conclusion of the leave of absence,
provided, (1) the employee returns within twelve (12) months of the
commencement of the leave of absence; (2) the employee returns at the
conclusion of the leave of absence; (3) the employee's former position still
exists; and (4) the employee has not violated the terms of the leave of
absence.
Employees returning from an authorized leave of absence shall exercise
their seniority rights to their prior job classification. Notwithstanding the
foregoing, if the employee had remained actively employed, he or she would have
been on layoff status on the date of their reinstatement from their leave of
absence or if the employee's
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former position is no longer available, the employee will be placed on layoff
status in his or her appropriate seniority position.
For purposes of the layoff and recall section of this Agreement an
employee placed on layoff status at the conclusion of the leave of absence
based on the fact that he or she would have been laid off if not on leave of
absence status, the employee will be considered to have been laid off on the
date that he or she would have been laid off if actively employed rather than
on leave of absence status.
ARTICLE XXV
HOLIDAYS
Section 1. All eligible regular full-time employees shall be paid at
their regularly daily rate for the following:
HOLIDAYS
1. New Year's Day
2. Memorial Day
3. Independence Day
4. Labor Day
5. Thanksgiving Day
6. Christmas Day
7. One floating holiday per year which may be taken in conjunction
with a designated holiday subject to operational requirements.
Section 2. COMPENSATION:
Holiday Work. An employee required to work on a holiday will be paid
his eight (8) hours holiday pay, plus his or her appropriate compensation rate
for work performed, or, the employee shall have the option of taking an
additional day off at his or her regular pay rate in the next thirty calendar
days or an additional vacation day.
Employees whose schedule includes holiday hours will receive holiday
pay for those hours only.
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In order to be paid for a holiday, an employee must have seniority as
of the date of the holiday, and work as scheduled the last scheduled work day
before and the first scheduled work day after a holiday, except as indicated
below.
(a) Employees absent due to illness or injury the last scheduled work
day before and the first scheduled work day after the holiday(s) will receive
holiday pay provided such absence is supported by a doctor's certificate and
the employee worked one day in the holiday week. Employees who are absent
either of the day before or the day after the holiday under the same
circumstances will be paid for the holiday if the employee's absence is
certified by an attending physician.
(b) When a holiday falls during a paid leave of absence (e.g.
bereavement leave, etc.), it is considered as one of the leave of absence days
and holiday compensation will not be paid.
(c) When a holiday falls on a day immediately preceding or following a
paid leave of absence, the employee will be paid for the holiday.
(d) When a holiday falls on the day immediately preceding or following
an unpaid leave of absence, the employee is paid for the holiday, provided the
holiday falls within the same work week.
(e) Employees terminating or terminated for other than cause will be
paid for a holiday falling within the same work week and immediately following
the employee's last day worked.
(f) Employees on layoff do not qualify for holiday pay, unless they
have performed work in at least one (1) day during the week preceding the
holiday.
(g) Employees scheduled off on a designated holiday do not receive
holiday pay.
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ARTICLE XXVI
Section 1. Vacation. All regular full-time bargaining unit employees
who meet the eligibility requirements and who have completed the following
schedule of service with the Company will receive vacation as per the following
schedule:
VACATION
CONTINUOUS YEARS OF SERVICE ALLOWANCE VACATIONS
Less than 6 months 0 0
6 months but less than 1 year 1 week 40 hours
1 year but less than 2 years 2 weeks 80 hours
* Including the 1 week earned after 6 months of service.
2 years but less than 5 years 2 weeks 80 hours
5 years but less than 15 years 3 weeks 120 hours
15 or more years 4 weeks 160 hours
For each five (5) full years
of service in excess of 15
years. 1 (one) day eight (8) additional hrs.
Part-time employees will be entitled to the same vacation based on
length of service, but will receive pay equivalent to the regularly scheduled
hours per week.
Section 2. Pro Rata Vacation benefits. Eligible employees, who during
the prior year, worked or were paid for less than twenty-six (26) work weeks
shall receive vacation pay allowance based on the number of full work weeks
worked as a percentage of 52.
Should a paid holiday fall within the employee's vacation period, the
employee shall receive an additional paid vacation day.
Vacation hours paid will be at the employee's hourly rate as of the
date the employee takes vacation.
Vacation pay will be determined on the basis of a 40 hour work week at
employee's base weekly salary or specified hourly rate or average hours worked
per week for part-time employees.
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Vacations are based on an employee's anniversary of employment date.
Vacation time not taken by the end of the employee's vacation year shall not be
carried forward.
An employee who is denied the opportunity to take vacation at times
desired by the employee shall be offered vacation time off prior to the end of
his/her vacation year.
An employee who has not taken vacation or been paid for vacation he or
she is eligible for by the end of his/her vacation year shall be paid for such
vacation.
Section 3. Vacations and Leaves of Absence/Termination.
Vacation time will be paid upon request to employees going on an
educational, military, personal, adoption, union business (except short-term),
or maternity leave of absence on their last pay check for the payroll period
worked before the leave began.
Vacation time will also be paid upon an employee's death, retirement
or termination. In the event of death, the vacation pay shall be paid to the
employee's legal heirs or estate.
Section 4. Vacation scheduling. By March 1, 1992 and each succeeding
March 1, the Company will post, by department, a vacation schedule. Employees
will then submit vacation requests on or before March 31 for the period April 1
through March 31. Such requests shall be filled on the basis of seniority.
Requests for work-week units shall be granted first before vacation requests
for less than work-week units are granted. The Company will post by department
by April 15 a vacation schedule for the coming year. Vacation requests
submitted after March 31 of any year shall be filled on a first-come basis, and
shall not displace selections made before April 15 on the basis of seniority.
Vacation requests shall be in writing. During rating periods on-air personnel,
producer-directors and reasonable numbers of news photographers may be denied
vacations.
Vacations will normally be taken in work-week units, but may be taken
one day at a time. Pay advance will be issued for a pay day occurring during a
vacation, providing the request is made at least ten (10) days prior to the pay
period in which the employee's last day worked prior to the vacation occurs.
Once a vacation request has been approved, such approval will only be rescinded
(a) at employee request or (b) for emergency situations.
A. Notice of layoff or discharge, except for misappropriation of
funds, shall not be given during an employee's vacation period.
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B. Accrued credited vacation time shall not be used in conjunction
with, or to extend the effective date (e.g. last day worked) of a leave of
absence or termination. Accrued vacation time may be paid upon request to
employees going on an educational, military, personal, adoption, Union leave
(except short-term), or maternity leave of absence.
C. Laid off employees may request payment of all accrued vacations at
any time during their layoff.
ARTICLE XXVII
Section 1. JOB FUNCTION LIMITATION.
Where operating errors occur while an Employee is performing multiple
job functions such facts shall be considered in extenuation of the errors. The
Company further agrees to assign multiple job functions on a reasonable basis.
No employee shall be required to furnish equipment or supplies.
The Company agrees technicians employed under this Agreement may not
be required to perform any duties where there exists danger of bodily injury or
conditions detrimental to health.
No Employee shall be required to climb any of the Company's antenna
towers.
Section 2. HIGH RISK AREA ASSIGNMENTS.
The Company and the Union recognize a joint responsibility to do
everything reasonable to assure and preserve the personal safety of Employees
while on assignment. Therefore in keeping with this common goal, the Company
recognizes its responsibility to assign personnel with utmost care and the
Union recognizes that in the business it is not always possible to anticipate
every troublesome situation. Recognizing these realities the Company will
operate under the following administrative guideline:
(a) The Company will place a high priority on the anticipation of
potentially troublesome conditions while on assignment.
(b) The Company will insist on regular Communication between base and
personnel as they respond to and confront any such situations in the field. The
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<PAGE> 47
Company will strive to avoid sending an Employee alone into an obviously
dangerous situation.
(c) The Company and the affected employees will endeavor to advise
personnel of any circumstances relevant to their personal safety as they
respond to various situations in the field. No employee should abandon any
assignment in the field or return to work without prior approval from his or
her department head or designee.
(d) The Company will endeavor to provide backup or support personnel
if possible whenever any such situations can be reasonably anticipated.
(e) The Company will place a high priority on backup and support of
any personnel that may in fact confront such situations in the field.
(f) The Company will endeavor to carefully and fully review any such
situation after-the-fact in order to improve coordination and response to any
similar future situation.
ARTICLE XXVIII
PART-TIME EMPLOYEES BENEFITS
Regular part-time bargaining unit employees will be eligible for the
following benefits based on proration of full time employee benefits:
Section 1. HOLIDAYS.
Part-time employees are eligible for their normal scheduled hours per
day of holiday pay, provided the holiday falls on the employee's regular
scheduled day.
Section 2. VACATIONS.
Part-time employees are eligible for their normal scheduled hours per
day. Vacation time is earned and credited in the same manner as full time
employees.
Section 3. BEREAVEMENT
Part-time employees are eligible for their normal scheduled hours for
up to three (3) days of bereavement time.
Section 4. JURY DUTY.
Part-time employees, if summoned, are eligible for jury duty pay of
their normal scheduled hours per day up to a maximum of ten (10) days (40
hours).
Section 5. HEALTH INSURANCE.
Part-time employees who work more than 1,040 hours in a calendar year
shall be eligible for (single only) insurance coverage on the first day of the
month after
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acquiring 1,040 hours under the same basis as regular full-time bargaining unit
employees. Such employees will remain eligible for such benefits until their
hours fall below 1,040. Family Coverage shall be available to such eligible
part-time employees at the employee's expense, via payroll deduction.
Section 6. PENSION BENEFITS.
Part-time employees shall be eligible for pension benefits provided in
this Agreement, provided they are employed for one (1) year or more, are age
twenty-one (21) and have worked one thousand (1,000) hours in the prior twelve
(12) months. Except as provided in this Article, part-time employees will not
be eligible for other employee benefits provided by this Agreement.
ARTICLE XXIX
Section 1. SUBSTANCE ABUSE.
Substance abuse is recognized to be a serious medical and social
problem for workers, their families and the community. Such addiction by
workers impairs their ability to function, contributes to increased absenteeism
and tardiness, and violation of Company rules. These problems may also lead to
anti-social activity. These factors in turn disrupt work schedules with
consequent dissatisfaction among the majority of workers sincerely trying to do
conscientious jobs. The Company and the International Union have an interest in
encouraging early and comprehensive treatment looking toward rehabilitation.
The Company and the Union agree to meet at a mutually convenient time and place
within a reasonable period of time after the effective date of this agreement
for the purpose of establishing and defining the functions, i.e. alcohol and
substance abuse of a Joint Employee Assistance Committee. The Committee shall
be composed of an equal number of Company and Union designated representatives
to work cooperatively on these problems. Among the responsibilities of the
committee will be:
1. Survey community resources to determine the availability of
appropriate treatment facilities and the cost of treatment.
2. Develop ways whereby the disease is identified in early stages, and
whereby the employee is encouraged and assisted to obtain treatment without
delay. It is recognized that the employee can be dealt with most effectively on
a cooperative Management-Union basis.
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<PAGE> 49
3. Help the employee understand that he may consult on a confidential
basis an outside qualified facility or agency, concerning his problem without
fear of disciplinary action based on such discussion.
4. Either the Committee will explain or arrange for the local
insurance program administrator to be available to explain to the employee
which recommended treatment qualifies for insurance payments.
Section 2. DISCIPLINARY PROCEDURES FOR SUBSTANCE ABUSE.
If an employee reports to work under the influence of drugs or alcohol
he or she shall be subject to immediate termination. However, in lieu of
termination, upon agreement of the individual, the Union and the Company an
employee may be placed on a leave of absence so that an employee may undergo
medical treatment for alcoholism or drug dependence in or from an appropriate
facility in accordance with this program, and when the employee has voluntarily
submitted himself or herself for such treatment and his or her seniority has
not already been broken, he or she will be granted a medical leave of absence.
Should the employee return to work from the leave of absence and, subsequent to
his or her return, report for work under the influence of drugs or alcohol, the
employee will be immediately terminated.
ARTICLE XXX
SICK DAYS/PERSONAL TIME
All full-time employees who have completed their probationary period
shall have forty (40) hours of paid sick time available per calendar year.
Management shall be notified by the employee prior to the beginning of the
shift that an employee cannot report for work. Eight (8) hours of the 40 hours
allotment may be used as personal time on reasonable notice to the Company. In
the event an employee becomes ill during his/her shift he/she shall be charged
with only the hours he/she is absent. Sick time hours shall not accrue from
year to year but if unused shall be paid to employees at the end of the
calendar year at the rate of 1/2 hour for each unused hour.
ARTICLE XXXI
LUNCH BREAK & REST PERIODS
Employees shall receive a paid 10 minute rest period for every four
(4) consecutive hours worked. If employees are required to work ten (10) hours
or more
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<PAGE> 50
they shall be given an extra ten (10) minute rest period.* All regular
full-time employees shall receive a one-hour unpaid lunch break.
No lunch break will commence prior to three (3) hours into the shift.
An employee and his supervisor may mutually agree to alter the times of the
lunch break or to no lunch break at all. This understanding is not to be abused
or misused by either party.
* Breaks given if relief available on shift.
ARTICLE XXXII
INSURANCE
The Company shall continue its group medical insurance. Employees
shall continue to contribute for single and family coverage at the rates in
effect as of the date of v this Agreement shall continue through December 31,
1991. Following December 31, 1991, Employees shall continue to contribute for
single and family coverage at such rates plus 25% of all increases in premiums
following December 31, 1991.
The Company will continue to provide Life Insurance to all full-time
seniority employees equal to their annual gross wages with a minimum of
$10,000. Increases in benefits will be in increments of $1,000.
The Company shall continue its dental plan. The Company shall pay the
premium for the employee. The Employee's contribution for family dental
coverage at the rate in effect as of the date of this Agreement will continue
through December 31, 1991. Following December 31, 1991 Employees shall continue
to contribute for family coverage at such rates plus 25% of all increases in
premiums following December 31, 1991.
The Company shall have the right to select the insurance carriers for
all of its insurance plans offered to bargaining unit employees or to become
self-insured, provided it maintains the same benefits as offered to bargaining
unit employees on August 8, 1994.
ARTICLE XXXIII
SHORT AND LONG TERM DISABILITY
Short and long term disability insurance will be made available to all
full-time seniority bargaining unit employees. The employee will only pay for
long term disability
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<PAGE> 51
coverage. The Company shall have the right to select the carrier for such
insurance coverage or to become self-insured, provided it maintains the same
level of benefits as provided to bargaining unit employees on August 8, 1994.
ARTICLE XXXIV
PENSION
All regular full time employees shall be eligible for an annual
contribution by the Employer of 3 1/2% of gross wages for each calendar year
into a 401 (k) Plan established by the bargaining unit employees, provided they
are employed for one (1) year or more, are age twenty-one (21) and have worked
one thousand (1,000) hours in the prior twelve (12) months.
The Company shall pay the yearly costs up to a maximum of $1,000 per
year to maintain and administer the employees 401(k) Plan. All yearly costs
in excess of $1,000 shall be the responsibility of the employees in the 401(k)
Plan. In the event the employees fail to pay such costs the Plan shall be
terminated and the costs of such termination shall be the responsibility of the
employees.
Employees shall be credited for all prior service and hours worked as
full time employees toward eligibility for the 3 1/2% contribution to the
401(k) Plan.
ARTICLE XXXV
COMPENSATION
All bargaining unit employees shall be compensated at no less than the
job rates for their classifications as set forth in Attachment "B", except that
employees hired after the effective date of this Agreement may be compensated
at fifty cents ($.50) per hour below the stated job rate for their
classification until they have satisfactorily completed their probationary
periods.
The rates of pay for employees hired on or before the effective date
of this Agreement shall be increased by twenty five cents ($.25) per hour on
the effective date of this Agreement, and by twenty five cents ($.25) per hour
on February 6, 1995, additional amounts of fifty cents ($.50) per hour on
August 7, 1995, August 5, 1996, and again August 4, 1997.
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If an employee bumps into a lower rated classification in lieu of
layoff, he/she shall receive the job rate for his/her new classification plus
the difference, if any, between his/her individual rate and the job rate for
the classification held prior to the layoff. Any such employee will maintain
that differential until the new classification job rate equals or exceeds the
employee's individual rate, unless he/she is demoted or voluntarily transfers
to a new lower rated classification. If an employee voluntarily transfers or is
demoted to a lower rated classification permanently he/she shall receive the
job rate for his/her new classification and shall be eligible in the future for
general wage increases.
ARTICLE XXXVI
SUBCONTRACTING
Subcontracting of maintenance work will be permitted only where
particular skills are involved or where specialized equipment not readily
available at the Company is required. It is understood that should the Company
subcontract bargaining unit work it will discuss with the Union the impact on
bargaining unit employees. However, nothing shall be construed as limiting the
Company's right to subcontract bargaining unit work, except as provided above
with respect to maintenance work.
ARTICLE XXXVII
NO STRIKE OR LOCKOUT
During the term of this Agreement, there shall he no general or
partial strikes, picketing, boycotts, work stoppages, slow-downs, or concerted
interruptions or delays of work, or any other interruption with the Company's
normal operations or similar activity. Neither the Union nor any of its
officers, representatives, agents, or employees shall authorize, assist,
support, cause or participate in any activities described in the above
paragraph. Nor shall any member assist, support, cause or participate in any
such activities.
In any case where an interruption of work occurs in violation of this
Agreement, the Union agrees that it will, without delay, exert itself to the
fullest extent to bring about a quick termination of such interruption of work
and will insist that the employee or employees involved therein return to work
and/or to normal operations. In the event that any employee participates in an
interruption of work in violation of this Article, the Company may discipline,
up to and including discharge, the participating employee.
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The Company shall likewise not lockout employees during the term of
this Agreement.
ARTICLE XXXVIII
SUCCESSOR CLAUSE
In the event of any change in the ownership of any of the facilities
covered by this Agreement, by sale, assignment, transfer, lease, merger,
consolidation or other change, the Company shall notify the Union within ten
(10) days prior to any such change, whenever possible. It is agreed that the
purchaser, assignee, transferee, lessee, or other appropriately designated
party, as the case may be, shall be fully bound by all of the terms and
conditions of this Agreement.
ARTICLE XXXIX
TERM OF AGREEMENT
The parties hereto acknowledge that during the negotiations which
resulted in this Agreement, each had the unlimited right and opportunity to
make demands and proposals with respect to any subject or matter not removed by
law from the area of collective bargaining. Thus, the understandings and
agreements arrived at by the parties after the exercise of such rights and
opportunities are set forth in this Agreement, which document constitutes the
entire Agreement between the parties and concludes collective bargaining for
its term.
Therefore, except as provided in this Agreement, the Company and the
Union for the life of this Agreement each voluntarily and unqualifiedly waives
the right, and agrees that the other shall not be obliged to bargain
collectively with respect to any subject or matter referred to or covered in
this Agreement or with respect to any subject or matter not specifically
referred to or covered in this Agreement, even though such subject or matter
may not have been within the knowledge or contemplation of either or both
parties at the time that they negotiated or signed this Agreement.
It is further understood by both parties that this Agreement
supersedes any and all prior agreements, past practices, or understandings,
either written or verbal, that are inconsistent with or in conflict with the
terms of this Agreement.
Should any part or provision of this Agreement be rendered or declared
illegal or invalid by any decree of a court of competent jurisdiction or by
decision of any
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<PAGE> 54
authorized government agency, the remaining, unaffected part's) or provisions)
of this Agreement shall not be affected thereby and shall remain in full force
and effect. However, in such a contingency, the parties shall meet promptly and
negotiate with respect to substitute provisions for those part's) or
provision's) rendered or declared illegal or invalid.
ARTICLE XXXX
DURATION OF AGREEMENT
This Agreement shall become effective August 8, 1994, and shall
continue in full force through August 7, 1998 and from year to year thereafter
unless modified or terminated.
Either party may amend, modify, or terminate this contract effective
midnight August 7, 1998 or any subsequent August 7, by giving notice in writing
at least sixty (60) days prior to August 7, 1998 or if no notice is given at
such time on any subsequent August 7.
The parties shall meet within thirty (30) days of receipt of said
notice to negotiate a subsequent agreement. In the event written notice to
amend, modify, or terminate the Agreement is served and no agreement is reached
as a result of negotiations on or before the termination date, either party
may, on or after such date, terminate this Agreement by serving upon the other
a five (5) day written notice of their intent to do so.
IN WITNESS WHEREOF, the parties have, by their authorized
representatives, affixed their signature to this Agreement at Flint, Michigan,
this day of April 6 1995.
For the UAW For WEYI (The company)
/s/ JAMES H. RAMEY [ILLEGIBLE]
- ------------------------------- -----------------------------------
/s/ JOHN D. RICHARDS
- ------------------------------- -----------------------------------
[ILLEGIBLE]
- ------------------------------- -----------------------------------
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<PAGE> 1
EXHIBIT 10.23
COLLECTIVE BARGAINING AGREEMENT
between
TELEVISION STATION PARTNERS
(for Station WROC -- TV)
Company
and
AMERICAN FEDERATION OF TELEVISION AND
RADIO ARTISTS (AFL-CIO)
Union
Effective June 1, 1993 through May 31, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1 - Recognition . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Supervisors of Producer -
Directors . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Supervisors of Staff Artists . . . . . . . . . . . . . . . . 2
1.4 Management Appearances . . . . . . . . . . . . . . . . . . . 2
1.5 Applicability . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2 - AFTRA Membership . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Union Security . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Acceptance into AFTRA
Membership . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Notification of Non-
Membership . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Checkoff . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Union Representatives . . . . . . . . . . . . . . . . . . . . 5
SECTION 3 - Strikes and Picketing . . . . . . . . . . . . . . . . . . . . 5
3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 4 - Minimum Terms and Conditions . . . . . . . . . . . . . . . . 6
4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5 - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Grievance Procedure . . . . . . . . . . . . . . . . . . . . . 7
5.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Survival of Grievances . . . . . . . . . . . . . . . . . . . 8
5.4 Right of Visitation . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6 - Leave of Absence . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Military Leave . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Pregnancy Leave . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 7 - Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(cont'd)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 8 - Management Rights . . . . . . . . . . . . . . . . . . . . . . 10
8.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 9 - Application of Fees . . . . . . . . . . . . . . . . . . . . . 11
9.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.3 Commercials . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.4 Network Programming . . . . . . . . . . . . . . . . . . . . . 12
9.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.6 Prerecorded Broadcasts . . . . . . . . . . . . . . . . . . . 12
9.7 Further Exclusions . . . . . . . . . . . . . . . . . . . . . 12
SECTION 10 - Special Television Provisions . . . . . . . . . . . . . . . . 13
10.1 Use of Videotape for Reference, File Audition, Trailer,
Promotional, and Out-of-City Purposes . . . . . . . . . . . 13
10.2 Unfair Provisions . . . . . . . . . . . . . . . . . . . . . . 13
10.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10.4 Incidental Rehearsal. . . . . . . . . . . . . . . . . . . . . 14
10.5 Wardrobe Provision . . . . . . . . . . . . . . . . . . . . . 14
SECTION 11 - Television Fees . . . . . . . . . . . . . . . . . . . . . . . 14
11.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 12 - Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.1 Interchangeability . . . . . . . . . . . . . . . . . . . . . 15
12.2 Staff Artists' Assignments . . . . . . . . . . . . . . . . . 15
12.3 Producer-Directors' Assignments . . . . . . . . . . . . . . . 16
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(cont'd)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 13 - Staff Wages . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 18
Anchorperson . . . . . . . . . . . . . . . . . . . . . . . . 18
Specialty Announcer . . . . . . . . . . . . . . . . . . . . . 19
Producer-Director . . . . . . . . . . . . . . . . . . . . . . 19
Announcer-Reporter . . . . . . . . . . . . . . . . . . . . . 19
SECTION 14 - Hours of Work, Special Provisions, Meal
Period, Transportation, Etc . . . . . . . . . . . . . . . . 20
14.1 Hours of Work . . . . . . . . . . . . . . . . . . . . . . . . 20
14.2 Special Provisions Covering
(i) Part-time or Trainee Employees . . . . . . . . . . . . . . 21
14.2
(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14.3 Length of Staff Stretch . . . . . . . . . . . . . . . . . . . 22
14.4 Meal Periods . . . . . . . . . . . . . . . . . . . . . . . . 22
14.5 Rest Between Staff Stretches . . . . . . . . . . . . . . . . 22
14.6 Transportation . . . . . . . . . . . . . . . . . . . . . . . 22
14.7 Travel Time . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.8 Bureaus . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.9 Sick Leave . . . . . . . . . . . . . . . . . . . . . . . . . 23
14.10 Vacations and Holidays . . . . . . . . . . . . . . . . . . . 24
14.11 Termination of Employment . . . . . . . . . . . . . . . . . . 25
14.12 Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
14.13 Assignments and Competitive Auditions . . . . . . . . . . . . 28
14.14 Pay for Auditions and Performance on Programs . . . . . . . . 28
14.15 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
14.16 Other Services . . . . . . . . . . . . . . . . . . . . . . . 30
14.17 Schedule Changes . . . . . . . . . . . . . . . . . . . . . . 30
14.18 Health Insurance . . . . . . . . . . . . . . . . . . . . . . 30
14.19 Retirement and Other Fringe Benefit Programs . . . . . . . . 32
14.20 Life Insurance . . . . . . . . . . . . . . . . . . . . . . . 32
14.21 Bereavement Pay . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 15 - Equal Opportunity . . . . . . . . . . . . . . . . . . . . . . 32
15.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 16 - Conformance with Law . . . . . . . . . . . . . . . . . . . . 32
16.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS
(cont'd)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 17 - Term of Agreement . . . . . . . . . . . . . . . . . . . . . . 33
17.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
17.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
17.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
TSP d/b/a WROC TV 8 and ROCHESTER LOCAL SIDE AGREEMENT . . . . . . . . . . . 35
</TABLE>
iv
<PAGE> 6
PREAMBLE
Agreement made as of the 1st day of June, 1993 by and between the AMERICAN
FEDERATION OF TELEVISION AND RADIO ARTISTS (A.F.L.- C.I.O.), having its
principal office at 260 Madison Avenue, New York, New York 10016, and its
ROCHESTER-LOCAL, party of the first part (hereinafter referred to as "AFTRA"),
bargaining representative for performing artists (talent) and producers, and
TELEVISION STATION PARTNERS, L.P. - Channel 8, party of the second part
(hereinafter called "Station" or "Company"), owning and operating station
WROC-TV having its principal office at 201 Humboldt Street, Rochester, New York
14610 (hereinafter referred to as the "Station").
In consideration of the covenants and agreements herein contained, it is
agreed as follows:
SECTION 1
RECOGNITION
1.1 The Company recognizes AFTRA as the exclusive collective bargaining
representative for all persons who appear physically or vocally before the
microphone or camera who are or hereafter will be employed by the Company at
the Station during the life of this Agreement (all such persons being
hereinafter referred to collectively as "Artists"); and for all television
producers who are or hereafter will be employed by the Company at the Station
during the life of this Agreement (all such persons being hereinafter referred
to collectively as "Producers-Directors"), but excluding accounting, clerical,
technical, sales, maintenance, and confidential employees, and guards and
supervisors as defined by the National Labor Relations Act (hereinafter
referred to as "Act") as amended.
1.2 Supervisors of Producer-Directors. Any supervisor who works as a
television Producer-Director who spends more than twenty hours per work week,
or more than fifty percent (50%) of his work time on production, shall be
deemed to be a staff Producer-Director and subject to all terms and conditions
of this Agreement relating to staff Producers. In any event, no supervisor
shall act as a staff Producer-Director except to replace a regular staff
Producer-Director who is absent due to: illness, vacation, leave of absence,
failure of assigned Producer-Director to appear for duty for any reason, in
case of other emergencies; or except if such work is performed by a supervisory
production manager or program manager. For the purposes of the last stated
exception the parties agree: (1) the Company shall designate and advise the
Union which
<PAGE> 7
-2-
one of the employees in these two classifications shall perform such work and
such designation shall not be changed except upon one week's notice; (2) such
work shall be limited to a maximum of fifteen (15) hours per week or until the
end of a non-regularly scheduled program which has begun during these hours,
e.g. an election or a disaster; 3) this exception shall not be used in a manner
to directly cause the layoff of a bargaining unit Producer-Director.
1.3 Supervisors of Staff Artists. Any supervisor who works as a staff
Artist who spends more than twenty (20) hours per workweek, or more than fifty
percent (50%) of his work time on announcing shall be deemed to be a staff
Artist and subject to all terms and conditions of this Agreement relating to
staff Artists. In any event no supervisor shall act as a staff Artist except to
replace a regular staff Artist who is absent due to: illness, vacation, leave
of absence, failure or assigned Artist to appear for duty for any reason, in
case of other emergencies, or except if such work is performed by a supervisory
news director.
1.4 Management Appearances. Any member of the management or ownership of
the Company, may appear on any of the Company's facilities at any time under
the following provisions:
(a) Such member of management may appear without staff Artist present
to do programs in the nature of station editorials.
(b) Emergencies and conditions including Acts of God and other
situations which are provided in Section 1 and Section 12, paragraph 2(a).
1.5 Applicability. The provisions of this Agreement shall be applicable to
said Rochester, New York facility of the Company.
SECTION 2
AFTRA MEMBERSHIP
2.1 Union Security. All Artists and Producer-Directors (except otherwise
herein provided) now or hereafter employed by the Company during the life of
this Agreement shall, not later than 31 days following the beginning of such
<PAGE> 8
-3-
employment or the effective date of this Agreement, whichever is later, be or
become members of AFTRA during the life of this Agreement as a condition of
continued employment. Any person who appears with regularity on any program of
the Station and who performs on such program duties which could normally be
performed by an Artist (in his respective category) shall be or become a member
of AFTRA subject to the conditions and limitations contained in the Act, as
amended, except that the provisions of this paragraph shall not apply to:
(a) Professional Appearances. Persons who appear on a single broadcast
or series of special broadcasts encompassed in a period of less than 30 days;
or experts and professionals, such as clergymen, physicians and lawyers,
speaking on subjects limited to and pertaining to their own fields, provided
that they do not perform the functions of commercial announcers; or public
figures appearing as such public figures without remuneration on programs of a
public service or significant public interest nature; or public figures
appearing as moderator on panel discussion programs, involving other public
members, in which the subject is of public nature; a traveling representative
of a company appearing as demonstrator for a certain product or products and
employed by the company whose product or products he is demonstrating for a 30
day period; and occasional nonprofessional guests, such as local leaders, civic
leaders and housewives.
(b) Interns. Interns who work at the Station as part of their school
curriculum provided: (1) no more than three (3) interns may appear in any
month; (2) no individual intern may appear more than three (3) times during
his/her internship; and (3) no more than three (3) interns may be engaged in
performing bargaining unit work at any time. If an intern is dispatched with
instructions to ask questions, it will be considered an appearance.
(c) Advertisers. Any bona fide, full time employee of an advertiser
using the Company's facilities may perform the services of a commercial
announcer, including lead-ins, introductions, closings, and similar functions
incidental thereto on an occasional program sponsored by his employer.
2.2 It is understood and agreed that Artists employed by the Company shall
not be required to appear on any program of the Station with any person who is
required to be a member of
<PAGE> 9
-4-
AFTRA hereunder and who fails to obtain such membership, unless AFTRA by
written waiver shall consent to such failure to become a member of AFTRA;
provided that this shall apply only with respect to persons whose failure to
obtain membership is based on their not having tendered their initiation fees
and periodic dues.
2.3 Acceptance into AFTRA Membership. AFTRA agrees to accept as a member
any Artist, Producer-Director or person covered by paragraph 2.1 of this
Agreement that the Company wishes to employ or use, subject to the imposition
of terms and penalties in the case of members suspended or expelled by AFTRA.
AFTRA further agrees that such membership will be available to any Artist or
person on the same terms and conditions generally applicable to other members,
that it will not impose unreasonble entrance fees, dues or assessments, nor
will it impose dues and initiation fees or penalties or other conditions not
uniformly required as a condition of acquiring or retaining membership. In the
event AFTRA should refuse membership to an Artist or person the Station wishes
to employ or use, such refusal shall not affect the privilege of the Station to
employ or use such Artist or person, so long as such Artist or person tenders
initiation fees and periodic dues, and shall not excuse other members of AFTRA
from appearing on a program with such Artist or person.
2.4 The provisions of Sections 1 and 2 of this Agreement shall apply with
equal force and effect to any Artist engaged or employed at the Station whether
hired directly or indirectly by the Company on behalf of itself or its
sponsors, advertising agencies, independent contractors, or outside producers
using the facilities of the Station; provided, however, that this paragraph in
no way establishes a liability or responsibility for the Company to investigate
the AFTRA membership of any person appearing live or on film, videotape, or
transcription produced by others than the Company.
2.5 Notification of Non-Membership. In order to aid in the enforcement of
this Article, the Station should give notice to the Rochester Local of all new
hires into the unit within 30 days of hire. Upon notification in writing by
AFTRA, the Company will terminate, within ten (10) days, any person covered by
this Agreement who fails to maintain AFTRA membership requirements as permitted
under the Act, as amended.
<PAGE> 10
-5-
2.6 Checkoff. The Company will deduct Union dues from the first (1st) pay
period in each month for each new employee joining the Union following
completion of his initial thirty-one (31) day period and present Union member
employees who complete, in duplicate, a lawful application authorizing monthly
deduction of Union dues.
2.7 Indemnification. The Union shall indemnify and save the Company
harmless against any and all claims, demands, suits, or other forms of liability
that shall arise out of or by the reason of action taken or not taken by the
Station for the purpose of complying with any of the provisions of this Section
or in reliance on any list, notice, or assignment furnished under any such
provisions.
2.8 Union Representatives. The Company agrees that only the
following persons and no others shall be deemed to be agents of AFTRA for the
purpose of administering this Agreement:
National Executive Director
National Representative, or
Rochester AFTRA Local Executive Director
and such other persons as may hereafter be designated by AFTRA by written
notice delivered to the Company. The Rochester AFTRA local shall from time to
time furnish the Stations' management with a list showing the names of the
officers of the local Union and the Union representation (shop steward) at the
Station. There shall be no more than one shop steward and one assistant shop
steward to fill in when the steward is absent, representing AFTRA employees.
SECTION 3
STRIKES AND PICKETING
3.1 During the term of this Agreement AFTRA guarantees on behalf of
itself and each of its members that there will be no strike of any kind,
boycott, picketing, work stoppage, or any other type of organized interference,
coercive or otherwise, with the Company's operations.
3.2 In the event of any strike, boycott, picketing, work stoppage, or any
other type of interferences with the Company's operations which is not
authorized by AFTRA, the Company agrees
<PAGE> 11
-6-
that there shall be no liability on the part of National or Local AFTRA or any
of their officers or agents, provided that in the event of such unauthorized
action AFTRA first meets all the following conditions:
(a) AFTRA shall declare publicly that such action is unauthorized.
(b) AFTRA shall promptly order its members to return to work or to
cease such unauthorized action, notwithstanding the existence of any picket
line.
(c) AFTRA shall not question the unqualified right of the Company to
discipline or discharge employees engaging in, participating in or encouraging
such unauthorized action after AFTRA has taken the action in (a) and (b) above.
It is understood that such disciplinary action or discharge by the Company
shall be final and binding upon AFTRA and its members and shall in no case be
construed as a violation by the Company of any provision of this Agreement,
provided that an issue of fact as to whether or not any particular employee has
engaged in, participated in, or encouraged any such violation may be subject
to the arbitration provisions of Section 5 hereof.
(d) During a strike by any other labor organization no AFTRA member
shall be assigned to, or requested to, perform any of the duties normally
performed by the striking employees.
SECTION 4
MINIMUM TERMS AND CONDITIONS
4.1 The Company agrees that the minimum terms and conditions governing
the employment of Artists and Producer-Directors of the Station are those
contained in Sections 11, 12, 13, 14 and the Company agrees that it will not
enter into any contract with, or employ any staff Artist upon terms and
conditions less favorable to the Artist or Producer-Director than those set
forth in these Sections. The parties agree that at no time shall any duty owed
by AFTRA's members to the Company require such member to work for less than
such minimum terms and conditions and the Company agrees that it will not
require any AFTRA member to work for less than the said minimum wages. No
refusal to work for less than the said minimum terms and conditions, whether or
not directly by
<PAGE> 12
-7-
AFTRA, shall constitute a breach of this Agreement by AFTRA, or a breach of any
individual member's contract. Such refusal to work shall not be deemed a
termination of this Agreement and this Agreement shall nevertheless remain in
full force and effect, and the dispute settled according to Section 5 of said
Agreement.
