<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
COMMISSION FILE NUMBER: 333-29555
STC BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2676358
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
3839 4th STREET NORTH, SUITE 420 (727) 821-7900
ST. PETERSBURG, FLORIDA 33703 (Registrant's telephone
(Address of principal executive offices) number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES x NO
----- ------
As of August 10, 1998, the registrant had 1,000 shares outstanding of common
stock, par value $.01.
<PAGE> 2
STC BROADCASTING, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1 UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheets as of
June 30, 1998 and December 31, 1997 2 - 3
Unaudited Consolidated Statement of Operations
for the Three Months ended June 30, 1998 and 1997 4
Unaudited Consolidated Statements of Operations for the
Six Months Ended June 30, 1998, the Four
Months Ended June 30, 1997, and the Two
Months Ended February 28, 1997 (Predecessor) 5
Unaudited Consolidated Statement of Stockholder's Equity
for the Six Months Ended June 30, 1998 6
Unaudited Consolidated Statement of Cash Flow for
the Three Months ended June 30, 1998 and 1997 7
Unaudited Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1998, the
Four Months Ended June 30, 1997, and the Two
Months Ended February 28, 1997 (Predecessor) 8
Notes to Unaudited Consolidated Financial Statements 9 - 11
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12 - 22
PART II OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 10-Q 22 - 24
SIGNATURE 25
</TABLE>
1
<PAGE> 3
Item 1. Financial Statements
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997*
------------- ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,997,980 $ 1,632,190
Receivables, net of allowance for doubtful
accounts of approximately $451,000 and
$286,000, respectively 13,669,223 10,924,654
Current portion of program rights 7,572,357 4,175,969
Other current assets 918,437 929,240
------------ ------------
Total current assets 26,157,997 17,662,053
------------ ------------
PROPERTY AND EQUIPMENT, net: 49,750,113 36,002,597
------------ ------------
INTANGIBLE ASSETS, net:
FCC licenses 81,222,962 58,403,429
Network affiliation agreements 141,646,746 110,571,178
Other 3,523,536 2,314,677
------------ ------------
Net intangible assets 226,393,244 171,289,284
------------ ------------
OTHER LONG-TERM ASSETS:
Deferred acquisition and financing costs
net of accumulated amortization of approximately
$1,920,000 and $1,098,000, respectively 12,337,710 9,590,604
Program rights, net of current portion 13,032,712 8,597,548
Other 102,127 102,127
------------ ------------
Total other long-term assets 25,472,549 18,290,279
------------ ------------
Total assets $327,773,903 $243,244,213
============ ============
</TABLE>
* Derived from the audited financial statements as of December 31, 1997.
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 4
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
June 30,1998 December 31, 1997*
------------ -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,062,458 $ 2,407,165
Accrued interest 3,269,444 3,273,520
Accrued compensation 739,545 805,897
Accrued other 956,943 678,256
Current portion of program rights payable 7,775,297 4,258,003
Asset swap payables (note 3) 55,846,750 --
------------- -------------
Total current liabilities 71,650,437 11,422,841
LONG-TERM DEBT 124,500,000 114,500,000
DEFERRED INCOME TAXES 23,862,000 23,562,000
PROGRAM RIGHTS PAYABLE, net of current portion 13,318,584 8,950,776
OTHER LONG-TERM LIABILITIES 111,846 116,041
REDEEMABLE PREFERRED STOCK, liquidation
preference of $30,000,000 34,728,100 32,263,225
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share, 1,000 shares
authorized, issued and outstanding 10 10
Additional paid in capital 64,011,972 64,011,972
Accumulated deficit (4,409,046) (11,582,652)
------------- -------------
Total stockholder's equity 59,602,936 52,429,330
------------- -------------
Total liabilities and stockholder's equity $ 327,773,903 $ 243,244,213
============= =============
</TABLE>
* Derived from the audited financial statements as of December 31, 1997.
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 5
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
NET REVENUES $ 16,991,856 $ 10,242,026
OPERATING EXPENSES:
Station operating 4,928,108 3,123,784
Selling, general and administrative 3,886,858 2,331,871
Trade and barter 533,567 328,447
Depreciation of property and equipment 1,901,738 936,810
Amortization of intangibles and other long-term assets 4,185,566 2,435,164
Corporate overhead 500,194 356,318
------------ ------------
Total operating expenses 15,936,031 9,512,394
------------ ------------
OPERATING INCOME 1,055,825 729,632
OTHER INCOME (EXPENSE):
Interest income 30,035 108,696
Interest expense (4,278,756) (2,821,208)
Gain on asset swap 17,559,479 --
Other income, net 2,205 (7,232)
------------ ------------
NET INCOME (LOSS) BEFORE INCOME TAX 14,368,788 (1,990,112)
INCOME TAX 636,000 24,000
------------ ------------
NET INCOME (LOSS) 13,732,788 (2,014,112)
REDEEMABLE PREFERRED STOCK
DIVIDENDS AND ACCRETION (1,253,048) (1,084,091)
------------ ------------
NET INCOME (LOSS) APPLICABLE TO
COMMON SHAREHOLDER $ 12,479,740 $ (3,098,203)
============ ============
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE $ 12,480 $ (3,098)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,000 1,000
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 6
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Company Company | Predecessor
Six Months Four Months | Two Months
Ended Ended | Ended
June 30, 1998 June 30, 1997 | February 28, 1997(1)
------------- --------------- | --------------------
<S> <C> <C> | <C>
NET REVENUES $ 28,326,574 $ 13,438,698 | $ 5,227,881
|
OPERATING EXPENSES: |
Station operating 9,025,616 4,134,749 | 2,078,753
Selling, general and administrative 6,867,161 3,042,295 | 1,525,923
Trade and barter 921,639 439,698 | 181,432
Depreciation of property and equipment 3,254,918 1,241,945 | 756,999
Amortization of intangibles and other long-term assets 7,584,512 3,334,847 | 976,884
Corporate overhead 960,624 458,203 | 146,000
------------ ------------ | ------------
Total operating expenses 28,614,470 12,651,737 | 5,665,991
------------ ------------ | ------------
OPERATING INCOME (LOSS) (287,896) 786,961 | (438,110)
|
OTHER INCOME (EXPENSE): |
Interest income 61,033 121,936 | 20,662
Interest expense (7,330,654) (3,557,123) | (962,920)
Gain on asset swap 17,559,479 -- | --
Other income, net 8,519 (112) | 18,522
------------ ------------ | ------------
NET INCOME (LOSS) BEFORE INCOME TAX 10,010,481 (2,648,338) | (1,361,846)
|
INCOME TAX 372,000 24,000 | 0
------------ ------------ | ------------
NET INCOME (LOSS) 9,638,481 (2,672,338) | $ (1,361,846)
| ============
REDEEMABLE PREFERRED STOCK |
DIVIDENDS AND ACCRETION (2,464,875) (1,445,455) |
------------ ------------ |
|
NET INCOME (LOSS) APPLICABLE TO |
COMMON SHAREHOLDER $ 7,173,606 $ (4,117,793) |
============ ============ |
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE $ 7,174 $ (4,118) |
============ ============ |
WEIGHTED AVERAGE NUMBER OF COMMON |
SHARES OUTSTANDING 1,000 1,000 |
============ ============ |
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(1) Note on 1997 Predecessor Statement:
The Predecessor statement shown above is derived from the audited combined
statements of operations 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. ("the Smith Stations") for the two months
ended February 28, 1997. No provision for income taxes has been shown since
income and loss of the partnerships is required to be reported by the partners
on their respective income tax returns.
5
<PAGE> 7
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statement of Stockholder's Equity
For the Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
Total
Common Additional Accumulated Stockholder's
Stock Paid-in Capital Deficit Equity
-------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $ 10 $ 64,011,972 $(11,582,652) $ 52,429,330
Net income applicable
to common shareholder -- -- 7,173,606 7,173,606
-------- ------------- ------------ -------------
Balance at June 30, 1998 $ 10 $ 64,011,972 $ (4,409,046) $ 59,602,936
======== ============= ============ =============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 8
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 13,732,788 $ (2,014,112)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation of property and equipment 1,901,738 936,810
Amortization of intangibles and other long-term assets 4,185,566 2,435,164
Amortization of program rights 1,396,589 908,487
Payments on program rights (1,423,794) (923,153)
Net deferred tax 600,000 --
Gain on asset swap (17,559,478) --
Loss on disposal of property and equipment 4,306 --
Change in operating assets and liabilities net of effects
from acquired stations:
Receivables (673,903) (1,094,016)
Other current assets 627,678 (159,188)
Accounts payable and accrued expenses 3,075,426 1,547,009
------------ ------------
Net cash provided by operating activities 5,866,916 1,637,001
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Smith Stations -- (11,435)
Net assets acquired in swap and acquisition transactions (66,158,624) --
Capital expenditures (1,177,705) (697,737)
Other 11,029 --
------------ ------------
Net cash (used in) investing activities (67,325,300) (709,172)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in payables related to swap transactions 55,846,750 --
Repayment of credit agreement (1,000,000) --
Deferred acquisition and debt refinancing
costs incurred (478,091) (195,398)
------------ ------------
Net cash provided by (used in) financing activities 54,368,659 (195,398)
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (7,089,725) 732,431
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE 11,087,705 8,652,795
------------ ------------
CASH AND CASH EQUIVALENTS, ENDING BALANCE $ 3,997,980 $ 9,385,226
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non cash items
Preferred dividend and accretion $ 1,253,048 $ 1,084,091
New program contracts $ 372,416 $ 181,000
Interest paid $ 1,492,363 $ 162,743
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
7
<PAGE> 9
STC BROADCASTING, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Company Company | Predecessor
Six Months Four Months | Two Months
Ended Ended | Ended
June 30, 1998 June 30, 1997 | February 28, 1997(1)
------------- ------------- | --------------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES: |
Net income (loss) $ 9,638,481 $ (2,672,338) | $ (1,361,846)
Adjustments to reconcile net income (loss) to net cash |
provided by operating activities: |
Depreciation of property and equipment 3,254,918 1,241,945 | 756,999
Amortization of intangibles and other long-term assets 7,584,512 3,334,847 | 976,884
Amortization of program rights 2,489,248 1,212,608 | 620,416
Payments on program rights (2,526,608) (1,231,217) | (621,037)
Net deferred tax 300,000 -- | --
Gain on asset swap (17,559,478) -- | --
Loss on disposal of property and equipment 7,562 -- | --
Change in operating assets and liabilities net of effects |
from acquired stations: |
Receivables 1,538,018 (1,265,410) | 1,210,423
Other current assets 915,894 (742,271) | (246,862)
Accounts payable and accrued expenses (1,017,803) 4,518,068 | 297,410
------------- ------------ | -------------
Net cash provided by operating activities 4,624,744 4,396,232 | 1,632,387
------------- ------------ | -------------
CASH FLOWS FROM INVESTING ACTIVITIES: |
Acquisition of Smith Stations -- (163,128,291) | --
Net assets acquired in swap and acquisition transactions (66,158,624) -- | --
Capital expenditures (1,463,916) (954,798) | (263,644)
Other 13,627 -- | 31,101
------------- ------------ | -------------
Net cash (used in) investing activities (67,608,913) (164,083,089) | (232,543)
------------- ------------ | -------------
CASH FLOWS FROM FINANCING ACTIVITIES: |
Proceeds from borrowing under credit agreement 12,000,000 90,800,000 |
Proceeds from senior subordinated notes -- 100,000,000 | --
Repayment of credit agreement (2,000,000) (90,800,000) | --
Proceeds from sale of preferred stock, net -- 28,500,000 | --
Proceeds from sale of common stock, net -- 49,011,982 | --
Increase in payables related to swap transactions 55,846,750 -- | --
Deferred acquisition and debt refinancing |
costs incurred (496,791) (8,439,899) | --
------------- ------------ | -------------
Net cash provided by financing activities 65,349,959 169,072,083 | --
------------- ------------ | -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,365,790 9,385,226 | 1,399,844
|
CASH AND CASH EQUIVALENTS, BEGINNING BALANCE 1,632,190 -- | 2,752,634
------------- ------------ | -------------
|
CASH AND CASH EQUIVALENTS, ENDING BALANCE $ 3,997,980 $ 9,385,226 | $ 4,152,478
============= ============ | =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non cash items
Preferred dividend and accretion $ 2,464,875 $ 1,445,455 --
New program contracts $ 488,719 $ 209,200 --
Interest paid $ 7,368,062 $ 593,234 --
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
(1) Note on 1997 Predecessor Statement:
The Predecessor statement shown above is derived from the audited combined
statements of operations of the Smith Stations for the two months ended
February 28, 1997.
8
<PAGE> 10
STC BROADCASTING, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements at June 30, 1998
1. PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include those of STC
Broadcasting, Inc. and its subsidiaries (the "Company"). As of June 30, 1998,
the Company owned and/or operated the following eight commercial television
stations (the "Stations").
<TABLE>
<CAPTION>
Acquisition or Network
Station Operation Date Market Affiliation
- ------- -------------- ------ -----------
<S> <C> <C> <C>
WEYI-TV March 1, 1997 Flint, Saginaw-Bay City, Michigan NBC
WROC-TV March 1, 1997 Rochester, New York CBS
WTOV-TV March 1, 1997 Wheeling, West Virginia and
Steubenville, Ohio NBC
WJAC-TV October 1, 1997 Johnstown, Altoona, and State College,
Pennsylvania NBC
KRBC-TV April 1, 1998 Abilene, Texas NBC
KACB-TV April 1, 1998 San Angelo, Texas NBC
WDTN-TV June 1, 1998 Dayton, Ohio ABC
WNAC-TV June 1, 1998 Providence, Rhode Island FOX
</TABLE>
All common shares of the Company are owned by Sunrise Television Corp.
("Sunrise"). The Company was incorporated on November 1, 1996 and commenced
operations on March 1, 1997. Significant intercompany transactions and accounts
have been eliminated. As permitted under the applicable rules and regulations
of the Securities and Exchange Commission, these financial statements are
condensed interim financial statements and do not include all disclosures and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the consolidated financial statements and notes thereto as of December 31,
1997 included in the previously filed Company's Annual Report on Form 10-K. 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. LONG TERM DEBT:
The Company's secured revolving credit facility (the "Bank Credit Agreement")
currently provides for borrowing up to $35,000,000 which can be used for
acquisitions, working capital and for general corporate expenses. The
outstanding balances under the Bank Credit Agreement as of June 30, 1998 and
December 31, 1997, were $24,500,000, and $14,500,000, respectively. The Company
has $100,000,000 of 11% Senior Subordinated Notes due March 15, 2007
outstanding at June 30, 1998 and December 31, 1997. See Note 4 to the unaudited
financial statements for the information on the Amended and Restated Bank
Credit Agreement.
3. ACQUISITIONS:
On April 1, 1998, the Company consummated the acquisition of all of the
outstanding common stock of Abilene Radio and Television Company ("ARTC") for
approximately $7,250,000 plus working capital. The transaction was funded by
additional borrowing under the Bank Credit Agreement.
9
<PAGE> 11
In a series of transactions, the Company has acquired certain assets from
Hearst-Argyle Stations, Inc., ("Hearst") through transactions structured as a
Section 1031 tax deferred exchange of assets. On February 3, 1998, the Company
agreed to acquire WPTZ-TV ("WPTZ"), WNNE-TV ("WNNE"), and a local marketing
agreement ("LMA") for WFFF-TV ("WFFF") from Sinclair Broadcast Group, Inc. for
$72,000,000, with the intention of using these assets in the Hearst transaction.