4.2 The minimums established by the Agreement shall be net to the Artist,
except for withholdings or deductions which are required by law, and voluntary
deductions for hospitalization, insurance, Relief-Association plans, Union dues
and such other deductions as may be agreed to by AFTRA.
SECTION 5
5.1 Grievance Procedure. Subject to Section 9(a) of the Labor Management
Relations Act of 1947, should any difference or dispute arise between the
Company and the Union as to the interpretation or application of the provisions
of this Agreement, there shall be no suspension of work, stoppage, slowdown or
lockout on account of such differences or disputes, but an earnest and good
faith effort shall be made by the parties to settle such differences or
disputes immediately in the following manner:
(a) STEP ONE: The Shop Steward shall discuss any differences or
disputes orally with the Department Head within fifteen (15) days after the
occurrence which gave rise to the difference or dispute. If the difference or
dispute cannot be settled to the satisfaction of the parties within ten (10)
days after it was first discussed as above, it shall, within fifteen (15) days
after first discussed as above, be reduced to writing and submitted to Step Two.
(b) STEP TWO: The written grievance will be submitted to the Station
General Manager or a designated representative. The Station General Manager and
the Union Executive Secretary or their designated representatives shall meet
promptly to discuss and settle such grievance. If such grievance cannot be
settled it may be submitted to arbitration by the Union or the Company under
the provisions of Paragraph 5.2 of this Section. Such referral of any grievance
from this Step Two to arbitration shall be in writing and within a thirty (30)
day time limit from date of written grievance, unless the time limit is
extended by mutual agreement in writing.
<PAGE> 13
-8-
(c) Any specific grievance not filed or appealed within the specified
time limits of Steps One and Two, shall be deemed to have been foreclosed and
not subject to further consideration. Such foreclosures shall not establish
precedent for future cases for either party.
5.2 Arbitration. The Union or the Company shall have the right to refer to
an impartial Arbitrator any differences which have not been satisfactorily
adjusted by means of the Steps established in Paragraph 5.1 of this Section,
and within the time limits specified.
(a) When the services of an impartial Arbitrator are required, the
Arbitrator shall be chosen from a list or lists to be submitted by the American
Arbitration Association. The decision of the Arbitrator so chosen shall be
final and binding on the parties. The Arbitrator shall have no right to add to,
subtract from, alter, or in any way modify the terms and conditions of this
Agreement, nor to issue an award of back pay or any other damages retroactive
to a date more than sixty (60) days prior to the date the grievance referred to
herein was filed.
(b) The compensation and expenses, under the rules of the American
Arbitration Association (AAA), of the impartial Arbitrator shall be shared
equally by the Company and the Union. Each party shall be responsible for
payment of its own witnesses.
(c) No more than one (1) grievance shall be submitted to an Arbitrator
for determination at one time unless a mutual written agreement of the parties
is obtained for the submission of multiple grievances to the same Arbitrator.
Grievances of a similar nature on the same subject may be combined for one
arbitration.
5.3 Survival of Grievances. If the Company or AFTRA or any AFTRA
member feels aggrieved by any act, omission, neglect, misfeasance, malfeasance
or nonfeasance which has taken place in whole or in part during the term of
this Agreement, the provisions of Sections 5.1 and 5.2 shall survive the
termination of this Agreement for a period of thirty (30) days and shall
constitute the sole and exclusive remedy therefor.
5.4 Right of Visitation. Any duly authorized representatives of AFTRA
shall be admitted to the premises of
<PAGE> 14
-9-
the Station at any reasonable time for the purpose of determining the
maintenance of salaries, fees, and other conditions agreed to hereby, provided
that any such representative shall notify the applicable General Manager or his
management representative prior to said visit and comply with all rules and
regulations of the Company while on its premises. Not more than two (2) AFTRA
representatives will be admitted at each visit. Visits shall not include the
right to inspect Company's official records.
SECTION 6
LEAVE OF ABSENCE
6.1 Military Leave. Artists or Producer-Directors who have heretofore or
may hereafter enter the armed services of the United States of America shall be
entitled to all the protection and benefits afforded by any laws effective in
relation thereto, and this Agreement shall be deemed subject to the provisions
of any such law.
All staff Artists and Producer-Directors (other than those employed on a
temporary basis) submitting proof of having been called for military service,
will be granted a leave of absence for the duration of such service. This
Section shall not apply to Artists or Producer-Directors who voluntarily enter
military service.
Such employees who have not taken a vacation which has been earned will be
paid for the earned vacation.
6.2 Pregnancy Leave. Leave of absence for pregnancy shall be covered by
applicable law.
SECTION 7
WAIVERS
7.1 Waivers or releases of any of the provisions of this Agreement shall
be null and void as far as any AFTRA member is concerned, unless AFTRA's prior
approval is first had and obtained, except as hereinafter provided.
7.2 AFTRA agrees to waive the provisions of this Agreement with respect to
programs, and persons employed as Artists, in
<PAGE> 15
-10-
each and all of the following cases:
(a) Bona fide amateurs employed in accordance with the present custom
of the industry, on a bona fide amateur program, or amateur episodes or
sketches in another program where the amateur nature of the performance is
clearly indicated.
(b) Singing groups, such as glee clubs, choirs, or choruses of
philanthropic, civic, nonprofit, education or religious organizations.
(c) Persons employed because of a reputation acquired in fields other
than those covered by the Associated Actors and Artists of America.
(d) Programs of a religious, charitable, educational or civic nature,
produced by nonprofit organizations, and not requiring the services of
professional actors and singers.
(e) Foreign language programs featuring ethnic folk art and
information of interest to their respective communities.
(f) Bona fide employees of advertisers as described in Section 2.1.
(g) Interns as described in Section 2.1.
7.3 The waivers set forth in sub-paragraphs (a) through (g) shall not be
used by the Company in a manner calculated to evade the object of this
Agreement or to reduce the employment of AFTRA artists.
SECTION 8
MANAGEMENT RIGHTS
8.1 The Company, except as explicitly abridged by any provision of this
Agreement, reserves and retains exclusively all of its normal and inherent
rights with respect to the Management of the business, whether exercised or
not, including but not limited to its rights to determine, and from time to
time redetermine, the number, location, and type of its operation and location,
and the methods, processes, and materials to be employed, to introduce new and
improved
<PAGE> 16
-11-
methods; to discontinue conduct of its business or operations in whole or in
part; to select and direct the working forces in accordance with the
requirements determined by Management to be necessary to the orderly,
efficient, and economical operation of the business, such measures to be
administered without discrimination against any employee. Management reserves
the right to maintain and require methods of record keeping.
SECTION 9
APPLICATION OF FEES
9.1 Application of fees shall be paid in accordance with the schedules and
conditions described under Sections 11 and 13, respectively.
9.2 Exclusions. There shall be no fees due and paid to Artists and/or
Producer-Directors for work performed:
(a) During the broadcast of live programs and/or announcements,
commercial or sustaining, when such broadcasts are scheduled coincident with
employees scheduled hours of work except as limited by this Agreement.
(b) During the recording of programs and/or commercial announcements
when such recording is scheduled coincident with employees' scheduled hours of
work. This shall not preclude payment of fees to Artists for recorded
commercial programs and/or commercial announcements scheduled for more than one
repeat broadcast except as limited by this Agreement.
(c) During the live presentation or recording of public service and/or
public affairs type programs and announcements coincident with employees'
scheduled hours of work, fees will not be paid for multiple broadcasts of such
programs and/or announcements.
(d) During the live presentation of Station's promotion announcements
coincident with employees' scheduled hours of work, fees will not be paid for
multiple broadcasts of such announcements on local stations. This shall include
Station Identification Announcements.
9.3 Commercials. Non-staff Artists who have been specifically selected and
chosen by an advertiser to perform
<PAGE> 17
-12-
live or recorded commercial programs and/or announcements will be compensated
in accordance with Sections 11 and 13 hereof.
9.4 Network Programming. Any network programming originating at the
Station shall be paid in conformity with applicable AFTRA code.
9.5 When video stories are sold to a network or cable system, the
artist(s) involved in that story are entitled to a minimum of 1/3 of the
payment. When the station is not paid for the story, the artist is not entitled
to any payment. If a newscast is simulcast or replayed on a cable system or a
network and the station does not receive cash compensation, the artists are not
entitled to any extra fee or payments. If the station is to be given cash
compensation, the artist(s) and the station shall negotiate appropriate talent
fees.
9.6 Prerecorded Broadcasts. All fees, or other applicable compensation set
forth herein, shall be payable whether the broadcast is live, film, videotape
or otherwise prerecorded or prepared in advance of the actual time of the
broadcast. This applies with equal force and effect to programs, dramatized
commercials, or other broadcast inserts, except as clearly and explicitly
abridged by this Agreement.
9.7 Further Exclusions. Artists performing announcements provided in
exchange for merchandise or services (generally referred to as reciprocal
barter agreements) used solely in connection with Station's audience
development, program, business or personality promotions in the form of prize
awards or remembrance advertising, shall not be entitled to fees.
Promotion announcements, whether or not they include a sponsorship mention
are not to be considered as commercials and
<PAGE> 18
-13-
no fee shall be payable thereon. For purposes of this Agreement, promotion
announcements shall be defined as those announcements, for which no revenue is
derived by the Company, which are offered to sponsors of commercial programs,
or featurettes in the form of "program plus" or "cross plugs" as an incentive
for sale; announcements in connection with joint station-client promotions
wherein client provides merchandise or services in exchange for attendant
publicity, and station receives no actual revenue therefrom; it being
understood, however, that if cash expenditures are involved on the part of the
client, that fees shall be paid on the basis of announcements and/or programs
covered by such cash expenditures in accordance with normal published
advertising rates. The Company agrees not to alter basic rate structures for
the primary purpose of avoiding payment of fees.
SECTION 10
SPECIAL TELEVISION PROVISIONS
10.1 Use of Videotape for Reference, File Audition, Trailer, Promotional,
and Out-of-City Purposes.
Videotape recordings of live local programs and excerpts therefrom may be
used only under the following conditions, in no other way and for no other
purposes:
(a) Videotape recordings and excerpts therefrom may be used for
reference and private audition for prospective sponsors and their agencies.
(b) Excepts from videotape recordings of not more than one minute in
length may be used on television and in theatres for trailer and promotional
purposes.
(c) Any videotape programs or commercials recorded at WROC-TV directly
by WROC-TV for use on any television station(s) outside the city of Rochester,
New York shall be governed by the applicable AFTRA Code provided, however, that
WROC-TV shall not be responsible or liable for the enforcement of said Code.
10.2 Unfair Provisions. Station agrees that it has notice that this
Agreement represents the minimum terms and working conditions for Artists and
Producer-Directors employed at the Station. Anyone representing the Station
engaging employees in
<PAGE> 19
-14-
these fields who breaches or violates conditions of the Agreement may be
regarded as unfair and employees covered by this Agreement may be instructed
not to work for anyone who is unfair. This paragraph is a statement by the
Company that it has notice of the facts stated in this paragraph, and goes no
further.
10.3 Anyone representing the Station who engages employees covered by this
Agreement who is declared to be unfair by any branch of the Associated Actors
and Artists of America, upon action taken by the 4 A.s or AFTRA, may be
declared unfair by AFTRA and Artists may be instructed not to work for any such
person. Employees may not be required to take direction from anyone who has
been declared unfair under this provision.
10.4 Incidental Rehearsal. Any time, authorized by the Company, spent by
an employee in obtaining wardrobe, or wigs, or fittings therefor, and time
authorized by the Company spent on makeup or wardrobe for the rehearsal or
performance shall be considered as rehearsal or staff stretch time.
10.5 Wardrobe Provision. The Station agrees to provide or compensate any
Artist for any special clothing or costume required by the Station for their
work.
SECTION 11
TELEVISION FEES
11.1 Staff Artists will be paid in accordance with the schedule below, as
appropriate, for recorded audio and videotape commercial announcements.
COMMERCIAL TAPING FEES:
<TABLE>
<CAPTION>
Length of Commercial
Announcement/Announcements 13 Week Unlimited Use
- -------------------------- ---------------------------------
Voice Only On Camera
---------- ---------
<S> <C> <C>
10 seconds or less $6.45 $16.00
11-60 seconds 16.00 50.00
61-120 seconds 20.00 55.00
Tags any length - unlimited use 2.70
</TABLE>
<PAGE> 20
-15-
11.2 Fees are effective on the first broadcast date and are paid to the
Artists the first (1st) day after the end of the standard broadcast month
billing date.
11.3 Artists and/or Producer-Directors performing commercial announcements
or tags live in shift during emergency situations will not be entitled to fees.
11.4 All multi-station and multi-city commercials will be made and paid
for in compliance with applicable AFTRA national and/or local code for Artists,
except as otherwise agreed to by the Station and AFTRA. Producer/Directors will
be paid $15.00 for producing/directing commercial announcements airing on other
stations effective with the first broadcast date only. No staff Artist or
Producer-Director will be required to produce or perform on multi-city
commercials, made by parties other than WROC-TV.
SECTION 12
ASSIGNMENTS
12.1 Interchangeability. At the discretion of management, Artists may be
assigned to perform services normally rendered by Producer-Directors and
Producer-Directors may be assigned to perform services normally rendered by
Artists subject to the applicable terms and conditions of the Agreement for the
respective category. However, in no event shall any Artist or Producer-Director
perform the services of both Artist and Producer-Director simultaneously in the
same broadcast.
12.2 Staff Artists' Assignments.
(a) Except in cases of emergency or as provided in Section 12.1 and
Sections 1 and 2, only staff Artists shall perform the regular duties of staff
Artists, provided that supervisors may continue to perform on programs on which
they have been assigned thereto on the basis of an agency or advertiser
audition or upon specific request of the agency or advertiser or where a
program(s) has been specifically built for use of his particular talents, but a
supervisor shall not perform as a substitute during overtime.
(b) Nonstaff Artists may be assigned to any program(s) in the
discretion of the Station, subject to the following conditions:
<PAGE> 21
-16-
That whenever a nonstaff Artist, other than the news director, is used
on a television broadcast, except foreign language programs and play-by-play
descriptions of sporting events, a staff Artist shall also be assigned to such
broadcast, with requisite salary, overtime, and/or fee payments; said fee
payments to be based on the category in staff Artists' fee schedule in which
the performance by the nonstaff Artist falls.
(c) The Company agrees that it will not use the "Interchangeability"
clauses in this contract, or in the absence of clauses requiring specific
number of Artists and/or Producer-Directors to be assigned at any time, for the
purpose of staff reduction.
(d) Wherever feasible and practicable, assignments shall be made on
the basis of advertiser or agency request. It is definitely understood,
however, that under no circumstances shall any Artists at any time solicit any
advertiser or agency to select him or her for specific announcement(s) or
program(s) without the prior knowledge and permission of Station's Management.
12.3 Producer-Director Assignments.
(a) Except in cases of emergency or as provided in Paragraphs 1.2, 1.3
and l2.1, only staff or supervisory Producer-Directors shall perform the
regular duties of staff Producer-Directors.
(b) The Station shall assign a staff or supervisory Producer-Director
to each local live camera television broadcast and at least one
Producer-Director shall be on duty at all times that the Station is
broadcasting local live camera television programs or originating a network
broadcast, except that the Station shall have the exclusive right to determine
whether or not a Producer-Director need be assigned to live programs or
announcements scheduled prior to 6:00 P.M. or until the end of a non-regularly
scheduled program which has begun before 6:00 P.M., e.g. an election or a
disaster, and after 11:30 P.M.
(c) The Station shall have the absolute right to assign any staff
Producer-Director to any particular broadcast, make whatever changes in
assignments as it deems proper from time to time, except that every effort
will be made to make such assignment on an equitable basis within the limits of
the Station's overall production requirements.
<PAGE> 22
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(d) Wherever feasible and practicable, assignments shall be made on
the basis of advertiser or agency request. It is definitely understood,
however, that under no circumstances shall any Producer-Director, at any time,
solicit any advertiser or agency to select him or her for specific
announcement(s) or program(s) without the prior knowledge and permission of
Station Management.
SECTION 13
STAFF WAGES
13.1 a. (i) The Company agrees to pay each Staff Artist and
Producer/Director the following minimum wages for hours worked in the category
assigned by management:
Category
<TABLE>
<S> <C>
ANCHOR PERSON $547/wk
SPECIALTY ANNOUNCER 513/wk.
PRODUCER-DIRECTOR 538/wk.
ANNOUNCER-REPORTER 456/wk.
</TABLE>
(ii) Effective June 1, 1995, the Company agrees .to pay each staff,
artist and producer/'director the following minimum wages for hours worked in
the category assigned by management:
Category
<TABLE>
<S> <C>
ANCHOR PERSON $580/wk.
SPECIALTY ANNOUNCER 543/wk.
PRODUCER-DIRECTOR 570/wk.
ANNOUNCER-REPORTER 485/wk.
</TABLE>
Provided:
b. (i) Each employee hired on or after June 1, 1990, shall be employed
at an initial wage which is not less than 77% of the minimum set forth above
for their category.
(ii) Effective June 1, 1995, each employee shall be employed at a wage
which is not less than 80% of the minimum set forth for their category.
<PAGE> 23
-18-
(iii) The initial wage rate provided in this Section shall be paid
even though the employee is serving as a probationary employee in accordance
with Section 14.11.
c. Employees not on personal service contracts shall receive increases
on their employment anniversary dates of 3 1/2% during the period 6/1/93 -
5/31/94; and increase of 3 1/2% on their anniversary date during the period
6/1/94 - 5/31/95; and 3% on their anniversary dates during the period from
6/1/95 - 5/31/96. This entire section shall not apply to any individual
employed under a personal service agreement.
d. The rates set forth in this Agreement are minimum rates and nothing
herein shall prohibit the Station and any individual employee from entering
into a personal services contract providing wages, terms and conditions more
favorable to the employee than those contained herein.
e. Anchorpersons will receive a program fee of $22.26 per newscast,
5:00 p.m. to signoff, for newscasts of not less than thirty (30) minutes nor
more than forty-five (45) minutes, and $36.87 per program for newscasts of more
than forty-five (45) minutes.
f. Specialty announcers will receive a program fee of $11.18 per
newcast, 5:00 p.m. to signoff, for newscasts of not less than thirty (30)
minutes nor more than forty-five (45) minutes.
g. Any artist performing a program of not less than thirty (30)
minutes nor more than forty-five (45) minutes in length scheduled in the
broadcast day part, sign on to 5:00 p.m., will be paid $7.44 per program.
h. Any artist performing a program of less than thirty (30) minutes
but more than three (3) minutes in length will be paid $4.85 per program.
i. Any artist substituting for another shall receive the applicable
program fee at the substitute's regular rate of pay. If no fee is applicable,
the artist will receive the higher rate of pay.
13.2 Definitions
ANCHORPERSON: Primary duties include, but are not limited to, performance
of at least one on-camera news program of at
<PAGE> 24
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least thirty (30) minutes at length, per day, Monday through Friday, within the
broad daypart of 5 P.M. to sign-off, and preparation of the material as
assigned, for such program(s).
SPECIALTY ANNOUNCER: Primary duties include, but are not necessarily
limited to, presentation of specialized program(s), including, but not limited
to, sports information, weather forecasts and reports, business news, consumer
reports and information, farm reports and information, and entertainment
industry critiques, on camera during regularly scheduled newscasts as assigned
by the Station, Monday through Friday, within the broad daypart of 5 P.M. to
sign-off, and preparation of material as assigned for such programs.
PRODUCER-DIRECTOR: Primary duties are to provide the service(s) of
Producer-Director of any program or production, commercial, sustaining of
public affairs type assigned by the Station during scheduled stretch.
ANNOUNCER-REPORTER: Duties include, but are not limited to, such services
as may be necessary for the program and production requirements of the Station,
including but not limited to, researching, gathering, writing, rewriting or
editing, and/or reporting news on film, tape or live and transmitting such
reports via phone lines and/or microwave, two-way radios or direct broadcast
and interviewing persons by such means; operation of journalism equipment;
reporting on-the-air in or out of the studio by tape or live in the case of
late breaking story(s), panel shows, interviews or as a second newscaster when
a principal newscaster or news Anchorperson is present; maintenance of records;
announcing television programs of all types; making live or tape station
identification announcements, time signals, weather reports, station sign-on
and sign-off, program opening, bridges, closings, commercial, promotional and
public service announcements; assignment Monday through Friday as a substitute
and/or replacement for an Anchorperson, Specialty announcer or other artist who
is absent due to illness, vacation, leave of absence, failure of assigned
Anchorperson, Specialty Announcer or Artist to appear for duty for any reason,
or in case of emergency; weekend news anchoring, weekend news specialty
announcing, program hosting or anchoring of regularly scheduled programs, and
other related duties as may be assigned, and such other services as the
programs requirements necessitate.
<PAGE> 25
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SECTION 14
HOURS OF WORK, SPECIAL PROVISIONS, MEAL PERIOD,
TRANSPORTATION, ETC.
14.1 Hours of work.
(a) The workweek of staff Artists shall consist of forty (40) hours in
five (5) workdays, with each workday to consist of not more than nine (9)
consecutive hours, including one (1) hour for meal time; provided, however,
that the Company may require the rendition of services for more than forty (40)
hours or more than five (5) days or for more than eight (8) hours per workday,
subject to the payment of overtime as hereinafter provided. The regularly
scheduled workweek shall begin at 3:01 A.M. on Monday and shall consist of
seven consecutive days ending 3:00 A.M. the following Monday. Days off shall be
scheduled consecutively, but not necessarily within the same work week.
(b) Overtime at the rate of one and one-half (1-1/2) times the regular
rate of pay shall be paid for assigned or scheduled hours worked in excess of
eight (8) hours per day or forty (40) hours in the workweek. Premium pay shall
also be paid for work during the twelve (12) hour rest between shifts unless
the employee and Station have agreed to provide for a ten (10) hour rest period
in accordance with Section 14.5. Duties performed on the sixth (6th)
consecutive day of work shall be at the rate of 1-1/2 times the regular rate of
pay. A minimum assignment of two (2) hours will be provided for employees
called back to staff work on the employee's scheduled workday. A minimum
assignment of four (4) hours will be provided for employees called back to
staff work on the day the employee is scheduled to be off. However, in the
event overtime hours are contiguous to the staff stretch, overtime payments
shall be for the hours actually worked, but in no event for units less than 15
minutes.
(c) Overtime at the rate of two (2) times the regular rate of pay
shall be paid for all hours worked in excess of twelve (12) during the workday.
Duties performed on the seventh (7th) consecutive day of work shall be at the
rate of two (2) times the regular rate of pay. Staff Artists who work between
the hours of 1:30 A.M. and 5:00 A.M. shall be paid for such time at the rate of
two (2) times their regular rate of pay. The rates in this paragraph apply
except as modified by other provisions for this Section.
<PAGE> 26
-21-
(d) Payment of overtime rates shall not be duplicated for the same
hours worked, but the higher of the applicable rates shall be used to prevent
pyramiding. Premiums do not apply when with Management's consent, scheduling is
for an employee's own convenience. Sixth and seventh consecutive day overtime
payments are exempt during two scheduled changes per 12 month period beginning
June 1 of any year per employee for the convenience or requirement of the
Station.
14.2 (i) Special Provisions Covering Part-time or Trainee Employees. The
Company may employ part-time artists and Producer-Directors, who may perform
any of the duties of Artists or Producer-Directors. The minimum call in for
part-time employees shall be four (4) hours. The maximum hours for each
employee shall be eight (8) hours per day and twenty-four (24) hours per week.
Wages earned shall be at the applicable rate times the number of hours worked.
Part-time employees shall not be eligible for the benefits provided under
Section 14.8 or 14.17. They shall receive pro rata benefits under Section 14.9.
The number of part-time compared to full-time Producer-Directors employed shall
not exceed 1 to 3, 2 to 6, 3 to 8, 4 to 12. The number of part-time compared to
full-time Artists (specialty announcers and announcer reporters as a group)
employed shall not exceed 1 to 3, 2 to 6, 3 to 8, 4 to 12. An additional two
(2) part-time Artists may be added between May 15 and September 30 solely for
the purpose of replacing staff Artists on vacation. The latter part-time
Artists shall not replace the absent staff Artists, but will perform the duties
of whichever staff Artists replaces the absent staff Artist.
14.2 (ii) Notwithstanding the provisions of this Section 14.2, the Station
may employ individuals to perform voice-over or other voice announcements in
connection with public service announcements or advertisements produced by the
Station on a freelance basis. There shall be no minimum hours for either daily
or weekly services required of such announcers. The announcers shall receive
an amount not less than the entry level hourly rate for an announcer. The
Station agrees to use its best efforts to utilize the services of members of
AFTRA on a freelance basis under this provision and AFTRA agrees to use its
best efforts in assisting in the identification of recruitment of such talent.
In the event the Station requires the services of a particular voice or a
particular type of voice, and AFTRA is unable to adequately provide such
talent,
<PAGE> 27
-22-
the Station shall be free to recruit individuals not members of AFTRA and such
individuals shall not automatically be subject to the provisions of the union's
security premium of the contract.
14.3 Length of Staff Stretch. The number of hours worked in any day by any
employee shall consist of the number of hours worked invervening between the
beginning of his/her assignment to perform staff duties on each of the days
during that particular week of which such workweek is part, and the conclusion
of his/her last assignment to perform staff duties on each of said days,
excluding one (1) hour for meals when assigned, such period being referred to
as the "staff stretch."
14.4 Meal Periods . The Company may assign a meal period of not more than
one (1) hour in each full working day. Meal periods so assigned and permitted
shall be excluded in the computation of elapsed time of the staff stretch. No
meal period shall be scheduled on any day consisting of less than five (5)
elapsed hours, but the Company agrees to allow a meal period on any day
consisting of five (5) hours or more. The said meal period shall not be
scheduled within the first two (2) hours or the last two (2) hours of the staff
stretch, except when emergencies or other extraordinary program requirements
make the same necessary. If a meal period is scheduled during the first two (2)
or the last two (2) hours of a staff stretch, as defined above, one (1) hour
straight time shall be paid, but such payment shall not be considered as
additional time worked for the purpose of determining overtime for the day
and/or week.
14.5 Rest Between Staff Stretches. The first staff assignment of any
employee on any day begins no sooner than ten (10) hours after the conclusion
of his/her last staff assignment on the preceding day, provided, however, that
the requirements shall not apply in the event of emergencies, special event
programs, or other extraordinary program requirements, but in all such cases,
the overtime pay provisions of this Agreement, where applicable, shall govern.
14.6 Transportation The Company agrees to provide appropriate
transportation to employees required to travel and to allow them money
sufficient to cover expenses. Where employees, with the consent of the Company,
use their own car in connection with such traveling, they shall receive not
less
<PAGE> 28
-23-
than twenty and one-half (20-1/2) cents per mile for the expense of operating
their car, but in any event they shall be paid a minimum travel expense of one
dollar and fifty cents ($1.50) per day.
The Company agrees that it will not require any employee to use their
automobile without their consent.
14.7 Travel Time Employees shall be credited with the following time
allowances:
(a) When sent out of the city on an assignment which requires him/her
to remain away overnight, he/she shall be credited with not less than one eight
(8) hour shift for each and every day he/she is away on such assignment. All
time spent in traveling up to eight (8) hours in any one day exclusive of the
time from midnight to 8:00 A.M. when sleeping accommodations are furnished shall
be considered as time worked.
(b) When sent out of the Station's premises on an assignment which
requires him/her to return to the point from which he/she started on the same
workday, he/she shall be credited with the total elapsed time spent on such
assignment.
14.8 Bureaus. For purposes of Sections 14.6 and 14.7, an employee
regularly assigned to a Bureau which is within 35 miles of the Station's
transmitter shall be deemed to be employed at the Bureau.
14.9 Sick Leave. Full time employees will be reimbursed at their regular
wage rate for absences totaling up to ten (10) scheduled work days in any
employment year when the absence is due to illness. If an employee is absent
due to illness beyond four (4) working days in an employment year, the Company
reserves the right to request of the employee a signed doctor's statement. If
requested, the doctor may be selected by the Station. His/her fee, to the
extent that it is not covered by insurance, will be paid for by the Station.
Such a statement, if requested, will be required before any wage payments for
the absentee period are made. Each employee may take three (3) personal days in
lieu of three (3) of the ten sick days provided above with six (6) days' prior
notice to the Station. The Station may decline to grant such a personal day off
if the employee has already taken one (1) during a rating period or if another
employee has already been granted permission to take a
<PAGE> 29
-24 -
personal day off on the day requested. These limitations will not apply in the
event of a personal emergency, such as a death in the employee's immediate
family. Each employee may accumulate and "bank" up to a total of fifteen (15)
days of unused sick leave. Such fifteen (15) days of accumulated sick leave may
be built over a period of years but in no event shall more than fifteen (15)
days be carried forward from one year to the next. The Bank may be used only
for extended illness, after the employee's current year entitlement is
exhausted and will be paid for only on medical proof.
New employees will not earn nor receive sick leave during their
probationary periods.
14.10 Vacations and Holidays. Staff Artists or Producer-Directors with
continuous service of six (6) months or more shall receive two (2) weeks
vacation with pay; staff Artists or Producer-Directors with continuous service
of one (1) year or more shall receive three (3) weeks vacation with pay; staff
Artists with continuous service of five (5) years or more shall receive four
(4) weeks vacation with pay; staff Artists and Producer-Directors with
continuous service of fifteen (15) years or more shall receive five (5) weeks
vacation with pay. Part-time employees who have worked at least 750 hours in
the preceding year shall be eligible for vacation benefits consistent with
their Years of continuous service and based upon their normal work week. The
weeks of paid vacation paid to part-time employees shall be calculated on the
basis of their average weekly pay in the preceding year.
In consideration of the vacation provided herein, no staff Artist or
Producer-Director who works on holidays, Sundays or evenings shall receive
extra pay, compensation or other benefits for such work. Seniority shall govern
in assignment of vacation schedules. Vacations will be taken in one (1) week
periods except with prior Company approval for other arrangements. The final
right to schedule vacations is retained by the Company to assure the orderly
operation of the business.
The Company will allow artists to, take up to five days vacation or
personal days during the two week period preceding November, February and May
ratings periods.
Staff Artists entitled to two (2) weeks vacation shall take such vacation
during the six (6) month period following their entitlement. Such staff Artist,
upon attaining service of one (1) year, shall be entitled to one (1) week
vacation during the next six (6) months and two (2) weeks during the ensuing
six (6) months. Thereafter, vacation entitlement shall be taken on a calendar
year basis.
<PAGE> 30
-25-
Staff Artists shall accumulate vacation entitlement during the time worked
for calculation of termination, lay off or other separation benefits as set
forth in this Agreement based on the following formula:
<TABLE>
<CAPTION>
Vacation Entitlement Accrual
<S> <C> <C>
2 weeks 0.83 days per month worked
3 weeks 1.25 days per month worked
4 weeks 1.66 days per month worked
5 weeks 2.08 days per month worked
</TABLE>
14.11 Termination of Employment.
(a) 1. The Company agrees not to terminate employment in violation of the
Act nor to terminate employment except for just cause as, insubordination,
misconduct, incompetence, nonqualification or for the purpose of reemploying an
employee (on leave of absence) upon his/her separation from the armed services
of the United States of America, in accordance with the UMT Act.
2. When the termination is because of insubordination or misconduct,
the Company need give no notice or termination pay. When the termination
is because of incompetence or non-qualification, the Company shall give
the affected employee four (4) weeks written notice or two (2) weeks
termination pay.
3. In addition, when termination is because of nonqualification, an
employee so separated is paid severance pay in accordance with the
provisions of subparagraph e.
4. An employee shall give the Company two (2) weeks written notice of
his/her intent to terminate his/her employment with the Company.
(b) 1. For the purposes of Paragraph 14.11, nonqualification is deemed
to mean: That the Artist's or Producer-Director's professional performance
is generally such that it significantly limits his/her usefulness to the
Company as measured by either his/her past performance or by the performance of
other employees having similar responsibilities
<PAGE> 31
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or by the then current requirements of taste, talent, style, and fashion
as established by sponsors, advertising agencies, listener or viewer
preference or programming demands. In the application of this cause for
an employee's severance, Station management shall be the interpreter of
these standards and any dispute over a severance shall not be subject to
arbitration, unless with regard to an employee with more than five (5)
years of service, management has failed within six (6) month preceding
the discharge to advise the employee of the deficiency in his/her
performance.
(c) No employee whose employment is terminated because of insubordination
or misconduct shall be entitled to any vacation or vacation pay beyond that
actually earned prior to time of termination of such employment. Employees
whose employment is terminated for any other reason, or who are laid off, shall
receive earned vacation or vacation pay, if any, at the time of such
termination.
(d) Where the Company desires to lay off employees for seasonal
inactivity, business decline or similar causes, or for purposes of reemployment
of a former employee upon his/her discharge from the armed services of the
United States of America, it shall give to any employee so laid off four (4)
weeks written notice or four (4) weeks' termination pay. Such layoffs shall be
on the basis of seniority, with consideration for ability. An employee so laid
off shall have preference in reemployment.
(e) Severance pay shall be paid to employees terminated for
nonqualification as provided in Paragraph 14(a) pursuant to the following terms
and conditions:
1. The amount of severance pay shall be two (2) times present base
wages per Week for each year of continuous employment with the Station,
up to a maximum of fourteen (14) weeks base pay.
2. "Continuous employment means the number of years from the last
date of hire computed from the date of hire to the closest anniversary
of said date. There shall be excluded from this computation time spent on
leave of absence for any reason including military. Date of hire is the
actual date of hire, subject to the provisions of Sections 1 and 2.
<PAGE> 32
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3. Base wages per week is the actual amount paid to the employee just
before notice of severance for nonqualification, exclusive of fees and
any other extra compensation.
4. Severance payments hereunder shall in no way affect the employee's
rights to unemployment insurance benefits, and such benefits shall not be
set off against, or be deducted from, the amount of severance due the
employee hereunder.
5. Federal and State withholding taxes shall be deducted from the pay
or payments as required by law.
6. There shall be deducted from the total severance pay payable
herein, any amounts owing to the Company by the employee.
7. Severance pay shall be in addition to any payments in lieu of
vacation which the employee may have earned.
8. In the event of an employee's death between the time he/she is
notified of termination for nonqualification and the time he/she receives
all of the severance pay due him/her, any balance due shall be due to
his/her estate.
9. When severance pay is complete, the Company shall have no further
obligation of any kind to the employee and be/she shall forfeit all
seniority rights and any other privileges, rights, or benefits to which
he/she is or may-be entitled, except-those which are specifically
reserved. In the event he/she is reemployed he/she shall be deemed a new
hire. The foregoing shall include a release signed by the employee and
AFTRA upon the employee's receipt of severance pay, specifically waiving
or withdrawing any grievance under this Agreement.
10. In the event that a termination for nonqualification is grieved
through the grievance and arbitration procedure any monies payable
hereunder or offered to be paid hereunder shall be withheld until
<PAGE> 33
-28-
the final arbitrator's award or withdrawal of the grievance.
(f) Paragraphs a, b, c and of Section 14.11 are subject to grievance
and arbitration procedures except as set forth in this Agreement.
The provisions of Section 14.11 shall not be applicable to an employee
during the first three (3) months of his/her employment (six (6) months if
mutually agreeable to the employee, the Station and local unions) which period
shall be deemed to be the employee's probationary period. Termination of
employment during the probationary period shall be at the sole discretion of the
Station without resort to the grievance or arbitration procedure.
14.12 Safety. Without his consent, no Artist or Producer-Director shall be
required to perform duties not reasonably compatible with his vocation or where
there exists danger of bodily injuries or conditions detrimental to health.
14.13 Assignments and Competitive Auditions. The sponsor or advertising
agency shall have the right to select such Artist or Artists as are available.