WPTZ and WNNE are the NBC affiliates and WFFF is the Fox affiliate serving the
Burlington, Vermont and Plattsburgh, New York television market. On February 18,
1998, the Company agreed with Hearst to trade KSBW-TV, WPTZ and WNNE for
WDTN-TV, the ABC affiliate in Dayton, Ohio, WNAC-TV, the Fox affiliate in
Providence, Rhode Island, WNAC-TV's interest in a Joint Marketing Programming
Agreement with WPRI-TV, the CBS affiliate in Providence, Rhode Island, and
approximately $22,000,000 in cash. On April 24, 1998, the Company completed a
purchase of non-license assets of WPTZ, WNNE and WFFF for $70,000,000. The
Company recorded the operations of WPTZ and WNNE for the period April 24, 1998
to May 31, 1998. Funds to complete this acquisition were provided by Hearst. The
assets acquired were pledged to Hearst under the related loan agreement.
During the second quarter of 1998, the Company received via contract rights the
benefits of the operation of stations WDTN-TV and WNAC-TV and WNAC-TV's joint
operating agreement with WPRI for the month of June 1998. Since the Company
received the economic benefits of the transaction subsequent to June 1, 1998,
the Company recorded a book gain of approximately $17,600,000 before a deferred
tax liability of $5,600,000 on the asset swap. Approximately $15,100,000 of the
book gain has been deferred for tax purposes in accordance with Section 1031 of
the tax code. In addition, the Company recorded a deferred tax asset of
$4,700,000 resulting from a reduction in valuation allowance at December 31,
1997, and the realization of loss carryforwards for the six months ended June
30, 1998.
At June 30, 1998, the Company had recorded the following amounts as payables
related to the swap transactions.
<TABLE>
<S> <C>
Payable to Hearst-Argyle Stations, Inc. $ 50,188,000
Payable to Sinclair Broadcasting Group, Inc. 2,008,000
Transactions fees 3,651,000
------------
$ 55,847,000
============
</TABLE>
The amount payable to Hearst represents approximately the difference between the
loan outstanding on the acquisition of WPTZ and WNNE, less the $22,000,000 in
cash owed the Company by Hearst, and plus the net working capital acquired on
June 1, 1998. The amount payable to Sinclair represents amounts due on the
license assets transfer.
On April 24, 1998, the Company sold to Robert N. Smith, the Chief Executive
Officer and Director of Sunrise and the Company, the assets and certain rights
and obligations related to WFFF. Within ninety days of the closing of the
exchange of WPTZ and WNNE by the Company to Hearst, Smith has agreed to pay the
Company $500,000, which amount would be increased to reflect any operating
losses associated with WFFF subsequent to the Company's commencement of
operations of WFFF under a Time Brokerage Agreement on April 24, 1998. The
$500,000 purchase price is secured by a note and liens on all of the assets
sold. On July 23, 1998, the Company received full payment on the note.
On April 27, 1998, the Company entered into a definitive agreement ("Meyer
Purchase Agreement") to acquire the television assets of Meyer Broadcasting
Company of Bismarck, North Dakota ("Meyer") for $63,750,000. Meyer's television
stations, which are all affiliated with NBC, include KVLY-TV, serving Fargo,
KFYR-TV serving Bismarck, KMOT-TV, serving Minot, KQCD-TV, serving Dickinson,
and KUMV-TV, serving Williston. It is anticipated that financing for the
transaction will be from additional equity contributions by Sunrise and
borrowings under the New Credit Agreement (as defined in Note 4 herein). The
transaction is expected to close on October 1, 1998, and is subject to Federal
Communications Commission review. The Meyer Purchase Agreement is subject to
customary conditions and no assurances can be given as to whether, or on what
terms, such transaction will be consummated by the Company.
10
<PAGE> 12
On July 24, 1998, the Company entered into a definitive agreement ("Elcom
Purchase Agreement") to acquire the television assets of Elcom of Ohio, Inc.
("Elcom") for approximately $72,600,000. Elcom owns WUPW-TV, the Fox affiliate
serving the Toledo, Ohio, television market. It is anticipated that financing
for this transaction will be provided through additional equity contributions by
Sunrise and from the remaining amounts available under the New Credit Agreement.
The transaction is expected to close on January 1, 1999, and is subject to
Department of Justice and Federal Communications Commission review. The Elcom
Purchase Agreement is subject to customary conditions and no assurances can be
given as to whether, or on what terms, such transaction will be consummated by
the Company.
4. SUBSEQUENT EVENT:
On July 2, 1998, the Company entered into an Amended and Restated Credit
Agreement ("New Credit Agreement") with various lenders which provides a
$100,000,000 term loan facility and $65,000,000 revolving credit facility. On
July 3, 1998, the Company borrowed $70,000,000 on the term loan facility and
$2,500,000 on the revolving credit facility to fund amounts payable to the
Hearst under the asset swap, retire amounts outstanding under the Bank Credit
Agreement, pay transaction fees and working capital needs. It is anticipated
that the remaining $30,000,000 of the term loan facility will be used on the
Meyer transaction and approximately $54,000,000 of the revolving credit facility
will be used to complete the Meyer and Elcom acquisitions.
The New 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 New Credit Agreement are
guaranteed by Sunrise and the Company's current direct, indirect, and future
subsidiaries. The New Credit Agreement contains certain financial and operating
maintenance covenants including a maximum consolidation leverage ratio
(initially 7.0:1), a minimum consolidated fixed charge coverage ratio (initially
1.05:1), and a consolidated interest coverage ratio (initially 1.35:1). The
Company is limited in the amount of annual payments that may be made for
corporate overhead.
In July 1998, the Company will record an extraordinary loss of approximately
$4,402,000 on the retirement of the Bank Credit Agreement in accordance with
generally accepted accounting principles. The loss will consist of approximately
$2,425,000 of previously unamortized costs incurred on the original issuance of
the Bank Credit Agreement and $1,977,000 of financing fees paid to the lenders
related to the New Credit Agreement.
On July 3, 1998, Sunrise invested an additional $10,400,000 in the Company in
the form of additional contributed capital.
11
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The operating revenues of the Stations are derived primarily from advertising
revenues and, to a much lesser extent, compensation paid by the networks to the
Stations for broadcast network programming. The Stations' primary operating
expenses are employee compensation and related benefits, news gathering, film
and syndicated programming expenditures and promotional costs. A significant
proportion of the operating expenses of the Stations are fixed.
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. 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 are 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. The Stations generally pay commissions to
advertising agencies on local and national advertising, and on national
advertising the Stations pay additional commissions to the national sales
representatives who operate under agreements that provide for exclusive
representation within the particular market of the Station. For the six months
ended June 30, 1998, local advertising comprised 58.3% of the Company's gross
spot revenues (excluding political advertising) and national advertising
comprised 41.7% of the Company's gross spot revenues (excluding political
advertising). The gross spot 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. Advertising spending by
political candidates is typically heaviest during the fourth quarter.
"Broadcast Cash Flow" is defined as operating income (loss) plus depreciation
of property and equipment, amortization of intangible assets, corporate
overhead 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 television broadcast companies
and are used by creditors and 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 for measures of performance prepared in accordance with generally
accepted accounting principles.
This Quarterly Report on Form 10-Q contains certain forward-looking statements
that involve a number of risks and uncertainties. When used in this Quarterly
Report on Form 10-Q the words "believes," "anticipates," and similar
expressions are intended to identify forward-looking statements. There are a
number of factors that could cause the Company's actual results to differ
materially from those forecasted or projected in such forward-looking
statements. These factors include, without limitation, competition from other
local free over-the-air television stations, acquisition of additional
broadcast properties and future debt service obligations. Readers are cautioned
not to place undue reliance on these forward-looking statements which speak
only as of the date hereof. The Company undertakes no obligations to publicly
release the result of any revisions to these forward-looking statements which
may be made to reflect events or circumstance after the date hereof or to
reflect the occurrence of unanticipated events.
12
<PAGE> 14
HISTORICAL PERFORMANCE
Broadcast Cash Flow.
The following table sets forth certain operating data for the Company for the
three months and six months ended June 30, 1998 and 1997. The six months ended
June 30, 1997 combines the four months ended June 30, 1997 for the Company and
the two months ended February 28, 1997 for the Smith Stations, the predecessor
entity. The predecessor entity operations are presented on a pre-acquisition
cost basis and are not comparable with the Company's six and three months of
operations ended June 30, 1998 and three and four months of operations ended
June 30, 1997.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------- ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Operating Income (Loss) $ 1,056 $ 730 $ (288) $ 349
Add:
Amortization of program rights 1,397 908 2,489 1,833
Depreciation of property and equipment 1,902 937 3,255 1,999
Amortization of intangibles 4,185 2,435 7,585 4,312
Corporate overhead 500 356 961 604
Less:
Payments for program rights (1,424) (923) (2,527) (1,852)
------- ------- -------- --------
Broadcast cash flow $ 7,616 $ 4,443 $ 11,475 $ 7,245
======= ======= ======== ========
</TABLE>
Television Revenues
Set forth below are the principal types of television revenues that the Company
has generated for the periods indicated and the percentage contribution of each
to total revenues. The six months ended June 30, 1997 combines the four months
ended June 30, 1997 for the Company and the two months ended February 28, 1997
for the Smith Stations, the predecessor entity.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------------- ---------------- ------------------ -------------------
$ % $ % $ % $ %
-------- ------- -------- ------ -------- ------ -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Local $ 9,828 49.3% $ 5,968 49.5% $ 16,396 49.4% $ 10,651 48.7%
National 6,887 34.6% 4,798 39.9% 11,739 35.4% 8,650 39.5%
Political 917 4.6% 0 0.0% 1,153 3.5% 0 0.0%
Network Compensation 1,176 5.9% 704 5.9% 2,123 6.4% 1,438 6.6%
Trade and barter 599 3.0% 383 3.2% 1,017 3.0% 703 3.2%
Income from Joint
Operating Agreement 327 1.6% 0 0.0% 327 1.0% 0 0.0%
Other 201 1.0% 184 1.5% 444 1.3% 441 2.0%
-------- ------ -------- ----- -------- ----- -------- -----
Total 19,935 100.0% 12,037 100.0% 33,199 100.0% 21,883 100.0%
Agency and national
representative commissions (2,943) (14.8%) (1,795) (14.9%) (4,872) (14.7%) (3,216) (14.7%)
-------- ------ -------- ----- -------- ----- -------- -----
Net revenue $ 16,992 85.2% $ 10,242 85.1% $ 28,327 85.3% $ 18,667 85.3%
======== ====== ======== ===== ======== ===== ======== =====
</TABLE>
13
<PAGE> 15
Results of Operations.
Set forth below is a summary of the operations of the Company for the periods
indicated and their percentages of net revenue. The six months ended June 30,
1997 combines the four months ended June 30, 1997 for the Company and the two
months ended February 28, 1997 for the Smith Stations, the predecessor entity.
The predecessor entity operations are presented on a pre-acquisition cost basis
and are not comparable with the Company's three and six months of operations
ended June 30, 1998 and three and four months of operations ended June 30,
1997.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------------- --------------------- -------------------- --------------------
% of % of % of % of
$ Revenues $ Revenues $ Revenues $ Revenues
-------- -------- -------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues: $ 16,992 100.0% $ 10,242 100.0% $ 28,327 100.0% $ 18,667 100.0%
Operating Expenses:
Station operating 4,928 29.0% 3,124 30.5% 9,025 31.9% 6,214 33.3%
Selling, General & Administrative 3,887 22.9% 2,332 22.8% 6,867 24.2% 4,568 24.5%
Trade and barter expense 533 3.1% 328 3.2% 922 3.3% 621 3.3%
Depreciation 1,902 11.2% 937 9.1% 3,255 11.5% 1,999 10.7%
Amortization 4,186 24.6% 2,435 23.8% 7,585 26.8% 4,312 23.1%
Corporate overhead 500 2.9% 356 3.5% 961 3.4% 604 3.2%
-------- ----- ------ ----- -------- ----- -------- -----
Operating income (loss) 1,056 6.3% 730 7.1% (288) (1.1)% 349 1.9%
======== ===== ====== ===== ======== ===== ======== =====
Broadcast cash flow 7,616 44.8% 4,443 43.4% 11,475 40.5% 7,245 38.9%
======== ===== ====== ===== ======== ===== ======== =====
</TABLE>
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997
Gross Revenues
Gross revenues increased by $7.9 million or 65.8% to $19.9 million for the
three months ended June 30, 1998 from $12.0 million for the comparable period
in 1997. Local and national revenues were up 64.7% and 43.5%, respectively,
over the comparable period in 1997. An increase of $4.2 million is attributable
to the acquisitions of WJAC, KRBC, and KACB ("Acquisitions") and an increase of
$3.1 million is attributable to the swap transactions. The three months ended
June 30, 1998 had approximately $0.9 million of political revenues compared to
none for the comparable period in 1997.
Net Revenues
Net revenues increased by $6.8 million or 66.7% to $17.0 million for the three
months ended June 30, 1998 from $10.2 million for the comparable period in
1997. An increase of $3.6 million is attributable to the Acquisitions and an
increase of $2.7 million is attributable to the swap transactions. The three
months ended June 30, 1998, had approximately $0.7 million of political
revenues compared to none for the comparable period in 1997.
Station Operating Expenses
Station operating expenses increased by $1.8 million to $4.9 million for the
three months ended June 30, 1998 from $3.1 million for the comparable period in
1997. An increase of $1.0 million is attributable to the Acquisitions and an
increase of $0.7 million is attributable to the swap transactions.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $1.6 million to $3.9
million for the three months ended June 30, 1998 from $2.3 million for the
comparable period in 1997. An increase of $1.1 million is attributable to the
Acquisitions and an increase of $0.4 million is attributable to the swap
transactions.
14
<PAGE> 16
Trade and barter expense
Trade and barter expenses increased by $0.2 million to $0.5 million for the six
months ended June 30, 1998 from $0.3 million for the comparable period in 1997.
An increase of $0.1 million is attributable to the Acquisitions and an increase
of $0.1 million is attributable to the swap transactions.
Depreciation
Depreciation increased by $1.0 million to $1.9 million for the three months
ended June 30, 1998 from $0.9 million for the comparable period in 1997. An
increase of $0.6 million is attributable to the Acquisitions and an increase of
$0.3 million is attributable to the swap transactions.
Amortization
Amortization increased by $1.8 million to $4.2 million for the three months
ended June 30, 1998 from $2.4 million for the comparable period in 1997. An
increase of $1.0 million is attributable to the Acquisitions and an increase of
$0.8 million is attributable to the swap transactions.
Corporate Overhead
Corporate Overhead increased by $0.1 million to $0.5 million for the three
months ended June 30, 1998 from $0.4 million for the comparable period in 1997.
Cost increases related to higher salary costs and additional staff.
Operating Income
Operating income increased by $0.4 million to $1.1 million for the three months
ended June 30, 1998 from $0.7 million for the comparable period in 1997 due to
the reasons outlined above.
Interest Expense
Interest increased by $1.5 million to $4.3 million for the three months ended
June 30, 1998 from $2.8 million for the comparable period in 1997. An increase
of $0.5 million is due to higher outstanding balances of the Bank Credit
Agreement resulting from the purchase of WJAC on October 1, 1997 and the
purchase of KRBC and KACB on April 1, 1998. An increase of $0.9 million is due
to interest related to and resulting from the purchase of the non-license
assets of WPTZ, WNNE and WFFF on April 24, 1998.