In the event a sponsor or advertising agency does not wish to select an Artist,
the Company will recommend that a competitive audition be held. If the sponsor
or agency refuses to make a selection or to have an audition then Station
management may assign an Artist to the program or announcement in question.
When requested by a sponsor or advertising agency to submit a list of all staff
Artists available for any commercial program or announcement, the Company shall
submit a list of all staff Artists employed by it, other than those engaged for
programs or announcements advertising competitive products, or for a program
conflicting as to time, or those Artists under exclusive contracts) to another
sponsor or advertising agency. A copy of each such list shall be made available
to all staff Artists. Competitive auditions shall be held whenever requested by
a sponsor or advertising agency and prompt notice thereof given to all
contestants. Only staff Artists shall be permitted to compete in auditions.
14.14 Pay for Auditions and Performance on Programs. In case of auditions
outside staff stretch, for a commercial program or announcement, at which the
staff Artist appears at
<PAGE> 34
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the specific request of the Company, he shall be paid at his/her normal
overtime rate.
14.15 Duties. Staff Artists shall render the following services which the
program requirements of the Company may necessitate:
(a) Keeping the program log and other required Company and/or FCC
documents.
(b) Performance of station identifications, time signals and all other
types of sustaining or commercial announcements; performing as talent on
sustaining, commercial or participating programs, preparing and performing on
musical programs, including selecting recordings and transcriptions for their
own programs, delivering them to appropriate control rooms for their own
programs, and preparing schedule sheets for their own use; delivering news and
sports programs and other regularly scheduled features, including gathering,
editing and writing such programs and features and performing on spot
announcements or personality features designed to promote programs on which
they are featured, for scheduling at the Station's discretion.
Subject to other provisions of this Agreement, performance of on-camera
programs, regardless of length, as assigned by the Station; services as may be
necessary for the programming and production requirements, including but not
limited to, gathering, preparation and/or delivery of any and all types of
material, prompter typewriting, operating journalism equipment, maintaining
written records, auditioning, public appearances, rehearsing, monitoring,
training other artists, rewriting and editing material from outside sources
such as wire services, newspapers, public relations handouts, etc.; determining
the activity of film cameramen/soundmen, film editors, videotape and audiotape
editors and other involved employees, operating as required, newsroom
equipment; assignment as a substitute as an Artist in any of the categories as
defined in Paragraph 13.2.
(c) Creative writing or original dramatic programs, or general
continuity writing assignments, shall not be considered staff duties, but may
be performed by Artists subject to individual negotiations with Company and/or
sponsor. It is understood that the preparation of material for these programs
on which specific Artists are themselves
<PAGE> 35
-30-
featured artists, or preparation of material for promotion of these programs,
does not fall within the meaning of the preceding sentence.
(d) Personal appearance for Station's promotion purposes when
requested by the Company shall be considered part of the staff Artist's duties.
If within the staff Artist's stretch, the Artist shall be paid only his
expense. If on the Artist's day off, the Artist shall be paid his expenses and
minimum of four (4) hours at overtime rates.
(e) Participating in Company auditions and giving voice auditions,
live or transcribed, for sales or promotion purposes.
14.16 Other Services: Acting or singing, personal appearances, writing,
producing, or other special services not covered by this Agreement shall be the
subject of individual bargaining between the Artist and the Company. Prior
Company approval must be obtained for all appearances and performances by staff
Artists, exclusive of services rendered to Company Station.
14.17 Schedule Changes. The Company agrees not to change the schedule of
any staff Artist at the request of a sponsor to enable him to secure the
services of an Artist at a fee lower than that which would be paid had such
change not been made.
If the Company, in the case of an emergency or because of some
extraordinary program requirements, requires a staff Artist to be absent from a
commercial program which nevertheless is broadcast, for which he regularly
receives a fee, the Company agrees to compensate the Artist for any loss in fee
which he may suffer as the result of the Company's withdrawal of the Artist
from such commercial program.
Hours of work shifts for the workweek shall be posted by noon of the day
five (5) days before the beginning of the workweek and shall not be changed by
the Station except to deal with events or matters that become known to the
Station following the time the schedule is required to be posted.
14.18 Insurance. The Company agrees to share the costs of Blue Cross/Blue
Shield hospital/medical insurance and Cigna dental insurance for full-time
Artists and Producer/Directors
<PAGE> 36
-31-
and their dependents, if any.
INSURANCE PREMIUMS
Blue Cross/Blue Shield:
<TABLE>
<CAPTION>
1993 1994 1994 1994
Monthly Monthly Employer Employee
Premium Premium Contribution Contribution
<S> <C> <C> <C> <C>
Single 153.57 167.26 117.11 50.15
Family 330.53 363.79 254.60 109.19
Blue Choice:
Single 126.33 134.77 104.33 30.44
Sponsor 291.83 309.98 211.22 98.76
Family 336.25 357.15 202.63 154.52
Preferred Care
Single 127.09 134.62 104.34 30.28
Sponsor 292.27 309.61 232.25 77.36
Family 332.98 358.29 257.50 100.19
</TABLE>
Any cost change, up or down, following the effective date of this
Agreement for the insurance premiums set out above will be shared equally by
the Company and the employee. In the event that the Company is required by any
law to contribute to a National Health Insurance Plan for its employees, the
insurance benefits will be revised to reflect nonduplication of benefits and
the employee and Company contributions.
The Company reserves the right to change the insurance carrier during the
life of this Agreement, providing the same benefits are extended to the
employees under a new carrier licensed by the State of New York. A thirty-day
notice of such change will be given to the Union.
<PAGE> 37
-32-
14.19 Retirement and Other Fringe Benefit- Programs. The Employer agrees
that upon sixty (60) days notice, it will sponsor a 401(k) Plan into which
bargaining unit employees may contribute. The cost of establishing and
administering the Plan shall be borne by the Union; provided, however, that the
Employer shall reimburse the Union for up to $500.00 of such cost in each
contract year.
14.20. After (90) days of employment each full time employee shall receive
life insurance coverage of $5,000 at the expense of the company.
14.21. Bereavement Pay. Employees will be paid up to three (3) days for
death and funerals in the immediate family. The immediate family shall include:
parents, step-parents, children, step-children, brother, sister, spouse and
mate living with employee. Employees will receive one (1) day with pay to
attend the funeral of grandparents, mother-in-law, father-in-law, and
grandchildren. Pay will be paid for regular work days only up to and including
the day of the funeral.
SECTION 15
EQUAL OPPORTUNITY
15.1 The parties agree to continue their policy of equal opportunity for
all employees in employment, promotion, demotion, transfer, layoff, recall and
disciplinary action, which will be applied without regard to race, creed,
color, age, sex, or national origin, disability, marital status, or sexual
orientation, and the parties will administer the provisions of this Agreement
without discrimination. The parties further agree to apply this Section to
marital status and disability, as those subjects are treated under New York
State law. Whenever a male or female pronoun is used in this Agreement, it
shall be deemed to apply equally to persons of both sexes.
SECTION 16
CONFORMANCE WITH LAW
16.1 If there are any valid provisions of law applicable to this Agreement
which are in conflict herewith, the provisions of this Agreement which conflict
therewith shall be deemed modified in conformity with the provisions of such
applicable
<PAGE> 38
-33-
law. If any provision of this Agreement, or the application of such provision
to any person or circumstances, shall be held invalid, the remainder of this
Agreement, or other than those as to which it is held invalid, shall not be
affected thereby.
SECTION 17
TERM OF AGREEMENT
17.1 This Agreement shall be known as the 1993-1996 AFTRA-WROC MINIMUM
BASIC AGREEMENT FOR TELEVISION AND RADIO ARTISTS AND PRODUCER-DIRECTORS. It
shall become effective June 1, 1993 and shall continue in effect through
sign-off of the Station on the broadcast day commencing May 31, 1996, and
thereafter it shall automatically continue in full force and effect for
additional one-year periods unless terminated by either party giving the other
at least sixty (60) days' written notice, by certified mail, prior to May 31,
1996, or any annual termination date thereafter.
17.2 The Company warrants that it operates the Station. The parties agree
that if the Company should transfer or assign the operation of the Station to
any third party or parties during the term of this Agreement as a result of any
action of any governmental agency immediately affecting the Company's operation
of the Station or in the event of the involuntary transfer or assignment, the
Company-need not require the transferee or assignee to assume the obligations
of this Agreement; and if the transferee does not assume such obligations,
AFTRA and its members shall be free of all obligations hereunder; but all other
cases of transfer or assignment of the Station shall require the transferee or
assignee to assume, for the benefit of AFTRA and its members, the obligations
of this Agreement.
17.3 The Company agrees that this Agreement is subject to approval by the
National Board of AFTRA and does not go into effect until countersigned by the
AFTRA National Executive Director.
IN WITNESS WHEREOF, this Agreement has been executed in behalf of the
parties thereto by their respective officers, thereunto duly authorized, on the
I day of June 1993. (Final approved contract was signed in January 1995).
<PAGE> 39
-34-
AMERICAN FEDERATION OF TELEVISION TELEVISION STATION PARTNERS,
AND RADIO ARTISTS INC.
By: /s/ DUANE BROZEK By: /s/ GARY R. BOLTON
-------------------------------- -----------------------------------
Duane Brozek, AFTRA Shop Steward Gary R. Bolton, VP & General Manager
By: By:
-------------------------------- -----------------------------------
By: By:
-------------------------------- -----------------------------------
APPROVED: AFTRA NATIONAL BOARD
By: /s/ BRUCE A. ZOULE
--------------------------------
DATE: 1/30/95
<PAGE> 1
EXHIBIT 10.24
COLLECTIVE BARGAINING AGREEMENT
Between
WROC-TV
(Smith Television of Rochester, L.P.)
and
NATIONAL ASSOCIATION OF BROADCAST
EMPLOYEES AND TECHNICIANS, AFL-CIO
(Local 22)
June 1, 1996 through May 31, 2000
<PAGE> 2
AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of June, 1996, by
and between SMITH TELEVISION OF ROCHESTER, L.P. and/or its successors, owner
and operator of Television Station WROC-TV, the Employer, (hereinafter called
the "Company") and the NATIONAL ASSOCIATION OF BROADCAST EMPLOYEES AND
TECHNICIANS, AFL-CIO and/or its successors, a labor organization (hereinafter
called the "Union" - NABET), bargaining representative for Employees employed
by, the Company at Station WROC-TV during the term of this Agreement. The
provisions of this Agreement shall be binding upon the Company, its successors
and assigns.
1. INTENT - "EMPLOYEE" DEFINED:
It is the intent and purpose of the parties hereto to set forth herein the
basic Agreement covering the rates of pay, hours of work, and conditions of
employment to be observed between the parties hereto, and provide procedures
for prompt, equitable adjustment of alleged grievances to the end that there
shall be no interruptions or impeding of work, work stoppages or strikes or
other interferences with television broadcasting and its facilities during the
life of this Agreement.
1.2 The term "Employee" as used in this Agreement applies to all the
broadcast, television technical Employees employed by Station WROC-TV and all
mobile or portable transmitters wherever located, employed in the broadcasting
engineering department of the Station, as shown in Article 9, except the Chief
Engineer and Assistant Chief Engineers.
2. MANAGEMENT RIGHTS:
2.1 Management - The Company, except as clearly and explicitly abridged,
by any provision of this Agreement, reserves and retains exclusively all of its
normal and inherent rights with respect to the Management of the business,
whether exercised or not, including but not limited to its rights to determine,
and from time to time redetermine, the number, location and types of
its operations and locations, and the methods, processes, and materials to be
employed, to introduce new and improved methods; to discontinue conduct of its
business or operations in whole or in part; to select and direct the working
forces in accordance with the requirements determined by Management to be
necessary to the orderly, efficient and economical operation of the business,
such measures to be administered without discrimination against any employee;
Management reserves the right to maintain and require methods of record keeping.
3. RECOGNITION, UNION SHOP:
3.1 The Company recognizes the Union as the exclusive bargaining agent for
all of the Employees of the Company as defined in Article 1, for the duration
of this Agreement. (The
<PAGE> 3
Company further recognizes the dignity of the Employee as an individual and the
Employees as a group.)
3.2 All present Employees shall remain members of the Union in good
standing as a condition of employment The Company may employ non-members of
the Union, provided that such employees shall apply for membership in the Union
within thirty (30) days after employment. The Union agrees to act on said
application within thirty (30) days after receipt of the application, and the
filing of the application shall constitute a working permit until such time as
the application has been acted upon.
3.3 The Company will, within five (5) business days after receipt of notice
from the Union, give notice to any Employee who is not in good standing in the
Union that his employment will be terminated within two (2) weeks if he does
not comply with Section 3.2, provided that his failure to be in good standing
is because of his failure to tender initiation fees and periodic dues, both of
which shall be uniformly applicable to all Employees.
3.4 The Company shall make a check-off of Union dues from each paycheck,
provided that the Company shall receive from the Employee concerned a written
assignment which shall not be irrevocable for a period of more than one (1)
year, or beyond the termination date of this Contract, whichever occurs sooner.
The Check-off Authorization shall be in the form as shown in Appendix "A".
3.5 It is further agreed that all new Employees shall be on a probationary
period of ninety (90) days. The Company may request and upon approval of the
affected Employee, the Union will agree to grant up to two (2) thirty (30) day
extensions to the current ninety (90) day probationary period described above,
during which time the Employee shall not be entitled to the protection of the
discharge clause. A copy of the notice of discharge given to the Employee shall
also be mailed to the Union at the same time. Temporary vacation relief
Employees as described in Section 10.5 shall not be entitled to the protection
of the discharge clause.
3.6 The Company recognizes the right of the Union members to refuse to
work with employees who do not become or offer to become Union members in
accordance with this Agreement, and any such refusal to work shall not
constitute a breach of this Agreement. This provision is subject to the
provisions of Sections 3.2 and 3.3.
3.7 The Company will not interfere with, restrain or coerce any Employee
because of membership in or activity on behalf of the Union. The Company will
not discriminate in respect to hire, tenure of employment or any term or
condition of employment against any Employee because of membership in or
activity on behalf of the Union, nor will it discourage or attempt to
discourage membership in the Union or attempt to encourage membership in
another Union.
3.8 Notwithstanding anything herein to the contrary, the Company may
utilize up to five (5) interns, as part of an affirmative action program or in
cooperation with an educational
-2-
<PAGE> 4
institution, who shall be excluded from coverage under the Contract but who
shall not be restricted from performing bargaining unit work so long as it is
under the general supervision of, and does not result in the layoff of, a
Bargaining Unit Employee. No intern may be employed for more than two (2)
semesters consecutively unless the Employer and Union mutually agree in writing
to extend such employment.
3.9 The Company and the Union recognize their respective responsibilities
under State and Federal laws and regulations relating to fair employment
practices. The Company and the Union agree to continue to adhere to the
national policy of not discriminating in employment in any manner prohibited by
law on the basis of race, creed, color, national origin, religion, sex, age,
sexual preference, arrest record, citizenship, disability arising from
military service, service in the Vietnam War, handicap or for any other reason
prohibited by law. The parties also agree that compliance with laws and
regulations pertaining to the Company's right to broadcast is essential, and
that any Employee who interferes with such compliance may be discharged. The
use of the pronouns "he", "she", "his" or "her" in this Agreement shall refer
to all Employees and is not intended to indicate the sex of any Employee.
3.10 Joint Liaison Committee: The parties agree to form a Liaison
Committee comprised of three persons representing the Station Manager and
three employees from the bargaining unit for the purpose of meeting and
conferring, upon request of either party, at reasonable times relating to
topics such as increased communication and cooperation as they concern the
operation of the Station and the work of the bargaining unit. Topics for
discussion may include, but not be limited to, the administration of the
bereavement leave policy, implementation of an educational reimbursement policy
for bargaining unit employees who receive, upon pre-approval of management,
additional training or education through seminars, educational courses or
training programs during their non-working hours so as to enhance the employees'
working skills as they relate to Station operations and improved efficiencies.
It is the intent of this procedure that discussions will be conducted
on a non-adversarial basis and in a good-faith attempt to consider developments
that occur during the term of the contract. The Liaison Committee shall not have
the power to add to, delete or otherwise modify the terms of the collective
bargaining agreement unless such changes are ratified by the parties.
Furthermore, the existence of the Liaison Committee shall not preclude
Station management from meeting with other bargaining unit employees and/or
with Stewards on a more frequent basis for a similar purpose.
3.11 The Company will notify the Union in writing of all newly hired
Employees prior to the time the Employee receives his first paycheck.
-3-
<PAGE> 5
4. MILITARY LEAVE:
4.1 Both the Company and the Union recognize the re-employment provisions
of the Military Service Act of 1948 and any subsequent Acts and all the
re-employment regulations promulgated by the Federal Government apply to all
Employees covered by this Agreement.
5. HOURS OF WORK, DAYS OFF, MEAL PERIODS:
5.1 (a) The normal work week of all full-time technical Employees shall
consist of not more than forty (40) hours of work during four (4) or five (5)
days in each seven (7) consecutive days. Such hours of work shall be
consecutive and shall not exceed eight (8) exclusive of a one (1) hour lunch
period on a five (5) day schedule or ten (10) on a four (4) day schedule. The
work week can include other combinations of hours and days so long as the
employee so scheduled receives at least two consecutive days off and further,
that such employee will not be required to work split shifts during any work
day. Said work week shall begin at 3:00 a.m. Monday and end at 3:00 a.m. on the
following Monday. However, for purposes of all overtime and premium pay under
this Agreement, a day will be defined as a twenty-four (24) hour period
commencing at the beginning of an Employee's shift.
(b) The Company may employ a number of part-time employees, to a
maximum of 25% of the full-time employees, provided that if more than 29
full-time employees are employed, the Station may employ a number of part-time
employees not to exceed 30% of the full-time employee complement. A part-time
employee's work week shall not be less than two (2) days of work. Part-time
employees may be called upon to work in excess of 32 hours in a work week for
emergency or fill-in purposes for employees on sick or vacation leave. In all
other instances, should a part-time employee work in excess of 32 hours in a
work week, he or she shall be compensated at one and one-half times his or her
normal part-time rate for such hours in excess of 32. Part-time employees shall
not accrue seniority except in the case of a part-time employee who, through
continuous service, becomes a full-time employee. In that instance, he or she
will be credited with seniority, on a pro-rata basis, for the time worked as a
part-time employee. Part-time employees are not eligible for health or life
insurance benefits provided through the Station. In the event any permanent
full-time Bargaining Unit Employee is on layoff status, the following will
apply:
(i) Any permanent full-time Bargaining Unit Employee on layoff who
is qualified for available part-time work shall be offered part-time employment
by seniority. Such part-time employment will be compensated at the part-time
hourly rate for part-time employees. Refusal or acceptance of part-time
employment shall in no way affect the Employee's recall rights.
(ii) In the event all qualified full-time Employees on layoff
refuse part-time employment or there are no full-time Employees on layoff
qualified for the available part-time work, the Company may hire one (1)
part-time Employee to perform the available work.
-4-
<PAGE> 6
5.2 (a) Employees regularly assigned to the news department may be
assigned a full eight (8) [or ten (1O) if on a four (4) day schedule] hour
shift, and if so, such Employees shall be assigned a twenty (20) minute paid
meal break within such shift on a regularly scheduled basis, provided a twenty
(20) minute uninterrupted period will be allowed for a meal during the shift.
(b) Employees scheduled on outside productions or new, including but
not limited to minicam, still photos, live ENG News assignments, shall take a
lunch period in the 4th, 5th or 6th hour (or within one [1] hour of this time
span in case of unforeseen news gathering requirements) of the shift as job
duties dictate and with the approval of the management person in charge.
Assigned travel time during the work shift shall not be considered
as part of the lunch period. If the lunch period cannot be taken, the
appropriate penalty shall apply as stated in Section 5.10(c).
(c) Employees assigned to television remotes (including those
involving live ENG pick-up) may be scheduled for a shift of eight (8)
consecutive hours or less with no scheduled lunch hours.
(i) A lunch period may be taken by Employees on remotes on
Company time, at whatever time it is possible without interfering with the
setup, rehearsal or broadcast of the remote.
(ii) When an Employee is assigned to a remote and is not allowed
at least thirty (30) minutes to eat while on duty on a TV remote, he shall
receive a penalty payment of five dollars ($5.00) in addition to any and all
pay received for time worked.
(iii) An Employee will not be required to ride in the TV remote
truck as a passenger unless suitable seats are provided. An Employee, if
properly qualified and capable of doing so, may be assigned to drive the TV
remote truck.
(iv) When an Employee works on a remote longer than eight (8)
consecutive hours, he shall receive overtime pay in accordance with appropriate
provisions of this Agreement.
5.3 In the event an Employee works beyond his regular tour of duty, he
shall be paid an overtime rate of time and one-half for the first five
consecutive hours worked during that day, and thereafter, at the rate of two
times his regular rate for all such continuing overtime hours on that day.
-5-
<PAGE> 7
5.4 (a) An Employee shall have two (2) [three (3) in the case of Employees
assigned to four (4) ten (10) hour shifts] days off in each seven (7) days,
which shall be either consecutive or the last and first (1st) days of
contiguous weeks (except as provided in 5.5).
(b) Schedules of working time (exclusive of overtime and exclusive of
lunch hours, the changing of which is provided for in Section 5.10) shall not be
changed unless notice of such change in working hours is posted seventy-two (72)
hours in advance of the time of which such change in schedule is effective,
except in circumstances beyond the control of the employer.
(c) Hours of work shifts and meal periods shall be posted at least
fourteen (14) days in advance. The Company shall have the right to make
subsequent modifications to accommodate the needs of the Station and the
affected Employees. Changes in days off will be posted fourteen (14) calendar
days in advance of the beginning of the work week in which the change will be
effective, except for changes about which the Company was not notified prior to
the time for changing the schedule and that are caused by personal leave,
personal days off, termination of probationary Employees, resignations or
extended illness of Employees.
5.5 (a) To accommodate a change of work days, it shall be permissible to
grant an Employee two (2) non-consecutive days off and no more than four (4)
[five (5) in the case of Employees assigned to four (4) ten (10) hour shifts]
consecutive days off. A non-consecutive day off is defined as at least
twenty-four (24) hours plus ten (1O) hours.
(b) The Company agrees to work with technicians with a view toward
achieving a system whereby a member of the unit may be granted, upon request, a
change of days off after working a given schedule for a period of six (6)
months, in a way which will satisfy the Employee and not interfere with the
Station's lawful and efficient operation.
5.6 Regular work shifts, exclusive of overtime, shall in all cases be
separated by at least ten (1O) hours. In the event an Employee starts a work
shift prior to the end of the turnaround period, hours within the turnaround
period shall be overtime work and shall be paid at a rate of one (1) times the
Employee's regular rate in addition to the Employee's regular rate of pay for
such hours, or portions thereof, worked during the turnaround period. The
turnaround period begins with the end of the last regularly scheduled shift,
exclusive of overtime, or in the case of days off, ten (1O) hours prior to the
Employee's next scheduled work day. Regularly scheduled hours may be cancelled
by the Company without reduction of regular pay to the Employee on less than
sixty (60) hours notice where to do so would avoid invading turnaround. At the
end of each work shift or absence (excluding vacation), an Employee shall
ascertain the next indicated work assignment as posted on the working schedule.
5.7 (a) Turnaround pay or penalty shall not apply to absences occasioned by
vacation, holiday, leave of absence or other absences occasioned by the
Employee, except bona fide illness of seven (7) days or less. Vacation, holiday
credit, leave of absence or other absences
-6-
<PAGE> 8
occasioned by an Employee, with the exception of illnesses of seven (7) days or
less shall be computed on the basis of the number of days times twenty-four
(24) hours.
(b) Notwithstanding anything in this Agreement to the contrary, a ten
(1O) hour turnaround shall apply to Employees assigned as vacation relief,
schedule changes for Unit Employees (only one such change within a thirty (30)
day period) and/or to an Employee who requests and is granted a schedule change.
5.8 Should an Employee, at Company request, be required to work on his
scheduled days off or in excess of forty (40) hours per week, or in excess of
eight (8) [ten (10) for 4/10 Employees] hours per day, overtime rates of pay
(time and one-half) shall apply on the first such day off or for hours in excess
of eight (8) [ten (1O) for 4/10 Employees] in one (1) day or in excess of forty
(40) in one (1) week. An Employee required to work on the second and/or third
such scheduled day off shall receive double his base rate for such hours worked.
5.9 Minimum call-in pay shall be four (4) hours at the employee's regular
rate of pay unless such additional time worked by virtue of the call-in results
in the employee exceeding 40 hours worked in a particular work week. In such
case, the employee shall receive overtime (at time and one-half his regular
rate) or upon mutual agreement, the employer and the employee may arrange for
appropriate compensatory time off for the hours worked in excess of 40. If an
Employee off duty is required to perform work, except work commencing prior to
or ending after and contiguous with his regularly scheduled shift, he shall
receive not less than four (4) hours of pay at time and one-half rates for such
call back on his regular workday and for the sixth (6th) (fifth in the case of
4/10 Employees) worked in any week. Provided: Employees may be called in for a
minimum of two (2) hours up to four (4) times each year, solely for the purpose
of attending department and/or station meetings or briefings.
5.10 Except as set forth in Section 5.2 (a) and (b) (transmitter, news
department, 4/10 Employees, outside production, minicam, and television
remotes), each Employee shall be scheduled a meal and rest period of one (1)
hour during his tour of duty.
(a) The Station may, in its discretion, schedule meal and rest period
of one-half hour during the employee's tour of duty if it reduces the remainder
of the employee's work day in a corresponding manner. On days an Employee works
only his regular shift or call-in of seven (7) hours or more, the following will
apply: the meal and rest period shall be scheduled only during the 4th, 5th, or
6th hour of the regular work shift.
(b) In the event an Employee works longer than his regular schedule by
starting earlier or working later, or both, such Employee shall receive a
twenty-five (25) minute rest or meal period for any work period which exceeds
six (6) hours of work preceding or following his scheduled meal period. Such
extra meal period will be on Company time and at a time reasonable to him and
suitable to the needs of the operation. In the event such additional
-7-
<PAGE> 9
period is not granted, he shall be paid time and one-half (1-1/2) pay in lieu
of the rest period in addition to pay for time actually worked.
(c) Assigned meal periods may be changed so long as the Employee is
notified of the change prior to the end of his preceding shift. A shift of the
starting time of up to one (1) hour in the scheduled meal period will not be
considered a change in the meal period. Similarly, a change in the starting time
of the meal period of more than one (1) hour, except when the change is made
prior to the end of the preceding shift, shall be considered a cancellation of
the meal period and overtime will apply. If an Employee works through his meal
period or if this period is cancelled, he shall be compensated for that hour as
overtime at the rate of time and one-half (1-1/2) which pay shall be in addition
to a penalty payment of five dollars ($5.00) for each occurrence. If an Employee
works up to one-half (1/2) of his scheduled meal period, such Employee will be
compensated for such time at time and one-half (1-1/2) pay, which pay shall be
in addition to a penalty payment of two dollars and fifty cents ($2.50) for
each occurrence.
5.11 Work shifts for technical Employees assigned to sign-on various media
will be scheduled so as to include sufficient time for checking and preparing
equipment for sign-on and work shifts for technical Employees assigned to
sign-offs will be scheduled so as to include sufficient time for the duties
involved in turning off equipment and otherwise securing same.
5.12 An Employee assigned to a shift which includes the hours of 1:30 a.m.
to 5:30 a.m. will receive a premium of 10% of his regular rate for all time
worked between 1:30 a.m. and 5:30 a.m., provided no other premium pay applies to
such hours.
5.13 There shall be no pyramiding of overtime, overtime pay or penalty
compensation. The maximum rate of pay shall be that which is called for in any
one circumstance covered in foregoing paragraphs, provisions of one paragraph
may not be used as base rate for computation for any other paragraph.
5.14 For all purposes under this Agreement, a television remote shall be
defined as any off the station premises production of a program or a segment of
a program which involves more than one (1) camera going to a common truck at the
remote site.
5.15 The Union and the Employees acknowledge that reasonable amounts of
overtime may be required to maintain efficient operations.
The Company will use all reasonable efforts to notify an Employee of
requirements to work overtime as early as possible. The Company will give
Employees who are requested to work overtime on their days off the opportunity
to turn down overtime provided other qualified Employees are available and
willing to work and it is practical to utilize them.
-8-
<PAGE> 10
6. HOLIDAY CREDIT, VACATIONS:
6.1 Employees not working the following holidays shall receive their
regular pay for: New Year's Day, Memorial Day, Fourth of July, Labor Day,
Thanksgiving Day and Christmas Day. To receive the holiday and compensation for
same, the employee must work his or her scheduled work days immediately prior
to and immediately after the holiday. The requirement of working the scheduled
days before and after the holiday shall not apply when the employee is absent
due to unforeseen, provable personal or family illness or due to bereavement
purposes. In the event that an employee works on a holiday, he shall also
receive one and one-half times his hourly rate for a normal shift on such
holiday.
6.2 Effective January 1, 1997, employees will earn and be eligible to
receive paid vacation during calendar year as follows:
IF EMPLOYED AT BEGINNING OF CALENDAR YEAR.
Less than 42 months service =2 weeks
42 months of service but less than 144 months =3 weeks
144 months or more =4 weeks
New employees hired subsequent to January 3, 1996 shall receive vacation
allotments to be earned and taken during their initial calendar year of
employment, based upon their hire date as follows:
If hired first quarter 7.5 days
If hired second quarter 5.0 days
If hired third quarter 2.5 days
If hired fourth quarter 0 days
6.3 (a) i. A vacation schedule form shall be posted on November 1 of each
year for the following year. Employees may pick and schedule appropriate
vacation time off in accordance with station policy, by seniority, until
December 15. After December 15, the proposed vacation schedule will become open
to all employees for selection purposes on a first come-first served basis. Up
to one week of vacation may be taken as single days, normally excluding days
during rating periods, subject to the operational needs of the station upon
advance approval of the department head.
Employees who quit during the year shall have their vacation allotment
prorated up to the date of employment termination.
ii. The Engineering and Production Department Employees shall be able
to go on vacation two (2) Employees at a time during the regular part of the
year, and three (3) at a time during the summer period. The News Department
Employees will be able to go on
-9 -
<PAGE> 11
vacation one (1) Employee at a time during the year. News Department Employees
may take one (1) week of vacation as single days, other than during rating
periods and subject to normal vacation scheduling or if not so scheduled, at the
mutual convenience of the Employee and the Employer and subject to business
conditions.
6.4 (a) An Employee otherwise eligible, who is terminated for any reason
except dishonesty or who quits or who dies shall receive the vacation credit
earned and not taken during the then current year In order to receive accrued
vacation credit, an Employee who quits must give two (2) weeks notice in
writing. Failure to give such notice shall result in forfeiture of any accrued
vacation or holiday credit earned during the year in winch the Employee leaves.
Any Employee recalled during the year in which the Employee was laid off shall
earn vacation credit on the basis of one (1) day of vacation each full month
from the date of recall until the next calendar year accrual will be based on
work within the year of recall.
(b) Only for the purpose of establishing a vacation schedule, the
following shall apply:
<TABLE>
<CAPTION>
TOTAL WEEKS OFF
CREDITED TIME AS OF ---------------
DECEMBER 31ST
-------------
<S> <C>
Over 6 months less
than 42 months 3 weeks
Over 42 months less
than 144 months 4 weeks
144 months or more 5 weeks
</TABLE>
6.5 An Employee must be informed prior to going on vacation when he shall
report back to work and to what shift he is being assigned for that first day
he returns to work.
6.6 If a scheduled vacation is disrupted, prior to commencement, due to
the Employee's illness, as below, death in the Employee's immediate family,
jury duty or military service, he shall be permitted to change his vacation or
the part affected to a mutually satisfactory period. For this section only,
illness is deemed to mean sickness for at least seven (7) days, which requires
a physicians attendance.
7. SICK LEAVE, LEAVE OF ABSENCE, BEREAVEMENT:
7.1 (a) The Company agrees to grant (10) working days sick leave per Year
at the regular rate of pay to full-time employees. During the full-time
employee's first year of employment he or she shall receive sick leave, based
upon his or her hire date, as follows:
-10-
<PAGE> 12
<TABLE>
<S> <C>
If hired first quarter 7.5 days
If hired second quarter 5 days
If hired third quarter 2.5 days
If hired fourth quarter 0 days
</TABLE>
(b) Sick leave may be utilized for absences due to illness caused by
childbearing.
(c) In order to receive sick pay, the Employer may require a Doctor's
Certification. Should such a request be made and the Employee fails to present
such, the Employee will not be paid for the absence. If a Doctors Certificate is
required by the Company, the Company will reimburse the Employee for the
uninsured portion of the cost.
(d) Employees may "bank" up to a maximum of ten (10) unused sick days.
Such "banked" days may be used only after exhaustion of the employee's current
sick leave.
(e) During the first (1st) year of employment, an Employee may use
one (1) of his/her paid sick leave days for personal reasons after completion of
six (6) months of employment and shall be entitled to use an additional or
second (2nd) day of his sick leave for personal reasons after he has completed
his twelve (12) months of employment. Employees who have completed one (1) year
of service as of December 31 may use up to two (2) days of their paid sick leave
in each ensuing year for personal reasons. Such personal days may be scheduled,
subject to business conditions with a minimum of two (2) week advance notice,
except in situations where such notice could not be given that is, for a death
of a family member not covered by bereavement leave or to bereavement leave,
because of the hospitalization of a member of the Employee's household or as
sick leave days after exhaustion of current sick leave.
(f) Employees may use up to two (2) half-days of sick leave per year
when required to be absent from work to visit doctors or dentists.
(g) Sick pay shall have no value except as provided herein.
7.2 Upon written request of the employee, the Station may, in its
discretion grant unpaid leaves of absence for reasonable purposes, including
leave for union activity or other justifiable cause for specific periods up to
but not exceeding one year in duration. Such leaves shall be without pay or
benefits. Seniority shall be frozen during the term of the unpaid leave of
absence. Upon return to employment from such leave of absence, the employee
shall be given his former position, without loss of any benefits and the Station
may release the substitute employee from employment.
The Station will not be required to grant a leave of absence for union
activity to more than one employee at any time and for personal reasons
specified above to more than one employee
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<PAGE> 13
at any time. In either instance, at least two weeks advance notice shall be
required from the employee in order for the Station to consider the request for
such leave of absence.
The Station will grant leaves of absence to qualified
employees for purposes covered under the Family Medical Leave Act, including
but not limited to, unpaid leaves of absence for personal illness or serious
family illness, etc. The parties will be governed by the provisions of the
Family Medical Leave Act with respect to rights and obligations for such
covered leaves of absence.
7.3 Employees shall be permitted to serve on jury duty. During the
first two (2) weeks of jury duty, the Employee shall receive his straight time
daily rate up to a maximum of forty (40) hours per week. Each day that an
Employee serves on jury duty shall be considered a day worked for purposes of
vacation and seniority credit. Employees called to jury duty, if not already on
a Monday to Friday day schedule, will revert to such a schedule. Such change in
schedule shall not result in premium pay under this Agreement to any Employee.
7.4 Bereavement Pay - Employees will be paid up to three (3) days
for death and funerals in the immediate family. The immediate family shall
include: parents, step-parents, children, step-children, brother, sister,
spouse and mate living with Employee. Employees will receive one (1) day with
pay to attend the funeral of grandparents, mother-in-law, father-in-law and
grandchildren. Pay will be paid for regular workdays only up to and including
the day of the funeral. If extensive travel is required in order to attend to
the funeral and other arrangements, the Station will grant the employee
additional time off, either as unpaid leave or, at the request of the employee,
in exchange for accrued vacation or unused sick leave which the employee may
have.
7.5 An Employee on sick leave, leave of absence, jury duty, or
bereavement leave shall ascertain, prior to the end of such period, when he
shall report for work.
8. ARBITRATION - CONTROVERSIES AND DISPUTES:
8.1 Should any dispute or grievance arise between the Company and
the Union regarding the meaning or application of any of the provisions of this
Agreement or should any other dispute arise hereunder, negotiations for their
settlement shall be conducted in the following manner.
8.2 The Company agrees to meet with a Grievance Committee, composed
of Employees regularly employed by the Company, for the purpose of adjusting
all disputes and grievances. Such a meeting of the Company and the Union's
Grievance Committee may be called by either party upon written notice to the
other within seventy-two (72) hours after the cause of the dispute or grievance
arose, and no dispute or grievance shall be considered unless such notice is
given within such time limit. Said meeting shall take place not later than
three(3) business days after issuance of said notice. Said notice shall contain
a concise statement of the facts giving rise to the dispute or grievance.
-12-
<PAGE> 14
8.3 Any dispute or grievance as described in 8.1 above that cannot
be resolved by the parties within ten (10) days after it has been submitted
under 8.2 above, shall be submitted to an impartial arbitrator, who shall be
appointed in accordance with the rules and regulations of the American
Arbitration Association. The decision of the arbitrator shall be final and
binding upon both parties. The fee of any such arbitrator shall be paid one-half
(1/2) by the Company and one-half (1/2) by the Union.
8.4 So long as the Company complies with the above provisions of
the grievance procedure, the Union will not authorize or direct its members to
strike or picket the Company in any manner whatsoever during the period of this
Union Agreement as long as the Company complies with the above provisions of
the grievance procedure. Likewise, the Company will not direct or authorize a
lock-out of Union members, as long as Union complies with the above provisions
of the grievance procedure.
8.5 When any member of the Committee for the Union are on duty and
are called upon to discuss with representatives of the company arising from any
condition of employment, said members of the Committee during such period of
discussion in reference to such labor problems will be paid their normal wage
rate by the Company. Except as provided in this Section (8.5), Union
representatives and/or Employees shall refrain from conducting any Union
business on Company time.
8.6 It is agreed that any and all claimed breaches of this
Agreement, whether alleged to have been committed by the Company, the Union or
their respective agents or officers, or by the Employees; and all grievances,
disputes, stoppages and any and all differences between the parties concerning
the interpretation or application of the provisions of this Agreement shall be
settled and determined exclusively through the process of collective bargaining
and if that fails, by the processes as herein provided.
8.7 The company recognizes the fact that the only agency which can
authorize a strike, stoppage or interruption or curtailment of operations for
Rochester Local 22 is the Executive Council of NABET. Neither Rochester Local 22
nor NABET shall be held liable for any of the actions of their officers or
agents and/or members, unless the Executive Council of NABET shall have
specifically authorized such actions, provided, however, that in the event of a
strike, stoppage or curtailment of operations that is not authorized by the
Executive Council of NABET, the said Executive Council shall take all reasonable
steps to end same promptly. Individual Employees will be liable for their
actions and subject to disciplinary action by the Company.
9. WAGES
GROUP I - ENGINEERS TECHNICIANS AND PHOTOGRAPHERS
9.1 All new full-time Employees shall be paid no less than $300.00
weekly effective June 1, 1996. This entry level rate shall remain in effect
throughout the term of this Agreement.
-13-
<PAGE> 15
(a) The wage rates of all Bargaining Unit Employees
(full-time) shall be increased as follows:
Effective June 1, 1996, all employees shall receive
a 4% increase in their base wage rate.
Effective June 1, 1997, all employees shall receive a
5% increase in their base wage rate.
Effective June 1, 1998, all employees shall receive
a 5% increase in their base wage rate.
Effective June 1, 1999, all employees shall receive a
4% increase in their base wage rate.
The above wage increases shall not prohibit the
Station from awarding merit pay raises or other increases above the minimum
increases set forth in this Agreement.
(b) Upon execution of the Agreement, there shall be paid
a single wage bonus of $500 to each full-time employee and $250 to each
part-time employee. This bonus is a one-time only payment and is not added to
the employee's base wage for computation of future increases.
(c) Eligible employees shall receive an additional bonus
within 15 days of the execution of the Agreement, representing the conversion
of accumulated but unused vacation leave for 1995 and the period commencing
January 1, 1996 through May 31, 1996. Such reimbursement is shown in Memorandum
of Agreement attached.
(d) Paid-time employees shall be paid a minimum hourly
rate during the term of the contract as follows:
Effective June 1, 1996 $7.25 per hour
Effective June 1, 1997 $7.61 per hour
Effective June 1, 1998 $8.00 per hour
Effective June 1, 1999 $8.31 per hour
GROUP II - SUPERVISORS - All individuals within Group II shall receive
eight percent (8%) above their wage rate during the term of the Agreement.
9.2 During the term of this Agreement, full-time Bargaining Unit
Employees shall be entitled to participate in the Blue Cross/Blue Shield and
Preferred Care Plans maintained by the Station for its non-union employees, or
equivalent plans. The Company shall continue to contribute toward the cost of
providing all such insurance at the same amounts as it is contributing as of
-14-
<PAGE> 16
May 31, 1996. Bargaining Unit Employee contribution rates shall remain the same
for such plans as in effect on May 31, 1996.
Increases in the cost of providing such health insurance plans
following June 1, 1996, in excess of the previous costs shall be allocated as
follows: Annually, the first 8% total increase in the cost of such premiums
shall be paid by the employee. Any increase above 8% up to 16% will be paid in
total by the employer. In the event the annual premium increase is greater than
16%, such increase shall be absorbed and paid on a 50-50 equal basis by the
bargaining unit employees and the Station.
DENTAL INSURANCE: During the term of this Agreement, bargaining unit
employees and their dependents shall be entitled to continue participation in
the dental plan maintained by the Station for its non-union employees, or
equivalent plans as in effect on May 31, 1996. The Company shall continue to
contribute toward the costs of providing all such insurance at the same amounts
as it is contributing as of May 31, 1996. Bargaining unit employee contribution
rates shall remain the same for such plans as in effect on May 31, 1996.
Increases in the cost of providing such dental insurance plans following June 1,
1996 in excess of the previous costs shall be allocated as follows: Annually,
the first 8% increase in the total cost of such premiums shall be paid by the
employer. Any increase above 8% up to 16% will be paid in total by the employee.
In the event the annual premium increase is greater than 16%, such increase
shall be absorbed and paid on a 50-50 equal basis by the bargaining unit
employee and the Station.
9.3 During the term of this Agreement, the Company will maintain
the life insurance, accidental death and dismemberment insurance short and
long-term disability insurance plans in effect on May 31, 1996, to the benefit
of the Employees.
9.4 If the Company changes carriers, it will notify Employees and
the Union prior to such change and will substitute substantially equivalent
plans without interruption of coverage.
9.5 Employees shall be eligible to participate in the Station's
401(k) savings plan wherein they may contribute, in accordance with the plan
specifications, up to 15% of their pre-tax earnings. In addition, the employer
will provide matching contributions to those made by the individual employees,
up to a maximum of 3% of salary. Participation in the 401(k) plan will be
dependent upon enrollment date requirements and minimum service eligibility as
contained in the employee handbook and summary plan description.
9.6 The parties acknowledge that during the course of
negotiations, they discussed retirement programs and other fringe benefits and
agreed to exclude the Employees covered by this agreement from any such
programs or benefits which are not explicitly provided for herein.
-15-
<PAGE> 17
10. TRANSFERS, SENIORITY, TERMINATION OF EMPLOYMENT:
10.1 When experienced Employees are transferred from one department
of the Company to the Technical Department, or if new Employees with experience
are hired, the Company, in its sole discretion, may make allowance for such
past experience by fixing a rate commensurate therewith in accordance with the
above pay scale.
10.2 (a) The Company agrees that individual seniority
computations, including rights to benefits based upon seniority, layoffs and
recall after lay-off, are to be based on years, or fractions thereof, of
full-time employment.
(b) The Company shall have the right to designate Group
II Employees, and in the event of a reduction of the number of Group II status
Employees or for just cause, the Company shall have the right to relieve such
Group II Employees of their Group II status and duties with corresponding
adjustments in pay. Such Company decisions shall not be subject to the
grievance and arbitration provisions of this Contract, provided such Company
decisions are not capricious or discriminatory.
10.3 In the event a permanent employee or employees must be laid
off because of insufficient work, relative ability to perform the work shall be
a contributing factor in deciding which employee shall be laid off. If relative
abilities are equal, then seniority within the job classification shall
prevail. In the event the selected employee has prior service with the Station
in another job or classification within the bargaining unit, such employee may
utilize that seniority to displace a less senior employee in such other job or
classification, as long as the employee can perform the functions of the job.
In the event that an employee displaces a less senior employee in a job
classification, such employee shall be allowed a trail period of up to sixty
(60) days to demonstrate that he or she can perform the functions of the
position in a satisfactory manner. The Station shall evaluate such performance
within thirty (30) days of the employee displacing the less senior employee,
and in performing such evaluation, shall receive, where possible, input from
the Group II supervisor. After such layoffs, recall to work shall be in the
reverse order; that is, the last Employee laid off on account of seniority
shall be the first to be recalled, provided such Employee is then capable of
and qualified to perform the available work. Employees shall be retained on the
seniority roster for one (1) year after layoff. The Company agrees to recall
during said period from said list before it hires any new Employees, provided
the Employees to be recalled are then capable of and qualified to perform the
available work. It is further provided that Employees shall be retained on the
seniority roster only until such time as they shall refuse a permanent position
which has been offered to them by the Company. The Company will be held to have
satisfied its obligations under this Section by making such offer in writing to
the Employees at the last address he has furnished the Company. If no reply is
received from the Company's written offer within fourteen (14) days, the
Employee will be held to have refused the offer. Employees so recalled within
such one (1) year period shall receive full credit for total years worked for
the Company exclusive of the period of the layoff, unless otherwise
specifically provided under the provisions applicable to any particular
benefit.
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<PAGE> 18
10.4 Employees covered by this Agreement who are promoted to
positions in the Engineering Department of the Company outside the coverage of
this Agreement shall retain all of their seniority rights accrued up to the
time of leaving the unit, and shall be permitted to exercise their seniority
rights and to return to the unit with the above seniority provided they do so
within one-hundred-twenty (120) days following the promotion. (This provision
does not apply to persons presently promoted outside the coverage of the
Agreement.)
10.5 Employees hired specifically for vacation relief, Employees
hired to temporarily fill a vacancy, or as a substitute for an Employee on a
leave of absence, shall be considered temporary Employees for a period not to
exceed one-hundred-eighty (180) work days in a calendar year and shall not
accrue seniority. The Company shall notify the Union no later than thirty (30)
days after the hiring of a temporary Employee. If such notice is not sent by
the Company, then such an Employee shall be regarded as a permanent Employee.
Any temporary Employee retained more than one-hundred-eighty (180) work days in
the employ of the Company shall be considered a permanent Employee and his
seniority shall date back to the last date of hire. The wages of such Employees
shall not be less than one-hundred eighty dollars ($180.00) per week. Temporary
Employees on vacation relief shall be exempt from the provisions of Sections
5.4, 5.5, 6.1, 6.2, 6.3, 9.3 and 9.4. The Company may assign up to four (4)
regular Employees to cover vacation schedules. Regular Employees, if so
assigned, shall receive a fee of ten dollars ($10.00) per week, in addition to
their regular salary, for each week so assigned and the restrictions of Section
5.5 shall not apply.
10.6 No Employee may be disciplined or discharged except for cause,
including but not limited to disloyalty, dishonesty, inability to do his work
properly, inefficiency, unproper conduct, violation of established rules. The
Company shall have the absolute right to discharge an Employee for cause, and
shall notify either Steward of any such discharge. The Stewards shall have the
right to question such discharge only on the ground that it was not for cause.
10.7 An Employee who desires to leave the Company shall give two
(2) weeks written notice to the Company. The failure to give such notice shall
result in the forfeiture of vacation and holiday credit entitlement as provided
in Section 6.2. The Company shall give four (4) weeks notice or four (4) week
pay in lieu of notice to any Employee whom it lays off as part of a reduction
of force. All other discharges may be immediate without notice or additional
pay.
10.8 In the event of layoffs resulting from technological
improvements, the following procedures shall be followed:
(a) The Employee shall be given three (3) months notice
of such layoffs and when released from employment shall receive severance pay
as follows:
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<PAGE> 19
<TABLE>
<CAPTION>
Length of Full-Time Service Severance Pay Equal
- --------------------------- -------------------
<S> <C>
6-12 months 1 week basic salary
12-24 months 3 weeks basic salary
24-36 months 5 weeks basic salary
36-48 months 7 weeks basic salary
48-72 months 9 weeks basic salary
72-120 months 12 weeks basic salary
120 months or more 15 weeks basic salary
</TABLE>
(b) It is understood that the provisions of this Section
are intended to be used only in case of change from technological improvements.
Reduction of force attributable to other causes, such as reduction in hours of
operation or deletion of certain programs, shall not be covered by the
provisions of this Section.
(c) See Appendix B for Seniority List.
11. TECHNICAL EQUIPMENT:
11.1 Employees within the bargaining unit will be employed,
consistent with their normal job duties, and may operate technical equipment
previously and traditionally performed as bargaining unit work. However, the
foregoing shall not, in any manner, prohibit other employees of the Station
from being permitted by the Company, in its discretion, from operating such
technical equipment from time to time. Such operation of technical equipment by
non-bargaining unit employees shall be used to supplement, but not supplant,
bargaining unit employees from performing regular work associated with their
classifications.
11.2 Any program, including live or taped remotes, over five (5)
minutes in duration, produced and originated by WROC-TV within a fifty (50)
mile radius of the WROC-TV studios for exclusive telecast on WROC-TV must be
produced with WROC-TV employed technicians performing the duties covered by
this Contract, provided unit personnel are qualified and available to perform
the work in question.
12. TIME AND TRAVEL ALLOWANCE:
12.1 When sent out of the city in which the studios or transmitters
of the Employer are located, on assignments requiring him to remain away
overnight, an Employee shall be credited with one (1) eight (8) hour shift for
each and every day he is away on such assignment. If his actual work in any one
(1) day exceeds more than eight (8) hours time, he shall be credited with such
additional time and shall be compensated for such additional time at the rate
of time and one-half (1 1/2) the regular rate of pay.
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<PAGE> 20
12.2 Travel expenses for actual live broadcasts or recordings for
broadcast or audition shall be provided by the Company. Payment for the use of
employee auto shall be at the Internal Revenue Service rate of reimbursement.
Employees must have a valid New York State driver's license to operate any
Company-owned vehicles, and in the event of using their own personal vehicle,
proof of adequate insurance in force is required. No Employee shall be required
to use his car or any other station employee's car as a condition of employment
13. DUTIES:
13.1 The duties of unit Employees for the purpose of this Agreement
shall be defined as the non-exclusive operation, maintenance and construction
of the technical equipment as noted in Article 11.
13.2 (a) Bargaining unit employees may be required to perform
other related duties as assigned by the Station, but will not be required to
regularly perform duties not reasonably compatible with their vocations or
their abilities. The Station will not assign any work or duties to bargaining
unit employees where there exists danger or bodily injury or known conditions
detrimental to health.
(b) Where operating errors occur while an Employee is
performing multiple job functions, such facts shall be considered in
extenuation of the errors. The Company further agrees to assign multiple job
functions on a reasonable basis.
13.3 No Employee shall be required to furnish equipment or
supplies.
13.4 (a) It is agreed that the Company will not require
Employees to drive unsafe station vehicles or to work under unsafe conditions.
The Company agrees that a Safety Committee shall be established. The Committee
shall consist of at least one (1) member of management and one (1) member of
the Union. If the Committee agrees that a condition is unsafe, Employees will
not be required to work under that condition until it is corrected.
(b) Any station vehicle that is unregistered or uninsured
or uninspected will not be driven by any Employee under any circumstances. Any
tickets received for violations above shall be the responsibility of the
Company and not the Employee.
13.5 Except as modified by Article 11, it is agreed by the Company
that the scope of the normal duties of the Employees shall include all
operations and maintenance duties as well as duties of construction, assembly,
setting up, placement, handling, moving, transporting or storage related to or
performed in conjunction with the following:
Sound effects and video camera and dolly operations; film
camera operations including film audio, film cutting,
processing, splicing, retouching and videotape editing if done
by the Company; television
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<PAGE> 21
recording (videotaping), film and slide projection (including
front and rear screen projection); studio and set lighting and
light direction, audio and video control operations;
transmitter operations, stage and studio sets and properties,
vehicle operation (only when it is a mobile transmitter or
vehicle designed exclusively for operating or moving
technical equipment); television prompting equipment
(telecue), automatic logging equipment, cue cards for
prompting (off camera); and Employees assigned to perform
floor work or camera operations will have the additional duty
of cueing artists, actors, and announcers who are performing
in the studio or at remote locations.
Such duties may be modified in accordance with Section 13.2
above.
13.6 A technician from the crew will be assigned as Technical
Director during rehearsals and broadcast of programs requiring the services of
four (4) or more technicians. The Technical Director shall:
(a) see to it that the crew is in the studio (or studio
control room) as scheduled.
(b) That his crew is properly assigned to cover the many
aspects of a live production, including but not limited to, camera set up and
operation, lighting, collecting and setting up props as scheduled or as
requested of the Technical Director by the producer, audio operation including
the securing and auditioning of all audio material to be used, mike placement,
etc.
(c) That any scheduled studio time not actually assigned
or used in the set up, production, rehearsal, or telecast of a live production,
be used as training sessions to further acquaint the crew members with the
camera operations, lighting, and other "routines" as he may select or as may be
assigned by supervisory technical personnel.
(d) Receive a fee of four dollars ($4.00) per day for
each day so assigned unless such Technical Director is already a Group II
Employee.
(e) The Technical Director shall also be responsible to
perform other related duties as assigned by the Station.
13.7 The duties of Group II Employees shall be: general supervision
and direction of technicians, not including hiring and/or firing, but may
include but not be limited to, issuing operating instructions, direction of
installation where necessary, installation operation, and maintenance of
technical equipment as defined herein. Group II Employees shall also schedule
work hours if so delegated by Management. However, scheduling is totally
subject to management approval. In addition, Group II Employees shall be
responsible for operational preparation, planning and performance during the
tour of duty. Group II Employees shall direct the work of the technicians
assigned to them and direct the solution of routine problems with respect to
NABET
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<PAGE> 22
personnel and facilities assignments). Group II Employees may assign or
reassign NABET personnel to meet station requirements subject to Management
direction and control. Group II Employees may recommend and/or impose
discipline up to but not including discharge.
13.8 If the Company temporarily upgrades a Group I Employee to
Group II status, for reasons such as, but not limited to, temporarily filling a
vacancy, covering for vacations or absences, or if it deems supervision is
appropriate on a shift when a Group II Employee is not scheduled to work, such
Employee shall receive a fee of seven dollars and fifty cents ($7.50) per shift
for each shift so assigned, provided that this paragraph may not be used by the
Company as a device to permanently reduce the number of Group II Employees on
staff below two (2).
13.9 The Company agrees that it will make reasonable efforts to
schedule a fifteen (15) minute period in advance of any live television show in
which no Employees will be assigned rehearsal or video taping duties.
13.10 Except for promotional purposes and/or integral program parts
(introduction, promotion and transition), technical Employees will not be
required as a condition of employment to present themselves to public
appearance or display by television.
13.11 Bargaining unit employees may be assigned for photographing
and editing news footage and may perform the function of asking questions of
subjects to obtain sound bites, etc. One-man crews may be used to set up and
operate live microwave equipment.
13.12 Editing may be performed by Directors, Promotions Manager,
Assistant Promotions Manager, Anchors, Reporters or Producers.
14. MINIMUM EMPLOYEE COMPLEMENT:
During the term of this Agreement, the minimum full-time employee complement
for the bargaining unit shall be 28 employees.
15. TERM OF AGREEMENT:
15.1 This Agreement shall become effective on June 1, 1996, and
shall continue in full force and effect through 3:00 a.m. May 31, 2000. At the
expiration date of this Agreement, this Agreement shall be automatically
renewed from year to year unless at least sixty (60) days prior thereto, or
prior to the end of any subsequent yearly period, as the case may be, either
party gives written notice to the other of any intention to modify, amend or
terminate the Agreement as of the end of such yearly period. In the event that
such notice is given, the Agreement will be deemed terminated as of the end of
such period.
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<PAGE> 23
15.2 Whenever notice is given under Section 15.1 above by either
party of proposed changes and negotiations thereon have not resulted in an
Agreement by the expiration date, either party may serve upon the other a
twelve (12) broadcast hour written notice terminating this Agreement, the terms
and provisions of the Agreement shall continue in full force and effect until
the expiration of said twelve (12) hour period.
15.3 It is the desire and intention of the parties to reach a
mutually satisfactory solution of their common problems, and the parties hereby
agree that they will consult and cooperate with each other in respect to any
matters covered by this Agreement, and that controversies arising hereunder
shall be promptly and amicably settled or disposed of.
IN WITNESS WHEREOF, THIS AGREEMENT has been executed on behalf of the
parties hereto by their respective officers, thereunto duly authorized on the
day and year above written.
/s/ MICHAEL TODY 7/22/96 /s/ JOHN PURCELL
- ----------------------------------- --------------------------------------
Michael Tody John Purcell
on Behalf of Local 22, NABET General Manager (WROC-TV)
/s/ JAMES ADAMS
- -----------------------------------
James Adams
International Representative, NABET
APPROVED:
[ILLEGIBLE]
- -----------------------------------
International President, NABET
-22-
<PAGE> 1
EXHIBIT 10.26
LOCAL 5
INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS
AND
TELEVISION STATION PARTNERS - WTOV-TV
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 - Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 - Scope of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 - Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 - Union Security . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 - Check-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 - Union Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 - Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 - No Strike - No Lockout . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 - Probationary Period . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 - Temporary Employees . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 - Part-Time Employees . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12 - Equal Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.13 - Transfer of Ownership . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 - Grievance and Arbitration Procedure . . . . . . . . . . . . . . . . . 7
2.2 - Investigation of Grievance . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 - Hours of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 - Workweek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 - Work Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 - Minimum Shift for Employees Scheduled to Work . . . . . . . . . . . . 9
3.5 - Rest Period between Shifts. . . . . . . . . . . . . . . . . . . . . . 10
3.6 A. - Preparation Time . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 B. - Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 - Travel Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 - Overtime and Premium Pay . . . . . . . . . . . . . . . . . . . . . . 11
3.9 - Travel Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 - Rate Progression . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.11 - Shift Differential . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 - Payday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 - Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 - Vacations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 - Sick Leave and Funeral Leave . . . . . . . . . . . . . . . . . . . . 15
3.16 - Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.17 - Group Life, Hospitalization, Major Medical and Dental Insurance . . . 16
3.18 - Bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 - Hazardous Work . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 - Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 - Clean and Safe Conditions . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
SECTION 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 - Leave of Absence . . . . . . . . . . . . . . . . . . . . . 18
5.2 - Layoffs and Preferential Re-Hire . . . . . . . . . . . . . 19
5.3 - Discharges . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 - Military Service . . . . . . . . . . . . . . . . . . . . . 20
5.5 - Management of the Business . . . . . . . . . . . . . . . . 20
5.6 - Total Agreement . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 - Termination of Agreement . . . . . . . . . . . . . . . . . 21
ii
<PAGE> 4
AGREEMENT
This Agreement entered into as of this 1st day of December, 1994,
by and between television Station Partners, owner and operator of Television
Station WTOV-TV, Steubenville, Ohio/Wheeling, West Virginia (hereinafter
referred to as the "Company"), and Local Union No. 5 of the International
Brotherhood Of Electrical Workers (hereinafter referred to as the "Union"),
bargaining representative for the Engineers, Switchers-Directors,
Projectionist-Audio, Floormen, Cameramen, Film Editors, Associate Film Editors,
Property Managers, and Artists (hereinafter referred to as "Technicians" or
"Employees"), employed by the Company at Station WTOV-TV during the term of
this Agreement.
BASIC PRINCIPLES
The general purpose of this Agreement is to set forth the hours
of work, rates of pay, and conditions to be observed by the Company and the
Union; and to provide orderly and harmonious procedures between the Company and
the Union; and to secure a prompt and fair disposition of grievances.
In consideration of the covenants and agreements contained
herein, it is agreed as follows:
SECTION 1
1.1 - Duration - This Agreement shall take effect the first day of
December, 1994, and shall remain in effect through November 30, 1997.
1.2 - Scope of Work - The work covered by this Agreement to be
performed only by Technicians, shall include all work in connection with the
installation (except the installation of conduit and alternating current wiring
therein, the wiring of light circuits and the wiring of power circuits up to
the final distribution panel), operation, maintenance and repair of television
<PAGE> 5
broadcast, facsimile and audio equipment and apparatus by means of which
electricity is applied in the transmission or transference production or
reproduction of voice, sound or vision with or without ethereal aid, including
all types of recordings, editing and splicing of film and tape and all work of
the manner and kind now performed by the present bargaining unit on equipment
owned, operated, leased or rented from other parties by the Company. Excluded
will be the equipment and apparatus used in the Wheeling West Virginia
satellite news studio, the teleprompter, all portable audio tape recorders, all
silent or sound film and tape equipment and film and tape editing equipment
used in news reporting, sports coverage, public affairs, and documentary
programs. Provided that bargaining unit employees may be assigned to operate
the Teleprompter so long as they are not required to simultaneously perform
other work, and so long as other personnel normally assigned to the
Teleprompter are not at work.
Notwithstanding anything to the contrary contained in this
Agreement, the operations manager, the assistant operations manager, the
creative services director, the chief engineer, and the assistant chief
engineer shall be permitted to perform bargaining unit work which is incidental
to their jobs, provided that such work may not exceed twenty percent (20%) of
their work time; and provided further that supervisors will not be scheduled in
advance to perform on air work.
1.3 - Recognition - The Company recognizes the right of its employees to
organize and to bargain collectively through representatives of their own
choosing. Local Union No. 5 of the International Brotherhood of Electrical
Workers is hereby recognized as the collective bargaining representative of the
Employees.
1.4 - Union Security - It is a condition of employment that all
present employees in the bargaining unit who are tendering uniform initiation
fees and the payment of periodic dues shall continue to do so during the term
of this Agreement or any extension thereof. All employees
2
<PAGE> 6
who are hired into the bargaining unit on or after the effective date of this
Agreement shall take such steps as are necessary to tender uniform initiation
fees and periodic payment of dues effective on or after the thirty-first (31st)
day following the beginning of such employment or the effective date of this
Agreement, whichever is later. The Union may request that the Employer
discharge an employee who fails to discharge such obligations. In the event the
Employer complies with such request, the Union shall indemnify, defend and save
the Employer harmless against any and all claims, demands, suits or other forms
of liability that may arise out of or by reason of action taken by the Employer
in relation to the obligations of this section.
1.5 - Check-Off - The Company agrees to deduct from wages of Employees
membership dues in the Union, provided the Company receives from each Employee
on whose account such deductions are to be made, an individually signed
check-off authorization card. Such check-off authorization cards may be
irrevocable during the balance of the term of this Agreement or for one (1)
year after the date on the card, whichever occurs sooner, and shall be
irrevocable for a successive period of one (1) year or successive terms of
collective agreements between the Company and the Union, provided they are not
revoked within the specified period set forth in the authorization card. The
Company and the Union have agreed upon a form of check-off authorization card
which is attached hereto as Exhibit "A", and which, by reference, is made a
part of this Agreement. Such deductions shall be made from wages payable on the
first (1st) day each month following the date such membership dues become
payable, and the Company shall promptly remit the same to the Treasurer of the
Union.
1.6 - Union Discipline - The Union reserves the right to discipline
its members for violation of its laws, rules and regulations, not contrary to
the provisions of this Agreement.
1.7 - Representation - The Union and the Company agree to meet and
confer through representatives at reasonable times on any and all questions or
matters relating to the terms of
3
<PAGE> 7
this Agreement. Should any employee, acting in an official capacity as a
representative of the Union, confer with the Company at reasonable times for
reasonable periods during regular working hours, he may do so if it becomes
necessary, providing he makes provisions with another qualified employee to
replace him, without cost to the Company.
1.8 - No Strike - No Lockout - The Union and members of the
bargaining unit agree that there will be no strikes, slowdowns, concerted
refusals to work overtime or work stoppages of any kind including, but not
limited to, refusals to cross picket lines established at the Employer's
premises, and the Company agrees that it will not engage in a lockout during
the term of this Agreement, whether or not the underlying dispute between the
parties can be resolved under the grievance and arbitration procedures provided
in this Agreement. The Union further agrees that it will take every reasonable
means which is within its powers to induce Employees engaged in a strike or
work stoppage in violation of this Agreement to return to work. All questions,
disputes, or controversies as to the interpretation, application and/or
performance under the terms of this Agreement shall be settled and determined
solely and exclusively by the grievance and arbitration procedures provided in
this Agreement.
1.9 - Probationary Period - A new Employee shall be on probation for
the first one hundred eighty (180) days of his employment unless the new
Employee has had at least one (1) year of documented experience by a previous
employer in television work, then his probationary period shall be ninety (90)
days. If the Company finds, after a trial, such probationary Employee is not
qualified for the position, the Company may, during such probationary period,
terminate the employment of such Employee and such termination shall not be
subject to the grievance procedure. An Employee in the employ of the Company
beyond the applicable probationary period shall be considered employed on a
regular basis.
4
<PAGE> 8
1.10 - Temporary Employees - Temporary employees will be employees who
are employed to cover for the vacations, long-term illnesses and leaves of
bargaining unit Employees. Temporary employees are not covered by this
Agreement and are not eligible for the benefits hereunder. They may be laid
off, disciplined or discharged as determined by the Company and their layoff,
discipline, or discharge shall not be subject to the grievance procedure.
Temporary employees continued in the service of the Company subsequent to their
temporary employment shall receive credit for such service. Any such temporary
employee whose employment is continued beyond 180 days shall be covered by this
Agreement and shall be deemed to have completed his probationary period. A
disruption in service of less than 90 days of such a temporary employee's
employment shall not work a forfeiture of his time served immediately prior to
such disruption. At the commencement of any such temporary employment, the
Company shall notify the Union of such employee's status.
1.11 - Part-Time Employees - Part-time Employees are Employees who
regularly work less than a forty (40) hour week and not less than four (4)
hours on any day. They earn seniority credit of one (1) week for each forty
(40) hours worked. They will be given preference in filling full-time vacancies
on the basis of seniority if qualified. Their probation period shall be one
hundred eighty (180) days. Part-time Employees are subject to all provisions of
this Agreement except progression, workweek, workday, and schedules. A
part-time Employee who is regularly scheduled to work thirty-two (32) or more
hours per week shall have the option of obtaining the Group Life and
Hospitalization coverage provided for under Section 3.17 of this Agreement, on
the same basis as full-time Employees. A part-time Employee who has completed
six (6) months of service and who has worked eighty-eight (88) hours or more
per month during any three of the four preceding months, but who is regularly
scheduled to work less than thirty-two (32) hours per week shall have the
option of obtaining for himself or
5
<PAGE> 9
herself alone the Group Life and Hospitalization coverage provided for under
Section 3.17 of this Agreement, at the cost to the part-time Employee of
one-half (1/2) of the cost to the Company of providing such insurance. Such
part-time Employees shall not be permitted to enroll their dependents in such
insurance plans. The number of part-time Employees actively employed cannot
exceed 25% of the number of full-time Employees actively employed. Part-time
Employees will be laid off first should layoffs become necessary, provided
qualified full-time employees are immediately available to perform the work
required. A temporary decline in full-time Employees, such as because of a
resignation, absence or termination, will not require an immediate part-time
termination.
1.12 - Equal Opportunity - The purpose of the parties is for equal
opportunity for all Employees in that employment, promotion, demotion,
transfer, layoff, recall and disciplinary action will be applied without regard
to race, creed, color, age, sex, national origin or any other factor prohibited
by law, and the parties will administer the provisions of this Agreement
without unlawful discrimination. Whenever a male or female noun or pronoun is
used in this Agreement, it shall be deemed to apply equally to both sexes.
1.13 - Transfer of Ownership - The Company warrants that it operates
television station WTOV-TV. The parties agree that if the Company should
transfer or assign the operation of the station to any third party or parties
during the term of this Agreement as a result of any action of any governmental
agency immediately affecting the Company's operation of WTOV-TV or because of
involuntary transfer or assignment, the Company need not require the transferee
or assignee to assume the obligations of this Agreement, and if the transferee
does not assume such obligations the Union and its members shall be free of all
obligations hereunder, but all other cases of transfer or assignment of WTOV-TV
shall require the transferee or assignee to assume, for the benefit of the
Union and its members, the obligations of this
6
<PAGE> 10
Agreement, and the Company shall be required to pay Employees for any vacation
earned, but not taken under this Agreement, and any other compensation due.
SECTION 2
2.1 - Grievance and Arbitration Procedure - Any grievance which arises,
of a dispute as to the application of this Agreement shall be settled promptly
and without any interruption or suspension of work in accordance with the
following procedure:
A. Any Employee having a grievance may first refer the
complaint to his shop steward or immediate supervisor for oral discussion of
the problem involved. The supervisor shall be required to render an oral
decision on the grievance within twenty-four (24) hours following the
presentation of the grievance.
B. In the event the supervisor fails to decide the matter
within twenty-four (24) hours or should his decision be unsatisfactory to the
grieved Employee, the grievance shall then be reduced to writing, filed by the
grieved Employee and referred to the Union representative who in turn shall
submit the written grievance to the Operations Manager or Chief Engineer or
their designee.
C. Management or their representatives shall answer said
grievance in writing within seventy-two (72) hours, unless it is mutually
agreed between the parties to extend the time.
D. If after exhausting the foregoing procedure, the grievance
remains unsettled, the business agent of the Union or his representative and a
representative of the Company shall meet with the grieved Employee and his
representative at a conference wherein an effort shall be made to amicably
dispose of the grievance.
E.1. In the event any dispute between the Company and the Union
or any of the Employees in the bargaining unit shall not have been
satisfactorily settled by the above
7
<PAGE> 11
procedure, the matter shall be submitted for arbitration to a suitable
disinterested person as impartial arbitrator who shall be appointed by the
American Arbitration Association upon written application by the parties. The
impartial arbitrator shall interpret and apply this Agreement, but he shall not
have authority to alter or modify the terms of this Agreement. The decision of
the impartial arbitrator shall be in writing and final and binding on the
Company, the Union and the Employees involved. Each party shall bear the
expense of its own representatives at the arbitration hearing, and the other
expenses, including that for the impartial arbitrator, shall be divided equally
and paid one-half (1/2) by the Company and one-half (1/2) by the Union.
2. The grievance procedure may be utilized by the Company in
processing Company grievances. In processing such grievances the Union shall
observe the specified time limits in answering.
3. All grievances under this Agreement must be taken up
within one (1) week after knowledge of the alleged error is available to the
party bringing the grievance. Where no time is otherwise specified for a step
to be taken, then such action shall be required to be taken within one week,
provided that a week's extension shall automatically be granted so long as it
is requested before the end of the time limit.
2.2 - Investigation of Grievance - An authorized representative of
the Union shall be allowed access to WTOV-TV television station where members
of the Union are employed under this Agreement to inspect or investigate
television operations of the Company for compliance with terms and conditions
herein, provided he receives prior permission from the supervisor in charge and
further provided, there is no interruption of or interference with routine
operations.
SECTION 3
3.1 - Hours of Work -
A. Normal hours per week shall be forty (40) hours of work.
8
<PAGE> 12
B. Normal hours per day shall be eight (8) continuous hours
per turn, excluding lunch period.
3.2 - Workweek - The workweek shall commence for each Employee at the
beginning of his workday on Monday or his first workday thereafter and run to
the end of the tour of duty commenced on the fifth (5th) day of work. Subject
to Section 3.01, this Article shall not be construed to be a guarantee of hours
of work per day or per week. Determination of daily and weekly work schedules
shall be made by the Company and such schedules may be changed by the Company
from time to time to suit varying conditions of business; provided that changes
deemed necessary by the Company shall be made known to the Union Shop Steward
in advance whenever the circumstances permit. Changes may be made at any time
due to circumstances beyond the control of management, or when due to another
Employee's absence.
3.3 - Work Schedules - Schedules showing Employees' workdays shall be
made known to Employees in accordance with prevailing practices but not later
than 5:00 P.M., nine (9) days prior to the start of the calendar week in which
the schedule becomes effective. Changes may be made at any time due to
circumstances beyond the control of management, or when due to another
Employee's absence. However, all other changes must have forty-eight (48)
hours' notice, or double time (2x) shall be paid to the Employee for the hours
worked on that changed shift.