Gain on Asset Swap
Gain on asset swap was $17.6 million for the three months ended June 30, 1998
with no gain in comparable period of 1997. $15.1 million of the gain is
attributable to the assets of KSBW while $2.5 million is attributable to the
assets of WPTZ and WNNE.
Income Tax
Income tax increased by $0.6 million to $0.6 million for the three months ended
June 30, 1998 from zero for the comparable period in 1997. An increase of $5.6
million is attributable to the deferred gain on the swap of KSBW assets. An
income tax benefit of $4.7 million is attributable to a $2.7 million decrease in
valuation allowance as of December 31, 1997, and a $2.0 million realization of
loss carryforward for the six months ended June 30, 1998. An income tax benefit
of $0.3 million is attributable to the acquisition of WJAC and the related
amortization of the step up in basis of WJAC assets for purchase accounting.
15
<PAGE> 17
Redeemable Preferred Stock Dividends and Accretion
Redeemable preferred stock dividends and accretion increased by $0.2 million to
$1.3 million for the three months ended June 30, 1998 from $1.1 for the
comparable period in 1997 due to higher value outstanding over the comparable
period of 1997.
Net Income (Loss) Applicable to Common Shareholder
Net income applicable to common shareholder increased by $15.6 million to $12.5
million for the three months ended June 30, 1998 from a loss of $3.1 million for
the comparable period in 1997 due to the reasons outlined above.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Gross Revenues
Gross revenues increased by $11.3 million or 51.6% to $33.2 million for the six
months ended June 30, 1998 from $21.9 million for the comparable period in
1997. Local and national revenues were up 53.9% and 35.7%, respectively, over
the comparable period in 1997. An increase of $6.8 million is attributable to
the Acquisitions and an increase of $3.3 million is attributable to the swap
transactions. The six months ended June 30, 1998 had approximately $1.2 million
of political revenues compared to none for the comparable period in 1997. The
majority of the remaining increase was due to the Olympic Games broadcast on
WROC, a CBS affiliate.
Net Revenues
Net revenues increased by $9.6 million or 51.3% to $28.3 million for the six
months ended June 30, 1998 from $18.7 million for the comparable period in
1997. An increase of $5.8 million is attributable to the Acquisitions and an
increase of $2.8 million is attributable to the swap transactions. The six
months ended June 30, 1998, has approximately $1.0 million of political
revenues compared to none for the comparable period in 1997.
Station Operating Expenses
Station operating expenses increased by $2.8 million to $9.0 million for the
six months ended June 30, 1998 from $6.2 million for the comparable period in
1997. An increase of $1.8 million is attributable to the Acquisitions and an
increase of $0.8 million is attributable to the swap transactions. Most of the
remaining increase was due to additional news expenditures at WROC, WTOV, and
WEYI.
Selling, General and Administrative
Selling, general and administrative expenses increased by $2.3 million to $6.9
million for the six months ended June 30, 1998 from $4.6 million for the
comparable period in 1997. An increase of $1.7 million is attributable to the
Acquisitions and an increase of $0.4 million is attributable to the swap
transactions. Most of the remaining increase was due to additional sales
expenses on increased sales.
Trade and barter expense
Trade and barter expenses increased by $0.3 million to $0.9 million for the six
months ended June 30, 1998 from $0.6 million for the comparable period in 1997.
An increase of $0.2 million is attributable to the Acquisitions and an increase
of $0.1 million is attributable to the swap transactions.
Depreciation
Depreciation increased by $1.3 million to $3.3 million for the six months ended
June 30, 1998 from $2.0 million for the comparable period in 1997. An increase
of $0.9 million is attributable to the Acquisitions and an increase of $0.3
million is attributable to the swap transactions.
16
<PAGE> 18
Amortization
Amortization increased by $3.3 million to $7.6 million for the six months ended
June 30, 1998 from $4.3 million for the comparable period in 1997. An increase
of $1.9 million is attributable to the Acquisitions and an increase of $0.9
million is attributable to the swap transactions. The additional increase is due
to the revaluation of assets at the time of the purchase of the four Smith
Stations by the company on March 1, 1997.
Corporate Overhead
Corporate Overhead increased by $0.4 million to $1.0 million for the six months
ended June 30, 1998 from $0.6 million for the comparable period in 1997. Cost
increases related to higher salary costs and additional staff.
Operating Income
Operating income decreased by $0.6 million to a loss of $0.3 million for the six
months ended June 30, 1998 from $0.3 million for the comparable period in 1997
due to the reasons outlined above.
Interest Expense
Interest increased by $2.8 million to $7.3 million for the six months ended June
30, 1998 from $4.5 million for the comparable period in 1997. An increase of
$1.0 million is due to higher outstanding balances of the Senior Subordinated
Notes resulting from the purchase of the Smith Stations by the company on March
1, 1997. An increase of $0.9 million is due to higher outstanding balances of
the Bank Credit Agreement resulting from the purchase of WJAC on October 1,
1997, and the purchase of KRBC and KACB on April 1, 1998. An increase of $0.9
million is due to interest related to and resulting from the purchase of the
non-license assets of WPTZ, WNNE and WFFF on April 24, 1998.
Gain on Asset Swap
Gain on asset swap was $17.6 million to $17.6 million for the six months ended
June 30, 1998 with no gain in the comparable period in 1997. An increase of
$15.1 of the gain million is attributable to the assets of KSBW while $2.5
million is attributable to the WPTZ and WNNE assets.
Income Tax
Income tax increased by $0.4 million to $0.4 million for the six months ended
June 30, 1998 from zero for the comparable period in 1997. An increase of $5.6
million is attributable to the deferred gain on the Hearst KSBW assets. An
income tax benefit of $4.7 million is attributable to a $2.7 million decrease in
valuation allowance as of December 31, 1997, and a $2.0 million realization of
loss carryforward for the six months ended June 30, 1998. An income tax benefit
of $0.6 million is attributable to the acquisition of WJAC and the related
amortization of the step up in basis of WJAC assets for purchase accounting.
Redeemable Preferred Stock Dividends and Accretion
Redeemable preferred stock dividends and accretion increased by $1.1 million to
$2.5 million for the six months ended June 30, 1998 from $1.4 for the comparable
period in 1997. The increase is attributable to six months of expense in 1998
versus four months of expense in 1997 and higher outstanding balances.
Net Income (Loss) Applicable to Common Shareholder
Net income applicable to common shareholder increased by $11.3 million to $7.2
million for the six months ended June 30, 1998 from a loss of $4.1 million for
the comparable period in 1997 due to the reasons outlined above.
17
<PAGE> 19
LIQUIDITY AND CAPITAL RESOURCES
On March 25, 1997, the Company completed a private placement of $100.0 million
principal amount of its 11% Senior Subordinated Notes (the "Old Notes") due
March 15, 2007. Interest is payable on March 15 and September 15 of each year.
On September 26, 1997, the Company completed an exchange offer in which all of
the Old Notes were exchanged for registered 11% Senior Subordinated Notes (the
"New Notes") of the Company having substantially identical terms as the Old
Notes. The Indenture imposes certain limitations on the ability of the Company
and certain of its subsidiaries to, among other things, pay dividends or make
certain other restricted payments, consummate certain asset sales, enter into
certain transactions with affiliates, incur liens, impose restrictions on the
ability of a subsidiary to pay dividends or make certain payments to the
Company, merge or consolidate with any person or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of the assets of the
Company. At June 30, 1998, the Bank Credit Agreement provided for borrowings of
up to $35.0 million under its secured revolving credit facility. Undrawn amounts
under such facility are available for acquisitions, working capital and general
corporate purposes.
On July 2, 1998, the Company entered into an Amended and Restated Credit
Agreement ("New Credit Agreement") with various lenders which provides a $100.0
million term loan facility and $65.0 million revolving credit facility. On July
3, 1998, the Company borrowed $70.0 million on the term loan facility and $2.5
million on the revolving credit facility to fund amounts payable to Hearst under
the asset swap, retire amounts outstanding under the former bank credit
agreement, pay transaction fees and working capital needs. It is anticipated
that the remaining $30.0 million of the term loan facility will be used on the
Meyer transaction and approximately $54.0 million of the revolving credit
facility will be used to finance the Meyer and Elcom acquisitions.
The New 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 New Credit Agreement are
guaranteed by Sunrise and the Company's current direct, indirect, and future
subsidiaries. The New Credit Agreement contains certain financial and operating
maintenance covenants including a maximum consolidation leverage ratio
(initially 7.0:1), a minimum consolidated fixed charge coverage ratio (initially
1.05:1), and a consolidated interest coverage ratio (initially 1.35:1). The
Company is limited in the amount of annual payments that may be made for
corporate overhead.
Interest payments under the New Credit Agreement and the New Notes represent
significant liquidity requirements for the Company. Loans under the New Credit
Agreement bear interest at floating rates based upon the interest rate option
selected by the Company. In addition, the Company's 14% Redeemable Preferred
Stock (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 New 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.
Based on the current level of operations, anticipated future internally
generated growth, additional borrowings under the expanded Amended and Restated
Bank Credit Agreement and additional equity contributions from Sunrise, the
Company anticipates that it will have sufficient funds to meet its anticipated
requirements for working capital, capital expenditures, interest payments and
its pending acquisitions. The Company's future operating performance and ability
to service or refinance the New Notes and to extend or refinance the New Credit
Agreement will be subject to future economic conditions and to financial,
business and other factors, many of which are beyond the control of the Company.
The ability of the Company to implement its business strategy, complete its
transaction with Meyer Broadcasting Company and Elcom of Ohio, Inc. and to
consummate future acquisitions will require additional debt and significant
equity capital and no assurance can be given as to whether, and on what terms,
such additional debt and/or equity capital will be available, including
additional equity contributions from Sunrise. The degree to which the Company is
leveraged could have a significant effect on its results of operations.
18
<PAGE> 20
CAPITAL EXPENDITURES
Capital expenditures were $3.1 million for the year ended December 31, 1997 and
$1.5 million and $1.2 million for the six month period ended June 30, 1998 and
1997, respectively. Capital expenditures are anticipated to be $5.2 million for
1998. The Company continues to improve the news gathering and production
capabilities of WROC, WEYI, WJAC and WDTN and has allocated approximately $1.9
million to rebuild KRBC and KACB.
DEPRECIATION, AMORTIZATION AND INTEREST
Because the Company has incurred substantial indebtedness in the acquisitions
of stations for which it will have significant debt service requirements, and
because the Company will have significant non-cash charges relating to the
depreciation and amortization expense of the property and equipment and
intangibles that were acquired in station acquisitions, the Company expects
that it will report net losses for the foreseeable future.
PRO FORMA BASIS
Broadcast Cash Flow.
The following information is not required disclosure for the interim financial
statement but the Company has included such information since they believe
investors and creditors will find it useful. The pro forma information
presented is not necessarily indicative of the actual results that would have
been achieved had each of the present eight stations been acquired at January
1, 1997, nor is it indicative of the future results of operations.
The following table sets forth certain operating data for the Company's eight
Stations for the three months and six months ended June 30, 1998 and June 30,
1997 as if the Company had owned all eight Stations since January 1, 1997.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- --------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Operating Loss $ 1,531 $ 249 $ 207 $ (2,251)
Add:
Amortization of program rights 1,962 1,976 3,933 3,943
Depreciation of property and equipment 1,936 1,843 3,830 3,686
Amortization of intangibles 4,210 4,112 8,421 8,224
Corporate overhead 500 500 1,000 1,000
Less:
Payments for program rights (1,993) (2,043) (3,981) (4,084)
-------- -------- -------- --------
Broadcast cash flow $ 8,146 $ 6,637 $ 13,410 $ 10,518
======== ======== ======== ========
</TABLE>
Television Revenues.
Set forth below are the principal types of television revenues that the
Company's eight Stations generated for the periods indicated as if they were
all owned since January 1, 1997 and the percentage contribution of each to
total revenues.
19
<PAGE> 21
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------------ ------------------ ------------------ ------------------
$ % $ % $ % $ %
-------- ------ -------- ------ -------- ------ -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Local $ 10,600 51.8% $ 9,997 52.3% $ 19,652 52.2% $ 18,004 51.7%
National 6,400 31.3% 6,075 31.8% 11,644 30.9% 11,070 31.8%
Political 371 1.8% 35 .2% 380 1.0% 36 .1%
Network Compensation 1,300 6.4% 1,370 7.2% 2,625 7.0% 2,749 7.9%
Trade and barter 578 2.8% 458 2.4% 1,014 2.7% 877 2.5%
Joint Operating Agreement 1,095 5.3% 1,017 5.3% 1,998 5.3% 1,634 4.7%
Other 127 .6% 154 .8% 335 .9% 438 1.3%
-------- ----- -------- ----- -------- ----- -------- -----
Total 20,471 100.0 19,106 100.0% 37,648 100.0% 34,808 100.0%
Agency and national
representative commissions (2,838) (13.9%) (2,652) (13.9%) (5,144) (13.7%) (4,774) (13.7%)
-------- ----- -------- ----- -------- ----- -------- -----
Net revenue $ 17,633 86.1% $ 16,454 86.1% $ 32,504 86.3% $ 30,034 86.3%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
Proforma Results of Operations.
Set forth below is a summary of the operations of the Company's eight Stations
for the periods indicated and their percentages of net revenue as if the
Company had owned the eight Stations from January 1, 1997.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------------ ------------------ ------------------ ------------------
$ % $ % $ % $ %
-------- ------ -------- ------ -------- ------ -------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues: $ 17,633 100.0% $ 16,454 100.0% $ 32,504 100.0% $ 30,034 100.0%
Operating Expenses:
Station operating 5,285 30.0% 5,506 33.5% 10,724 33.0% 10,907 36.3%
Selling, general &
administrative 3,677 20.9% 3,827 23.3% 7,421 22.8% 7,688 25.6%
Trade and barter expense 494 2.8% 417 2.5% 901 2.8% 780 2.6%
Depreciation 1,936 11.0% 1,843 11.2% 3,830 11.8% 3,686 12.3%
Amortization 4,210 23.9% 4,112 25.0% 8,421 25.9% 8,224 27.4%
Corporate overhead 500 2.8% 500 3.0% 1,000 3.1% 1,000 3.3%
-------- ----- -------- ----- -------- ----- -------- -----
Operating income $ 1,531 8.6% $ 249 1.5% 207 .6% $ (2,251) (7.5%)
======== ===== ======== ===== ======== ===== ======== =====
Broadcast cash flow $ 8,146 46.2% $ 6,637 40.3% $ 13,410 41.3% $ 10,518 35.0%
======== ===== ======== ===== ======== ===== ======== =====
</TABLE>
Sales are increasing at all the stations for the three and six month periods
with the most significant period to period sales increases at WJAC and WDTN.
Significant period to period expense decreases have been recorded at WJAC and
WDTN.