3.4 - Minimum Shift for Employees Scheduled to Work - An Employee who
is scheduled or notified to report and who does report for work shall be
provided with an assigned minimum of four (4) hours of work on the job for
which he was scheduled or notified to report or, in the event such work is not
available, shall be assigned to another job of at least equal rate of pay for
which he is qualified. Provisions of this paragraph shall not apply in the
event of fire, storm, flood, power failure, work stoppage, or causes beyond the
control of the Company.
9
<PAGE> 13
3.5 - Rest Period between Shifts - An Employee shall be allowed a ten
(10) hour rest period between the completion of one (1) day's tour of duty and
the beginning of the next day's tour of duty and before the start of a
scheduled vacation.
3.6 A. - Preparation Time -
1. Unless a separate crew activates and checks out equipment
before the start of each day's operation, the Employee(s) assigned to activate
the equipment shall be allowed a fifteen (15) minute "sign-on" time allowance.
At the conclusion of each day's operation, a fifteen (15) minute "sign-off"
time period shall be allowed.
2. The Company shall allow adequate time prior to live
programming for preparation, and shall schedule in Employees accordingly.
3.6 B. - Technology - It is management's intention, given existing
technology utilized by the station and the current conditions on weekends for
the live 6 and 11 P.M. news broadcasts, to schedule a crew of at least six (6)
persons covered by the contract.
3.7 - Travel Time - An Employee shall be credited with the following
time allowances:
A. When sent out of Brooke, Hancock, Ohio, Marshall, Belmont
and Jefferson Counties on an assignment requiring him to remain away overnight,
he shall be credited with no less than one (1) eight (8) hour shift for each
day he is away on such assignment. All time spent in traveling up to eight (8)
hours in any one (1) day, exclusive of the time from midnight to 8:00 A.M.,
when sleeping accommodations are furnished, shall be considered as time worked
except meal times. All time spent driving a car shall be considered as time
worked.
B. When sent out of Brooke, Hancock, Ohio, Marshall, Belmont,
and Jefferson Counties on an assignment which requires him to return to the
point from which he on the same workday, he shall be credited with the total
elapsed time spent on such assignment.
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<PAGE> 14
C. He shall not be credited with time spent reporting to or
from work at studios or transmitters, but shall be credited with all time spent
thereafter during his day's assignment, such as traveling between studios,
remotes, transmitters, or other assignments on which traveling is required.
3.8 - Overtime and Premium Pay - Employees shall be paid overtime,
computed in tenths of an hour segments, for work performed as follows:
A. Time and one-half (1 1/2) in excess of forty (40) hours in
one (1) week actually worked.
B. Time and one-half (1 1/2) on an Employee's day off.
C. All hours worked within a period of less than a ten (10)
hour rest period shall be paid for at overtime rate of time and one-half (1
1/2).
D. Each Employee who is called to work or scheduled to work
on his time off or called back to work on his ten (10) hour rest period, will
receive double time (2x). This extra pay will not apply, however, if an
Employee is normally scheduled more than forty (40) hours per week and it is
necessary to work hours in excess of forty (40), nor will it apply on a call
back for an emergency or circumstances beyond the control of Management, nor
will it apply due to another Employees absence.
E. Overtime pay shall not apply for both daily and weekly
computation. Any hours actually worked on a holiday shall count as hours worked
in computing the forty (40) hours after which time and one-half (1 1/2) is
payable under sub-paragraph "A" above, otherwise there will be no pyramiding of
overtime or premium pay.
F. Overtime work, if available, will be offered to all
Employees in the same manner as in the past. Employees will not be penalized
if they decline to work excessive amounts of overtime.
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<PAGE> 15
3.9 - Travel Expenses - The Company shall reimburse each Employee for all
reasonable traveling expenses when travel by such Employee is required or
authorized by the Company. In the event any Employee is required to use his own
automobile for transportation in connection with his assigned duties, the
Company shall reimburse such Employee at the rate of twenty-nine cents ($0.29)
per mile for such use. The Company shall have the right to determine the method
of transportation, except that an Employee shall not be required to use his own
automobile unless he consents thereto. Where the transportation of equipment
is necessary, the use of public motor buses shall not be required. An Employee
shall be reimbursed weekly for all authorized expenditures made for and on
behalf of his assignment, as provided herein, upon submitting an itemized
statement of his expenses to the Company.
3.10 - Rate Progression
A. The rate progression applicable only to Employees who were
hired prior to December 1, 1988 is attached as Exhibit "B".
B. Employees hired on or after December 1, 1994 shall be
hired at no less than $5.50 per hour in production jobs or $6.00 per hour in
engineering jobs. They shall receive wage increases of $.50 per hour effective
when they complete their probationary periods. In lieu of any progression
increases Employees hired on or after December 1, 1988 shall receive the
following increases on the following dates, provided that they have completed
their probationary periods by such times:
<TABLE>
<CAPTION>
Effective Date Hourly Increase
<S> <C>
12/01/94 $.40
12/01/95 $.40
12/01/96 $.40
</TABLE>
Employees who are not on progression and are not at or above
scale shall be placed on the progression set forth in Exhibit B at the step
immediately higher than their then
12
<PAGE> 16
current hourly wages rates, in order of seniority, as employees performing work
in the same category of jobs (production or engineering) who are on progression
or are at or above scale leave the Company.
3.11 - Shift Differential - A shift differential of $.25 per hour will
be paid to Employees for regularly scheduled hours worked between 12 midnight
and 7:00 a-m.
3.12 - Payday - Payday shall be every other Friday.
3.13 - Holidays -
A. Overtime at the rate of two (2) times the regular rate of
pay shall be paid for all hours worked by an Employee during any of the
following six (6) holidays:
New Year's Day (January 1st)
Independence Day (July 4th)
Easter Sunday
Labor Day (First Monday in September)
Thanksgiving Day (Fourth Thursday in November)
Christmas Day (December 25th)
In addition, each full-time Employee who has satisfied his
probationary period shall be entitled to two (2) personal holidays each
contract year. The Employee shall be required to give at least two (2) weeks'
advance notice of his intention to take such a holiday and it shall be subject
to operating requirements as determined by the Company.
B. The overtime rate shall apply for the twenty-four (24)
hour period beginning at 12:01 A.M. of the holiday, or turn starting nearest
thereto, and shall end twenty-four (24) hours later.
C. An Employee who does not work on a holiday listed above
shall be paid an amount equivalent to eight (8) times his straight time,
regular hourly rate of pay, provided, however, that if an eligible Employee who
is scheduled to work on any such holiday fails to
13
<PAGE> 17
report and perform his scheduled or assigned work, he shall become ineligible
to be paid for the unworked holiday.
D. No Employee shall receive more than two (2) times his
regular rate of pay for hours worked on any holiday.
3.14 - Vacations -
A. Each full-time Employee in the employ of the Company on
July 1st of each year, and who performs work during that year, shall receive a
vacation with full pay in advance, according to length of service with the
Company in the year preceding such vacation as follows: An Employee who works
more than sixteen hundred (1600) hours in the preceding vacation year shall
receive forty (40) hours pay at his regular rate of pay for each week of
vacation. An Employee who works less than sixteen hundred (1600) hours shall
receive one and three-fourths percent (1-3/4%) of his total earnings during the
year preceding July 1st.
<TABLE>
<S> <C> <C>
1 year 1 week 40 hours pay
2 years 2 weeks 80 hours pay
7 years 3 weeks 120 hours pay
15 years 4 weeks 160 hours pay
25 years 5 weeks 200 hours pay
</TABLE>
In addition, any employee who has worked 35 years or more shall
receive an extra week's pay upon retirement.
B. Relief Employees will not be eligible for vacation.
C. The vacation shall be taken between January 1st and
December 31st of each year.
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<PAGE> 18
D. Employees shall have the choice of vacation period in
order of their seniority of service with the Company, provided, however, that
the final right to allot vacations is retained by the Company to assure the
orderly operation of the business.
E. Employees who have less than one (1) year of service but
who have at least seven (7) months of service shall receive one (1) day or
eight (8) hour of pay for each month of service in excess of seven (7) months
prior to July 1st of each year.
F. Part-time Employees shall be entitled to a prorated
vacation based on the above schedule.
G. Any Employee whose employment is terminated for any reason
other than discharge for just cause or voluntary resignation shall be
considered as having accrued vacation pay on a pro-rata monthly basis.
3.15 - Sick Leave and Funeral Leave -
A. Each Employee will earn one-half (1/2) day or four (4)
hours sick leave credit for each month he works up to a maximum of four (4)
days per year. Leave time earned but not taken will accumulate from one year to
the next, up to a maximum of fifteen (15) days.
Earned but unused leave time in excess of fifteen (15) days shall
be paid at the rate of one half (1/2) day for each day in excess of fifteen
(15) days earned but unused at the end of each contract year. Employees whose
employment terminate prior to December 1 shall receive no payout under
provision.
B. Pay allowance will be paid for sick of employees
incapacitating them for work. A doctor's certificate must be presented before
pay will be allowed.
C. Pay allowance will be paid up to three (3) days for death
and funerals in the immediate family. This includes brother, sister, father,
mother, son, daughter, wife, husband, provided the Employee attends the
funeral.
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D. Pay allowance will be paid for one (1) day for attending a
funeral for mother-in-law, father-in-law, sister-in-law, brother-in-law,
grandmother or grandfather.
E. Pay allowance will be paid only for days missed that are
regular scheduled workdays for the Employee.
F. Pay allowance will be considered lost for computing weekly
overtime pay.
G. Leave allowances under this Section will continue on the
same basis as heretofore granted by the Company without counting against annual
allowances. Duplication of pay allowances will not be permitted.
H. The allowances established herein are given only to take
care of absences that are unavoidable, and are to be taken only when the
Employee conscientiously feels that attendance would not be in the best
interest of himself or the Company.
3.16 - Pension Plan - The parties have agreed that the Company
will terminate the Pension Plan as to Employees in the bargaining unit
effective on midnight December 31, 1985, and following such date the Employees
shall not be covered under any retirement, money purchase, profit sharing or
similar plan maintained by the Company. The terms of the payout of accrued
benefits to the Employees are specified in a separate memo agreement signed by
the parties.
3.17 - Group Life, Hospitalization, Major Medical and Dental
Insurance - Until February 1, 1995 the Company will make available to the
full-time Employees covered by this Agreement, the Blue Cross Preferred Health
Plan and the Blue Cross Prescription card and $12,500 Life and AD&D insurance
(reduced by 35% at age 65, 50% at age 70 and terminating at retirement). The
cost of the foregoing insurance for both Employees and their dependents shall
be paid for monthly on a 75% Company and 25% Employee ratio throughout the term
of this Agreement.
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Effective February 1, 1995 the Non-Bargaining Unit Employees Plan
for Group Life, Hospitalization and Major Medical Insurance will be made
available to the full-time Employees covered by this Agreement, with the
full-time unit Employees paying twenty-five percent (25%) of the cost of the
Insurance. New full-time Employees must choose either the Non-Bargaining Unit
Employees Plan or the HMO. Except with regard to the sharing formula for
bargaining unit Employees, which shall not be changed except by negotiation,
the Employer may make such other changes in such insurance as it deems
appropriate, so long as it does not discriminate between bargaining unit and
non-bargaining unit employees.
The Company will continue to make available the dental plan
offered to nonbargaining unit employees at no charge to the bargaining unit
Employees for individual coverage and for $8.25 per month for dependent
coverage. Any increase in premiums for the aforesaid dental plan shall be paid
by the bargaining unit Employee.
Bargaining unit Employees will be provided short-term disability
coverage on the same basis as non-bargaining unit employees.
In the event that the Company is required by any law to
contribute to a National Health Insurance Plan for its Employees, the insurance
benefits will be revised to reflect non-duplication of benefits and Employee
and Company contribution.
3.18 - Bonuses - Bonuses are granted at the will and pleasure of the
Board of Directors.
SECTION 4
4.1 - Hazardous Work -
A. For reasons of safety, no Employee shall be required to
perform hazardous work unless another Employee or other qualified person is in
the area. There shall be mutual agreement between the Company and Union as to
definition of what comprises hazardous work.
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B. Employees shall not be required to climb or work at
heights in excess of twenty-five (25) feet above the floor. Should an Employee
consent to such climbing or hazardous work, he shall receive double his hourly
rate of pay for such work but not less than $10.00 per such assignment.
4.2 - Tools - The Company shall furnish all tools and equipment
necessary for the installation, repair and maintenance of equipment.
4.3 - Clean and Safe Conditions. - The Company will provide clean and
sanitary wash and rest rooms. It is the intent of both the Union and management
to keep all work areas clean and safe at all times.
SECTION 5
5.1 - Leave of Absence -
A. Any Employee shall, for valid health reasons, be granted a
leave of absence not to exceed six (6) months, provided such leave of absence
is approved by both the Company and the Union. An approved copy of such leave
of absence shall be furnished the Employee by the Company. Upon the return of
an Employee from a leave of absence, he shall be re-employed in the position
held immediately preceding such leave, provided such still exists; otherwise,
he shall be re-employed in a position as nearly the same as practicable. In
computing the Employee's seniority, except as it pertains to wages, such leave
of absence shall be credited the Employee as time worked. The Employee will not
be permitted to perform outside work or receive wages or remuneration during
the time of leave of absence. The Employer and the Union will comply with the
federal Family and Medical Leave Act (the "FMLA"). Any leave granted by the
Employer pursuant to the FMLA shall run concurrently with the non-FMLA leave
provisions contained in this section.
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B. The Company agrees to grant a leave of absence to an
Employee who is elected or appointed to a position with the Union, or any
Employee who attends a school to pursue a course in broadcasting, which
requires his absence from work. Such leave shall be for a period of not more
than one (1) year. Such leave of absence shall not interrupt the Employee's
seniority, and if he returns to work at the expiration of such leave, he shall
resume his position based on his total seniority. This provision shall be
available to not more than one (1) Employee at any time.
5.2 - Layoffs and Preferential Re-Hire -
A. Should it become necessary at any time for the Company to
lay off any Employee, he shall be granted a service letter at his request. If
thereafter a vacancy occurs in the bargaining unit of the Employees, he shall
be given preference in filling such vacancy, at a rate of pay commensurate with
his length of service at the time of his layoff. To receive this preferential
consideration for more than six (6) months, and not to exceed one (1) year, an
Employee who has been laid off must give written notice to the Company of his
availability every three (3) months after the first six (6) months from date of
his layoff.
B. Layoffs shall be made in inverse order of seniority of the
Employees. For the purpose of determining such seniority, all Employees in the
employ of the Company at the time of the execution of this Agreement shall be
given credit for the time they have heretofore been continuously employed
within the jurisdiction of work covered by this Agreement for the Company, and
the seniority of any Employee hereafter employed shall begin as of the date of
his employment. This Section shall not apply to temporary relief employees.
5.3 - Discharges - The Company shall have the right to discharge
any employee for just cause, including but not limited to insubordination,
fighting on station premises, the violation of any State or Federal rule or
regulation pertaining to the operation of the Company's
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business, the possession or use of alcohol or illegal drugs on Company premises
or working under their influence or refusing to submit to a blood or urine test
to determine such influence if the Company has reasonable suspicion to believe
that the employee has reported to work or is working under their influence. (In
the testing procedure, the parties shall designate a testing laboratory and the
employee shall be permitted to submit a split sample. Employees who test
positive on the first incident shall be entitled to enroll in a rehabilitation
program on a leave of absence instead of discharge.) If the discharge is
revoked, the Employee shall be returned to employment and receive any
compensation lost by him at his regular rate of pay for the time lost. The
Employee may at any time within five (5) working days from the filing of the
Company's decision, present a grievance to be handled in accordance with the
grievance procedure introduced at the arbitration stage.
5.4 - Military Service - The Company will provide benefits of the
Selective Service Act of 1948, as amended, to Employees, according to its
lawful obligation.
5.5 - Management of the Business - The Company, except as clearly and
explicitly abridged by any provision of this Agreement, reserves and retains
exclusively all of its normal and inherent rights with respect to the
management of the business, whether exercised or not, including, but not
limited to, its rights to determine, and from time to time redetermine, the
number, location and types of its operations and locations, and the methods,
processes, and materials to be employed, to introduce new and improved methods;
to discontinue conduct of its business or operations in whole or in part; to
select and direct the working forces in accordance with the requirements
determined by management to be necessary to the orderly, efficient and
economical operation of the business, such measures to be administered without
discrimination against any Employee; management reserves the right to maintain
and require
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methods of record keeping, provided exercise of such rights shall not be in
violation of other articles contained within this Agreement.
5.6 - Total Agreement - The parties acknowledge that during the
negotiations which resulted in this Agreement, each had the unlimited right and
opportunity to make demands and proposals with respect to any subject or matter
not removed by law from the area of Collective Bargaining, and that the
understanding and agreements arrived at by the parties after the exercise of
that right and opportunity are set forth in this Agreement. Therefore, the
Company and the Union, for the life of this Agreement, each voluntarily and
unqualifiedly waives the fight and each agrees that the other shall not be
obligated to bargain collectively with respect to any subject or matter
referred to or covered in this Agreement, even though such subject or matter
may not have been within the knowledge or contemplation of either or both the
parties at the time they negotiated or signed this Agreement.
SECTION 6
6.1 - Termination of Agreement - Except as otherwise expressly provided
in this Agreement, the Agreement shall become effective as of December 1, 1994,
and shall continue in effect to and including midnight of November 30, 1997 and
from December 1 to November 30 each year thereafter until terminated by a sixty
(60) day written notice, by either party prior to November 30 each year.
Either party may, on or before September 30, 1997, give notice to
the other party of the desire of the party giving such notice to negotiate with
respect to the terms and conditions of a new Basic Agreement. If such notice is
given, the parties shall meet within thirty (30) days after September 30, 1997,
to negotiate with respect to a new contract. If parties shall not agree with
respect to a new agreement by midnight of November 30, 1997, either party may
thereafter resort to strike or lockout as the case may be in support of its
position.
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Any notice to be given under this Agreement shall be given under
registered mail, if by the Company, be addressed to the Business Agent,
I.B.E.W., Local Union No. 5, 150 River Avenue, Pittsburgh, Pa. 15212, and if by
the Union, to the Company at WTOV-TV, Box 9999, Steubenville, Ohio 43952.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
23 day of January, 1995.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
Local Union No. 5 Television Station Partners
International Brotherhood
of Electrical Workers
- ------------------------------ ------------------------------
/s/ JOHN F. McAVLYRE /s/ TIMOTHY S. McCOY
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
Subject to the approval of the
International President of the
International Brotherhood of
Electrical Workers.
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<PAGE> 1
EXHIBIT 10.27
AFTRA/WTOV-TV BASIC AGREEMENT
FOR NEWSROOM EMPLOYEE - 1996-1999
AGREEMENT made as of January 29,1996, AMERICAN FEDERATION OF TELEVISION
AND RADIO ARTISTS, and its PITTSBURGH LOCAL, a voluntary association organized
and existing under the State of New York and having its principal offices at
260 Madison Avenue, New York, 10016 (hereinafter called "AFTRA"), and Smith
Broadcasting Group, Inc., owner of WTOV-TV, located in Steubenville, Ohio
(hereinafter called "Company" or WTOV-TV).
In consideration of the covenants and agreements herein contained it is
agreed as follows:
1. BARGAINING UNIT
(a) UNIT:
This Agreement applies to all full-time and regular part-time
newsroom employees now and hereinafter employed by the Company at
WTOV-TV (herein called "newspersons") excluding all office
clerical employees, interns, the assistant news
director/executive producer, the assignment editor/executive
producer, non-news professional employees, supervisors as
defined in the Labor Management Act, as amended, and all other
non-news employees. The Company warrants it is the sole owner and
operator of station WTOV-TV.
(b) TEMPORARY EMPLOYEES:
A temporary employee is one hired by the Company to accommodate
temporary openings resulting from promotions, terminations,
vacations, leaves of absence, extended illnesses or significant
or unexpected fluctuations in the work load not to exceed ninety
(90) days unless extended by mutual agreement which consent shall
not be reasonably withheld. Temporary employees hired by the
Company, who subsequently are hired as regular employees within
thirty (30) days beyond the ninety (90) days shall accrue
seniority as of temporary hire. Temporary employees shall be
covered by all terms of this Agreement except for protection
relating to just cause for discipline or discharge, "fringe
benefits", i.e., medical insurance, sick-leave vacation, etc. and
shall not be covered by the union shop provision until they
become employees. Temporary employees shall not be hired to
permanently replace regular full or part-time bargaining unit
employees and shall be laid-off before any regular seniority
employees in the same classification can be laid off. Overtime
will be offered to full-time and part-time employees in the
same classification before any temporaries.
<PAGE> 2
(c) PROBATIONARY PERIOD:
New employees shall work under the provision of this Agreement
but shall be employed on a trial basis for ninety (90) days. This
period may be extended by the mutual agreement of the Company,
AFTRA and the individual employee. During the probationary
period, the employee may be terminated with or without cause and
without recourse to the grievance and arbitration machinery.
2. REPRESENTATION
AFTRA warrants, represents and agrees that it represents for collective
bargaining purposes, a majority of the newspersons employed by the
Company at WTOV-TV. Upon such warranties, representations and agreements
by AFTRA, the Company hereby recognizes AFTRA as the exclusive
collective bargaining agency.
3. UNION SHOP
(a) It is agreed that during the term of this Agreement, the Company
will employ and maintain in its employment, only such newspersons
covered by this Agreement as are members of AFTRA in good standing
or as shall make application for membership not later than thirty
(30) days after the date of hiring as such, or the effective date
of this Agreement, whichever is later.
(b) The provisions of this paragraph shall be subject to the Labor
Management Relations Act, as amended.
(c) AFTRA agrees that it is and will continue to be an open union and
that it will keep its membership rolls open and will admit to
membership all eligible newspersons engaged by the Company. AFTRA
agrees not to impose unreasonable entrance fees or dues upon its
members.
(d) The union shop provision of this Section and other terms of this
Agreement shall not apply to interns who are college students
working at the station as part of a credit-bearing course
provided that such interns shall not be used to permanently
replace any bargaining unit member or position and provided
further that no more that five (5) interns may be engaged at any
one time.
4. ADMISSION TO PREMISES
(a) Any duly authorized and accredited representative of AFTRA shall
be admitted to the premises of the Company at reasonable times to
check the performance by the Company of this Agreement; but such
checking shall be done so as not to interfere with the conduct of
the Company's business and after making an appointment with
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the Station's Management for this purpose. No more than two such
representatives shall be admitted for this purpose.
(b) The Company agrees that only the following persons and no others
shall be recognized to represent AFTRA for purposes of this
Agreement or for any other purpose: National Executive Secretary,
Pittsburgh Local Executive Secretary, National Representative and
such other person as AFTRA may designate hereafter by written
notice to the Company. The Company agrees that AFTRA shall have
no liability by reason of or responsibility for the actions of
any other that those herein designated.
5. MINIMUM TERMS: WAIVERS
The Company agrees that the minimum terms and conditions governing the
employment of newspersons by the Company are those contained in this
Agreement and the Company agrees that, except as permitted by this
Agreement, it will not enter into any contract with, or employ any
newsperson upon terms and conditions less favorable to the newsperson
than those set forth herein. The parties further agree that nothing in
this Agreement shall be deemed to prevent any newsperson from
negotiating for or obtaining better terms than the minimum terms
provided for herein. The Company agrees not to reduce such terms and
conditions during the course of the newspersons personal service
agreement The Company agrees not to require any newsperson to do any act
that would violate any internal rule of as long as such rule of AFTRA is
not inconsistent with or violative of any term or provision of this
Agreement.
6. DISCRIMINATION
Both the Company and the Union subscribe to the principle that there
should be no discrimination against any person because of race, creed,
color, national origin, religion, sex, age, veteran status or
disability, to the extent prohibited by applicable federal, state or
local law.
7. MANAGEMENT RIGHTS/RULES REGULATIONS
The Company, except as they clearly and explicitly abridged by any
provision of this Agreement, reserves and retains exclusively all of its
normal and inherent rights with respect to the management of the
business, whether exercised or not, including, but not limited to, its
rights to determine, and from time to time redetermine, the number,
location and types of its operations and locations, and the methods,
process, and materials to be employed, to introduce new and improved
methods; to discontinue conduct of its business or operations in whole
or in part; to select and direct the working forces in accordance with
the requirements determined by management to be necessary to the
orderly, efficient and economical operation of the business, such
measures to be, administered without
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discrimination any Employee; management reserves the right to maintain
and require methods of record keeping, provided exercise of such rights
shall not be in violation of other articles contained within this
Agreement. The Company's right to terminate employment or otherwise
discipline for just cause shall include, but not to be limited to, the
right to terminate or discipline employees for possession or use of
alcohol or illegal drugs on Company premises or working under their
influence or refusing to submit to a blood or urine test to determine
such influence if the Company has reasonable cause to believe that the
employee has reported to work or is working under their influence. (In
the testing procedure, the parties shall designate a testing laboratory
and the employee shall be permitted to submit a split sample. Employees
who test positive on the first incident shall be entitled to enroll in a
rehabilitation program on a leave of absence instead of discharge.)
INDIVIDUAL AGREEMENTS
The Employer shall have the right to bargain, and execute individual
employment agreements, with covered newspersons. Such agreements shall
not provide for wages and benefits less favorable that those provided
for in this Agreement, but such agreements may provide for restrictive
covenants, i.e. non-compete clauses, expiration dates, and such other
terms and conditions acceptable to the individual newsperson and the
Company, provided however that in the event any employee covered by an
individual agreement works weekly hours in excess of forty on a
cumulative contract year basis so that his compensation would be less
than it would have been under this Agreement, then all such hours which
are in excess of such threshold shall be paid at time and one half the
employees hourly rate. To calculate the employee's hourly rate, his
weekly compensation under the individual agreement shall be divided by
40.
8. ARBITRATION
In the event there should be any controversy or dispute arising with
respect to the interpretation or breach of this contract between AFTRA
and the Company, AFTRA and the Company agree promptly and in good faith,
to attempt to settle such dispute amicably. In the event that they are
unable to do so, any such controversy or dispute shall be submitted in
writing specifying the specific provision of the Agreement allegedly
breached and the relief sought. If the controversy or dispute continues
it shall be settled by arbitration each party bearing half the expense
of the arbitrator, the hearing room and transcript when requested by
both parties. Enforcement of the award may be obtained in the federal
court having jurisdiction.
In referring the matter to arbitration, the aggrieved party shall be
required within (30) days after the acts or conduct that gave rise to
the dispute, to request under the then current Voluntary Labor
Arbitration Rules of the American Arbitration Association a list of
available arbitrators, and if possible, the parties shall select a
mutually agreeable arbitrator from this list. If the parties cannot so
select, the Voluntary Labor Arbitration
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procedures of the American Arbitration Association shall govern the
selection of the arbitrator. A final decision of the arbitrator shall be
made speedily, shall be transmitted in writing by registered mail to the
parties, such decision shall be binding upon both parties and each of
them will promptly comply. AFTRA will aid the enforcement of any awards
against its members by appropriate disciplinary action. The powers of the
arbitrator are specifically limited to a determination of the meaning or
the application of this Agreement including the arbitration clause and he
shall have no power to modify or amend this Agreement nor to render a
decision finding a violation of this Agreement unless it is based on a
specific provision of this Agreement, nor to rule on the merits of any
dispute which is not submitted in the format and time limits specified
herein.
Nothing herein contained shall prohibit the Company and newsperson from
resolving their dispute on an individual basis so long as it does not
create a precedent binding on AFTRA or other employees before any
grievance is filed.
9. NO STRIKE CLAUSE
(a) AFTRA agrees that during the term of this contract and any
extension thereto and unless the Company is refusing to comply
with a final arbitration award rendered hereunder, newspersons
will perform their obligations hereunder and will not strike
against, picket, refuse to cross a picket line, boycott nor
withhold any services from the Company.
(b) The Company agrees there will be no lock-out of newspersons
during the term of this Agreement and any extension thereto.
10. SECONDARY STRIKE
In no case shall newspersons strike against, picket or boycott nor
withhold any services from the Company by reason of the reception,
broadcast and transmission by the Company of programs which persons are
used who are employed by others than the Company, irrespective of
whether such programs originate at a point at which AFTRA or others are
striking, or are broadcast over the Company's facilities on behalf of a
sponsor or agency against whom AFTRA or others are striking.
The Company agrees that in the event AFTRA is striking on behalf of
members (not limited provided in Paragraph 1 hereof), performing duties
at any radio or television station, the Company will not, without the
consent of AFTRA, require its newspersons to render services in programs
excess of the number of programs that are normally available to such
station, where such excess broadcasting involves the services of
newspersons is designed to replace broadcasts which would, in the
absence of such strike, be of local origination at the station where
such strike exists.
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The Company further agrees that newspersons shall not be required to go
to any other Company station where an authorized strike is in progress.
11. GOVERNMENTAL REGULATIONS
This Agreement and all of its provisions are subject to the rules,
regulations and orders of the Federal Communications Commission or any
other governmental body having jurisdiction over the Company's
broadcasting license for Station WTOV-TV.
12. TERM OF AGREEMENT
This Agreement extends to January 28, 1999 and from year to year
thereafter unless notice of termination is given by either party at
least sixty (60) days prior to expiration.
13. TITLE OF AGREEMENT
This Agreement shall be known as the AFTRA/WTOV-TV Minimum Basic
Agreement for Newspersons, 1996-1999.
The Company agrees that the following are the minimum terms and
conditions which govern employment of newspersons now or hereafter
employed by the Company at Station WTOV-TV.
14. WORK WEEK
(a) The work week of a newsperson shall consist of 40 hours in
consecutive days within a seven-day period. The Company, at its
discretion, may assign newspersons to work on a flexible
scheduling basis so as to provide any combination of days and
hours worked per day as long as such scheduling results in the
employee having at least two consecutive full days off in each
week and the required rest between staff stretches. For example,
the Company may schedule newspersons for a work schedule of five
8-hour days, four 10-hour days, or a combination of two 12-hour
work days with two 8-hour work days. The Company may require the
rendition of services for more than 40 hours or more than 5 days
in any seven-day period, subject to the payment of overtime as
hereinafter provided.
Overtime shall be paid for hours worked in excess of 40 in one
week or on a daily basis in instances where the newsperson's
regularly scheduled work day (i.e., eight hours, ten hours or
twelve hours for the individual employee) is exceeded by that
employee. Modifications in such flexible scheduling for
newspersons shall be in accord with requirements noted in
Subjection (e) below and subject to the ten-day advance posting
requirement.
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(b) Adequate "prep" time shall be scheduled before on-the-air work.
(c) The Company agrees to schedule the work week of each newsperson
so that his/her two consecutive days off in each week shall
permit him/her to be continuously absent from employment not less
than fifty-eight (58) hours.
(d) For payroll purposes only a "week" shall consist of seven (7)
consecutive days beginning with the commencement of broadcasting
on Monday at 4:30 a.m. Pay day shall be every other Friday.
(e) All work schedules shall be posted ten (10) days in advance.
Unless forty-eight (48) hour notice is received, any employee
whose schedule is changed shall receive a penalty payment of five
dollars ($5) for the first day changed except for instances of
sickness, jury duty, funeral or emergency leave of the employee
or other employees, or reasons beyond the control of the Company
not known prior to the schedule change cut-off time for prior
notification. Mutual agreement of the employee and the Company is
excepted.
15. OVERTIME
(a) Hours worked by any newsperson in any seven (7) consecutive days
starting with the first consecutive day scheduled for the
employee in excess of forty (40) hours shall be overtime.
Overtime will also be paid on a daily basis for hours worked by
employees in excess of their scheduled work day. Overtime shall
be paid for at the hourly rate of one and one-half times 1/40 of
the respective newsperson's weekly salary.
(b) The minimum assignment for a newsperson to perform duties on
his/her scheduled day off or on a regular work day not contiguous
to the regular schedule shall be not less than four (4) hours.
16. MEAL PERIOD
The Company shall assign employees a 1/2 hour unpaid meal period in
addition to the eight hours worked each day. If the employee is unable
to take a 1/2 hour break because of the requirements of the assignment
on a particular day, such employee shall be paid for 1/2 hour additional
compensation, and will be permitted to eat while on duty.
17. REST BETWEEN STAFF STRETCHES
The first staff assignment of any newspersons shall begin not sooner
that eleven (11) hours after the conclusion of his/her last staff
assignment on the preceding day; except as a result of a change of hours
requested by the newsperson, or in the case where a newsperson is
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scheduled temporarily by reason of the absence (except for vacation)
of another staff newsperson, or by reason of an occurrence beyond the
control of the Company. In all other cases, an amount computed at the
rate of one-half times 1/40th of the newspaper's weekly salary shall,
in addition to any other compensation, be paid to the newsperson for
all hours worked within the period which ends eleven (11) hours after
the conclusion of the assignment of the preceding day.
18. STAFF DUTIES
A. For their weekly salary and within the regularly scheduled staff
stretch, the following are generally descriptive of the types of
duties of each employee category. The listing of these duties should
not be interpreted as creating a requirement that all the duties shall
be performed during a single staff stretch. Employees shall be given
a reasonable amount of time to perform their duties consistent with
delivery of a quality product and the efficient operation of the
station. Employees in each category may be assigned to perform duties
in other categories when needed by the Employer as long as they
possess the necessary qualifications and skills to perform such work.
REPORTER:
1. Initiating, researching, writing and/or reporting of stories,
updates, commentaries, special reports, series, documentaries
on tape or live.
2. Establishing and maintaining familiarity with at least the
local market and statewide issues, as well as individual
and/or best contracts and sources.
3. Interviewing persons connected with news and public service
programs.
4. Working with other news department employees when in pursuit
of and/or editing of news and public service programs.
5. Rewriting and editing material from outside sources such as
wire and network services, satellite feeds, newspapers, public
relations material and other agencies or institutions.
6. Assist the producer and/or photographer in developing ideas
for graphics and video effects.
7. Duties normally associated with desk assistance or assignment
editor, including but not limited to assigning stories,
gathering, writing and preparation of news material for use by
themselves or others.
8. Record, log and preview newsfeeds from network satellite
services and other
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incoming material on equipment provided the Employer.
9. Duties normally associated with announcing, including but not
limited to, station identifications, promotion and public
service announcements in accordance with past practice.
10. Putting news tapes in, order and deliver to control and
answering telephone, and operating Teleprompter when those who
normally perform those tasks are unavailable.
VIDEOGRAPHER:
1. Photograph all news related material, live or on tape, edit
news related material record, edit and shoot "bumps" and
headlines or any other video that appears in news and public
service programs.
2. Working with other news department employees when in pursuit
of and/or editing of news and public service programs.
3. Assist the producer and/or reporter in developing graphics and
video effects.
4. Record, log and preview newsfeeds from network satellite
services and other incoming material on equipment provided by
the employer.
5. Oversee and monitor quality control with all news equipment
and news vehicles.
6. Performance of such other duties as news and program
requirements of Employer may necessitate including but not
limited to, putting news tapes in order and deliver to
control, answering telephone, operating Teleprompter and other
newsroom tasks when those normally assigned to perform such
tasks are unavailable.
7. AFTRA's Jurisdiction over photographing live news outside of
the Steubenville studio shall not apply when the switching of
cameras is required.
ANCHOR/REPORTER/PRODUCER
1. Anchor live or taped newscasts and other news and public
service programs.
2. Produce newscasts, oversee the newsroom in the absence of News
Director, Assistant News Director or Executive
Producer/Assignment Editor when assigned.
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<PAGE> 10
19. HAZARDOUS WORK AND ASSIGNMENTS
Without his/her consent, no newsperson shall be required to work under
conditions where there exists immediate imminent danger of bodily
harm. If such a condition exists, the newsperson shall call management
to discuss the situation as soon as they are out of such imminent,
immediate danger.
20. TRAVELING TIME AND EXPENSE
A proper allowance shall be included in the elapsed time for necessary
traveling time to and from remote points on location assignments, and
time spent at remote points to which a newsperson may be assigned by
the Company, it being understood and agreed that not less than eight
(8) elapsed hours shall be credited to such newsperson for each day
spent in transit and/or at such remote points on such assignment. No
other payment shall be required for time spent in traveling when
sleeping accommodations are furnished at remote points. The Company
will pay all reasonable, ordinary and necessary out-of-town traveling
expenses actually incurred as authorized and upon proper vouchers as
required by the Company. The Company will provide coach air
transportation on all flights. When the newsperson with the consent of
the Company uses his/her own car, he/she shall be paid the WTOV
mileage rate (to be increased if the Company's rate increases),
parking expenses and tolls. Those newspersons assigned to Wheeling
shall receive payment for parking his/her own car, provided they have
obtained management's approval as to price and location.
21. VACATIONS AND HOLIDAYS
A. Vacations:
1. Existing bargaining unit employees as of the date of transfer
of ownership shall receive payments for their accrued but
unused vacation leave that existed as of the date of transfer.
Payments shall be calculated based upon salaries and wages
earned during 1995. Payments will be made within 45 days of
execution of this agreement.
2. Effective with commencement of the new agreement, the Company
will convert vacation benefits (and eligibility for same) for
the bargaining unit from the former "Employee Anniversary
Date" basis to an "Employer Calendar Year" basis using January
3, 1996 as the commencement date. Upon such conversion,
newspersons in the bargaining unit will be able to earn and
utilize vacation leave in the same year. Newspersons will
receive the same vacation allotments as provided below:
1-5 years of employment as of Jan. 3 2 weeks
6-15 years of employment as of Jan. 3 3 weeks
More than 15 years of employment as of Jan. 3 4 weeks
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<PAGE> 11
Additionally, newspersons who are eligible to receive four (4)
weeks vacation may elect to take 3 weeks of vacation leave and
be paid an additional week's pay on an agreed upon "sell-back
reimbursement basis".
3. For purposes of conversion, any employee who was in his or her
first year of employment (and had not completed same at the
time of transfer) shall be considered as a first-year employee
and will be eligible to receive the 2 weeks vacation leave
noted above.
4. New bargaining unit full-time employees hired after the
commencement of the contract shall be entitled to vacation,
sick leave and personal day usage based upon schedules which
will take into account the new employee's commencement of
employment and pro-rated leave benefits. This schedule shall
be determined by the parties' representatives.
5. The Employer shall have the right to adjust and deduct from a
departing employee's final paycheck(s) any amounts
representing such leave taken during the year when the
departure date is such that the employee has already exceeded
the pro-rata paid leave time allowed. (For example, an
employee is entitled to four weeks vacation leave and takes
all vacation prior to departure of June 30 in a calendar
year. In such case, since the employee had completed less
than 1/2 year of service but had taken a full year's worth of
vacation credits, the employer may withhold two weeks salary
from the employee's final paycheck(s).
6. Newsperson shall advise the Company of their vacation period
preference no later than March 7 of each year. Vacation weeks
shall coincide with the normal work week (i.e. five (5) work
days plus the regular two (2) days off) and shall be
scheduled and taken at any time of the year, subject to
management's right to place limitations on vacations during
rating periods. Newspersons shall have the choice of vacation
periods in order of their seniority in the newsroom during
non-rating periods. Vacation must be used during the year it
is earned.
7. Part-time newspersons shall receive vacation pro rated based
on their normal work schedules.
B. HOLIDAYS:
1. Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, and New Year's Day shall be paid holidays. In
addition, each full-time Employee who has satisfied his
probationary period shall be entitled to one (1) personal
holiday each contract year. The Employee shall be required to
give at least two (2) weeks' advance notice of his intention
to take such a holiday and it shall be subject to operating
requirements as determined by the Company. Any newsperson who
is
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<PAGE> 12
required to work on such holidays, full-time or part-time,
will be paid at double time for the hours worked or by mutual
agreement, can receive another day off with pay. Any
newsperson who is on vacation when such holiday falls on one
of his/her normally scheduled work days will be given one (1)
additional day of vacation. Any employee not scheduled to work
on a holiday listed above shall be paid an extra day's pay in
lieu of the holiday or be given a day off with pay, at
management's option.
Any newsperson, full-time or part-time, performing work on the
above holidays outside his/her basic work week will be paid at
double time for the hours worked.
Each newsperson may elect to forego the holiday pay for
working on the holidays named above and to substitute days off
with pay for each day so selected at another time, said day(s)
off to be mutually agreeable to the Company and the
newsperson, with the newsperson required to give fifteen (15)
days notice for any such day(s), whether single days or
collective days. The Company shall approve or reject such
requests within seven (7) days.
2. Part time newspersons shall receive holidays pro rated based
on their normal work schedules.
22. TERMINATION OF EMPLOYMENT
(a) No permanent employee covered by this Agreement shall be
suspended, demoted or dismissed without just and sufficient
cause. Newspersons employed under personal services contracts
may be subject to other written provisions relating to
separation from employment and/or discharge. Except where
employment is terminated for just cause, resignation or
retirement, the Company shall give any newsperson who has
completed his or her probationary period notice of layoff of
at least two weeks or pay in lieu thereof and one week of
severance pay for each complete year of service, up to a
maximum of 12 weeks.
(b) A newsperson employed under an individual agreement providing
for compensation in excess of the minimum they would receive
under this Agreement may be discharged at the termination of
the individual agreement upon the Company releasing him/her
from any non-compete provision that may exist in the
individual agreement and payment of notice and severance pay
as described above. The Company may offer continued employment
with compensation less favorable than the expired personal
agreement, but in that event the newsperson could opt to
decline such an offer and the newsperson would be considered
to be discharged.
(c) The severance formula noted above in Section (a) shall not
apply to employees working under personal services contracts
which have more favorable provisions for severance
compensation and notice regarding expiration and non-renewal.
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<PAGE> 13
(d) The Company will pay any newsperson for unused vacation and
accrued holiday time at the time of termination provided the
newsperson has given the Company two weeks notice of his/her
resignation, if the termination occurs as a result of the
newsperson's resignation.
(e) The Company agrees not to discriminate against any newsperson
because of any claim made by him/her or submitted by him/her
to AFTRA respecting this Agreement by the Company.
23. LAYOFFS
Should it become necessary due to economic reasons to lay off a
newsperson, seniority shall be considered first, provided that
qualifications, ability, suitability and past work record may also be
taken into consideration. This provision shall not be used to
undermine the principle that terminations shall be for just cause,
unless caused by economic reasons. Such laid off employee shall be
entitled to all benefits of the termination clause herein. If
thereafter for a period of six (6) months, a vacancy occurs in his/her
job classification, the Company shall notify the newsperson laid off
and such newsperson will be re-employed according to his/her
seniority status at the time of layoff, provided he/she responds to
the layoff notice within two (2) weeks. However, if an employee is
recalled, he shall begin a new severance pay accrual from the date of
recall.
24. LEAVE OF ABSENCE
Any employee with one (1) or more years of service shall, for valid
health reasons, be granted a leave of absence not to exceed six (6)
months, provided such leave of absence is approved by the Company. An
approved copy of such leave of absence shall be furnished the employee
by the Company. Upon the return of an employee from a leave of
absence, he/she shall be re-employed in the position held immediately
preceding such leave, provided such still exists; otherwise he/she
shall be re-employed in a position as nearly the same as practicable,
or if no such position is available, shall be laid off and be eligible
for recall for the following six (6) months. In computing the
employee's seniority, except as it pertains to wages and vacation
accrual, such leave of absence shall be credited the employee as time
worked. The employee will not be permitted to perform outside work or
receive wages or remuneration during the time of leave of absence.
25. FAMILY AND MEDICAL LEAVE
(a) An employee who is pregnant may work so long as her physician
certifies that she is fully able to perform her normal duties.
Periods of disability associated with pregnancy and childbirth
shall be treated in the same fashion as illness.
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<PAGE> 14
(b) Child leave and other leave required by the Family and Medical
Leave Act shall be granted in accordance with the provision of
that ACT.
(c) In the event a newsperson has utilized unpaid family illness
leave (or has used accumulated vacation leave for such a
purpose) in excess of five consecutive work days, he or she
may thereafter utilize up to a maximum of five days of his or
her accrued paid sick leave for such continuing family illness
leave.
26. RE-EMPLOYMENT AFTER MILITARY SERVICE
Any newsperson who enlists or is drafted into active military service
of the United States shall be granted a leave of absence for the
period of such military service (but not to exceed the period required
by draft or one enlistment). Such newsperson who thereafter (1)
receives a certificate or other evidence of honorable discharge under
the laws of the United States and (2) is, at time of discharge or
completion of such military service, qualified to perform the duties
of the position of employment which he/she left, and (3) makes
application for reemployment within ninety (90) days, after he/she is
relieved from such military service, shall be restored by the Company
to the position which he/she left or to a position which is of like
seniority status and pay within the bargaining unit covered by this
Agreement at Television Station WTOV-TV where he/she had been employed
and with the seniority accumulated during service unless the Company's
circumstances have so changed as to make it impossible or unreasonable
to do so.
27. OUTSIDE EMPLOYMENT
Newspersons shall be permitted to engage in outside employment and
activities which do not interfere with the performance of their duties
or obligations to the Company so long as they notify the Company in
advance, and so long as they are not employed by radio, television,
cable or other communication companies that compete with the Company.
Newspersons serving under personal services contracts may be subject
to limitations or restrictions regarding outside employment or
off-premises activities as contained therein consistent with the
above.
28. SICK LEAVE AND FUNERAL LEAVE
A. New employees hired during the calendar year shall, upon
completion of their probationary period, be entitled to
pro-rata sick leave for the remainder of their first calendar
year of employment. Thereafter, such employees shall be
entitled to eight (8) days sick leave credit on an annual
basis.
All other full-time employees who have completed their
probationary period will receive eight (8) days sick leave
credit per calendar year. Sick leave earned but not utilized
will accumulate from year to year, up to a maximum of twenty
(20) days.
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<PAGE> 15
B. Pay allowance will be paid for sickness of employees
incapacitating them for work. Upon the Company's request, a
doctor's certificate must be presented before pay will be
allowed.
C. Pay allowance will be paid up to three (3) days for death and
funerals in the immediate family. This includes brother,
sister, father, mother, son, wife, husband provided the
Employee attends the funeral.
D. Pay allowance will be paid for one (1) day for attending a
funeral for mother-in-law, father-in-law, sister-in-law,
brother-in-law, grandmother or grandfather.
E. Pay allowance will be paid only for 3 days missed that are
regular scheduled workdays for the Employee.
29. JURY DUTY
Any newsperson with one or more years of service called for jury duty
or subpoenaed to appear as a witness at a trial, shall be granted time
off to attend to such responsibilities. The Company shall pay the
difference between any jury pay or witness fee received and the
newsperson's regular salary, up to maximum of five (5) days per year.
30. HEALTH BENEFITS
The Company shall continue to provide for existing full-time
newspersons and their dependents such hospitalization coverage, major
medical coverage, life, vision, dental coverage, short-term and
long-term disability insurance as is provided through the Smith Health
Insurance Plan. The provision of benefits under this plan shall be at
the same employee contribution rates as previously existed under the
("TSP") Company plan. The Company shall pay 75% and the employee shall
pay 25% of such increases in the costs for individual or dependent
coverage. The Employer shall be free to change carriers and alter,
amend or discontinue such plans so long as it does not discriminate
between the newspersons and the non-bargaining employees with regard
to such benefits.
Existing full-time newspersons shall have the option to
continue their enrollments in such HMO plans as were in force and
which remain available at the contribution rate of 85% Company/15%
employee for dependent coverage; 94% Company and 6% employee for
single coverage. Future cost increases shall be divided in the same
manner as with the Smith Plan (75% Company, 25% Employee), except that
in no event shall the dollar amount of the Company's share of such
increase in the HMO cost exceed the Company's share of dollars paid
for the increase in the above described Smith Plan in any year.
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<PAGE> 16
Additionally, should employees elect to continue participation
in such HMO's, the employer will provide a special life plan to
supplement the HMO plan wherein the employee will receive term life
coverage with a death benefit computed at the rate of one and one-half
times his or her annual salary, to a maximum of $200,000. The total
cost of such additional life insurance protection shall be borne by
the employer.
New employees hired after execution of this agreement who
qualify as full-time newspersons shall receive the health insurance
plans noted above and will be eligible for the HMO option. Such
employees hired after January 3, 1996 shall pay the same employee
contribution rate for such individual or dependent coverage as
non-bargaining unit employees. If an employee returns, for the
purpose of enrollment, to the Smith plan after leaving, he or she
shall be responsible for the employee contribution rate as determined
for new employees entering the Smith Plan.
31. DEFERRED INCOME PLAN
The parties acknowledge that they have negotiated concerning
retirement and deferred income plans and have agreed to modify that
participation in a Section 401(k) plan offered by the Company will
be made available in accordance with the following contribution
schedule:
Employees may contribute in accordance with Plan rules and
regulations. The employer agrees to provide matching contributions in
the total amount of 1% for 1996, 2% for 1997 and 3% for 1998 for
employees who choose to contribute.
32. SALARIES
The minimum weekly salary for newspersons in the categories listed
shall be as follows:
MINIMUM WEEKLY ENTRY
LEVEL SALARIES FOR NEW EMPLOYEES
(HIRED AFTER JANUARY 29, 1996)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
CLASSIFICATION EFF.1/29/96 EFF.1/29/97 EFF.1/29/98
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ANCHOR/PRODUCER 330 340 350
- ----------------------------------------------------------------------------------------
WEEKEND NEWS, SPORTS, WEATHER ANCHOR 265 273 281
- ----------------------------------------------------------------------------------------
REPORTER/PRODUCER 250 258 265
- ----------------------------------------------------------------------------------------
VIDEOGRAPHERS 240 247 255
- ----------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE> 17
Existing Employees
Existing employees shall receive compensation increases as
noted below.
Effective Upon Ratification
If an employee, as of 12/31/95, was earning less than $7.00 per
hour, such employee shall receive the greater of an increase to
$7.00 per hour or three percent (3%) added to his or her wage
rate. Except as noted below or as set forth in a signed
memorandum supplementing this Agreement, all other employees
shall receive a three percent (3%) increase.
Effective 1/29/97
All employees shall receive a three percent (3%) increase.
Effective 1/29/98
All employees shall receive a three percent (3%) increase.
The Station may hire or promote newspersons based upon combinations of
duties of positions.
STORY FEES
The Reporter and Photographer responsible for a story that is sold by
the station shall receive in the aggregate one half (1/2) of the fee
received by the station. The employee's portion of the story fee will
be paid after each calendar quarter newsperson provided he was
actively employed by WTOV-TV at the last day of the quarter.
33. PART-TIME NEWSPERSONS
(a) Part-time newspersons shall be compensated at one-fortieth
(1/40th) of the weekly salary for each hour worked.
(b) A part-time newsperson shall be paid for a minimum four (4)
hours for any day he/she is called to work.
(c) In the event a part-time newsperson works more than forty (40)
hours in any workweek or more than eight (8) hours per day,
he/she shall be paid overtime for all such excess hours.
Payment shall be computed in not less than ten (10) minute
units.
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<PAGE> 18
(d) Termination of employment benefits of a part-time newsperson
shall be based on a proportionate basis of that payable to a
full-time newsperson.
(e) The Company may employ one part-timer for three full-timers.
(f) Regular part-time employees who are regularly scheduled for 32
or more hours per week will be eligible for health and
insurance benefits on the same basis as full-time employees.
(g) Part-time newspersons regularly scheduled to work thirty (30)
hours or less per week shall receive pro-rated vacation leave
and shall also receive pro-rated sick leave up to a maximum of
five (5) days per year.
34. NOTIFICATION TO AFTRA
The Company will furnish AFTRA with the names and addresses of all
newspersons within fifteen (15) days of hire or termination.
35. PERFORMANCE BY NONBARGAINING UNIT PERSONNEL
The Company and AFTRA agree on the principle that persons not covered
by this Agreement shall not perform any duties listed of their working
time except that interns working at the station, temporary employees
for up to ninety (90) days of employment by the station or such period
as may be agreed upon pursuant to 1(b), and the News Director and
either the Asst. News Director/Executive Producer or the Assignment
Editor/Executive Producer shall be subject to no limitation provided
that their performance of such duties is consistent with past practice
except that either the Asst. News Director/Executive Producer or the
Assignment Editor/Executive Producer shall be permitted to report up
to five stories per week.
36. CHECK-OFF
The Company agrees to deduct from the wages of employees initiation
fees and dues required by the union upon notification from the union
of the amounts due, provided the Company receives from each such
employee on whose account such deductions are to be made, an
individually signed check-off authorization form lawful under the
Labor Management Relations Act, as amended. Such check-off forms shall
be irrevocable during the term of this Agreement or for one year,
whichever occurs sooner. Such deductions shall be made from the first
payday each month and forwarded promptly to AFTRA-Pittsburgh, 625
Stanwix Street, Pittsburgh, PA 15222.
37. TRANSFER OF OWNERSHIP
The parties agree that if the Company should transfer or assign the
operation of the station to any third party or parties during the term
of this Agreement as a result of any action of any
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<PAGE> 19
governmental agency immediately affecting the Company's operation of
WTOV-TV or because of involuntary transfer or assignment, the Company
need not require the transferee or assignee to assume the obligations
of this Agreement, and if the transferee does not assume such
obligations, the Union and its members shall be free of all
obligations hereunder; but all other cases of transfer or assignment
of WTOV-TV shall require the transferee or assignee to assume, for the
benefit of the Union and its members, the obligations of this
Agreement, and the Company shall be required to pay Employees for any
vacation earned, but not taken under this Agreement, and any other
compensation due.
38. COMPLETE AGREEMENT
The parties hereto acknowledge that during the negotiations which
resulted in this Agreement, each had the unlimited right and
opportunity to make demands and proposals with respect to any subject
or matter not removed by law from the area of collective bargaining.
Thus, the understandings and agreements arrived at by the parties
after the exercise of such rights and opportunities are set forth in
this Agreement, which document constitutes the entire Agreement
between the parties and concludes collective bargaining for its term.
Therefore, except as provided in this Agreement, the Company and the
Union for the life of this Agreement each voluntarily and
unqualifiedly waives the right, and agrees that the other shall not be
obliged to bargain collectively with respect to any subject or matter
referred to or covered in this Agreement or with respect to any
subject or matter not specifically referred to or covered in this
Agreement, even though such subject or matter may not have been within
the knowledge or contemplation of either or both parties at the time
that they negotiated or signed this Agreement.
It is further understood by both parties that this Agreement
supersedes any and all prior agreements, past practices, or
understandings, either written or verbal, that are inconsistent with
or in conflict with the terms of this Agreement.
Should any part of provision of this Agreement be rendered or declared
illegal or invalid by any decree of a court of competent jurisdiction
or by decision of any authorized government agency, the remaining,
unaffected part(s) or provision(s) of this Agreement shall not be
affected thereby and shall remain in full force and effect. However,
in such a contingency, the parties shall meet promptly and negotiate
with respect to substitute provisions for those part(s) or
provision(s) rendered or declared illegal or invalid.
39. LAWS OF OHIO
This Agreement, made, executed and delivered in the City of
Steubenville, Ohio, shall be governed by the laws of the State of
Ohio.
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<PAGE> 20
40. RATIFICATION
This Agreement is subject to ratification by the AFTRA National Board
and the President of Smith Broadcasting Group, Inc. and shall not
become effective or binding upon the parties until so ratified and
countersigned by the National Executive Secretary of AFTRA, and the
President of Smith Broadcasting Group, Inc.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
AMERICAN FEDERATION OF TELEVISION & SMITH BROADCASTING GROUP, INC.
RADIO ARTISTS, PITTSBURGH LOCAL WTOV-TV
By: [ILLEGIBLE] By: [ILLEGIBLE]
------------------------------------ ------------------------------------
Local Executive Secretary Station Manager
APPROVED AND RATIFIED: APPROVED AND RATIFIED:
By: [ILLEGIBLE] By: /s/ DAVID A. FITZ
------------------------------------ ------------------------------------
AFTRA National Executive Smith Broadcasting Group, Inc.
Dated: 6-10-96. Dated: 7-9-96
--------------------------------- --------------------------
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<PAGE> 1
EXHIBIT 10.28
STC BROADCASTING, INC.
$100,000,000
11% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
March 19, 1997
CHASE SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
SCHRODER WERTHEIM & CO., INCORPORATED
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
STC BROADCASTING, INC., a Delaware corporation (the
"Company"), proposes to issue and sell $100,000,000 aggregate principal amount
of its 11% Senior Subordinated Notes due 2007 (the "Securities"). The
Securities will be issued pursuant to an Indenture to be dated as of March 25,
1997 (the "Indenture") between the Company and U.S. Trust Company of Texas,
N.A., as trustee (the "Trustee"). The Company hereby confirms its agreement
with Chase Securities Inc. ("CSI"), NationsBanc Capital Markets, Inc. and
Schroder Wertheim & Co. Inc. (together with CSI, the "Initial Purchasers")
concerning the purchase of the Securities from the Company by the several
Initial Purchasers.
The Securities will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon exemptions therefrom. The
Company has prepared a preliminary offering memorandum dated February 28, 1997
(the "Preliminary Offering Memorandum") and a final offering memorandum dated
the date hereof (the "Final Offering Memorandum"; and, together with the
Preliminary Offering Memorandum, the "Offering Memoranda") setting forth
information concerning the Company and the Securities. Copies of the
Preliminary Offering Memorandum have been, and copies of the Final Offering
Memorandum will be,
<PAGE> 2
delivered by the Company to the Initial Purchasers pursuant to the terms of
this Agreement. Any references herein to the Preliminary Offering Memorandum
and the Final Offering Memorandum shall be deemed to include all amendments and
supplements thereto, unless otherwise noted. The Company hereby confirms that
it has authorized the use of the Preliminary Offering Memorandum and the Final
Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in accordance with Section 2.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of
an Exchange and Registration Rights Agreement, substantially in the form
attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to
which the Company will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of
senior subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
In connection with the acquisition (the "Acquisitions") by the Company
and Smith Acquisition Company of substantially all of the assets of four
television broadcasting stations from Jupiter/Smith T.V. Holdings, L.P. and
Smith Broadcasting Partners, L.P. (collectively, the "Sellers"), (i) the
Company entered into a $95.0 million credit facility (the "Credit Agreement")
with The Chase Manhattan Bank, as administrative agent, and each of the lenders
named therein and (ii) Sunrise Television Corp., the corporate parent of the
Company ("Holdings"), made a $50.0 million gross equity capital contribution
(the "Capital Contribution") to the Company. The net proceeds of the offering
and sale of the Securities (the "Offering"), will be used by the Company to
repay all outstanding indebtedness under the Credit Agreement. The
consummation of the Offering is sometimes referred to hereinafter as the
"Transaction".
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Final Offering Memorandum.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the several Initial
Purchasers that:
(a) Each of the Preliminary Offering Memorandum, as of its
date, and the Final Offering Memorandum, as of the date hereof and as
of the Closing Date (as defined in Section 3) did not (or will not),
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or omitted
from the Preliminary Offering Memorandum or
<PAGE> 3
the Final Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any
Initial Purchaser relating to such Initial Purchaser specifically for
use therein (the "Initial Purchasers' Information"). The parties
hereto acknowledge and agree that, for all purposes of this Agreement,
the Initial Purchasers' Information consists solely of the last
paragraph on the front cover page concerning the terms of the Offering
by the Initial Purchasers, the first paragraph of the legends on page
"i" concerning over-allotments and the statements relating to the
Initial Purchasers in the third, fourth, sixth, seventh, eighth and
ninth paragraphs under the heading "Plan of Distribution" in the
Preliminary Offering Memorandum and the Final Offering Memorandum.
(b) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth herein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the
Securities by the Initial Purchasers in the manner contemplated by
this Agreement and the Final Offering Memorandum, to register the
Securities under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(c) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to
so qualify or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole (a "Material
Adverse Effect").
(d) On the Closing Date, the authorized capital stock of the
Company will consist of 1,000,000 shares of preferred stock, par value
$0.01 per share, of which 300,000 shares are issued and outstanding
and 1,000 shares of common stock, $0.01 par value per share, of which
1,000 shares are issued and outstanding; all of the outstanding shares
of capital stock of the Company are duly and validly authorized and
issued and fully paid and non-assessable; and the preferred stock of
the Company conforms in all material respects to the description
thereof contained in the Final Offering Memorandum under the caption
"Description of Redeemable Preferred Stock". All of the outstanding
shares of capital stock of each subsidiary of the Company (and, in the
case of Smith Acquisition Company, 100% of the nonvoting stock) have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company,
free and clear of any
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<PAGE> 4
lien, charge, encumbrance, security interest, restriction upon voting
(except for Smith Acquisition Company) or transfer or any other claim
of any third party (other than liens and security interests created
pursuant to the Credit Agreement, the Indenture or applicable law) and
restrictions on transfer imposed by Federal Communications Commission
(the "FCC") requirements.
(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement and the Securities (collectively, the
"Transaction Documents") and to perform its obligations hereunder and
thereunder.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except (i) to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and (ii) to the extent
that the enforceability of rights to indemnification and contribution
thereunder may be limited by federal or state securities laws or
regulations or the public policy underlying such laws or regulations.
(g) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
(i) to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law) and (ii) to the extent that the enforceability of
rights to indemnification and contribution thereunder may be limited
by federal or state securities laws or regulations or the public
policy underlying such laws or regulations.
(h) The Indenture has been duly authorized by the Company
and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except to the
extent that the waiver contained in Section 4.10 of the Indenture may
not be enforceable.
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<PAGE> 5
(i) The Securities have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be
duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law) and except to the extent that the
waiver contained in Section 4.10 of the Indenture may not be
enforceable.
(j) The Exchange Securities have been duly authorized by
the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and the Registration Rights
Agreement, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except to the
extent that the waiver contained in Section 4.10 of the Indenture may
not be enforceable.
(k) Each Transaction Document that is described in the Final
Offering Memorandum conforms in all material respects to the
description thereof contained in the Final Offering Memorandum.
(l) The execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance, authentication, sale
and delivery of the Securities by the Company and compliance by the
Company with the terms thereof and the consummation by the Company and
its subsidiaries of the transactions contemplated by the Transaction
Documents do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except for any such conflict, breach,
violation, default, lien, charge or encumbrance that could not, singly
or in the aggregate, reasonably be expected to have a Material Adverse
Effect; nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries; or any statute or any order, rule or regulation
(including, without limitation, the Communications Act of 1934, as
amended (the "Communications Act"), and the rules and regulations of
the FCC
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<PAGE> 6
thereunder) of any court or arbitrator or governmental agency or body
(including, without limitation, the FCC) having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets, except for any such conflict, breach, violation, default,
lien, charge or encumbrance that could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
and, except for such consents, approvals, authorizations,
registrations or qualifications which have been obtained or as may be
required under (i) applicable Blue Sky or securities laws in
connection with the purchase and resale of the Notes by the Initial
Purchasers, (ii) the Trust Indenture Act of 1939 in connection with
the Exchange Securities or (iii) the Securities Act and state Blue Sky
laws or securities laws in connection with the actions contemplated by
the Registration Rights Agreement, no consent, approval, authorization
or order of, or filing or registration with, any such court or
arbitrator or governmental agency or body (including, without
limitation, the FCC, the Federal Trade Commission (the "FTC") and the
Department of Justice (the "DOJ")) is required for the execution,
delivery and performance by the Company of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company with the terms thereof and
the consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which have been obtained
or made prior to the Closing Date, (ii) as may be required to be
obtained or made under the Securities Act and applicable state
securities laws as provided in the Registration Rights Agreement and
(iii) that from time to time, the Company or its Subsidiaries may be
required to obtain from or make with the FCC in the ordinary course of
business.
(m) The network affiliation agreements between each of
the broadcast television stations of the Company and CBS Inc. and
National Broadcasting Company, Inc., as applicable, have been duly
authorized, executed and delivered by the Company and constitute valid
and legally binding agreements of the respective parties thereto and
the description of such network affiliation agreements contained in
the Final Offering Memorandum is a fair and accurate summary thereof.
(n) (i) Arthur Andersen LLP are independent public
accountants with respect to the Company and its subsidiaries within
the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder and (ii) the financial
statements (including the related notes) contained in the Offering
Memorandum have been prepared in conformity with generally accepted
accounting principles consistently applied throughout the periods
covered thereby and fairly present in all material respects the
financial condition and the results of operations of the entities
purported to be covered thereby for the respective periods indicated
except as otherwise disclosed therein. The financial information
contained in the Offering Memorandum under the headings
"Summary--Summary Historical and Pro Forma Combined Financial Data,"
"Capitalization," "Selected Historical Combined Financial
Information,"
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<PAGE> 7
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" are derived from the accounting records of the
entities purported to be covered thereby and fairly present the
information purported to be shown thereby. The pro forma financial
information and statistical data contained in the Final Offering
Memorandum has been prepared on a basis consistent with the historical
financial statements contained in the Final Offering Memorandum and
the pro forma adjustments specified therein include all material
adjustments to the historical financial information required by Rule
11-02 of Regulation S-X under the Securities Act to fairly reflect the
transactions described in the Final Offering Memorandum, and utilizes
assumptions made on a reasonable basis to give effect to the
historical and proposed transactions described in the Final Offering
Memorandum.
(o) There are no legal or governmental proceedings
(including, without limitation, before or by the FCC, the FTC or the
DOJ) pending to which the Company or any of its subsidiaries is a
party or of which any property or assets of the Company or any of its
subsidiaries or affiliates is the subject which, singularly or in the
aggregate, if determined adversely to the Company or any of its
subsidiaries or affiliates, could reasonably be expected to have a
Material Adverse Effect; and to the best knowledge of the Company, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(p) No injunction, restraining order or order of any nature
by any federal or state court of competent jurisdiction has been
issued with respect to the Company or any of its subsidiaries which
would prevent or suspend the issuance or sale of the Securities or the
use of the Preliminary Offering Memorandum or the Final Offering
Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries before any
court or arbitrator or any governmental agency, body or official,
domestic or foreign, which could reasonably be expected to interfere
with or adversely affect the issuance of the Securities or in any
manner draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant
thereto.
(q) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject or (iii)
in violation in any material respect of any applicable law, ordinance,
court decree, governmental rule or regulation (including, without
limitation, the Communications Act and the rules and regulations of
the FCC thereunder) to which it or its property or assets may be
subject.
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<PAGE> 8
(r) The Company and each of its subsidiaries possess all
material licenses, orders, certificates, authorizations, approvals and
permits issued by, and have made all declarations and filings with,
the appropriate federal, state or foreign regulatory agencies or
bodies (including, without limitation, the FCC, the FTC and the DOJ)
that are necessary or desirable for the ownership of their respective
properties or the conduct of their respective businesses as described
in the Final Offering Memorandum, except where the failure to possess
or make the same would not, singularly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its
subsidiaries has received notification of any revocation or
modification of any such license, certificate, authorization or permit
that is generally renewable in the ordinary course or has any reason
to believe that any such license, certificate, authorization or permit
will not be renewed in the ordinary course. The licenses issued with
respect to the Company's television broadcast stations by the FCC (the
"Licenses") are valid and in full force and effect with no
restrictions or qualifications (other than standard restrictions or
qualifications usually on similar licenses) that would, singly or in
the aggregate, have a Material Adverse Effect. No event has occurred
that permits, or with notice or lapse of time or both would permit,
and no legal governmental proceeding has been instituted or threatened
that could cause, the revocation or termination of any of the Licenses
or that might result in any other impairment or modification of the
rights of the Company or any subsidiary thereof that in any such case
would, singly or in the aggregate, have a Material Adverse Effect.
The Company has no reason to believe that any License issued by the
FCC will not be renewed in the ordinary course.
(s) Neither the Company nor any of its subsidiaries is (i) an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the rules and
regulations thereunder.
(t) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(u) The Company and each of its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are in the Company's opinion adequate to protect
the Company and its subsidiaries and their respective businesses.
Neither the Company nor any of its subsidiaries has received notice
from any insurer
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<PAGE> 9
or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to continue
such insurance.
(v) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the
conduct of their respective businesses does not conflict in any
material respect with, and the Company and its subsidiaries have not
received any notice of any claim of conflict with, any such rights of
others.
(w) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of the Company and its subsidiaries, taken as
a whole, in each case free and clear of all liens, encumbrances and
defects other than (i) liens and encumbrances to be granted pursuant
to the Credit Agreement and (ii) liens, encumbrances and defects that
do not materially interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries or could not
reasonably be expected to have a Material Adverse Effect.
(x) No labor disturbance by or dispute with the employees
of the Company or any of its subsidiaries exists or, to the best
knowledge of the Company, is imminent, which could reasonably be
expected to have a Material Adverse Effect.
(y) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release or
threatened release of any kind of toxic or other wastes or other
hazardous substances by, due to or caused by the Company or any of its
subsidiaries (or, to the best knowledge of the Company, any other
entity (including any predecessor) for whose acts or omissions the
Company or any of its subsidiaries is or could reasonably be expected
to be liable) upon any property now or previously owned or leased by
the Company or any of its subsidiaries, or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability except for any
violation or liability which would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company has knowledge,
except for any such disposal, discharge, emission or other release of
any kind which would not have, singularly or in the aggregate with all
such disposal, discharge, emission and other release, a Material
Adverse Effect.
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<PAGE> 10
(z) On the Closing Date, the Company and its subsidiaries,
taken as a whole, (after giving effect to the issuance of the
Securities as described in the Final Offering Memorandum) will be
Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the aggregate fair
value (or present fair saleable value) of the assets of the Company
and its subsidiaries, taken as a whole, is not less than their total
existing debts and liabilities (including contingent liabilities) as
they become absolute and matured in the normal course of business and
(ii) the Company and its subsidiaries, taken as a whole, do not have
an unreasonably small amount of capital with which to conduct their
businesses. In computing the amount of such contingent liabilities at
any time, it is intended that such liabilities will be computed at the
amount that, in the light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
(aa) Except as described in the Final Offering Memorandum,
there are no outstanding subscriptions, rights, warrants, calls or
options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or
issuance of, any shares of capital stock of or other equity or other
ownership interest in the Company.
(bb) No holder of securities of the Company or any of its
subsidiaries will be entitled to have such securities registered under
the registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement, other than as expressly
permitted thereby.
(cc) The statistical and market-related data included in the
Final Offering Memorandum are based on or derived from sources which
the Company believes to be reliable and accurate.
(dd) None of the proceeds of the sale of the Securities will
be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of
the Securities to be considered a "purpose credit" within the meanings
of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
(ee) Neither the Company nor any Affiliate (as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation D"))
has directly, or through any agent (provided that no representation is
made as to the Initial Purchasers or any Person acting on their
behalf) (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in
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<PAGE> 11
any form of general solicitation or general advertising (as those
terms are used in Regulation D) in connection with the offering of the
Securities.
(ff) When the Securities are delivered pursuant to this
Agreement, none of the Securities will be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of
the Company or any subsidiary of the Company that are listed on a
national securities exchange registered under Section 6 of the
Exchange Act or that are quoted in a United States automated
inter-dealer quotation system.
(gg) None of the Company, any of its subsidiaries, any of
their respective Affiliates (as defined in Rule 501(b) of Regulation
D) or any person acting on any of their behalf (other than the Initial
Purchasers) has engaged in any directed selling efforts (as that term
is defined in Regulation S under the Securities Act ("Regulation S"))
with respect to the Securities; the Company and its Affiliates and any
person acting on any of its behalf (other than the Initial Purchasers)
have complied with the offering restrictions requirement of Regulation
S.
(hh) The Company is in compliance with all provisions of
Section 517.075 of Florida Statutes, as amended, relating to issuers
doing business with the government of Cuba.
(ii) Since the date as of which information is given in the
Final Offering Memorandum, except as otherwise stated therein, (i)
there has been no material adverse change or any development involving
a prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or
business prospects of the Company, whether or not arising in the
ordinary course of business, (ii) neither the Company nor any of its
subsidiaries has incurred any liability or obligation, direct or
contingent, other than in the ordinary course of business, which
would, singly or in the aggregate, have a Material Adverse Effect,
(iii) neither the Company nor any of its subsidiaries has entered into
any material transaction other than in the ordinary course of business
and (iv) there has not been any change in the capital stock or
long-term debt of the Company, or any dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
2. Purchase and Resale of the Securities. (a) On the basis
of the representations, warranties and agreements contained herein, and subject
to the terms and conditions set forth herein, the Company agrees to issue and
sell to each of the Initial Purchasers, severally and not jointly, and each of
the Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Securities set forth opposite the name of such
Initial Purchaser on Schedule 1 hereto at a purchase price equal to 97.0% of
the principal amount thereof. The Company shall not be obligated to deliver any
of the Securities except upon payment for all of the Securities to be purchased
as provided herein.