Recent Developments
In a series of transactions, the Company has acquired certain assets from
Hearst-Argyle Stations, Inc., ("Hearst") through transactions structured as a
Section 1031 tax deferred exchange of assets. On February 3, 1998, the Company
agreed to acquire WPTZ-TV ("WPTZ"), WNNE-TV ("WNNE"), and local marketing
agreement ("LMA") for WFFF-TV ("WFFF") from Sinclair Broadcast Group, Inc. for
$72.0 million, with the
20
<PAGE> 22
intention of using these assets in the Hearst transaction. WPTZ and WNNE are
the NBC affiliates and WFFF is the Fox affiliate serving the Burlington,
Vermont and Plattsburgh, New York television market. On February 18, 1998, the
Company agreed with Hearst to trade KSBW-TV, WPTZ and WNNE for WDTN-TV, the ABC
affiliate in Dayton, Ohio, WNAC-TV, the Fox affiliate in Providence, Rhode
Island, WNAC-TV's interest in a Joint Marketing Programming Agreement with
WPRI-TV, the CBS affiliate in Providence, Rhode Island, and approximately $22
million in cash. On April 24, 1998, the Company completed a purchase of
non-license assets of WPTZ, WNNE and WFFF for $70.0 million dollars. The
Company recorded the operations of WPTZ and WNNE for the period April 24 to May
31, 1998. Funds to complete this acquisition were provided by Hearst. The
assets acquired are pledged to Hearst under the related loan agreement.
During the second quarter of 1998, the Company received by contract the benefits
of the operation of stations WDTN-TV and WNAC-TV and its joint operating
agreement with WPRI for the month of June 1998. Since the Company received the
economic benefits of the transaction subsequent to June 1, 1998, the Company
recorded a book gain of approximately $17.6 million dollars before a deferred
tax liability of $5.6 million on the asset swap. Approximately $15.1 million of
the book gain has been deferred for tax purposes in accordance with Section 1031
of the tax code. In addition, the Company recorded a deferred tax asset of
$4,700,000 resulting from a reduction in valuation allowance at December 31,
1997, and the realization of loss carryforwards for the six months ended June
30, 1998.
On April 24, 1998, the Company sold to Robert N. Smith, the Chief Executive
Officer and Director of Sunrise and the Company, the assets and certain rights
and obligations related to WFFF. Within ninety days of the closing of the
exchange of WPTZ and WNNE by the Company to Hearst, Smith has agreed to pay the
Company $0.5 million, which amount would be increased to reflect any operating
losses associated with WFFF subsequent to the Company's commencement of
operations of WFFF under a Time Brokerage Agreement on April 24, 1998. The $0.5
million purchase price is secured by a note and liens on all of the assets
sold. On July 23, 1998, the Company received full payment on the note.
On April 27, 1998, the Company entered into a definitive agreement ("Meyer
Purchase Agreement") to acquire the television assets of Meyer Broadcasting
Company of Bismarck, North Dakota ("Meyer") for $63.75 million. Meyer's
television stations, which are all affiliated with NBC, include KVLY-TV, serving
Fargo, KFYR-TV serving Bismarck, KMOT-TV, serving Minot, KQCD-TV, serving
Dickinson, and KUMV-TV, serving Williston. It is anticipated that financing for
the transaction will be from additional equity contributions by Sunrise and
borrowings under the New Credit Agreement. The transaction is expected to close
on October 1, 1998, and is subject to Federal Communications Commission review.
The Meyer Purchase Agreement is subject to customary conditions and no
assurances can be given as to whether, or on what terms, such transaction will
be consummated by the Company.
On July 24, 1998, the Company entered into a definitive agreement ("Elcom
Purchase Agreement") to acquire the television assets of Elcom of Ohio, Inc.
("Elcom") for approximately $72.6 million. Elcom owns WUPW-TV, the Fox affiliate
serving the Toledo, Ohio, television market. It is anticipated that financing
for this transaction will be provided through additional equity contributions by
Sunrise and from the remaining amounts under the New Credit Agreement. The
transaction is expected to close on January 1, 1999, and is subject to
Department of Justice and Federal Communications Commission review. The Elcom
Purchase Agreement is subject to customary conditions and no assurances can be
given as to whether, or on what terms, such transaction will be consummated by
the Company.
Inflation
The Company believes that its business is affected by inflation to an extent no
greater than other businesses are generally affected.
Year 2000 Compliance
The Company has commenced a study of its computer systems in order to assess
its exposure to year 2000 issues. The Company expects to make the necessary
modifications or changes to its computer information systems to enable proper
processing of transactions relating to the year 2000 and beyond and anticipates
its internal costs will not have a material effect on future operations. There
can be no assurance other matters relating to year 2000 issues will not have a
material adverse effect on the Company.
21
<PAGE> 23
Environmental Regulation
Prior to the Company's ownership or operation of its facilities, substances or
wastes that are or might be considered hazardous under applicable environmental
laws may have been generated, used, stored or disposed of at certain of those
facilities. In addition, environmental conditions relating to the soil and
groundwater at or under the Company's facilities may be affected by the
proximity of nearby properties that have generated, used, stored or disposed of
hazardous substances. As a result, it is possible that the Company could become
subject to environmental liabilities in the future in connection with these
facilities under applicable environmental laws and regulations. Although the
Company believes that it is in substantial compliance with such environmental
requirements, and has not in the past been required to incur significant costs
in connection therewith, there can be no assurance that the Company's costs to
comply with such requirements will not increase in the future. The Company
presently believes that none of its properties have any condition that is
likely to have a material adverse effect on the Company's financial condition
or results of operations.
Employees
As of June 30, 1998, the Stations had approximately 450 full-time and 51
part-time employees. WEYI has a contract with United Auto Workers that expired
on August 7, 1998 with respect to 49 employees. Company and the Union have
agreed to negotiate a new agreement in the near future. WROC has a contract with
American Federation of Television and Radio Artists ("AFTRA") that expires on
March 2, 1999 with respect to 19 employees, and 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 33
employees. 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, 2000 with respect to 22 and 18 employees respectively. WJAC has a
contract with International Alliance of Theatrical Stage Employees that expires
on September 30, 2002 with respect to 45 employees. WDTN-TV has a contract with
the International Brotherhood of Electrical Workers that expires on July 2, 2003
with respect to 47 employees. No significant labor problems have been
experienced by the Stations. 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 or results of operations.
PART II
Item 6 Exhibits and Reports on Form 10-Q
(a) Exhibits
2.1 Asset Purchase Agreement, dated as of February 3, 1998, by
and among Tuscaloosa Broadcasting, Inc. as Seller and STC
Broadcasting of Vermont, Inc., as Buyer (1)
2.2 Asset Exchange Agreement, dated as of February 18, 1998, by
and among STC Broadcasting, Inc., STC Broadcasting of
Vermont, Inc., STC License Company, STC Broadcasting of
Vermont Subsidiary, Inc and Hearst-Argyle Stations, Inc. (1)
2.3 Contract of Sale by and between Meyer Broadcasting Company
and STC Broadcasting, Inc. dated April 27, 1998 (2)
2.4 Asset Purchase Agreement by and between Elcom of Ohio, Inc.,
and STC Broadcasting, Inc. dated as of July 24, 1998 (3)
10.1 Affiliation Agreement, dated March 2, 1998 between National
Broadcasting Company, Inc. and STC Broadcasting, Inc. (2)
10.2 Letter Agreement between STC Broadcasting of Vermont, Inc.
and Smith Broadcasting of Vermont, LLC dated April 24,
1998 (2)
10.3 Interim Operating Agreement by and among Smith Broadcasting
of Vermont, LLC, STC Broadcasting, Inc., STC Broadcasting of
Vermont, Inc., STC License Company, and STC Broadcasting of
Vermont Subsidiary, Inc. dated April 24, 1998 (2)
22
<PAGE> 24
10.4 Security Agreement dated April 24, 1998 made by Smith
Broadcasting of Vermont, LLC in favor of STC Broadcasting of
Vermont Subsidiary, Inc. (2)
10.5 $500,000 Promissory Note dated April 24, 1998 made by Smith
Broadcasting of Vermont, LLC in favor of STC Broadcasting of
Vermont Subsidiary, Inc. (2)
10.6 Letter Agreement between STC Broadcasting, Inc. and
Hearst-Argyle Stations, Inc. regarding certain amendments to
the STC Broadcasting, Inc and Sinclair Broadcast Group, Inc.
Asset Purchase Agreement and the STC Broadcasting, Inc. and
Hearst-Argyle Stations, Inc. Asset Exchange Agreement (2)
10.7 First Amendment to Transitional Service Agreement between STC
Broadcasting of Vermont Subsidiary, Inc., Tuscaloosa
Broadcasting Inc., William Evans, Rollins, Telecasting and
WNNE-TV, Inc. dated April 24, 1998 (2)
10.8 First Amendment to Asset Purchase Agreement by and between STC
Broadcasting of Vermont, Inc. and certain subsidiaries of
Sinclair Broadcast Group, Inc. dated April 20, 1998 (2)
10.9 Second Amendment to Asset Purchase Agreement by and between STC
Broadcasting of Vermont, Inc. and certain subsidiaries of
Sinclair Broadcast Group, Inc. dated April 24, 1998 (2)
10.10 Waiver and Second Amendment dated April 22, 1998 to the
Credit Agreement dated February 28, 1997 by and among STC
Broadcasting, Inc and The Chase Manhattan Bank and
NationsBank of Texas, N.A. (2)
10.11 Credit Agreement between STC Broadcasting of Vermont Subsidiary,
Inc. as borrower and Hearst-Argyle Stations, Inc. as lenders
dated April 24, 1998 (2)
10.12 Agreement dated July 3, 1998 between the Company and the
International Brotherhood of Electrical Workers, AFL-CIO
Local No. 1266 representing certain employees of WDTN-TV,
Dayton, Ohio. (3)
10.13 Amended and Restated Credit Agreement dated as of July 2,
1998 among Sunrise Television Corp., STC Broadcasting, Inc.,
as borrowers and the Chase Manhattan Bank, Salomon Brothers
Holding Company, Inc., and NationsBank, N.A. as lenders and
agents (3)
10.14 First Amendment and Assignment and Acceptance dated to the
Amended and Restated Credit Agreement dated July 2, 1998
(item 10.13) dated as of July 27, 1998 among Sunrise
Television Corp., STC Broadcasting, Inc., various lenders as
listed on the signature pages, Chase Manhattan Bank, Salomon
Brothers Holding Company, Inc., and NationsBank, N.A. (3)
10.15 Primary Television Affiliation Agreement dated June 5, 1998
between STC Broadcasting, Inc., WDTN-TV and the
American Broadcasting Companies, Inc. (3)
10.16 Memorandum, Opinion and Order of the Federal Communications
Commission dated July 1, 1998, related to the Hearst
Argyle Stations, Inc. asset swap. (3)
10.17 Letter agreement dated March 2, 1998 between STC
Broadcasting, Inc., WJAC-TV, and NBC Television Network
amending the Affiliation Agreement dated December 16, 1994.
(3)
10.18 Letter agreement dated March 2, 1998 between STC
Broadcasting, Inc., KRBC/KACB and NBC Television Network
amending the Affiliation Agreement dated December 20, 1995.
(3)
10.19 Letter agreement dated March 2, 1998 between STC
Broadcasting, Inc., WEYI and NBC Television amending the
Affiliation Agreement dated July 10, 1995. (3)
10.20 First Amendment to Asset Exchange Agreement dated April 24,
1998 amending the Asset Exchange Agreement dated as
of February 18, 1998 (item 2.2) (3)
23
<PAGE> 25
10.21 Letter Agreement dated April 24, 1998 between STC Broadcasting,
Inc. and Hearst-Argyle Stations, Inc. consenting to amendments
to Asset Purchase Agreement and Asset Exchange Agreements. (3)
10.22 Joint Exchange Agreement dated July 3, 1998 by and among STC
Broadcasting, Inc., STC Broadcasting of Vermont, Inc., STC
License Company, STC Broadcasting of Vermont Subsidiary,
Inc., Smith Acquisition Company, Smith Acquisition License
Company, Hearst-Argyle Stations, Inc., and Chicago Deferred
Exchange Corporation. (3)
10.23 Closing Letter Agreement Dated July 2, 1998, between
Hearst-Argyle Stations, Inc., and STC Broadcasting, Inc.,
regarding certain matters in connection with the Closing
under the Asset Exchange Agreement. (3)
21.1 Subsidiaries of STC Broadcasting, Inc. (2)
27.1 Financial Data Schedule (3)
(1) Incorporated by reference to the Form 10-K of STC Broadcasting, Inc.
for the period March 1, 1997 to December 31, 1997.
(2) Incorporated by reference to the Form 10-Q of STC Broadcasting, Inc.
for the period January 1, 1998 to March 31, 1998.
(3) Filed Herewith
(b) Reports on Form 8-K
On July 17, 1998, the Company filed an 8-K relating to the
consummation of the Hearst asset swap. The required proforma and
audited financial statements would be filed within 60 days.
24
<PAGE> 26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STC Broadcasting, Inc.
Registrant
Date: August 11, 1998 By: /s/ David A. Fitz
------------------------
David A. Fitz
Senior Vice-President/
Chief Financial Officer
25
<PAGE> 1
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ELCOM OF OHIO, INC.
AND
STC BROADCASTING, INC.
DATED AS OF
JULY 24, 1998
i
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND REFERENCES..........................................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; ADJUSTMENTS; ASSUMPTION OF LIABILITY...................7
2.1 Purchase of Assets...............................................................................7
2.2 Excluded Assets..................................................................................9
2.3 Escrow Deposit..................................................................................10
2.4 Purchase Price..................................................................................10
2.5 Payment of Purchase Price.......................................................................12
2.6 Assumption of Liabilities and Obligations.......................................................12
ARTICLE 3 REPRESENTATIONS AND WARRANTIES BY SELLER...........................................................12
3.1 Organization and Standing.......................................................................12
3.2 Authorization...................................................................................13
3.3 Compliance with Laws............................................................................13
3.4 Required Consents; No Conflicts.................................................................13
3.5 Financial Statements............................................................................14
3.6 Absence of Certain Changes or Events............................................................14
3.7 Absence of Litigation...........................................................................15
3.8 Ownership and Condition of Elcom Assets.........................................................15
3.9 FCC Matters.....................................................................................17
3.10 Intellectual Property..........................................................................18
3.11 Reports and Records............................................................................18
3.12 Material Contracts.............................................................................18
3.13 Taxes..........................................................................................20
3.14 Employee Benefit Plans.........................................................................20
3.15 Labor Relations................................................................................21
3.16 Environmental Matters..........................................................................22
3.17 Insurance......................................................................................23
3.18 Cable Systems..................................................................................23
3.19 Necessary Assets...............................................................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES BY BUYER............................................................24
4.1 Organization and Standing.......................................................................24
4.2 Authorization...................................................................................24
4.3 Compliance with Laws............................................................................24
4.4 Qualification of Buyer..........................................................................24
4.5 Absence of Litigation...........................................................................25
4.6 No Other Representation.........................................................................25
4.7 Bankruptcy......................................................................................25
4.8 Required Consents; No Conflicts.................................................................25
4.9 Financing.......................................................................................26
ARTICLE 5 PRE-CLOSING FILINGS AND UNDERTAKINGS...............................................................26
5.1 Applications for FCC Consent....................................................................26
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.2 Hart-Scott-Rodino...............................................................................26
5.3 Sharing Information.............................................................................26
ARTICLE 6 COVENANTS AND AGREEMENTS OF SELLER.................................................................27
6.1 Negative Covenants..............................................................................27
6.2 Affirmative Covenants...........................................................................28
6.3 Confidentiality.................................................................................31
ARTICLE 7 COVENANTS AND AGREEMENTS OF BUYER..................................................................32
7.1 Confidentiality.................................................................................32
7.2 Actions.........................................................................................32
7.3 Access..........................................................................................32
7.4 Notice of Certain Events........................................................................33
7.5 Compliance with Laws............................................................................33
7.6 Use of Name and Logo............................................................................33
ARTICLE 8 MUTUAL COVENANTS AND UNDERSTANDINGS OF SELLER AND BUYER............................................33
8.1 Possession and Control..........................................................................33
8.2 Risk of Loss....................................................................................33
8.3 Public Announcements............................................................................34
8.4 Employee Matters................................................................................34
8.5 Collection of Accounts Receivable...............................................................35
8.6 Preservation of Books and Records...............................................................36
ARTICLE 9 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE................................................36
9.1 Representations and Covenants...................................................................36
9.2 Consents........................................................................................37
9.3 Delivery of Documents...........................................................................37
9.4 FCC Order.......................................................................................37
9.5 Legal Proceedings...............................................................................37
9.6 Hart-Scott-Rodino...............................................................................37
9.7 Title Insurance; Survey.........................................................................38
9.8 Tower Lease.....................................................................................38
9.9 Material Adverse Effect.........................................................................38
ARTICLE 10 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE..............................................38
10.1 Representations and Covenants..................................................................38
10.2 Delivery by Buyer..............................................................................38
10.3 FCC Order......................................................................................38
10.4 Legal Proceedings..............................................................................39
10.5 Hart-Scott-Rodino..............................................................................39
ARTICLE 11 THE CLOSING.......................................................................................39
11.1 Closing........................................................................................39
11.2 Delivery by Seller.............................................................................39
11.3 Delivery by Buyer..............................................................................41
ARTICLE 12 SURVIVAL; INDEMNIFICATION.........................................................................42
12.1 Survival of Representations, Warranties and Covenants..........................................42
</TABLE>
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<TABLE>
<S> <C> <C>
12.2 Indemnification................................................................................43
ARTICLE 13 TERMINATION.......................................................................................45
13.1 Termination....................................................................................45
13.2 Effect of Termination..........................................................................45
ARTICLE 14 REMEDIES..........................................................................................46
14.1 Default by Seller..............................................................................46
14.2 Default by Buyer; Liquidated Damages...........................................................46
14.3 Remedies Not Exclusive.........................................................................46
14.4 Specific Performance...........................................................................46
14.5 Other Termination..............................................................................47
ARTICLE 15 GENERAL PROVISIONS................................................................................47
15.1 Further Assurances.............................................................................47
15.2 Brokers........................................................................................47
15.3 Expenses.......................................................................................47
15.4 Mail...........................................................................................48
15.5 Notices........................................................................................48
15.6 Waiver.........................................................................................49
15.7 Benefit and Assignment.........................................................................50
15.8 Entire Agreement; Amendment....................................................................50
15.9 Severability...................................................................................50
15.10 Headings......................................................................................51
15.11 Governing Law.................................................................................51
15.12 Signature in Counterparts.....................................................................51
</TABLE>
iv
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EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Bill of Sale and Assignment and Assumption Agreement
Exhibit B Form of Assignment of FCC License
Exhibit C Form of Raycom Joinder Agreement
Exhibit D Longley-Rice Coverage Pattern
</TABLE>
v
<PAGE> 6
INDEX OF SCHEDULES
<TABLE>
<S> <C>
2.1(a) FCC Licenses
2.1(b) Real Property
2.1(c) Tangible Personal Property
2.1(d) Intellectual Property
2.1(e) Contracts
2.1(f) Vehicles
2.1(j) Certain Securities
2.4(b) Deposits, Reserves, Prepaid and Deferred Items
3.1(a) Organization and Standing
3.4(a) Consents
3.4(b) No Conflicts
3.5 Financial Statements
3.6 Absence of Certain Changes or Events
3.7 Litigation
3.9(a) FCC Matters
3.12(b) Material Contracts (enforceability exceptions)
3.12(c) Affiliated Transactions
3.13(b) Taxes
3.14(a) Employee Benefit Plans
3.15 Labor Relations
3.16(d) Environmental Matters
3.16(e) Underground Storage Tanks, PCBs and Asbestos
3.17 Insurance
6.1(d) Employee Matters
9.2(b) Required Program Contract Consents
9.8 Tower Lease Terms
</TABLE>
vi
<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
July 24, 1998, by and between ELCOM OF OHIO, INC., a Delaware corporation (the
"Seller"), and STC BROADCASTING, INC., a Delaware corporation (the "Buyer").
RECITALS
A. Seller owns and operates WUPW-TV, Channel 36, a television station
in Toledo, Ohio (the "Station").
B. Seller desires to sell, and Buyer desires to purchase, all of the
assets used or useful in connection with the operation of the Station, all in
accordance with and subject to the terms and conditions set forth below.
C. Unless otherwise specifically provided herein, all references to
schedules set forth in this Agreement refer to the numbered sections contained
in a separate document of even date herewith (the "Disclosure Schedules")
delivered by the Seller to the Buyer which schedules and information set forth
therein are incorporated by reference 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
Unless the context otherwise specifies or requires, capitalized terms
used herein without definition shall have the respective meanings assigned
thereto as follows (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.
"ACCOUNTS PAYABLE" means all accounts payable of Seller billed to
Seller by third party vendors in the Ordinary Course of Business as of the
Effective Time.
"ACCOUNTS RECEIVABLE" means all accounts receivable of Seller (other
than accounts receivable in respect of trade, barter or similar arrangements
for the sale of advertising time) accrued in accordance with GAAP in the
Ordinary Course of Business as of the Effective Time.
"ADDITIONAL AGREEMENTS" means any and all Contracts, agreements and
leases executed and delivered by Seller between the date hereof and the Closing
Date in accordance with Section 6.1.
"AFFILIATE" means a Person controlling, controlled by or under common
control with another Person specified herein. The term "control" means the
possession, direct or indirect, of
1
<PAGE> 8
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, the holding of
proxies, by contract other than a commercial contract for goods or
non-management services, or otherwise. Control is presumed to exist if any
Person, directly of indirectly, owns, controls, holds with the power to vote,
or holds shareholders, proxies representing 10% or more of the voting
securities of any other Person, or holds or controls sufficient proxies to
elect the majority of the board of directors of any other Person.
"ASSIGNMENT APPLICATIONS" shall have the meaning specified in
Section 5.1.
"ASSIGNMENT OF FCC LICENSES" means an Assignment of FCC Licenses, in
substantially the form attached as Exhibit B hereto, executed by the Seller
pursuant to which, effective as of the Closing Date, Seller shall assign,
transfer and convey to Buyer all of the FCC Licenses of the Station.
"ASSUMED LIABILITIES" shall have the meaning ascribed to it in
Section 2.6.
"BASKET AMOUNT" shall have the meaning specified in Section 12.2(c)(i).
"BENEFIT ARRANGEMENT" means any benefit arrangement, program,
obligation, custom or practice, whether or not legally enforceable, providing
for benefits including bonuses, incentive compensation, vacation pay, severance
pay, insurance, restricted stock, stock options, employee discounts, company
cars, tuition reimbursement or any other perquisite or benefit which is not a
Scheduled Employment Contract (including, without limitation, any fringe
benefit under Section 132 of the Code) to employees, officers or independent
contractors that is not a Plan.
"BILL OF SALE" means a Bill of Sale and Assignment and Assumption
Agreement, dated as of the Closing Date and executed by the Buyer and the
Seller, substantially in the form attached hereto as Exhibit A, pursuant to
which, effective as of the Closing Date, (i) Seller shall assign, transfer and
convey to Buyer the Elcom Assets, except for the FCC Licenses of the Station,
and (ii) Buyer shall assume the Assumed Liabilities, insofar as such Assumed
Liabilities relate to the period and events occurring after the Effective Time.
"BUSINESS DAY" means a day other than a Saturday or a Sunday on which
banks in Ohio are not authorized or required by law or executive order to
close.
"BUYER DOCUMENTS" means, collectively, this Agreement, the Escrow
Agreement, the Bill of Sale and any other agreement to be executed and
delivered by the Buyer hereunder, or as otherwise contemplated herein.
"BUYER INDEMNIFIED PARTIES" shall have the meaning specified in
Section 12.2(a).
"CLOSING" means the closing of the purchase, assignment and sale of
the Elcom Assets.
"CLOSING DATE" means the time and date on which the Closing takes
place, as established by Section 11.1.
2
<PAGE> 9
"CODE" means the Internal Revenue Code of 1986, as amended, and all
Laws promulgated pursuant thereto.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as amended,
and the rules and regulations of the FCC promulgated pursuant thereto.
"CONSENTS" means those consents, permits, or approvals of third
parties, including any Governmental Authority, which are necessary to transfer
the Elcom Assets to Buyer or otherwise to consummate the transactions
contemplated hereby.
"CONTRACTS" shall have the meaning set forth in Section 2.1(e).
"CURRENT BALANCE SHEET DATE" shall have the meaning specified in
Section 3.5.
"DESIGNATED EMPLOYEE" shall have the meaning specified in
Section 8.4(a).
"DIRECT CLAIM" shall have the meaning specified in Section 12.2(d)(v).
"DIRECT CLAIM NOTICE" shall have the meaning specified in
Section 12.2(d)(v).
"EFFECTIVE TIME" means 12:01 a.m., Ohio time on the Closing Date.
"ELCOM ASSETS" shall have the meaning specified in Section 2.1.
"ELCOM EMPLOYEE BENEFIT PLANS" shall have the meaning specified in
Section 3.14.
"ENCUMBRANCES" means any mortgages, pledges, liens, claims, security
interests, agreements, restrictions, defects in title, easements, rights-of-way
or encumbrances and other matters affecting title.
"ENVIRONMENTAL LAWS" means 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. ss. 9601 et
seq.; the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 et seq.;
the Clean Water Act ("CWA"), 33 U.S.C. ss. 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. ss. 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. ss.
7401 et seq.; or any other applicable federal, state, or local laws relating to
the protection of the environment from Hazardous Materials, including any
plans, rules, regulations, orders, or ordinances adopted, pursuant to the
preceding laws or other similar laws, regulations, rules, orders, or ordinances
now or hereafter in effect relating to Hazardous Materials generation,
production, use, storage, treatment, transportation or disposal.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all Laws promulgated pursuant thereto.
"ESCROW AGENT" means United Bank or its successors, as escrow agent
under the Escrow Agreement.
3
<PAGE> 10
"ESCROW AGREEMENT" means the Deposit Escrow Agreement of even date
herewith among Buyer, Seller, and the Escrow Agent pursuant to the terms of
which the Escrow Deposit will be held and disbursed.
"ESCROW DEPOSIT" means the amount set forth in Section 2.3, which
amount shall be held and disbursed pursuant to the terms of the Escrow
Agreement.
"EXCLUDED ASSETS" shall have the meaning specified in Section 2.2.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FCC LICENSES" shall have the meaning specified in Section 2.1(a).
"FCC ORDER" means an order or orders 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 Station without any conditions
adverse to the Buyer.
"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 and the time for seeking further relief with
respect thereto shall have expired without any request for such further relief
having been filed.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"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.
"HART-SCOTT-RODINO" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and all Laws promulgated pursuant thereto.
"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 as hazardous, toxic,
pollutants or contaminants under any Environmental Law, including without
limitation, substances defined as "hazardous wastes," "hazardous substances,"
"toxic substances," "radioactive materials," or other similar designations in,
or otherwise subject to regulation under, any Environmental Laws. "Hazardous
Materials" includes, without limitation, polychlorinated biphenyls (PCBs),
asbestos, lead-based paints and petroleum and petroleum products.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the respective
meanings specified in Section 12.2(c)(i).
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"INDEPENDENT ACCOUNTING FIRM" means any "Big Six" accounting firm or
its successor, except the respective independent public accountants of Seller,
Buyer and their respective Affiliates.
"INTELLECTUAL PROPERTY" shall have the meaning specified in
Section 2.1(d).
"IRS" means the Internal Revenue Service.
"LAWS" means any statute, law, code, ordinance, regulation, rule,
resolution, order, determination, writ, injunction, award (including, without
limitation, any award of any arbitrator), judgments and decrees applicable to
the specified persons or entities and to the businesses and assets thereof
(including, without limitation, Laws relating to the sale, leasing, ownership
or management of real property; employment practices, terms and conditions, and
wages and hours; building standards, land use and zoning; safety, health and
fire prevention; and environmental protection, including Environmental Laws).
"LIABILITIES" means, as to any Person, all debts, adverse claims,
liabilities and obligations, direct, indirect, absolute or contingent of such
Person, whether accrued, vested or otherwise, whether in contract, tort, strict
liability or otherwise and whether or not actually reflected, or required by
GAAP 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 (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 to, interest, penalties and reasonable attorneys'
fees and disbursements.
"MARKET CABLE SYSTEM" shall mean all U.S. cable systems located within
any particular station's market, as defined in Section 76.55 of the FCC
regulations.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, property, condition (financial or otherwise) of the Elcom
Assets (other than the Excluded Assets), the Seller or the Station, taken as a
whole.
"MATERIAL CONTRACTS" shall have the meaning specified in
Section 3.12(a).
"MULTIEMPLOYER PLAN" means any Plan described in Section 3(37)
of ERISA.
"NON-TRANSFERRED EMPLOYEE" shall have the meaning specified in
Section 8.4(a).
"ORDINARY COURSE OF BUSINESS" means, with respect to Seller, the
ordinary course of business, consistent with past practices, of Seller or the
Station.
"PERMITTED ENCUMBRANCES" means (a) easements that do not materially
adversely affect the full use and enjoyment of any Real Property for the
purposes for which such Real Property is currently used or detract from the
value of such Real Property in any material respect; (b) liens
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for taxes not yet due and payable; and (c) liens of Seller's lenders, all of
which shall be removed at the Closing.
"PERSON" means an individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory authority or
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.
"PROGRAM CONTRACT" shall have the meaning set forth in
Section 3.12(a)(vii).
"PURCHASE PRICE" means the purchase price for the Elcom Assets,
payable by Buyer as specified in Section 2.4.
"RAYCOM JOINDER AGREEMENT" means a Joinder Agreement, dated as of the
Closing Date and executed by Raycom Media, Inc., substantially in the form
attached hereto as Exhibit C, pursuant to which Raycom shall agree to the
prompt and complete payment and performance of the obligations of Seller under
this Agreement.
"REAL PROPERTY" shall have the meaning set forth in Section 2.1(b).
"SELLER DOCUMENTS" means, collectively, this Agreement, the Escrow
Agreement, the Bill of Sale, the Assignment of FCC Licenses and any other
agreements to be executed and delivered by Seller hereunder or as otherwise
contemplated herein.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 12.2(b).
"SELLER'S KNOWLEDGE" (or "Knowledge of Seller") means the actual
knowledge of the executive officers, general manager, business manager and
chief engineer of Seller and/or the Station.
"STATION" shall have the meaning set forth in the recitals.
"SURVEY" means a survey for the parcel or parcels of Real Property
described in Schedule 2.1(b), prepared in accordance with the Minimum Standard
Detail Requirements for ALTA/ASCM Land Title Surveys (as jointly established
and adopted in 1997 by the American Land Title Association and American
Congress on Survey and Mapping) by a registered land surveyor licensed in the
state where such Real Property is located (the "Surveyor"), certified by the
Surveyor to Buyer and Buyer's lender, and showing (a) the location of all lot
and street lines, (b) the location of encroachments, overhangs or projections
by buildings or improvements erected on adjacent lands or on such Real
Property, (c) adequate means of ingress and egress to public roads, (d) the
location of all utility and other easements, rights of way, set-back lines and
other matters of record affecting such real property; (e) a description and the
location of all existing improvements (including parking areas), and (f) such
other facts and information as Buyer or Buyer's lender may require.