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<PAGE> 12
(b) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Final Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company that (i) it is purchasing the Securities pursuant to a
private sale exempt from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, as part of its initial offering, only to (A) persons whom it
reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Securities Act as such
rule may be amended from time to time ("Rule 144A"), or if any such person is
buying for one or more institutional accounts for which such person is acting
as fiduciary or agent, only when such person has represented to it that each
such account is a Qualified Institutional Buyer to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A and in each
case, in transactions in accordance with Rule 144A or (B) a limited number of
other accredited investors ("Accredited Investors") as defined in Rule
501(a)(1), (2), (3) or (7) under Regulation D that are institutional investors
in private sales exempt from registration under the Securities Act. Each
Initial Purchaser, severally and not jointly, agrees that, prior to or
simultaneously with the confirmation of sale by such Initial Purchaser to any
purchaser of any of the Securities purchased by such Initial Purchaser from the
Company pursuant hereto, such Initial Purchaser shall furnish to that purchaser
a copy of the Final Offering Memorandum (and any amendment or supplement
thereto that the Company shall have furnished to such Initial Purchaser prior
to the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections
5(d) and (f), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and warranties
of the Initial Purchasers and their compliance with their agreements contained
in this Section 2, and each Initial Purchaser hereby consents to such reliance.
3. Delivery of and Payment for the Securities. (a) Delivery
of and payment for the Securities shall be made at the offices of Cahill Gordon
& Reindel, New York, New York, or at such other place as shall be agreed upon
by the Initial Purchasers and the Company, at 10:00 A.M., New York City time,
on March 25, or at such other time or date, not later than seven full business
days thereafter, as shall be agreed upon by the Initial Purchasers and the
Company (such date and time of payment and delivery being referred to herein as
the "Closing Date").
(b) On the Closing Date, payment of the purchase price for
the Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other
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<PAGE> 13
means as the parties hereto shall agree prior to the Closing Date against
delivery to the Initial Purchasers of the certificates evidencing the
Securities. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations
of the Initial Purchasers hereunder. Upon delivery, the Securities shall be in
global form, registered in such names and in such denominations as CSI on
behalf of the Initial Purchasers shall have requested in writing not less than
two full business days prior to the Closing Date. The Company agrees to make
one or more global certificates evidencing the Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York at
least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees
with each of the several Initial Purchasers:
(a) to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Final
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Final Offering Memorandum (as amended
or supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Final Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding
for any such purpose; and to use its reasonable best efforts to
prevent the issuance of any such order preventing or suspending the
use of the Preliminary Offering Memorandum or the Final Offering
Memorandum or suspending any such qualification and, if any such
suspension is issued, to obtain the lifting thereof at the earliest
possible time;
(b) to furnish to each of the Initial Purchasers, without
charge, as many copies of the Preliminary Offering Memorandum and the
Final Offering Memorandum (and any amendments or supplements thereto)
as may be reasonably requested;
(c) prior to making any amendment or supplement to the Final
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect
any such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period
to review, which shall not be in any case longer than five business
days after receipt of such copy;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the opinion
of counsel for the Initial Purchasers or counsel for the Company, to
amend or supplement the Final Offering Memorandum in order that the
Final Offering Memorandum will not include an untrue statement of a
material fact or
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<PAGE> 14
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Final Offering Memorandum to
comply with applicable law, to promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or
omission so that the Final Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and
prospective purchasers of the Securities designated by such holders,
upon request of such holders or such prospective purchasers, the
information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to and in
compliance with Section 13 or 15(d) of the Exchange Act;
(f) for a period of five years following the Closing Date, to
furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by the Company with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Securities pursuant to the Indenture;
(g) to use their reasonable best efforts to qualify the
Securities for sale under the state securities or Blue Sky laws of
such jurisdictions as the Initial Purchasers may reasonably designate
and to continue such qualifications in effect for so long as required
for the distribution of the Securities; provided, however, that the
Company and its subsidiaries shall not be obligated to qualify as
foreign corporations or to file a general consent to service of
process in any jurisdiction;
(h) to use their reasonable best efforts to assist the
Initial Purchasers in arranging for the Securities to be designated
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers,
Inc. ("NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through the
Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the
case may be, not to, and to
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<PAGE> 15
cause its affiliates as such term is defined in Rule 501(B) of
Regulation D not to, and not to authorize or knowingly permit any
person acting on their behalf to, solicit any offer to buy or offer to
sell the Securities by means of any form of general solicitation or
general advertising within the meaning of Regulation D or in any
manner involving a public offering within the meaning of Section 4(2)
of the Securities Act; and not to offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act to
cease to be applicable to the offering and sale of the Securities as
contemplated by this Agreement and the Final Offering Memorandum;
(k) for a period of 90 days from the date of the Final
Offering Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement (except as required by the Registration Rights Agreement)
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities issued or guaranteed by the Company
or any of its subsidiaries (other than the Securities or the Exchange
Securities) without the prior written consent of the Initial
Purchasers;
(l) in connection with the Offering, until CSI on behalf of
the Initial Purchasers shall have notified the Company of the
completion of the resale of the Securities, neither the Company nor
any of its affiliated purchasers (as defined in Rule 10b-6 under the
Exchange Act), either alone or with one or more other persons, will
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and neither
it nor any of its affiliated purchasers will make bids or purchase for
the purpose of creating actual, or apparent, active trading in or of
raising the price of the Securities;
(m) to not take any action prior to the Closing Date which
would require the Final Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);
(n) to apply the net proceeds from the sale of the Securities
as set forth in the Final Offering Memorandum under the heading "Use
of Proceeds".
5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the several Initial Purchasers hereunder are subject
to the accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company and its officers made in any certificates
delivered pursuant hereto, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
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<PAGE> 16
(a) The Final Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchasers as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchasers may agree; and no stop order suspending the sale of
the Securities in any jurisdiction shall have been issued and no
proceeding for that purpose shall have been commenced or shall be
pending or threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Final Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which is material or omits to
state any fact which, in the opinion of such counsel, is material and
is necessary to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of each of the
Transaction Documents and the Final Offering Memorandum, and all other
legal matters relating to the Transaction Documents and the
transactions contemplated thereby, shall be reasonably satisfactory in
all material respects to the Initial Purchasers, and the Company shall
have furnished to the Initial Purchasers all documents and information
that they or their counsel may reasonably request to enable them to
pass upon such matters.
(d) Weil, Gotshal & Manges shall have furnished to the
Initial Purchasers their written opinion, as counsel for the Company,
addressed to the Initial Purchasers and dated the Closing Date,
substantially to the effect set forth in Annex B hereto.
(e) Each of Fisher Wayland Cooper Leader & Zaragoza L.L.P.
and Hogan and Hartson L.L.P. shall have furnished to the Initial
Purchasers their respective written opinions, as FCC counsel for the
Company and Smith Acquisition Company, respectively, addressed to the
Initial Purchasers and dated the Closing Date, substantially to the
effect set forth in Annex C hereto.
(f) The Initial Purchasers shall have received from Cahill
Gordon & Reindel, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchasers may reasonably require, and the Company shall have
furnished to such counsel such documents and information as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(g) With respect to the letter (the "Initial Letter") of
Arthur Andersen LLP delivered to the Initial Purchasers concurrently
with the execution of this Agreement (which letter shall be in form
and substance satisfactory to the Initial Purchasers and counsel for
the Initial Purchasers), the Company shall have caused Arthur Andersen
LLP to furnish to the Initial Purchasers a letter (the "Bring-Down
Letter") addressed to the Initial Purchasers and dated the Closing
Date (i) confirming that they are
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<PAGE> 17
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of
Professional Conduct of the AICPA and its interpretations and rulings
thereunder, (ii) stating, as of the date of the Bring-Down Letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Final Offering Memorandum, as of a date not more than three
business days prior to the date of the Bring-Down Letter), that the
conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter
are accurate and (iii) confirming in all material respects the
conclusions and findings set forth in the Initial Letter.
(h) The Company shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of a senior
executive officer in his capacity as an officer of the Company and not
as an individual stating that (A) such officer has carefully examined
the Final Offering Memorandum, (B) in his opinion, the Final Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and since
the date of the Final Offering Memorandum, no event has occurred which
should have been set forth in a supplement or amendment to the Final
Offering Memorandum so that the Final Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading and (C) to the best of his knowledge, as of the Closing
Date, the representations and warranties of the Company in this
Agreement are true and correct in all material respects, the Company
has complied in all material respects with all agreements and
satisfied in all material respects all conditions on its part to be
performed or satisfied hereunder on or prior to the Closing Date in
all material respects, and subsequent to the date of the most recent
financial statements contained in the Final Offering Memorandum, there
has been no material adverse change in the financial position or
results of operations of the Company or any of its subsidiaries, or
any material change, or any material development including a
prospective material change, in or affecting the condition (financial
or otherwise), results of operations, business or prospects of the
Company and its subsidiaries taken as a whole, except as set forth in
the Final Offering Memorandum.
(i) The Initial Purchasers shall have received on the date
hereof a counterpart of the Registration Rights Agreement which shall
have been executed and delivered by a duly authorized officer of the
Company.
(j) The Indenture shall have been duly executed and delivered
by the Company and the Trustee, and the Securities shall have been
duly executed and delivered by the Company and duly authenticated by
the Trustee.
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<PAGE> 18
(k) If any event shall have occurred that requires the
Company under Section 4(d) to prepare an amendment or supplement to
the Final Offering Memorandum, such amendment or supplement shall have
been prepared, the Initial Purchasers shall have been given a
reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchasers reasonably in advance of
the Closing Date.
(l) There shall not have occurred any invalidation of Rule
144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the reasonable judgment
of the Initial Purchasers would materially impair the ability of the
Initial Purchasers to purchase, hold or effect resales of the
Securities as contemplated hereby.
(m) Other than as contemplated by the Transactions or the
Final Offering Memorandum, since the dates as of which information is
given in the Final Offering Memorandum, there shall not have been any
change in the capital stock or long-term debt or any change, or any
development involving a prospective change, in or affecting the
condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, the
effect of which, in any such case described above, is, in the judgment
of CSI, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated in the Final Offering
Memorandum (exclusive of any amendment or supplement thereto).
(n) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance, sale or resale of the
Securities.
(o) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Securities or any of the Company's other debt securities
or preferred stock by any "nationally recognized statistical rating
organization," as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
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<PAGE> 19
(p) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established on
any such exchange or market by the Commission, by any such exchange or
by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended
or (ii) a general moratorium on commercial banking activities shall
have been declared by federal or New York state authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the
United States of a national emergency or war or (iv) a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) the effect of which, in the case of
this clause (iv), is, in the judgment of CSI, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or
the delivery of the Securities on the terms and in the manner
contemplated by this Agreement and in the Final Offering Memorandum
(exclusive of any amendment or supplement thereto).
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
6. Termination. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(p) shall have occurred and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing
Date, any Initial Purchaser defaults in the performance of its obligations
under this Agreement, the non-defaulting Initial Purchasers may make
arrangements for the purchase of the Securities which such defaulting Purchaser
agreed but failed to purchase by other persons satisfactory to the Company and
the non-defaulting Initial Purchasers, but if no such arrangements are made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchasers or the Company,
except that the Company will continue to be liable for the payment of expenses
to the extent set forth in Sections 8 and 12 and except that the provisions of
Sections 9, 10, 14 and 16 shall not terminate and shall remain in effect. As
used in this Agreement, the term "Initial Purchasers" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule 1 hereto that, pursuant to this Section 7, purchases
Securities which a defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or any
non-defaulting Initial Purchaser for damages caused by its default. If other
persons agree to purchase the Securities of a defaulting Initial
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<PAGE> 20
Purchaser, either the non-defaulting Initial Purchasers or the Company may
postpone the Closing Date for up to seven full business days in order to effect
any changes that in the reasonable opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Offering Memorandum
or in any other document or arrangement, and the Company agrees to reasonably
promptly prepare any amendment or supplement to the Final Offering Memorandum
that effects any such changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a)
this Agreement shall have been terminated pursuant to Section 6, (b) the
Company shall fail to tender the Securities for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Securities for any reason permitted
under this Agreement, the Company shall reimburse the Initial Purchasers for
such reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase of the
Securities. If this Agreement is terminated pursuant to Section 7 by reason of
the default of one or more of the Initial Purchasers, the Company shall not be
obligated to reimburse any such defaulting Initial Purchaser on account of such
expenses.
9. Indemnification. (a) The Company shall indemnify and
hold harmless each Initial Purchaser, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls any Initial Purchaser within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
9(a) and Section 10 as an Initial Purchaser), from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, without limitation, any loss, claim, damage, liability or action
relating to purchases and sales of the Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Final Offering Memorandum or in any amendment or
supplement thereto or in any information provided by the Company pursuant to
Section 4(e) or (ii) the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with any Initial
Purchasers' Information; and provided, further, however, that with respect to
any such untrue statement in or omission from the Preliminary Offering
Memorandum, the
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<PAGE> 21
indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of any such Initial Purchaser to the extent that such sale to the
person asserting any such loss, claim, damage, liability or action was an
initial resale by such Initial Purchaser and any such loss, claim, damage,
liability or action of or with respect to such Initial Purchaser results from
the fact that both (A) a copy of the Final Offering Memorandum was not sent or
given to such person at or prior to the written confirmation of the sale of
such Securities to such person and (B) the untrue statement in or omission from
the Preliminary Offering Memorandum was corrected in the Final Offering
Memorandum unless, in either case, such failure to deliver the Final Offering
Memorandum was a result of non-compliance by the Company with Section 4(b).
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 9(b) and
Section 10 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Final Offering Memorandum or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with Initial Purchasers' Information, and
shall reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 9 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and, provided, further,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 9. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other
- 21 -
<PAGE> 22
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
an indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the
indemnified party) or (3) the indemnifying party has not in fact employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No indemnifying
party shall be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party (which consent shall not be
unreasonably withheld), effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party
unless such settlement (i) does not contain an admission of fault or wrongdoing
and (ii) includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
The obligations of the Company and the Initial Purchasers in
this Section 9 and in Section 10 are in addition to any other liability that
the Company or the Initial Purchasers, as the case may be, may otherwise have.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss,
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<PAGE> 23
claim, damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company on the one hand and the Initial Purchasers on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
purchased under this Agreement (before deducting expenses) received by or on
behalf of the Company, on the one hand, and the total discounts and commissions
received by the Initial Purchasers with respect to the Securities purchased
under this Agreement, on the other, bear to the total gross proceeds from the
sale of the Securities under this Agreement, in each case as set forth in the
table on the cover page of the Final Offering Memorandum. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to the Company or information supplied by the
Company on the one hand or to any Initial Purchasers' Information on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
Company and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total discounts and
commissions received by such Initial Purchaser with respect to the Securities
purchased by it under this Agreement exceeds the amount of any damages which
such Initial Purchaser has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations to contribute as provided in this Section 10 are
several in proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 9 and 10 with respect to affiliates,
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<PAGE> 24
officers, directors, employees, representatives, agents and controlling persons
of the Company and the Initial Purchasers and in Section 4(e) with respect to
holders and prospective purchasers of the Securities. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 11, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
12. Expenses. The Company agrees with the Initial Purchasers
to pay (a) the costs incident to the authorization, issuance, sale, preparation
and delivery of the Securities and any taxes payable in that connection; (b)
the costs incident to the preparation, printing and distribution of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments or supplements thereto; (c) the costs of reproducing and
distributing each of the Transaction Documents; (d) the costs incident to the
preparation, printing and delivery of the certificates evidencing the
Securities, including stamp duties and transfer taxes, if any, payable upon
issuance of the Securities; (e) the fees and expenses of the Company's counsel
and independent accountants; (f) the fees and expenses of qualifying the
Securities under the securities laws of the several jurisdictions as provided
in Section 4(h) and of preparing, printing and distributing Blue Sky Memoranda
(including related fees and expenses of counsel for the Initial Purchasers in
an amount up to $7,500); (g) any fees charged by rating agencies for rating the
Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such parties); (i) all
expenses and application fees incurred in connection with the application for
the inclusion of the Securities on the PORTAL Market and the approval of the
Securities for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section 8,
the Initial Purchasers shall pay their own costs and expenses (including the
costs and expenses of their counsel).
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchasers contained in this Agreement or made by or on behalf of the
Company or the Initial Purchasers pursuant to this Agreement shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them.
14. Notices, etc.. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: James P. Casey
(telecopier no.: (212) 270-0994); or
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<PAGE> 25
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company at 3839 4th Street
North, Suite 420, St. Petersburg, Florida 33703, Attention: Chief
Executive Officer (telecopier no.: (813) 821-8092) and to Lawrence D.
Stuart Jr., Hicks, Muse, Tate & Furst Incorporated, 200 Crescent
Court, Suite 1600, Dallas, Texas (telecopier no: (214) 740-7355);
provided, however, that any notice to an Initial Purchaser pursuant to Section
9(c) shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof. The
Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICTS OF LAW PROVISIONS THEREOF TO THE EXTENT THE APPLICATION OF THE
LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
18. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall each
be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 26
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon
this instrument will become a binding agreement between the Company and the
several Initial Purchasers in accordance with its terms.
Very truly yours,
STC BROADCASTING, INC.
By /s/ ROBERT N. SMITH
-----------------------------------
Name: Robert N. Smith
Title: Chief Executive Officer
Accepted:
CHASE SECURITIES INC.
By /s/ JEFFREY L. BLUMIN
------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
NATIONSBANC CAPITAL MARKETS, INC.
By /s/ IAN J. HARDINGTON
------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
901 Main Street, 66th Floor
Dallas, Texas 75202
Attention: Legal Department
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<PAGE> 27
SCHRODER WERTHEIM & CO. INCORPORATED
By /s/ ETHAN S. BUYON
---------------------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
787 Seventh Avenue
New York, New York 10019
Attention: Legal Department
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<PAGE> 1
EXHIBIT 10.29
SHAREHOLDERS' VOTING AGREEMENT
THIS SHAREHOLDERS' VOTING AGREEMENT (this "Agreement") is made
as of this 9th day of May, 1997, by and among STC Broadcasting, Inc., a
Delaware corporation ("Purchaser"), WJAC Acquisition Corp., a Pennsylvania
corporation and a wholly-owned subsidiary of Purchaser ("Sub"), and each of the
undersigned shareholders of WJAC, Incorporated, a Pennsylvania corporation (the
"Company") (such shareholders of the Company are each individually referred to
herein as a "Major Shareholder" and collectively as the "Major Shareholders");
WHEREAS, approximately seventy percent (70%) of the beneficial
and record ownership of the issued and outstanding shares of common stock, no
par value, of the Company (the "Company Stock"), is held, in the aggregate, by
the Major Shareholders in the manner set forth below their signatures hereto;
WHEREAS, Purchaser, Sub and the Company have entered into an
Agreement and Plan of Merger dated as of the date hereof (such agreement, as it
may be amended from time to time, being referred to as the "Merger Agreement"),
which provides, among other things, for the merger (the "Merger") of Sub with
and into the Company, with the result that the surviving corporation will
become a wholly-owned subsidiary of Purchaser; and
WHEREAS, to induce Purchaser and Sub to enter into the Merger
Agreement and effect the Merger each of the Major Shareholders wishes to enter
into this Agreement.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DISPOSITION OF SHARES
Except for the conversion of their shares of Company Stock as required
by the Merger Agreement, each Major Shareholder agrees that such Major
Shareholder will not sell, transfer, pledge, assign or otherwise dispose of, or
enter into any contract, option or other agreement or understanding with
respect to the sale, transfer, pledge, assignment or other disposition of, any
shares of Company Stock now owned or hereafter acquired by such Major
Shareholder.
<PAGE> 2
SECTION 2. VOTING
Each Major Shareholder agrees to vote all of the shares of Company
Stock now owned or hereafter acquired by such Major Shareholder (a) in favor of
adoption of the Merger Agreement and the transactions contemplated thereby
(including any amendments or modifications of the terms thereof approved by the
board of directors of the Company) and (b) against approval or adoption of any
action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage the Merger, including, but not limited to: (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company and its subsidiaries; (ii) a sale or
transfer of a material amount of assets of the Company and its subsidiaries or
a reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any change in the management or board of directors of the
Company; (iv) any material change in the present capitalization or dividend
policy of the Company; or (v) any other material change in the Company's
corporate structure or business. Each of the Major Shareholders further
covenants and agrees not to grant any proxies, deposit the shares of Company
Stock into a voting trust or enter into a voting agreement with respect to the
shares of Company Stock, or take any action that would make any representation
or warranty made by such Major Shareholder herein untrue or incorrect or have
the effect of preventing or disabling such Major Shareholder from performing
such Major Shareholder's obligations under this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE MAJOR SHAREHOLDERS
Each of the Major Shareholders represents and warrants to Purchaser
and Sub as follows:
(a) The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
violate any law, regulation, court order, judgment or decree applicable to such
Major Shareholder or by which the property of such Major Shareholder is bound
or affected, or conflict with or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under any contract or agreement to which such Major Shareholder is a
party or by which such Major Shareholder or his or its respective properties
are bound or affected, which conflict, violation, breach or default would
adversely affect such Major Shareholder's ability to perform this Agreement.
(b) Except for any filings that may be required to be
made by the Major Shareholders to obtain requisite regulatory approval with
respect to the
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<PAGE> 3
Merger, such Major Shareholder is not required to give any notice or make any
report or other filing with any governmental authority in connection with the
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby and no waiver, consent, approval or authorization of any
governmental or regulatory authority or any other person or entity is required
to be obtained by such Major Shareholder in connection with the execution and
delivery of this Agreement by such Major Shareholder or the consummation of the
transactions contemplated hereby, other than where the failure to make such
filings, give such notices or obtain such waivers, consents, approvals or
authorizations would not adversely affect such Major Shareholder's ability to
perform this Agreement.
(c) The shares of Company Stock set forth below the name
of such Major Shareholder on the signature pages hereof are the only shares of
Company Stock owned beneficially or of record by such Major Shareholder and
such Major Shareholder holds no options, warrants, or other rights to acquire
shares of Company Stock or shares of any class of capital stock of the Company.
(d) Such Major Shareholder is the beneficial and record
owner of the number of shares of Company Stock indicated under such Major
Shareholder's name on the signature pages hereof, free and clear of all liens,
claims, charges, security interests and encumbrances with respect to ownership
of or the right to vote any such shares, and such shares of Company Stock are
duly authorized, validly issued, fully paid and nonassessable, with no personal
liability attaching to the ownership thereof.
SECTION 4. COVENANTS AND AGREEMENTS OF THE MAJOR SHAREHOLDERS
(a) Each of the Major Shareholders agrees to cooperate with
Purchaser and Sub in seeking the successful consummation of the Merger pursuant
to the terms of the Merger Agreement and to use reasonable efforts to cause
each of the conditions set forth in the Merger Agreement for the consummation
of the Merger to be so performed or complied with. Without limiting the
foregoing, each of the Major Shareholders agrees to use reasonable efforts to
cause the Company to promptly file all such filings as may be required to
obtain the requisite regulatory approvals in respect of the Merger and any
requested or supplementary filings required by any regulatory authority.
(b) Each of the Major Shareholders covenants and agrees that,
from and after the date hereof and before the Effective Time (as such term is
defined in the Merger Agreement) of the Merger, without the prior written
consent of Purchaser, such Major Shareholder will not cause the Company or any
of its subsidiaries to, except as contemplated herein, (i) purchase or redeem or
issue or
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<PAGE> 4
sell any shares of capital stock of the Company, including, without limitation,
the Company Stock; (ii) issue or grant any options, warrants, conversions or
other rights to purchase any such shares or any securities convertible into or
exchangeable for such shares; (iii) enter into any employment or severance
agreement with any of its directors, officers or employees or with any other
person or establish any new employee benefit plans or confer any material new
employee benefits upon such persons; or (iv) otherwise take any action or fail
to take any action that would (A) violate the terms and conditions of the
Merger Agreement or (B) cause the conditions to the Merger set forth in the
Merger Agreement not to be met or fulfilled.
SECTION 5. INDEMNIFICATION
Each of the Major Shareholders agrees to indemnify and hold harmless
Purchaser and Sub and their respective officers, directors and agents against
and in respect of any and all losses, damages, deficiencies, costs, liabilities
and expenses, including without limitation reasonable attorneys' fees,
resulting from or relating to any breach by such Major Shareholder of any of
the agreements of such Major Shareholder contained in this Agreement.
SECTION 6. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO THE
PRINCIPLE OF CONFLICTS OF LAW.
SECTION 7. REMEDIES
Each of the Major Shareholders understands and agrees that the
covenants and undertaking on each of their parts herein contained are uniquely
related to the desire of the parties that Purchaser and Sub consummate the
Merger, that the Merger is a unique business opportunity for the Company,
Purchaser, Sub and each of the Major Shareholders, and that, although monetary
damages may be available for the breach of such covenants and undertakings,
monetary damages would be an inadequate remedy therefor. Accordingly, each of
the Major Shareholders agrees that Purchaser and Sub shall be entitled to
obtain specific performance by the Major Shareholders of every covenant and
undertaking contained herein to be performed by them.
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<PAGE> 5
SECTION 8. SURVIVAL; BINDING EFFECT
All rights and authority granted herein by each Major Shareholder
shall survive the death or incapacity of the Major Shareholder. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and
their respective heirs, personal representatives, successors and assigns.
Purchaser and Sub may, without the consent of any of the Major Shareholders,
assign their rights hereunder to any entity to which Purchaser and Sub assign
their rights under the Merger Agreement.
SECTION 9. AMENDMENT
This Agreement may be amended by the parties hereto at any time, but
only by an instrument in writing duly executed and delivered on behalf of each
of the parties hereto.
SECTION 10. NOTICES
All notices required to be given hereunder shall be deemed given if
mailed, first class, postage prepaid, to the respective party at its address as
set out in the following:
If to the Major Shareholders, to the addresses set forth below the
signatures of the Major Shareholders.
If to Purchaser or Sub:
STC Broadcasting, Inc.
3839 4th Street North, Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy No.: (813) 821-8092
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
Attention: William S. Reyner, Jr., Esq.
Telecopy No.: (202) 637-5910
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<PAGE> 6
SECTION 11. ENTIRE AGREEMENT
This Agreement, together with the Merger Agreement, and the agreements
contemplated thereby constitutes the entire agreement between the parties
hereby pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties.
SECTION 12. HEADINGS
Section headings are included solely for convenience and are not
considered to be part of this Agreement and are not intended to be an accurate
description of the contents thereof.
SECTION 13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
SECTION 14. TERMINATION
This Agreement shall terminate upon the termination of the Merger
Agreement.
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<PAGE> 7
IN WITNESS WHEREOF, Purchaser, Sub and each Major Shareholder has
executed this Shareholders' Voting Agreement all as of the date first above
written.
PURCHASER:
STC BROADCASTING, INC.
By: /s/ROBERT N. SMITH
-----------------------------------
Name: Robert N. Smith
---------------------------------
Title: President
--------------------------------
SUB:
WJAC ACQUISITION CORP.
By: /s/ROBERT N. SMITH
-----------------------------------
Name: Robert N. Smith
---------------------------------
Title: President
--------------------------------
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE]
<PAGE> 8
MAJOR SHAREHOLDERS:
ANDERSON H. WALTERS TRUST:
/s/CARL M. GILLESPIE
----------------------------------------
Carl Gillespie
/s/RICHARD H. MAYER
----------------------------------------
Richard H. Mayer
/s/LOUIS A. PRADT
----------------------------------------
Louis A. Pradt
each in his capacity as a
trustee of the Anderson H.
Walters Trust (Number of
Shares: 19,789 beneficially
and of record) (Percentage of
Outstanding Shares: 65.0184%)
/s/RICHARD H. MAYER
----------------------------------------
Richard H. Mayer,
individually (Number of
Shares: 1436 beneficially and
of record) (Percentage of
Outstanding Shares: 4.7181%)
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<PAGE> 1
EXHIBIT 10.30
DEPOSIT ESCROW AGREEMENT
THIS DEPOSIT ESCROW AGREEMENT (this "Escrow Agreement") is
made and entered into as of this 9th day of May 1997, by and among STC
Broadcasting, Inc., a Delaware corporation ("Purchaser"), WJAC Acquisition
Corp., a Pennsylvania corporation and a wholly-owned subsidiary of Purchaser
("Sub"), and WJAC, Incorporated, a Pennsylvania corporation (the "Company," and
together with Purchaser and Sub, the "Undersigned"), and Mellon Bank, N.A., a
national banking association ("Escrow Agent").
RECITALS
WHEREAS, Purchaser, Sub and the Company have entered into an Agreement
and Plan of Merger dated as of May 9, 1997 (the "Merger Agreement") pursuant
to which the Sub shall merge with and into the Company on the terms and
conditions set forth in the Merger Agreement, whereby the Company shall become
a wholly-owned subsidiary of Purchaser;
WHEREAS, pursuant to the Merger Agreement, the Purchaser is required
to deliver to the Escrow Agent an original, irrevocable letter of credit (the
"Letter of Credit") issued for the benefit of the Company (and for the purposes
of Section 1.5 hereof, Escrow Agent) in the amount of $4,000,000 in the form
attached hereto as Appendix A;
WHEREAS, as a condition to the execution of the Merger Agreement, the
Undersigned have agreed to execute and deliver this Escrow Agreement; and
WHEREAS, unless otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to them in the Merger Agreement.
AGREEMENTS
Accordingly, in consideration of the recitals and of the respective
agreements and covenants contained herein and in the Merger Agreement, and
intending to be legally bound hereby, the parties agree as follows:
<PAGE> 2
ARTICLE I
Section 1.1 Letter of Credit Escrow.
(a) Contemporaneously with the execution of this Escrow
Agreement, Purchaser has delivered the Letter of Credit to Escrow Agent,
pursuant to the provisions of the Merger Agreement.
(b) The Letter of Credit, any proceeds from the Letter of
Credit payable by its terms to the Escrow Agent and any interest or income
accrued thereon (the "Funds") are referred to herein as the "Escrowed
Property". The Escrowed Property shall be held, administered and disposed of
by the Escrow Agent in accordance with the terms and conditions hereinafter set
forth.
Section 1.2 Acceptance of Appointment as Escrow Agent. Escrow Agent,
by signing this Escrow Agreement, accepts its appointment as escrow agent with
respect to the Escrowed Property and agrees to hold and deliver the Escrowed
Property in accordance with the terms of this Escrow Agreement.
Section 1.3 Delivery of Letter of Credit to the Company.
(a) Not more than five (5) business days after (a) the
delivery to Escrow Agent of written instructions signed by the Company and
Purchaser stating that the Letter of Credit is to be delivered to the Company,
or (b) the delivery to Escrow Agent of a copy of a Final Determination (as
defined below) establishing the Company's right to the Letter of Credit, Escrow
Agent shall deliver the Letter of Credit to the Company as provided in such
instructions or Final Determination. A "Final Determination" shall mean a
final non-appealable judgment of a court of competent jurisdiction. The Escrow
Agent, at its option, shall be entitled to seek and, if received, rely
conclusively upon a written opinion of legal counsel to the effect that a Final
Determination delivered to the Escrow Agent pursuant to this Escrow Agreement
satisfies the requirements hereof.
(b) In the event that the Company is entitled to receive the
Letter of Credit pursuant to Section 1.3(a) above, the Company shall have the
right to direct Escrow Agent in writing to deliver the Letter of Credit to
Richard H. Mayer as agent on behalf of the shareholders of the Company (the
"Shareholders' Agent"). The Company acknowledges and agrees that delivery of
the Letter of Credit to the Shareholders' Agent at the Company's direction
shall satisfy in full and discharge the Escrow Agent's obligations set forth in
Section 1.3(a) for all purposes whatsoever as if Escrow Agent had delivered the
Letter of Credit directly to the Company.
Section 1.4 Delivery of Letter of Credit to Purchaser. Except as
otherwise provided in the last sentence of this Section 1.4, not more than five
(5) business
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<PAGE> 3
days after (a) the delivery to Escrow Agent of written instructions signed by
Purchaser and the Company stating that the Letter of Credit is to be delivered
to Purchaser, or (b) the delivery to Escrow Agent of a copy of a Final
Determination establishing Purchaser' right to the Letter of Credit, Escrow
Agent shall deliver the Letter of Credit to Purchaser. At the Closing,
simultaneously upon receipt by Escrow Agent of written instructions signed by
Purchaser and the Company stating that the Letter of Credit is to be delivered
to Purchaser, the Escrow Agent shall deliver the Letter of Credit to Purchaser
or its representative.
Section 1.5 Replacement of Letter of Credit.
(a) Purchaser may provide to the Company for its approval at
least forty-five (45) calendar days before the expiration of the Letter of
Credit a form of (i) an extension of the original Letter of Credit issued by
the issuer of the then expiring Letter of Credit (with no modifications to the
original Letter of Credit other than extending the expiration date for at least
an additional ninety (90) days after the then expiration date of the Letter of
Credit), or (ii) a substitute Letter of Credit in a form identical to Appendix
A (with an expiration date of not less than ninety (90) days after the
expiration date set forth in the then expiring Letter of Credit) issued by the
issuer of the original Letter of Credit or by a United States bank having
assets and a net worth (as established by the most recent public financial
information of such bank, copies of which shall be provided by Purchaser to the
Company) equal to or greater than the bank which issued the then expiring
Letter of Credit, together with a statement signed by an officer of Purchaser,
in each case, certifying that such substitute Letter of Credit or extension
will comply with the foregoing requirements. If the Company approves such form
of substitute Letter of Credit or extension in writing (such approval not to be
unreasonably withheld, conditioned or delayed) and Purchaser delivers to Escrow
Agent an original of such substitute Letter of Credit or extension (duly
executed by the issuing bank) and the Company's written approval, at least
thirty (30) calendar days before the expiration of the Letter of Credit, such
substitute Letter of Credit (or such then expiring Letter of Credit as extended
by the extension) shall thereafter be deemed the "Letter of Credit" for all
purposes hereunder; and if a substitute Letter of Credit is being provided, the
Escrow Agent shall simultaneously exchange the prior Letter of Credit for the
substituted Letter of Credit and give receipts, if requested by Purchaser, for
the same.
(b) In the event that (i) Purchaser delivers a form of
substitute Letter of Credit and the Company does not approve the form thereof,
or (ii) Purchaser does not deliver an original substitute Letter of Credit to
Escrow Agent (or an extension of the expiring Letter of Credit) at least thirty
(30) calendar days before the expiration of the then expiring Letter of Credit,
Purchaser may not replace the Letter of Credit, and upon written instructions
signed by the Company, Escrow Agent shall immediately present the Letter of
Credit for payment (with a drawing certificate signed by the Company) and hold
the funds drawn pursuant thereto in
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<PAGE> 4
accordance with the terms of this Escrow Agreement notwithstanding any actual
or alleged default hereunder or under the Merger Agreement by any party or any
instruction to the contrary by Purchaser or any other person, and
notwithstanding any other state of facts.
Section 1.6 Investment of Proceeds of Letter of Credit.
(a) If the Letter of Credit is drawn by the Escrow Agent or
the Company because it will expire and Purchaser has not replaced it pursuant
to and in accordance with Section 1.5, upon receipt of the Funds of such
drawing pursuant to the terms of the Letter of Credit, Escrow Agent shall hold
the Funds in escrow in lieu of the Letter of Credit, and shall invest the Funds
in Permitted Investments (as defined in (b) below). Escrow Agent shall hold
and release the Funds in accordance with the terms of this Escrow Agreement
(all references herein to the Letter of Credit being deemed to be references to
the Funds for such purpose).