"TALENT CONTRACTS" shall have the meaning set forth in Section 6.1(d).
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"TAX RETURNS" means all federal, state, local, foreign and other
applicable Tax returns and declarations of estimated Tax reports required to be
filed by Seller.
"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, and any interest, penalties or additions to tax
imposed thereon or in connection therewith.
"TITLE INSURANCE COMMITMENT" means an irrevocable title insurance
commitment issued by a title insurance company acceptable to Buyer with respect
to the Real Property described in Schedule 2.1(b) for (a) a prepaid owner's
policy of title insurance (on ALTA 1992 Owner's Form), showing fee simple or,
to the extent insurable, leasehold title to the Real Property owned or leased
by Seller described in Schedule 2.1(b) in Buyer, and (b) a prepaid
full-coverage mortgagee policy of title insurance (on the ALTA 1992 Lender's
Form), naming Buyer's lender as the insured party, with no exception as to
survey matters, insuring that the mortgage of Buyer's lender constitutes a
valid and recorded first lien on a good and marketable fee simple or, to the
extent insurable, leasehold interest in the Real Property owned or leased by
Seller described in Schedule 2.1(b), and providing full protection against
filed and unfiled mechanics' and materialmen's liens.
"TRADE-OUT AGREEMENT" shall have the meaning specified in
Section 3.12(a)(vii).
"TRANSFER TAXES" shall have the meaning specified in Section 15.3.
"WELFARE PLAN" means an "employee welfare benefit plan" as such term
is defined in Section 3(1) of ERISA.
ARTICLE 2
SALE AND PURCHASE OF ASSETS; PURCHASE PRICE;
ADJUSTMENTS; ASSUMPTION OF LIABILITY
2.1 PURCHASE OF ASSETS.
Subject to the terms and conditions set forth in this
Agreement Seller agrees to sell, assign, transfer, convey, and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase from Seller, the Station and
all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, owned, leased, used or otherwise held by Seller and
used or useful in the business and operations of the Station, wherever located
(other than the Excluded Assets specified in Section 2.2), free and clear of
any Encumbrances except for Permitted Encumbrances (collectively, the "Elcom
Assets"). The Elcom Assets shall include, without limitation, all of Seller's
right, title and interest in, to and under the following:
2.1(a) FCC Licenses. All licenses, permits and other
authorizations issued by the FCC to Seller for the operation of the Station
(the "FCC Licenses"), including without
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limitation those listed and described in Schedule 2.1(a), and all applications
therefor, together with any renewals, extensions or modifications thereof and
additions thereto;
2.1(b) Real Property. All interests in real property used or
useful in the operation and business of the Station, including, but not limited
to, all realty, towers, antennae, easements, rights of access, rights of way,
leasehold interests in real estate, and all buildings, improvements and
fixtures thereon and appurtenances thereto, and other interests of every kind
and nature in real property owned by the Seller, including any undivided
interest in any of the foregoing, whether owned or leased by or to Seller
("Real Property"), including, but not limited to those interests listed or
described in Schedule 2.1(b);
2.1(c) Tangible Personal Property. All of the furniture,
fixtures, furnishings, machinery, computers, equipment (mobile or otherwise),
inventory, spare parts, supplies, antenna installations, towers, translators,
earth stations, and other auxiliary facilities and all applications therefor,
all office materials and other tangible property of every kind and description
owned, leased or used by Seller, 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 but not limited to the property listed or described in
Schedule 2.1(c);
2.1(d) Intellectual Property. All of Seller's rights in and
to the service marks, copyrights (including copyrights in Seller's web page, to
the extent owned by Seller), franchises, software, licenses (other than the FCC
Licenses), trademarks, trade names, call letters, jingles, slogans, logotypes,
domain name and other intellectual property maintained, owned, leased, used, or
held for use by Seller (including any and all common law rights, applications,
registrations, extensions and renewals relating thereto) (the "Intellectual
Property"), and all goodwill, rights, benefits and privileges associated
therewith including but not limited to the Intellectual Property listed or
described in Schedule 2.1(d);
2.1(e) Contracts. All contracts, commitments, plans,
agreements, leases, arrangements, undertakings and licenses to which Seller is
a party or by which Seller is bound, including, without limitation, the
Additional Agreements and the Material Contracts listed or described in
Schedule 2.1(e) (collectively, the "Contracts");
2.1(f) Vehicles. All automotive equipment and motor vehicles,
owned, leased, or otherwise used by Seller, including, without limitation,
those set forth and described in Schedule 2.1(f);
2.1(g) Files and Records. All engineering, business and other
books, customer lists, papers, logs, files and records pertaining to the Elcom
Assets or the business and operations of the Station, excluding the corporate
records of Seller, copies of all of which will be provided to the Buyer;
2.1(h) Third-Party Claims. Except for claims relating to
Taxes or to Excluded Assets, all rights and claims of Seller whether mature,
contingent or otherwise, against third parties whether in tort, contract, or
otherwise, including, without limitation, causes of action,
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unliquidated rights and claims under or pursuant to all warranties,
representations and guarantees made by manufacturers, suppliers or vendors;
2.1(i) 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, and all pending applications therefor;
2.1(j) Certain Securities. All stock, partnership interests,
joint venture interests and other interests in any entity (other than Seller)
which owns or leases any broadcast tower, antenna, transmitter site or other
Elcom Asset used in the operation of the Station including, but not limited to,
those listed in Schedule 2.1(j);
2.1(k) Goodwill. The business of the Station as a "going
concern", customer relationships and goodwill;
2.1(l) Deposits. All deposits, reserves and prepaid
expenses of the Station; and
2.1(m) Other Elcom Assets. Without duplication, all other
assets of the Seller used or held for use in the business and operations of the
Station, including, but not limited to, inventory.
2.2 EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement,
the assets described below shall be excluded from the Elcom Assets (such
excluded assets, the "Excluded Assets").
2.2(a) Third Party Claims. All rights and claims of
Seller, including any Affiliate thereof, against third parties relating to
Taxes and to property or equipment repaired, replaced or restored by Seller
prior to the Closing;
2.2(b) Insurance. All contracts of insurance and any life
insurance plans and the assets thereof, including without limitation, prepaid
insurance expenses; and all insurance proceeds or claims of Seller relating to
property or equipment repaired, replaced or restored by Seller prior to the
Closing;
2.2(c) Employee Plans and Plan Assets. All Elcom Employee
Benefit Plans, including, without limitation, the assets thereof and any
prepaid expenses related thereto;
2.2(d) Certain Books and Records. All books, records and
documents that Seller is required by law to retain, as well as all books,
records and documents relating to any Excluded Assets or to Seller's
organization or other internal matters, and all tax records;
2.2(e) Excluded Contracts. All Contracts that have
terminated or expired prior to the Closing as permitted by this Agreement;
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2.2(f) Cash. Except as provided in Section 6.1(a)(ii), all
cash and cash equivalents held by Seller, bank balances and rights in and to
bank accounts, marketable securities, prepaid expenses, any and all bonds,
letters of credit or other similar items of Seller;
2.2(g) Accounts Receivable. All Accounts Receivable;
2.2(h) Name. All rights in and to the name "Elcom";
2.2(i) Representation Agreement. That certain Master
Agreement, dated September 15, 1997, by and between Telerep, Incorporated and
Raycom Media, Inc.; and
2.2(j) News Service Agreements. The following news service
agreements: (i) that certain Program License Agreement dated February 2, 1996
by and between Elcom of South Carolina, Inc. and Cosmos Broadcasting
Corporation (the "Program License Agreement"), and (ii) that certain CNN
Program Order, dated September 18, 1997,.by and between the Station and CNN
Newsource Sales, Inc.
2.3 ESCROW DEPOSIT.
Simultaneously with the execution and delivery of this
Agreement, Buyer has delivered to Escrow Agent an original, irrevocable letter
of credit (the "Letter of Credit") issued for the benefit of the Seller by The
Chase Manhattan Bank for an amount equal to FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) (the "Escrow Deposit"), such Letter of Credit to be held in
accordance with the terms and conditions of the Escrow Agreement. Buyer and
Seller shall cause the Letter of Credit to be returned to Buyer on the Closing
Date.
2.4 PURCHASE PRICE.
2.4(a) Purchase Price. The Purchase Price for the Elcom
Assets shall be Seventy-Two Million Six Hundred Thirty Thousand and No/100
Dollars ($72,630,000), adjusted as provided in Section 2.4(b) below
(collectively, the "Purchase Price"). The Purchase Price shall be payable as
described in Section 2.5.
2.4(b) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of the revenues and expenses
of the Station. All revenues and all expenses arising from the operation of the
Station, excluding (i) federal, state or local income taxes payable, deferred
income taxes and any taxes arising from the transfer of the Elcom Assets under
this Agreement, (ii) intercompany receivables and payables and (iii) accrued
sick leave, vacation and personal days, but including (i) business and
non-governmental license fees, (ii) annual regulatory fees imposed by the FCC,
(iii) utility charges, (iv) property and equipment rentals, (v) real and
personal property taxes and assessments levied against the Elcom Assets, (vi)
rents, paid or collected by Seller with respect to Real Property leased by or
to Seller, (vii) applicable copyright or other fees (including any fees of
ASCAP or BMI), (viii) sales and service charges, (ix) programming fees and
expenses, (x) employee wages, salaries and commissions, and (xi) the deposits,
reserves and prepaid and deferred items listed on Schedule 2.4(b), shall be
prorated between Buyer and Seller in accordance with GAAP and Seller shall be
entitled to all revenues and shall be responsible for all expenses, costs, and
Liabilities allocable to the period
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prior to the Closing Date and Buyer shall be entitled to all revenues and shall
be responsible for all expenses, costs, and Liabilities allocable to the period
on and after the Closing Date. Notwithstanding the preceding sentence, there
shall be no adjustment for, and Seller shall remain solely liable with respect
to, any obligation or liability not being assumed by Buyer in accordance with
Section 2.6.
2.4(c) Manner of Determining Adjustments.
(i) Any adjustments will, insofar as
feasible, be determined and paid on the Closing Date, with final settlement and
payment by the appropriate party occurring within the time frame described in
this Section 2.4(c). Seller shall prepare and deliver to Buyer not later than
five (5) Business Days before the Closing Date a preliminary settlement
statement which shall set forth Seller's good faith estimate of the prorations
under Section 2.4(b). The preliminary settlement statement shall contain all
information reasonably necessary to determine the prorations under Section
2.4(b), including appropriate supporting documentation and such other
information as may be reasonably requested by Buyer, to the extent such
prorations can be determined or estimated as of the date of the preliminary
settlement statement and shall be certified by an officer (but without personal
liability of such officer) on behalf of Seller to be true and complete to
Seller's knowledge.
(ii) Not later than ninety (90) days after the
Closing Date, Buyer shall deliver to Seller a statement setting forth Buyer's
determination of any changes to the prorations made at the Closing. Buyer's
statement (A) shall contain all information reasonably necessary to determine
the prorations to the Purchase Price under Section 2.4(b), including
appropriate supporting documentation, and such other information as may be
reasonably requested by Seller, and (B) shall be certified by an officer (but
without personal liability to such officer) on behalf of Buyer to be true and
complete to Buyer's knowledge. Seller (and its authorized representatives)
shall have the right to visit the Station during normal business hours to
verify and review such documentation upon providing reasonable notice to Buyer
(such access not to unreasonably interfere with the business or operation of
the Station). If Seller disputes the prorations determined by Buyer, Seller
shall deliver to Buyer within thirty (30) days after Seller's receipt of
Buyer's statement a statement setting forth Seller's determination of such
prorations. If Seller notifies Buyer of its acceptance of Buyer's statement, or
if Seller fails to deliver its statement within the thirty (30) day period
specified in the preceding sentence, Buyer's determination of such adjustments
and prorations shall be conclusive and binding on the parties as of the last
day of such thirty (30) day period.
(iii) Buyer and Seller shall use good faith
efforts to resolve any dispute involving the determination of the prorations in
connection with the Closing. If the parties are unable to resolve any dispute
within fifteen (15) days following the delivery to Buyer of the statement
described in the penultimate sentence of Section 2.4(c)(ii), Buyer and Seller
shall jointly designate a nationally recognized firm of independent certified
public accountants (the "Independent Accounting Firm") to resolve such dispute.
If the parties are unable to agree on the designation of the Independent
Accounting Firm, then a nationally recognized accounting firm will be selected
by lot from two names submitted by Seller and two names submitted by Buyer,
none of which shall be employed by Seller or Buyer or any of their respective
Affiliates. The Independent Accounting Firm's resolution of the dispute shall
be made within sixty (60)
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days of their selection, shall be based on presentations by Seller and Buyer
and not by independent financial audit and shall be final and binding on the
parties. The Independent Accounting Firm's resolution of the dispute may be
enforced by any court of competent jurisdiction. Fees of the Independent
Accounting Firm shall be split equally between the parties.
2.5 PAYMENT OF PURCHASE PRICE.
Buyer shall deliver the Purchase Price, as adjusted under
Section 2.4(b), by wire transfer of same day funds pursuant to wire
instructions delivered by Seller to Buyer at least two (2) days prior to the
Closing Date.
2.6 ASSUMPTION OF LIABILITIES AND OBLIGATIONS.
As of the Closing Date, Buyer shall assume and undertake to
pay, discharge, and perform all Liabilities of Seller to be assumed, observed
and performed by Seller from and after the Closing Date (collectively, the
"Assumed Liabilities") (a) under the FCC Licenses and the Contracts insofar as
such Liabilities arise on and after the Closing Date and relate to the period
on or after the Closing Date, (b) with respect to which an adjustment to the
Purchase Price is made in favor of Buyer pursuant to Section 2.4(b), and (c) to
any employee of Seller who is hired by Buyer insofar as such Liabilities arise
on and after the Closing Date and relate to the period on or after the Closing
Date. Buyer shall not assume any other obligations or liabilities of Seller,
including, without limitation, (i) any Liabilities under any Contract which is
an Excluded Asset, (ii) any Liabilities under the Contracts relating to the
period prior to the Closing Date, (iii) any claims or pending or threatened
litigation or proceedings relating to the operation of the Station prior to the
Closing, (iv) any Liabilities of Seller under any Elcom Employee Benefit Plans
and (v) any Liabilities of Seller for any accrued vacation pay for any
employees of the Station (except to the extent provided for in Section 8.4(b)
hereof). Except as expressly set forth in this Section 2.6, Buyer does not
assume any Liabilities of the Seller or the Station and Seller shall defend,
indemnify and hold Buyer harmless from and against any and all Liabilities of
the Seller and the Station other than those expressly assumed herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES BY SELLER
The Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND STANDING.
Seller is a corporation duly formed, validly existing and in
good standing under the laws of Delaware and has all requisite power and
authority to own and lease, as applicable, the Elcom Assets and to carry on its
business as now being conducted. Seller has all requisite power and authority
to execute and deliver the Seller Documents to which it is a party and to
consummate the transactions contemplated hereby and thereby. Neither the nature
of the business of the Station nor the character of the properties owned,
leased or otherwise held and operated by Seller for use in the Station's
business makes any qualification necessary in any
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other state, country, territory or jurisdiction other than as set forth in
Schedule 3.1(a). Seller, to the extent required by law, is qualified to do
business and is in good standing in each such jurisdiction. Seller has
delivered to Buyer copies of (i) its Certificate of Incorporation and (ii) its
Bylaws, and each amendment to any of the foregoing documents, and such copies
are complete and correct, and no amendments have been made thereto or have been
authorized since the date of the last amendment thereto. Seller does not own
any capital stock of or other equity interest in any corporation, partnership,
limited liability company or other entity, except as set forth in Schedule
3.1(a).
3.2 AUTHORIZATION.
The execution, delivery and performance by the Seller of this
Agreement and the other Seller Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary actions of Seller and its stockholder
and boards of directors (none of which actions has been modified or rescinded
and all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery of each other Seller Document will
constitute, valid and binding agreements and obligations of the Seller,
enforceable in accordance with their respective terms.
3.3 COMPLIANCE WITH LAWS.
Seller has complied and is in compliance in all material
respects with all Laws and regulations applicable to Seller, to the Elcom
Assets and/or the Station and the ownership, leasing or operation (as
applicable) of the Elcom Assets. Seller has obtained and holds all permits,
licenses and approvals (none of which has been 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 in accordance with applicable Law, as
presently conducted, and to own, use and maintain the Elcom Assets, except for
such permits, licenses and approvals the failure of which to obtain or hold
does not or would not constitute a Material Adverse Effect.
3.4 REQUIRED CONSENTS; NO CONFLICTS.
3.4(a) Except as set forth in Schedule 3.4(a) or in
connection with the filings referred to in Section 5.1 and Section 5.2, the
execution, delivery and performance by the Seller of the Seller Documents will
not require the Consent, approval, authorization or permit of, or filing with,
or notification to any Governmental Authority, except (i) as have been obtained
or will be obtained or have occurred prior to the Closing, (ii) certain of the
Material Contracts may be assigned only with the Consent of third parties as
set forth in Schedule 3.4(a), and (iii) those the absence of which will not be
reasonably expected to have a Material Adverse Effect.
3.4(b) Except as set forth in Schedule 3.4(b), the execution
and delivery of the Seller Documents, the fulfillment of and the compliance
with the respective terms and provisions of each, and the consummation of the
transactions described in each, do not and will not (i) conflict, in any
material respects, with or violate any Law, regulation, order, award, judgment,
injunction or decree applicable to or affecting Seller, the Station or the
Elcom Assets, (ii) conflict, in any material respects, with or result in any
material breach of or constitute a
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default (or an event which with notice or lapse of time or both would become a
default) under any Contract to which Seller is a party or by which Seller is
bound or to which any of the Elcom Assets or the Station is subject or
affected, or result in the creation of any Encumbrance upon the Elcom Assets,
or (iii) conflict with or violate the organizational documents of Seller.
3.5 FINANCIAL STATEMENTS.
Set forth in Schedule 3.5 are (i) unaudited balance sheets of
Seller as of May 31, 1998, December 31, 1996 and December 31, 1997 (the
"Current Balance Sheet Date"), and (ii) unaudited statements of income for the
five (5) month period ended May 31, 1998 and as of the end of the fiscal years
ending December 31, 1996 and 1997. All of the financial statements referred to
in this Section or furnished to Buyer after the date hereof pursuant to Section
6.2(l): (i) are or will be, as the case may be, in accordance with the books
and records of Seller, (ii) present fairly and accurately in all material
respects the financial condition of Seller as of the respective dates and the
results of operations for the respective periods indicated, (iii) have been
prepared in accordance with GAAP, consistently applied (except that unaudited
financial statements do not contain footnotes and financial statements for
periods of less than a year are subject to year-end adjustments required under
GAAP), and (iv) reflect solely the business and operations of the Station and
of no other asset(s) owned or used by Seller.
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 change in the business,
operations, condition (financial or otherwise) of the Station, the Elcom Assets
(other than Excluded Assets) or Liabilities of Seller which is reasonably
likely to have a Material Adverse Effect. Except as set forth and described in
Schedule 3.6, since the Current Balance Sheet Date, Seller has conducted its
business diligently and substantially in the manner heretofore conducted and
only in the Ordinary Course of Business, and Seller has not (a) incurred an
uninsured loss of, or significant injury to, any of the Elcom Assets (other
than Excluded 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 in excess of One Hundred Thousand Dollars ($100,000)
in the aggregate, which loss or injury has not been replaced or repaired; (b)
incurred, or become subject to, any material obligation or material liability
(absolute or contingent, matured or unmatured, known or unknown), except
Liabilities incurred in the Ordinary Course of Business; (c) discharged or
satisfied any Encumbrance or paid any material obligation or material liability
(absolute or contingent, matured or unmatured, known or unknown), other than
Liabilities shown in the balance sheets furnished pursuant to Section 3.5,
Liabilities incurred since the Current Balance Sheet Date in the Ordinary
Course of Business and repayment of indebtedness from the proceeds of the
transactions contemplated by this Agreement; (d) mortgaged, pledged or
subjected to any Encumbrance any of the Elcom Assets (other than the Excluded
Assets), other than in the Ordinary Course of Business; (e) sold, exchanged,
transferred or otherwise disposed of any of the Elcom Assets (other than the
Excluded Assets) or canceled any debts or claims, other than in the Ordinary
Course of Business; (f) written down the value of any Elcom Assets, except
write-downs (i) in the Ordinary Course of Business, none of which, individually
or in the aggregate, constitutes a Material Adverse Effect, or (ii) as are
required by GAAP; (g) made any material
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increase in compensation or benefits payable to any employee, (h) entered into
any transactions other than in the Ordinary Course of Business; (i) made
capital expenditures, or entered into commitments therefor, materially in
excess of the capital expenditures budgets previously delivered to Buyer; (j)
made any material change in any method of accounting or accounting practice,
except as may be required under GAAP; or (k) entered into any agreement to do
any of the foregoing.
3.7 ABSENCE OF LITIGATION.
Except as set forth and described in Schedule 3.7, there is
no action, suit, investigation, claim, arbitration or litigation or similar
proceeding, nor any order, decree or judgment pending or, to Seller's
Knowledge, threatened against, affecting or involving Seller, the Elcom Assets,
the Station or the business and operations of the Station, or the transactions
provided for in this Agreement or any other Seller Document, at law or in
equity, or before or by any court, arbitrator or Governmental Authority, and
the Station is not operating under or subject to an order, award, judgment,
writ, decree, determination or injunction of any court, arbitrator or
Governmental Authority.
3.8 OWNERSHIP AND CONDITION OF ELCOM ASSETS.
3.8(a) Real Property. Schedule 2.1(b) contains a complete and
accurate description of all the Real Property and Seller's interest therein.
The Real Property listed on Schedule 2.1(b) comprises all real property
interests owned, leased or used by Seller in the conduct of the business and
operations of Seller as now conducted and which is material to the business and
operations of the Station, and Seller (i) is the owner of, and has good and
marketable fee simple title to all fee estates of Seller included in the Real
Property, and (ii) has good and marketable leasehold interests in all Real
Property leased by Seller, in each case free and clear of any Encumbrances,
except for Permitted Encumbrances. All Real Property (including the
improvements thereon) (i) is available for immediate use in the conduct of the
business and operations of Buyer, and (ii) complies in all material respects
with all applicable building or zoning codes and regulations of any
Governmental Authority having jurisdiction. Seller has full legal and practical
access to the Real Property. Except as set forth in Schedule 2.1(b), to
Seller's Knowledge, all buildings, structures and facilities including, without
limitation, the structural elements thereof, the mechanical systems therein
(including, without limitation, all heating, ventilating, air conditioning,
plumbing, electrical, elevator, security, telephone, utility and sprinkler
systems), the roofs thereon and the parking areas relating thereto, which are
included in the Real Property are structurally sound with no material defects
and are in good operating condition and repair, subject to normal routine wear
and maintenance and are usable in the Ordinary Course of Business. To Seller'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 or, to the knowledge of Seller, threatened. To the best of Seller's
Knowledge, all water, sewer, gas, electric, telephone, drainage and other
utility equipment, facilities and services required by law or necessary for the
operation of the Real Property as it is now improved and operated are installed
and connected pursuant to valid permits, are sufficient to service the Real
Property and are in good operating condition except in each case as will not
materially detract
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from the marketability or value of the Real Property in any material respect
and do not impair the operations of the owner thereof in any material respect.
To the best of Seller's Knowledge, the soil condition of the Real Property is
such that it will support all of the improvements thereon for the foreseeable
life of the improvements, without the need for new or unusual subsurface
excavations, fill, footings, caissions, or other installations.
3.8(b) Seller has delivered to Buyer true, correct and
complete copies of all leases pertaining to the Real Property, and, with
respect to such leases:
(i) each is in full force and effect and
each is valid and enforceable on the terms set forth therein and has not been
modified, amended, or altered, in writing or otherwise;
(ii) all obligations of the landlord or lessor
under such leases which have accrued have been performed and, to the knowledge
of Seller, no landlord or lessor is in default under or in arrears in the
payment of any sum or in the performance of any obligation required of it under
any such lease, and no circumstance presently exists which, with notice or the
passage of time, or both, would give rise to a default by the landlord or
lessor under any lease except such as will not materially detract from the
marketability or value of the leased Real Property in any material respect and
will not impair the operations of the lessee thereof in any material respect;
and
(iii) all obligations of the tenant or lessee
under the leases which have accrued have been performed, and Seller is not in
default under or in arrears in the payment of any sum or in the performance of
any obligation required of it under any lease, and no circumstance presently
exists which, with notice or the passage of time, or both, would give rise to a
default by Seller except such as will not materially detract from the
marketability or value of the leased Real Property in any material respect and
will not impair the operations of the lessee thereof in any material respect;
and
3.8(c) To the extent that such documents are in Seller's
possession, Seller has delivered to Buyer true, correct and complete copies of
the following documents with respect to the Real Property: (i) deeds, by which
Seller has received a fee interest in any of the Real Property; (ii) leases, by
which Seller is the lessee or lessor of any of the Real Property; (iii)
instruments, by which Seller holds an interest in any other Real Property; (iv)
title insurance policies or commitments; (v) surveys; and (vi) tower inspection
reports or other instruments or reports relating to the other, including,
without limitation, any Phase I environmental reports or other similar
environmental reports, surveys or assessments (including any and all amendments
and other modifications of such instruments).
3.8(d) Personal Property. Schedule 2.1(c) specifically
identifies as such and contains a complete description of all of Seller's
machinery, equipment and other tangible personal property, including, without
limitation, motor vehicles, used or useful to the business and operation of the
Station (collectively, the "Material Equipment"). Except as specifically
disclosed in Schedule 2.1(c), Seller has good and marketable title to all of
the Material Equipment. None of such Material Equipment is subject to any
Encumbrance or other charge, except as specifically disclosed in Schedule
2.1(c). The Material Equipment constitutes all of the personal
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property necessary for Buyer to continue the business and operations of the
Station as is currently conducted by Seller. Except as otherwise specified in
Schedule 2.1(c), all Material Equipment of Seller is in good repair and working
order (ordinary wear and tear excepted) and has been well maintained in
compliance with good engineering and business practice and is otherwise
sufficient to permit the Station to operate in accordance with all Laws, the
FCC Licenses, the underlying construction permits of the Station, and the rules
and regulations of the FCC.
3.8(e) Leases. Schedule 2.1(f) contains a complete list of
all of Seller's vehicle leases and subleases for the Station and Schedule
2.1(c) contains a list of all leases and subleases pursuant to which Seller
leases personal property for the Station. Except as set forth in Schedules
2.1(c) and 2.1(f), (i) all of Seller's leasehold interests in such leases and
(ii) all of Seller's leasehold interests in the leases pertaining to Real
Property, are valid as to any other party thereto, binding, in full force and
effect and constitute a legal and binding obligation of, and are legally
enforceable against Seller and, to Seller's Knowledge, each other party thereto
and grant the leasehold interests they purport to grant, including any rights
to nondisturbance and peaceful and quiet enjoyment that may be contained
therein, except that such enforcement is subject to any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar Laws affecting the
enforcement of creditors' rights generally and to general principles of equity
(whether or not considered in a court of law or equity), and there are no
existing material defaults by Seller thereunder; and Seller has not received
notice of the occurrence of any event which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a material default thereunder by any party thereto.
3.9 FCC MATTERS.
3.9(a) Seller holds the FCC Licenses listed as held by Seller
on Schedule 2.1(a). Such FCC Licenses constitute all of the licenses, permits
and authorizations from the FCC that are necessary or required for and/or used
in 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(a),
unimpaired by any condition which could have an adverse effect on the business
and operations of the Station. Except as set forth on Schedule 2.1(a), 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 and the proceedings set forth in
Schedule 3.9(a) hereto, no application, complaint, action or proceeding is
pending or, to the best of Seller's Knowledge, threatened that may result in
the (i) denial of an application for renewal, (ii) the revocation,
modification, non-renewal or suspension of any of such FCC Licenses, (iii) the
issuance of a cease-and-desist order, or (iv) the imposition of any
administrative or judicial sanction with respect to the Station.
3.9(b) The Station, its respective physical facilities,
electrical and mechanical systems and transmitting and studio equipment (i) are
being operated in all material respects in compliance with the specifications
of the applicable FCC Licenses, and (ii) are being operated in compliance in
all material respects with all requirements of the Communications Act. Seller
has complied in all material respects with all requirements of the FCC and the
Federal Aviation Administration with respect to the construction and/or
alteration of Seller's antenna structures, and "no hazard" determinations for
each antenna structure have been obtained. The broadcast
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signal coverage of the Station is consistent with the Longley-Rice coverage
pattern set forth on Exhibit D hereto.
3.9(c) Seller and the Station are in compliance in all
material respects with the Communications Act.
3.9(d) Seller knows of no facts, conditions or events
relating to Seller or the Station that might cause the FCC to revoke any FCC
License or to not grant any pending applications for renewal of the FCC
Licenses or to deny the assignment of the FCC Licenses as provided for in this
Agreement.
3.10 INTELLECTUAL PROPERTY.
Seller possesses adequate rights, licenses and authority to
use all Intellectual Property necessary to conduct the business of the Station
as presently conducted. Seller has good title to all Intellectual Property that
it owns, free and clear of any Encumbrances, except for Permitted Encumbrances.
Except as set forth on Schedule 2.1(d), Seller is not obligated to pay any
royalty or other fees to anyone for use of the Intellectual Property and has
the right to bring action for the infringement thereof to the extent permitted
by the Contracts relating thereto and applicable Law. Seller does not have any
knowledge and has not received any notice to the effect that any service
rendered by Seller relating to the business of the Station may infringe, or
that Seller is otherwise infringing, on any Intellectual Property right or
other legally protectable right of another. No director, officer or employee of
Seller has any interest in any Intellectual Property. Seller has the right
pursuant to the rules and regulations of the FCC to the use of the various call
letters that relate to the Station and are specifically identified as such on
Schedule 2.1(a).
3.11 REPORTS AND RECORDS.
All returns, reports, statements and other documents relating
to the Station currently required to be filed by Seller with the FCC or, to the
best of Seller's Knowledge, any other Governmental Authority in connection
with, or as a result of, Seller's operation of the Station or ownership of the
Elcom Assets, have been filed and complied with by Seller and are true, correct
and complete in all material respects as filed. All such reports, statements
and other documents shall continue to be filed on a current basis until the
Closing Date, and shall be true, correct, and complete in all material
respects. All documents required by the FCC to be deposited by Seller in
Seller's public file (as defined in the rules and regulations of the FCC)
during the period of operation of the Station by Seller have been deposited
therein.