(b) "Permitted Investments" shall mean direct obligations of
the U.S. government having maturities of 90 days or less, money market funds
that invest solely in direct obligations of the U.S. government, and such other
investments as may be specified from time to time by joint written instructions
from Purchaser and the Company to the Escrow Agent; provided, such other
investments are consistent with the Escrow Agent's investment criteria. Escrow
Agent will act upon investment instructions the day that such instructions are
received, provided the requests are communicated within a sufficient amount of
time to allow Escrow Agent to make the specified investment. Instructions
received after an applicable investment cutoff deadline will be treated as
being received by Escrow Agent on the next business day, and Escrow Agent shall
not be liable for any loss arising directly or indirectly, in whole or in part,
from the inability to invest funds on the day the instructions are received.
The Escrow Agent shall not be liable for any loss incurred by the actions of
third parties or by any loss arising by error, failure or delay in making of an
investment or reinvestment, and the Escrow Agent shall not be liable for any
loss of principal or income in connection therewith, unless such error, failure
or delay results from the Escrow Agent's gross negligence or willful
misconduct. As and when the Funds are to be released under this Escrow
Agreement, Escrow Agent shall cause the Permitted Investments to be converted
into cash and shall not be liable for any loss of principal or income in
connection therewith. None of the Company, Purchaser or Escrow Agent shall be
liable for any loss of principal or income due to the choice of Permitted
Investments in which the Funds are invested or the choice of Permitted
Investments converted into cash pursuant to this paragraph (b).
(c) All interest or other income on the Funds shall be the
property of Purchaser and shall be distributed by Escrow Agent to Purchaser by
check on a monthly basis less the amount payable by Escrow Agent to the Company
under Section 1.6(d), if any. The parties acknowledge that payment of any
interest earned
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<PAGE> 5
on the funds invested in this escrow will be subject to backup withholding
penalties unless a properly completed Internal Revenue Service form W8 or W9
certification is submitted to Escrow Agent.
(d) For tax purposes, the Funds shall be property of
Purchaser and all interest and other income earned on the Funds shall be the
income of the Purchaser. Purchaser and the Company shall file Tax Returns and
the Escrow Agent shall file a Form 1099 consistent with such treatment. In the
event that the Internal Revenue Service or any other governmental authority
successfully claims that the interest and other income earned on the Funds is
taxable to the Company for any taxable period, Purchaser shall promptly pay to
the Company cash equal to the product of the Effective Tax Rate times all
amounts paid by Escrow Agent to Purchaser pursuant to Section 1.6(c) for such
taxable period, plus interest on such amount at the rate specified by section
6621(a)(2) of the Code and corresponding provisions of applicable state and
local laws, and the Escrow Agent shall thereafter make monthly distributions to
the Company of cash equal to the product of the Effective Tax Rate times the
income distributable pursuant to Section 1.6(c) for such period. The term
"Effective Tax Rate" shall mean the highest marginal effective combined
federal, state and local income tax rate applicable with respect to the Company
or the partners of the Company, as the case may be, as reasonably computed and
provided to the Escrow Agent by the Company.
ARTICLE II
ESCROW AGENT
Section 2.1 Language Concerning the Escrow Agent. To induce the
Escrow Agent to act hereunder, it is further agreed by the Undersigned that:
(a) The Escrow Agent shall not be under any duty to give
the Escrowed Property any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Escrow Agreement. Uninvested funds held hereunder shall not
earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Escrow
Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the
provisions of any agreement among the Undersigned except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its
own gross negligence or willful misconduct and, except with respect to claims
based upon such gross negligence or willful misconduct that are successfully
asserted against the Escrow Agent, the Undersigned shall jointly and severally
indemnify and hold
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<PAGE> 6
harmless the Escrow Agent (and any successor Escrow Agent) from and against any
and all losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursements, arising out of and in connection
with this Escrow Agreement. Without limiting the foregoing, the Escrow Agent
shall in no event be liable in connection with its investment or reinvestment
of any cash held by it hereunder in good faith, in accordance with the terms
hereof, including without limitation, any liability for any delays (not
resulting from its gross negligence or willful misconduct) in the investment or
reinvestment of the Funds or any loss of interest incident to any such delays.
(d) The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine the authenticity
or the correctness of any fact stated therein or the propriety or validity or
the service thereof. The Escrow Agent may act in reliance upon any instrument
or signature believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to
do so. Without limiting the generality of the foregoing, Escrow Agent may rely
on any extension or Letter of Credit delivered to it as constituting the Letter
of Credit hereunder for all purposes unless notified in writing by the Company
to the contrary prior to its substitution.
(e) The Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agreement and shall
not be liable for any action taken or omitted in accordance with such advice.
(f) The Escrow Agent does not have any interest in the
Escrowed Property deposited hereunder but is serving as escrow holder only and
having only possession thereof. Purchaser shall pay or reimburse the Escrow
Agent upon request for any transfer taxes or other taxes relating to the
Escrowed Property incurred in connection herewith and shall indemnify and hold
harmless the Escrow Agent from any amounts that it is obligated to pay in the
way of such taxes. Any payments of income from this Escrow Account shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will promptly provide the Escrow Agent with
appropriate W-9 forms for Tax I.D. number certifications, or W-8 forms for
non-resident alien certifications. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to income earned on
investment of the Funds and is not responsible for any other reporting. This
paragraph and Section 2.1(c) shall survive notwithstanding any termination of
this Escrow Agreement or the resignation of the Escrow Agent.
(g) The Escrow Agent makes no representations as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
-6-
<PAGE> 7
(h) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by delivering the Escrowed Property to any successor
Escrow Agent jointly designated by each of the Undersigned in writing or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be discharged
of and from any and all further obligations arising in connection with this
Escrow Agreement. The resignation of the Escrow Agent will take effect on the
earlier of (i) the appointment of a successor (including a court of competent
jurisdiction) or (ii) the day which is thirty (30) days after the date of
delivery of its written notice of resignation to each of the Undersigned. If
at that time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be
to safekeep the Escrowed Property until receipt of a designation of successor
Escrow Agent or a joint written disposition instruction by each of the
Undersigned or a final order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of the arbitrators or any third party contemplated
herein as a means to resolve disputes and may rely without any liability upon
the contents thereof.
(k) In the event of any disagreement between the Undersigned
resulting in adverse claims or demands being made in connection with the
Escrowed Property, or in the event that the Escrow Agent in good faith is in
doubt as to what action it should take hereunder, the Escrow Agent shall retain
the Escrowed Property until the Escrow Agent shall have received (i) a Final
Determination directing delivery of the Escrowed Property or (ii) a written
agreement executed by the Company and Purchaser directing delivery of the
Escrowed Property, in which event the Escrow Agent shall disburse the Escrowed
Property in accordance with such order or agreement. The Escrow Agent, at its
option, shall be entitled to seek and, if obtained, rely conclusively upon an
opinion of independent counsel to the effect that any court order delivered to
Escrow Agent is a Final Determination. The Escrow Agent shall act on such court
order and legal opinion without further question.
(l) The compensation of the Escrow Agent (as payment in
full) for the services to be rendered by the Escrow Agent hereunder shall be
paid by Purchaser in the amount of One Thousand Five Hundred ($1,500), together
with reimbursement for all reasonable expenses, disbursements and advances
incurred or made by the Escrow Agent in performance of its duties hereunder
(including reasonable fees, expenses and disbursements of its counsel). All
fees and expenses of the Escrow Agent hereunder, other than initial fee paid
upon the execution
-7-
<PAGE> 8
hereof, shall be paid first out of interest, dividends, and other income earned
on the Funds, if any, and then, to the extent of any shortfall, by Purchaser.
Any fees or expenses of the Escrow Agent or its counsel which are not paid as
provided for herein may be taken from any property held by the Escrow Agent
hereunder. It is understood that the Escrow Agent's fees may be adjusted from
time to time to conform to its then current guidelines.
(m) The Undersigned hereby irrevocably submit to the
jurisdiction of any state or federal court located in the Commonwealth of
Pennsylvania in any action or proceeding arising out of or relating to this
Escrow Agreement, and the parties hereby irrevocably agree that all claims in
respect of such action or proceeding, shall be heard and determined in such a
New York State or federal court. The Undersigned hereby consent to and grant
to any such court jurisdiction over the persons of such parties and over the
subject matter of any such dispute and agree that delivery or mailing of any
process or other papers in the manner provided hereinabove, or in such other
manners as may be permitted by law, shall be valid and sufficient service
thereof.
(n) No printed or other matter in any language (including
without limitation, prospectuses, notices, reports and promotional material)
which mentions the Escrow Agent shall be issued by the other parties hereto or
on such parties' behalf unless the Escrow Agent shall first have given its
specific written consent thereto, or is otherwise required by statute, law or
court order.
(o) The other parties hereto authorize the Escrow Agent, for
any securities held hereunder, to use the services of any United States central
securities depository it deems appropriate, including, but not limited to, the
Depository Trust Company and the Federal Reserve Book Entry System.
ARTICLE III
MISCELLANEOUS
Section 3.1 Notices. All notices, requests, consents or other
communications required or permitted under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given or delivered by any party
(a) when received by such party if delivered by hand, (b) upon confirmation
when delivered by telecopy (any communication delivered by telecopy shall be
followed promptly with an original thereof), (c) within one day after being
sent by recognized overnight delivery service, or (d) within three business
days after being mailed by first-class mail, postage prepaid, and in each case
addressed as follows:
-8-
<PAGE> 9
(i) if to Purchaser or Sub:
STC Broadcasting, Inc.
3839 4th Street North, Suite 420
St. Petersburg, Florida 33703
Attention: David A. Fitz
Telecopy No.: (813) 821-8092
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, NW
Washington, DC 20004-1109
Attention: William S. Reyner, Jr., Esq.
Telecopy No.: (202) 637-5910
(ii) if to the Company, to:
WJAC, Incorporated
The Tribune Building
Johnstown, PA 15901
Attention: Mr. Richard Mayer
Telecopy No.: (814) 539-9808
with copies (which shall not constitute notice) to:
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Attention: John C. Rodney, Esquire
Telecopy No.: (412) 355-6501
and to:
Stonewood Capital Management, Inc.
Three Gateway Center, 13 East
Pittsburgh, PA 15222
Attention: George R. Knapp
Telecopy No.: (412) 391-0500
-9-
<PAGE> 10
(iii) if to Escrow Agent, to
Mellon Bank, N.A.
Two Mellon Bank Center, Room 325
Pittsburgh, PA 15259-0001
Attention: Brian McMurray
Corporate Trust Group
Telecopy No.: (412) 234-9196
Federal Reserve Fund Transfers:
ABA #043000261
Mellon Bank, N.A.
Pittsburgh, PA
C/A 900-9010
Corporate Trust Group
Attention: Brian McMurray
RE:STC/WJAC Escrow Account
Any party by written notice to the other parties pursuant to this Section 3.1
may change the address or the persons to whom notices or copies thereof are to
be sent to it by giving written notice of a change of address in the manner
provided in this Escrow Agreement for giving notice.
Section 3.2 Assignment. This Escrow Agreement and the rights and
duties hereunder shall be binding upon and inure to the benefit of the parties
hereto and the successors and assigns of each of the parties to this Escrow
Agreement. No rights, obligations or liabilities hereunder shall be assignable
by any party without the prior written consent of the other parties, except
that Purchaser may assign its rights under this Escrow Agreement without
obtaining the prior written consent of the other parties hereto to any person
or entity to whom, pursuant to the Merger Agreement, Purchaser is permitted to
assign all or any portion of its rights under the Merger Agreement, provided
that any such assignee duly executes and delivers an agreement to assume
Purchaser' obligations under this Escrow Agreement.
Section 3.3 Amendment. This Escrow Agreement may be amended or
modified only by an instrument in writing duly executed by the parties to this
Escrow Agreement.
Section 3.4 Waivers. Any waiver by any party hereto of any breach of
or failure to comply with any provision of this Escrow Agreement by any other
party hereto shall be in writing and shall not be construed as, or constitute,
a continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Escrow Agreement.
-10-
<PAGE> 11
Section 3.5 Construction. This Escrow Agreement shall be construed
and enforced in accordance with and governed by the internal substantive laws
of the State of New York without regard to conflicts of laws principles. The
headings in this Escrow Agreement are solely for convenience of reference shall
unto be given any effect in the construction or interpretation of this Escrow
Agreement. Unless otherwise stated, references to Sections and Exhibits are
references to Sections and Exhibits of this Escrow Agreement.
Section 3.6 Third Parties. Nothing expressed or implied in this
Escrow Agreement is intended, or shall be construed, to confer upon or give any
person or entity other than Purchaser, the Company and Escrow Agent any rights
or remedies under, or by reason or, this Escrow Agreement.
Section 3.7 Termination. This Escrow Agreement shall terminate at
the time of the delivery by Escrow Agent of the Letter of Credit or the Funds,
if any, to the Company or Purchaser, as the case may be, in accordance with the
provisions of this Escrow Agreement.
Section 3.8 Counterparts. This Escrow Agreement may be executed in
one or more counterparts, each of which shall be deemed any original and all of
which together shall constitute a single instrument.
Section 3.9 Waiver of Offset Rights. Escrow Agent hereby waives any
and all rights to offset that it may have against the Letter of Credit
including, without limitation, claims arising as a result of any claims,
amounts, liabilities, costs, expenses, damages, or other losses (collectively,
"Claims") that Escrow Agent may be otherwise entitled to collect from any party
to this Escrow Agreement, other than Claims arising under this Escrow
Agreement.
[The remainder of this page is intentionally left blank.]
-11-
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
STC BROADCASTING, INC.
By: /s/ROBERT N. SMITH
-----------------------------------
Name: Robert N. Smith
----------------------------------
Title: President
---------------------------------
WJAC ACQUISITION CORP.
By: /s/ROBERT N. SMITH
------------------------------------
Name: Robert N. Smith
----------------------------------
Title: President
---------------------------------
WJAC, INCORPORATED
By: /s/RICHARD H. MAYER
------------------------------------
Name: Richard H. Mayer
----------------------------------
Title: President
---------------------------------
MELLON BANK, N.A.
By: /s/BRYAN KARHU
------------------------------------
Name: Bryan Karhu
----------------------------------
Title: Vice President
---------------------------------
-12-
<PAGE> 1
Exhibit 12.1
STC Broadcasting, Inc.
Computation of Ratio of Earnings to Fixed Charges
(In Thousands, Except Ratio)
<TABLE>
<CAPTION>
Year ended December 31, 1996 Three months ended March 31, 1997
Historical Pro Forma Historical Pro Forma
---------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Earnings:
Loss before income taxes $ (92) $ (16,670) $ (2,381) $ (5,827)
Interest expense and amort-
ization of Deferred
Financing Costs 6,072 12,917 1,699 3,230
Dividends and accretion on
Redeemable Preferred Stock 0 4,332 361 1,083
-------------------------- ------------------------------
Total Earnings (loss) $ 5,980 $ 579 $ (321) $ (1,514)
========================== ==============================
Fixed Charges:
Interest expense and amort-
ization of Deferred
Financing Costs $ 6,072 $ 12,917 $ 1,699 $ 3,230
Dividends and accretion on
Redeemable Preferred Stock 0 4,332 361 1,083
-------------------------- -------------------------------
Total Fixed Charges $ 6,072 $ 17,249 $ 2,060 $ 4,313
========================== ===============================
Ratio (deficiency) of earnings to fixed
charges (1) 1.0 (16,670) (2,381) (5,827)
</TABLE>
(1) If the ratio is less than 1.0x, the deficiency is shown.
<PAGE> 1
EXHIBIT 21.1
STC BROADCASTING, INC.
<TABLE>
<CAPTION>
SUBSIDIARIES STATE OF INCORPORATION
------------ ----------------------
<S> <C>
STC License Company Delaware
Smith Acquisition Company Delaware
Smith Acquisition License Company Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports and to all references to our firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas,
June 18, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of STC Broadcasting, Inc.
on Form S-1 of our report dated January 28, 1997 (May 8, 1997 as to Note 11)
(which expresses an unqualified opinion and includes an explanatory paragraph
relating to the Company changing its method of accounting for postretirement
benefits other than pensions, effective January 1, 1995) appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Independent Auditors"
in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
June 19, 1997
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) X
-------
-------------------------
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Avenue, Suite 2700 75201-2936
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201-2936
(214) 754-1200
(Name, address and telephone number of agent for service)
-------------------------
STC Broadcasting, Inc.
(Exact name of obligor as specified in its charter)
Delaware 75-2676358
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3839 4th Street North, Suite 420
St. Petersburg, FL 33703
(Address of principal executive offices) (Zip Code)
-------------------------
11% Senior Subordinated Notes due 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
GENERAL
1. General Information.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of Dallas (11th District),
Dallas, Texas (Board of Governors of the Federal
Reserve System) Federal Deposit Insurance
Corporation, Dallas, Texas The Office of the
Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of
the Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting
securities of the Trustee:
As of June 18, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Col A. Col B.
- --------------------------------------------------------------------------------
Title of Class Amount Outstanding
- --------------------------------------------------------------------------------
<S> <C>
Capital Stock - par value $100 per share 5,000 shares
</TABLE>
4. Trusteeships under Other Indentures.
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor
or Underwriters.
Not Applicable
<PAGE> 3
6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person
Owning 50 Percent or More of the Voting Securities of the Obligor.
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
Not Applicable
13. Defaults by the Obligor.
Not Applicable
14. Affiliations with the Underwriters.
Not Applicable
15. Foreign Trustee.
Not Applicable
16. List of Exhibits.
T-1.1 - A copy of the Articles of Association of U.S. Trust Company
of Texas, N.A.; incorporated herein by reference to Exhibit
T-1.1 filed with Form T-1 Statement, Registration No.
22-21897.
<PAGE> 4
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to
commence business; incorporated herein by reference to
Exhibit T-1.2 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise
corporate trust powers; incorporated herein by reference to
Exhibit T-1.3 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas,
N.A., as amended to date; incorporated herein by reference
to Exhibit T-1.4 filed with Form T-1 Statement,
Registration No. 22-21897.
T-1.5 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939.
T-1.6 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of June 18, 1997, the Trustee had 5,000 shares of Capital Stock
outstanding, all of which are owned by U.S. T.L.P.O. Corp. As of June 18,
1997, U.S. T.L.P.O. Corp. had 35 shares of Capital Stock outstanding, all of
which are owned by U.S. Trust Corporation. U.S. Trust Corporation had
outstanding 19,591,502 shares of $5 par value Common Stock as of June 18, 1997.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of
all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the
Trustee disclaims responsibility for the accuracy or completeness of such
information.
--------------------
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
U.S Trust Company of Texas, N.A., a national banking association organized
under the laws of the United States of America, has duly caused this statement
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
18th day of June, 1997.
U.S. Trust Company of Texas, N.A.,
Trustee
By: /s/ BILL BARBER
--------------------------------
Bill Barber
Vice President
<PAGE> 6
Exhibit T-1.5
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of STC Broadcasting, Inc.
11% Senior Subordinated Notes due 2007, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
U.S. Trust Company of Texas, N.A.
By: /s/ BILL BARBER
--------------------------------
Bill Barber
Vice President
<PAGE> 7
EXHIBIT T-1.6
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council OMB Number: 1557-0081
Expires March 31,1999
- ----------------------------------------------------------------------------------------------------------------------------
Please Refer to Page i, (1)
Table of Contents, for
(LOGO) the required disclosure
of estimated burden
- ----------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH
DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100
MILLION - - FFIEC 034
(970331)
----------
REPORT AT THE CLOSE OF BUSINESS March 31,1997 (RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State This report form is to be filed by banks with domestic
member banks); 12 U.S. c. Section 1817 (State nonmember banks); offices only. Banks with branches and consolidated
and 12 U.S. C. Section 161 (National banks). subsidiaries in U.S. territories and possessions, Edge or
Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities
must file FFIEC 031.
- ----------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an The Reports of Condition and Income are to be prepared in
authorized officer and the Report of Condition must be attested accordance with Federal regulatory authority instructions.
to by not less than two directors (trustees) for State NOTE: these instructions may in some cases differ from
nonmember banks and three directors for State member and generally accepted accounting principles.
National Banks.
We, the undersigned directors (trustees), attest to the
I, Alfred B. Childs, SVP & Cashier correctness of this Report of Condition (including the
---------------------------------------------------- supporting schedules) and declare that it has been examined
Name and Title of Officer Authorized to Sign Report by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the
of the named bank do hereby declare that these Reports of appropriate Federal regulatory authority and is true and
Condition and Income (including the supporting schedules) have correct.
been prepared in conformance with the instructions issued by
the appropriate Federal regulatory authority and are true to
the best of my knowledge and belief. /s/ Stuart M. Pearman
---------------------
Director (Trustee)
/s/ Alfred B. Childs
- --------------------- /s/ J. T. Moore Jr.
Signature of Officer Authorized to Sign Report ---------------------
Director (Trustee)
April 17,1997
- --------------------- /s/ Peter J. Denker
Date of Signature ---------------------
Director (Trustee)
- ----------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the NATIONAL BANKS: Return the original only in the special
appropriate Federal Reserve District Bank. return address envelope provided. If express mail is used
in lieu of the special return address envelope, return the
STATE NONMEMBER BANKS: Return the original only in the original only to the FDIC, c/o Quality Data Systems, 2127
special return address envelope provided. If express mail is Espey Court, Suite 204, Crofton, MD 21114.
used in lieu of the special return address envelope, return
the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- ----------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number ____________ 12-31-96
(RCRI 9050) Banks should affix the address label in this space.
U. S. Trust Company of Texas, National Association
--------------------------------------------------
Legal Title of Bank (TEXT 9010)
2001 Ross Avenue, Suite 2700
----------------------------
City (TEXT 9130)
Dallas, TX 75201
-------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 03/31/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 Page RC-2
DALLAS, TX 75201 Transit #: 11101765
---------------
9
---------------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31,1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C100
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions: RCON
a. Noninterest-bearing balances and currency and coin (1,2) ______ _______ 0081 1,255 1.a
b. Interest bearing balances (3) ______ _______ 0071 629 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) ______ _______ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) ______ _______ 1773 105,764 2.b
3. Federal funds sold and securities purchased under agreements to resell:
a. Federal funds sold (4) ______ _______ 0276 0 3.a
b. Securities purchased under agreements to resell (5) ______ _______ 0277 0 3.b
4. Loans and lease financing receivables: RCON
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 43,079 4.a
b. LESS: Allowance for loan and lease losses 3123 511 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and reserve RCON
(item 4.a minus 4.b and 4.c) ______ _______ 2125 42,568 4.d
5. Trading assets ______ _______ 3545 0 5.
6. Premises and fixed assets (including capitalized leases) ______ _______ 2145 752 6.
7. Other real estate owned (from Schedule RC-M) ______ _______ 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) ______ _______ 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding ______ _______ 2155 0 9.
10. Intangible assets (from Schedule RC-M) ______ _______ 2143 0 10.
11. Other assets (from Schedule RC-F) ______ _______ 2160 1,933 11.
12. a. Total assets (sum of items 1 through 11) ______ _______ 2170 152,901 12.a
b. Losses deferred pursuant to U.S.C. 1823(j) ______ _______ 0306 0 12.b
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 12.a and 12.b) ______ _______ 0307 152,901 12.c
</TABLE>
(1) Includes cash items in process of collection and unposed debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report 'term federal funds sold' in Schedule RC, item 4.a, 'Loans and
leases, net of unearned income,' and in Schedule RC-C, part 1.
(5) Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 3.a, 'Federal
funds sold.'
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 3/31/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 Page RC-2
DALLAS, TX 75201 Transit #: 11101765
---------------
10
---------------
</TABLE>
SCHEDULE RC - CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
columns A and C from Schedule RC-E) RCON 2200 124,978 13.a
(1) Noninterest-bearing (1) 6631 19,997 13.a.1
(2) Interest-bearing 6636 104,981
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased and securities sold under agreements to repurchase: RCON
a. Federal funds purchased (2) ______ _______ 0278 0 14.a
b. Securities sold under agreements to repurchase (3) ______ _______ 0279 0 14.b
15. a. Demand notes issued to the U.S. Treasury ______ _______ 2840 0 15.a
b. Trading liabilities ______ _______ 3548 0 15.b
16. Other borrowed money:
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS ______ _______ 2332 1,000 16.a
b. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR ______ _______ 2333 5,000 16.b
17. Mortgage indebtedness and obligations under capitalized leases ______ _______ 2910 0 17.
18. Bank's liability on acceptances executed and outstanding ______ _______ 29200 0 18.
19. Subordinated notes and debentures ______ _______ 3200 0 19.
20. Other liabilities (from Schedule RC-G) ______ _______ 2930 1,468 20.
21. Total liabilities (sum of items 13 through 20) ______ _______ 2948 132,446 21.
22. Limited-life preferred stock and related surplus ______ _______ 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ______ ______ 3838 7,000 23.
24. Common stock ______ ______ 3230 500 24.
25. Surplus (exclude all surplus related to preferred stock) ______ ______ 2829 8,384 25.
26. a. Undivided profits and capital reserves ______ ______ 3632 4,711 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities ______ ______ 8434 (140) 26.b
27. Cumulative foreign currency translation adjustments ______ ______ 3210
28. a. Total equity capital (sum of items 23 through 27) ______ ______ 3210 20,455 28.a
b. Losses deferred pursuant to 12 U.S.C. 1823(j) ______ ______ 0306 0 28.b
c. Total equity capital and losses deferred pursuant to 12 U.S.C.
1823(j) (sum of items 28.a and 28.b) ______ ______ 3559 20,455 28.c
29. Total liabilities, limited-life preferred stock, equity capital, and
losses deferred pursuant to 12 U.S.C. 1823(j) (sum of items 21, 22, and
28.c) ______ ______ 2257 152,901 29.
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent RCON
external auditors as of any date during 1995 6724 1 M.1
</TABLE>
<TABLE>
<C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in accordance work)
with generally accepted auditing standards by a certified 8 = No external audit work
public accounting firm (may be required by state chartering
authority)
</TABLE>
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Report "term federal funds purchased" in Schedule RC, item 16, 'Other
borrowed money.'
(3) Report securities sold under agreements to repurchase that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 14.a, 'Federal
funds purchased.'
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 DEC-31-1996
<CASH> 8,653 2,753
<SECURITIES> 0 0
<RECEIVABLES> 7,142 8,205
<ALLOWANCES> 305 224
<INVENTORY> 0 0
<CURRENT-ASSETS> 20,025 13,876
<PP&E> 27,072 30,432
<DEPRECIATION> 305 4,204
<TOTAL-ASSETS> 191,561 106,608
<CURRENT-LIABILITIES> 7,462 8,675
<BONDS> 100,000 65,000
28,861 0
0 0
<COMMON> 10 0
<OTHER-SE> 47,992 36,313
<TOTAL-LIABILITY-AND-EQUITY> 191,561 106,608
<SALES> 8,424 37,559
<TOTAL-REVENUES> 8,424 37,559
<CGS> 4,693 10,050
<TOTAL-COSTS> 8,805 33,131
<OTHER-EXPENSES> (60) (1,460)
<LOSS-PROVISION> 26 121
<INTEREST-EXPENSE> 2,060 5,980
<INCOME-PRETAX> (2,381) (92)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (2,381) (92)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,381) (92)
<EPS-PRIMARY> (2,381) 0
<EPS-DILUTED> (2,381) 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
11% SENIOR SUBORDINATED NOTES DUE 2007
OF
STC BROADCASTING, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
U.S. TRUST COMPANY OF TEXAS, N.A.
<TABLE>
<C> <C>
By Registered or Certified Mail: By Hand:
U.S. Trust Company of Texas, N.A. U.S. Trust Company of Texas, N.A.
P.O. Box 841 111 Broadway
Attn: Corporate Trust Services Lower Level
Cooper Station Attn: Corporate Trust Services
New York, New York 10276-0841 New York, New York 10006-1906
By Overnight Courier: By Facsimile:
U.S. Trust Company of Texas, N.A. (212) 420-6504
770 Broadway, 13th Floor -
Corporate Trust Operations For Information or
New York, New York 10003 Confirmation by Telephone:
(800) 225-2398
</TABLE>
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service).
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
IF YOU WISH TO EXCHANGE UNREGISTERED 11% SENIOR SUBORDINATED NOTES DUE 2007
FOR AN EQUAL AGGREGATE PRINCIPAL AMOUNT OF REGISTERED 11% SENIOR SUBORDINATED
NOTES DUE 2007, PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER (AND NOT
WITHDRAW) OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
DESCRIPTION OF TENDERED OLD NOTES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Owner(s) Aggregate
as it appears on the 11% Senior Subordinated Notes due 2007 Certificate Principal Amount
("Old Notes") Number(s) of Old Notes
(Please fill in, if blank) of Old Notes Tendered
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Total Principal
Amount of Notes
Tendered
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to STC Broadcasting, Inc., a Delaware
corporation (the "Company"), the 11% Senior Subordinated Notes due 2007 (the
"Old Notes"), described above pursuant to the Company's offer of $1,000
principal amount of 11% Senior Subordinated Notes due 2007 (the "New Notes"), in
exchange for each $1,000 principal amount of the Old Notes, upon the terms and
subject to the conditions contained in the Prospectus dated ,
1997 (the "Prospectus"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full
authority to tender the Old Notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Company to
be necessary or desirable to complete the tender of Old Notes.
3. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and the Company as to the terms and conditions set forth
in the Prospectus.
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the undersigned,
whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is engaging in or
intends to engage in a distribution of such New Notes;
(iii) neither the undersigned nor any such other person has an arrangement
or understanding with any person to participate in the distribution
of such New Notes; and
(iv) neither the holder nor any such other person is an "affiliate," as
such term is defined under Rule 405 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company.
<PAGE> 3
5. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Exchange and
Registration Rights Agreement, dated as of March 25, 1997, between the Company
and Chase Securities Inc., NationsBanc Capital Markets, Inc. and Schroder
Wertheim & Co. Incorporated in the form filed as an exhibit to the Registration
Statement (the "Registration Agreement") (all terms used in this Item 5 with
their initial letters capitalized, unless otherwise defined herein, shall have
the meanings given them in the Registration Agreement). Such election may be
made by checking the box under "Special Registration Instructions" on page 4. By
making such election, the undersigned agrees, as a Holder participating in a
Shelf Registration, to indemnify and hold harmless the Company, its affiliates,
their respective officers, directors, employees, representatives and agents and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information relating to the undersigned furnished to the Company in writing by
or on behalf of the undersigned specifically for use therein, and shall
reimburse the Company promptly upon demand for any legal or other expenses
reasonably incurred in connection with investigating or defending or preparing
to defend against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred. Any
such indemnification shall be governed by the terms and subject to the
conditions set forth in the Registration Agreement, including, without
limitation, the provisions regarding notice, retention of counsel, contribution
and payment of expenses set forth therein. The above summary of the
indemnification provision of the Registration Agreement is not intended to be
exhaustive and is qualified in its entirety by the Registration Agreement.
6. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and delivering a prospectus, the undersigned will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. If the undersigned is a broker-dealer and Old Notes held for its
own account were not acquired as a result of market-making or other trading
activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and legal
and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery Instructions,"
please issue the certificates for the New Notes in the name of the undersigned.
<PAGE> 4
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail [ ] Issue [ ] (check appropriate boxes) certificates to:
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDING ZIP CODE)
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 5 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to indemnify certain entities and individuals as set forth in
Item 5 above.
[ ] By checking this box the undersigned hereby (i) represents that it is
unable to make all of the representations and warranties set forth in Item 4
above, (ii) elects to have its Old Notes registered pursuant to the shelf
registration described in the Registration Agreement, and (iii) agrees to
indemnify certain entities and individuals identified in, and to the extent
provided in, Item 5 above.
SPECIAL BROKER-DEALER INSTRUCTIONS
(See Item 5)
[ ] Check here if you are a broker-dealer and wish to receive 10
additional copies of the Prospectus and 10 copies of any amendments or
supplements thereto.
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address:
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
(INCLUDING ZIP CODE)
<PAGE> 5
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by registered
holder exactly as name appears on Old Notes. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
X
-----------------------------------------------------------------------------
X
-----------------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:
-----------------------------------------------------------------------------
Name(s):
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
-----------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
-----------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
FIRM)
-----------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
-----------------------------------------------------------------------------
(PRINTED NAME)
-----------------------------------------------------------------------------
(TITLE)
Dated:
-----------------------------------------------------------------------------
PLEASE READ THE INSTRUCTIONS ON THE REVERSE SIDE HEREOF,
WHICH FORM A PART OF THIS LETTER OF TRANSMITTAL.
<PAGE> 6
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by an eligible guarantor institution that is a member or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or by an "eligible guarantor institution" within the meaning of Rule
17Ad-15 promulgated under the Exchange Act (an "Eligible Institution") unless
the box entitled "Special Delivery Instructions" has not been completed or the
Old Notes described above are tendered for the account of an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. The Old Notes, together
with a properly completed and duly executed Letter of Transmittal (or copy
thereof), should be mailed or delivered to the Exchange Agent at the address set
forth above.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered holder
of any Old Notes, such Old Notes must be endorsed or accompanied by appropriate
bond powers, signed by such registered holder exactly as such registered
holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Old Notes
will be resolved by the Company in its sole discretion, which determination will
be final and binding. The Company reserves the absolute right to reject any or
all Old Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities, or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent,
nor any other person shall be under any duty to give notification of defects in
such tenders or shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holder thereof as soon as practicable following the
Expiration Date.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
TO TENDER
11% SENIOR SUBORDINATED NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
STC BROADCASTING, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997
As set forth in the Exchange Offer (as defined in the Prospectus (as
defined below)), this form or one substantially equivalent hereto must be used
to accept the Exchange Offer if certificates for unregistered 11% Senior
Subordinated Notes due 2007 (the "Old Notes"), of STC BROADCASTING, INC., are
not immediately available or time will not permit a holder's Old Notes or other
required documents to reach the Exchange Agent on or prior to the Expiration
Date (as defined), or the procedure for book-entry transfer cannot be completed
on a timely basis. This form may be delivered by facsimile transmission, by
registered or certified mail, by hand, or by overnight delivery service to the
Exchange Agent. See "The Exchange Offer -- Procedures for Tendering" in the
Prospectus.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS
EXTENDED BY THE COMPANY.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
U.S. TRUST COMPANY OF TEXAS, N.A.
By Registered or Certified Mail:
U.S. Trust Company of Texas, N.A.
P.O. Box 841
Attn: Corporate Trust Services
Cooper Station
New York, New York 10276-0841
By Hand:
U.S. Trust Company of Texas, N.A.
111 Broadway
Lower Level
Attn: Corporate Trust Services
New York, New York 10006-1906
By Overnight Courier:
U.S. Trust Company of Texas, N.A.
770 Broadway, 13th Floor -- Corporate Trust Operations
New York, New York 10003
By Facsimile:
(212) 420-6504
For Information or
Confirmation by Telephone:
(800) 225-2398
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
Delivery of this Notice to an address or transmission of instructions via
facsimile other than as set forth above will not constitute a valid delivery.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to STC Broadcasting, Inc., a Delaware
corporation (the "Company"), in accordance with the Company's offer, upon the
terms and subject to the conditions set forth in the Prospectus dated
, 1997 (the "Prospectus"), and in the accompanying Letter of
Transmittal, receipt of which is hereby acknowledged, $ in
aggregate principal amount of Old Notes pursuant to the guaranteed delivery
procedures described in the Prospectus.
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
(Please Type or Print)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code & Telephone No.:
- --------------------------------------------------------------------------------
Certificate Number(s) for
Old Notes (if available):
- --------------------------------------------------------------------------------
Total Principal Amount
Tendered and Represented
by Certificate(s): $
- --------------------------------------------------------------------------------
Signature of Registered Holder(s):
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
[ ] The Depository Trust Company
(Check if Old Notes will be tendered
by book-entry transfer)
Account Number:
- --------------------------------------------------------------------------------
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, being a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office in the United States, hereby
guarantees (a) that the above named person(s) "own(s)" the Old Notes tendered
hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities
Exchange Act of 1934, as amended, (b) that such tender of such Old Notes
complies with Rule 14e-4, and (c) to deliver to the Exchange Agent the
certificates representing the Old Notes tendered hereby or confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at The
Depository Trust Company, in proper form for transfer, together with the Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees and any other required documents, within
three New York Stock Exchange trading days after the Expiration Date.
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No.:
- -------------------------------------------------------------------------
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
Title:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL.