3.12 MATERIAL CONTRACTS.
3.12(a) Schedule 2.1(e) contains a complete list, as of the
date hereof, of all of the Contracts which are material to the business and
operations of the Station (the "Material Contracts"), including, without
limitation:
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(i) Each partnership or joint venture agreement to
which Seller is a party;
(ii) Each agreement limiting the right of Seller to
engage in or compete with any Person in any business or in any geographical
area;
(iii) Each agreement or other arrangement of or
involving Seller with respect to indebtedness for money borrowed, including
letters of credit, guaranties, indentures, swaps and similar agreement;
(iv) Each management, consulting, severance or
similar agreement, and each employment agreement to which Seller is a party;
(v) Each collective bargaining agreement to which
Seller is a party;
(vi) Each operating contract and agreement to which
the Seller is a party or by which Seller is bound, including, without
limitation, each broadcast time sales agreement (which has a remaining term of
more than six (6) months), each network affiliation agreement, national
representation agreement, national and local marketing agreement, each lease and
sublease relating to leased Real Property, each employment agreement and talent
contract, and each agreement relating to any motor vehicles;
(vii) Each film and programming license and
agreement (syndicated or otherwise) and Contract under which Seller is
authorized to broadcast film product or programs on the Station including,
without limitation, each cash and non-cash (barter) program contract and sports
broadcasting agreement ("Program Contracts"); each Contract pursuant to which
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,
including, without limitation, contracts under which commercial air time
availability within a particular program are exchanged for the provision of such
program ("Trade-out Agreements"); and each rebroadcasting or retransmission
agreement to which Seller is a party;
(viii) Each Contract which imposes a remaining
Liability on Seller in excess of $25,000; and
(ix) Each other Contract that is material to
Seller or the business and operations of the Station.
3.12(b) Except as set forth in Schedule 3.12(b), each
Material Contract is in full force and effect, and constitutes a legal, valid
and binding obligation of, and is legally enforceable against Seller and each
other party thereto. There are no Contracts other than those listed on Schedule
2.1(e) which represent material Liabilities of Seller or are material to the
business or operations of Seller or to the Elcom Assets. Seller and, to the
best of Seller's Knowledge, the other parties thereto, have complied with all
of the material provisions of such Material Contracts and are not in breach or
default thereunder in any material respect, and there has not occurred any
event which (whether with or without notice or lapse of time) would constitute
such a material breach or default by any of the parties thereunder. To Seller's
Knowledge, there has not been any threatened cancellation of any Material
Contract or any
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outstanding dispute thereunder. Subject to obtaining the Consents listed in
Schedule 3.4(a), Seller has full legal power and authority to assign Seller's
rights under the Material Contracts to Buyer in accordance with this Agreement,
and the assignment of the Material Contracts to Buyer will not affect the
validity, enforceability or continuation of any of the Material Contracts.
3.12(c) Except as set forth in Schedule 3.12(c), Seller is
not now, or during the past two (2) years has not been, a party, directly or
indirectly, to any contract, lease, arrangement or transaction, 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.
3.13 TAXES.
3.13(a) 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 Tax Returns on or before the Closing Date with
respect to all applicable Taxes and has paid or will pay all Taxes shown to be
due on the Tax Returns. Seller has paid all Taxes relating to the Elcom Assets
or the business and operations of the Station. No penalties or other charges
are or will become due with respect to any of the Seller Tax Returns as the
result of the late filing thereof. All of the 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 respects. The Seller Tax Returns for
the calendar years 1996 and 1997 are consistent with the information set forth
in Seller's financial statements described in Section 3.5 hereto.
3.13(b) Except as set forth in Schedule 3.13(b), there is no
action, suit, proceeding, audit, investigation or claim pending or, to the
Knowledge of Seller, threatened in respect of any Taxes for which Seller is or
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
Contract, waiver or Consent providing for an extension of time with respect to
the assessment or collection of any Taxes against the Seller, and no power of
attorney granted by Seller with respect to any tax matters is currently in
force.
3.14 EMPLOYEE BENEFIT PLANS.
3.14(a) Schedule 3.14(a) lists all Plans and Benefit
Arrangements of Seller in which any current, former or retired employee of
Seller or the Station participates (collectively, "Elcom Employee Benefit
Plans"). Seller has complied with all applicable provisions of all Laws
pertaining to the Elcom Employee Benefit Plans, and all premiums and
assessments relating to the Elcom Employee Benefit Plans. Each Elcom Employee
Benefit Plan has been maintained in material compliance with its terms and with
ERISA, the Code and other applicable Laws, and Seller has no liability for any
delinquent contributions within the meaning of Section 515 of ERISA (including,
without limitation, related attorneys' fees, costs, liquidated damages and
interest) for any arrearages of wages.
3.14(b) Seller has (i) filed or caused to be filed all
returns and reports on the Elcom Employee Benefit Plans that Seller is required
to file and (ii) paid or made adequate provision for all fees, interest,
penalties, assessments or deficiencies that have become due
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pursuant to those returns or reports or pursuant to any assessment or
adjustment that has been made relating to those returns or reports. There are
no unpaid fees, penalties, interest, assessments, contributions or other
payments required by or due from Seller with respect to the Elcom Employee
Benefit Plans that are or could become an Encumbrance on any Elcom Asset (other
than any Excluded Asset) or could otherwise adversely affect the business of
the Station or any Elcom Assets, and Seller has taken no action (including,
without limitation, actions required by Law) relating to any Elcom Employee
Benefit Plan that will increase Seller's obligation under any Elcom Employee
Benefit Plan. Seller has collected or withheld all amounts that are required to
be collected or withheld by Seller to discharge Seller's obligations under any
Elcom Employee Benefit Plan, and all of those amounts have been paid to the
appropriate Governmental Authority or set aside in appropriate accounts for
future payment when due. Seller has furnished to Buyer true and complete copies
of all documents setting forth the terms of each Elcom Employee Benefit Plan.
3.14(c) Any Pension Plan terminated by Seller was terminated
in accordance with applicable Law and Seller has no remaining Liabilities with
respect thereto. No Plan is a Multiemployer Plan, and Seller has never been a
party to or participant in a Multiemployer Plan.
3.14(d) To the best of Seller's Knowledge, Seller has no
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.
3.14(e) 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.
3.15 LABOR RELATIONS.
3.15(a) Seller has made available to Buyer a true and
complete list of all employees of Seller engaged in the business or operations
of the Station as of the date hereof, together with such employee's position,
title, salary and date of hire, and all information with respect to all benefit
plans or policies, bonus plans, commissions, severance plans or policies,
compensation arrangements or other benefits provided to such employee. Except
for the liabilities expressly assumed by Buyer pursuant to Section 8.4(e)
hereto, the consummation of the transactions contemplated hereby will not cause
Buyer 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 3.15 hereto, no employee of Seller has any contractual right
to continued employment by Seller or the Station following consummation of the
transactions contemplated by this Agreement.
3.15(b) Except as set forth on Schedule 3.15, there are no
strikes, work stoppages, grievance proceedings, union organization efforts
pending or, to Seller's Knowledge, threatened between Seller and (i) its
current or former employees or agents, or (ii) any union or collective
bargaining unit representing or claiming to represent such employees. Seller is
in
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compliance in all material respects with all applicable Laws and regulations
relating to 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.
3.15(c) Except as set forth in Schedule 2.1(e), (i) no labor
union or other collective bargaining unit represents or claims to represent any
of the employees of the Station, (ii) there are no collective bargaining
agreements to which Seller is a party or by which Seller is bound, (iii) there
are no employment agreements, contracts, plans, arrangements, commitments or
understandings between Seller and Seller's employees not terminable at will,
and (iv) there are no professional service contracts not terminable at will
relating to the Station or the business and operations thereof to which Seller
is a party or by which Seller is bound.
3.16 ENVIRONMENTAL MATTERS.
3.16(a) To the best of Seller's Knowledge, Seller has
complied and is in material compliance with, and the Real Property and all
improvements thereon are in material compliance with, all Environmental Laws.
3.16(b) To the best of Seller's Knowledge, neither Seller nor
any other person has generated, spilled, treated, stored or disposed of, nor in
any manner arranged for the disposal or treatment of any Hazardous Materials in
violation of any Environmental Laws on or from the Real Property and, to the
best of Seller's knowledge, there are currently no Hazardous Materials present
on, in or under the Real Property above any applicable threshold level which
now requires clean-up or remediation under any Environmental Laws.
3.16(c) To the best of Seller's Knowledge, there are no
pending or threatened actions, suits, claims, legal proceedings or other
proceedings based on, and neither Seller nor any officer, director or
stockholder thereof has directly or indirectly received any notice of any
complaint, order, directive, citation, notice of responsibility, notice of
potential responsibility, or information request from any Governmental
Authority or any other person or entity or knows or suspects any fact(s) which
might form the basis for any such actions or notices arising out of or
attributable to: (i) the presence at any part of the Real Property of Hazardous
Materials or any substances that pose a hazard to human health or an impediment
to working conditions; (ii) 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 or any substances that pose a hazard to human health
or an impediment to working conditions; (iii) the off-site disposal of
Hazardous Materials originating on or from the Real Property, the business of
Seller or the Elcom Assets; (iv) any facility operations or procedures of
Seller which do not conform to requirements of the Environmental Laws; or (v)
any violation of Environmental Laws at any part of the Real Property or
otherwise arising from any of Seller's activities involving Hazardous
Materials.
3.16(d) To the best of Seller's Knowledge, Seller has been
duly issued, and currently has and will maintain through the Closing Date, all
permits, licenses, certificates, and approvals required under any Environmental
Law. A true and complete list of all such permits,
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licenses, certificates and approvals, all of which are valid and in full force
and effect, is set out in Schedule 3.16(d). Except in accordance with such
permits, licenses, certificates and approvals or any Environmental Laws, there
has been no discharge of any Hazardous Materials or any other material
regulated by such permits, licenses, certificates or approvals.
3.16(e) Except as set forth in Schedule 3.16(e), to Seller's
Knowledge, the Real Property contains no underground storage tanks, or
underground piping associated with such tanks, used currently or in the past
for Hazardous Materials, and no portion of the Real Property is or has been
used as a dump or landfill or consists of or contains filled in land or
wetlands. Except as set forth in Schedule 3.16(e), neither PCBs nor friable
asbestos materials are present on or in the Real Property.
3.16(f) Seller has furnished to Buyer all environmental
assessments in Seller's possession pertaining to the Real Property.
3.16(g) To the best of Seller's Knowledge, the operation of
the Station does not cause or result in exposure of workers or the general
public to levels of radio frequency radiation in excess of the "Radio Frequency
Protection Guides" recommended in "American National Standard Safety Levels
with Respect to Human Exposure to Radio Frequency Electromagnetic Fields 300
kHz to 100 gHz" (ANSI C95.1-1982), issued by the American National Standards
Institute, and renewal of the FCC Licenses would not constitute a "major
action" within the meaning of Section 1.1301, et seq., of the FCC's rules.
3.17 INSURANCE.
Schedule 3.17 contains a true and complete list of all
policies of title, property, fire, casualty, liability, life, workers'
compensation, libel and slander, and other forms of insurance of any kind
relating to the Elcom Assets (other than the Excluded Assets) or the business
and operations of the Station and owned or held by Seller as of the date
hereof. All such policies are (a) in full force and effect; (b) are sufficient
for compliance in all material respects by Seller with all requirements of Law
and of all agreements to which Seller is a party; and (c) are valid,
outstanding, and enforceable policies and the policy holder is not in default
in any material respect thereunder.
3.18 CABLE SYSTEMS.
The Station has not had any (a) complaints or problems with
respect to its Market Cable Systems on which the Station has made a must-carry
election, (b) complaints or problems with respect to any retransmission consent
agreements, and/or (c) claims under the Station's copyright indemnification
agreements.
3.19 NECESSARY ASSETS.
The Elcom Assets include all of the assets and properties
which are necessary for the business and operations of the Station as currently
conducted by the Seller. At the Closing,
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Buyer shall acquire good title and interest in and to the Elcom Assets, free
and clear of all Encumbrances or other charges, except for any Permitted
Encumbrances.
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 has all requisite
power and authority to carry on its business as now being conducted. Buyer has
all requisite power and authority to execute and deliver this Agreement and the
other Buyer Documents to which it is a party, and to consummate the
transactions contemplated hereby and thereby. A certified copy of Buyer's
certificate of incorporation has been delivered to Seller, is complete and
correct, and no amendments have been made thereto or have been authorized since
the date thereof.
4.2 AUTHORIZATION.
The execution, delivery and performance by the Buyer of this
Agreement and the other Buyer Documents to which it is a party, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary actions of the Buyer and its
stockholders and board of directors (none of which actions has been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes, and upon execution and delivery of each other Buyer
Document to which it is a party will constitute, valid and binding agreements
and obligations of Buyer, enforceable in accordance with their respective
terms. Except for the filings referred to in Section 5.1 and Section 5.2, the
execution, delivery and performance by the Buyer of this Agreement and the
other Buyer Documents to which it is a party will not require the consent,
approval or authorization of any person, entity or Governmental Authority.
4.3 COMPLIANCE WITH LAWS.
Buyer has complied and is in compliance in all material
respects with all Laws and regulations applicable to Buyer, its business and
operations.
4.4 QUALIFICATION OF BUYER.
Except as previously disclosed to Seller in writing, Buyer
has no knowledge of any facts, circumstances or proceedings which would
reasonably be expected to disqualify Buyer under the Communications Act or
otherwise from acquiring or operating the Station, would cause the FCC not to
approve the assignment of the FCC Licenses or would require any waiver of the
currently effective FCC's rules in order to grant the Assignment Application.
To the best knowledge of Buyer, except as set forth above, it will not be
necessary for Buyer or any Affiliate
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of Buyer to sell, dispose of or surrender any FCC license held by Buyer or any
such Affiliate as may be required under the Laws, rules, regulations and
policies of the FCC in order to consummate the sale and purchase of the Elcom
Assets as provided for in this Agreement.
4.5 ABSENCE OF LITIGATION.
There is no action, suit, investigation, claim, arbitration
or litigation pending or, to Buyer's knowledge, threatened against, affecting
or involving the transactions contemplated by this Agreement or any other Buyer
Document, at law or in equity, or before or by any court, arbitrator or
Governmental Authority, and the Buyer is not operating under or subject to an
order, award, judgment, writ, decree, determination or injunction of any court,
arbitrator or Governmental Authority which would affect any such transactions.
4.6 NO OTHER REPRESENTATION.
The only representations and warranties of Seller relied upon
by Buyer in evaluating Seller and making the decision to purchase the Elcom
Assets are those set forth in this Agreement, the other Seller Documents and
any Schedule hereto, or any certificate to be delivered to Buyer at the Closing
pursuant to this Agreement.
4.7 BANKRUPTCY.
Buyer is not subject to any case under the Bankruptcy Code,
Title 11 of the United States Code, or any other bankruptcy arrangement,
reorganization, receivership, custodianship or similar proceeding under any
federal, state or foreign Law with respect to itself or any material portion of
its property.
4.8 REQUIRED CONSENTS; NO CONFLICTS.
4.8(a) Except in connection with the filings referred to in
Sections 5.1 and 5.2, the execution, delivery and performance by Buyer of the
Buyer Documents will not require the consent, approval, authorization or permit
of or filing with or the notification of any Person or Governmental Authority,
except (i) as have been obtained or will be obtained or have occurred prior to
Closing or (ii) which would not materially affect Buyer's ability to consummate
the transactions provided for in the Buyer Documents.
4.8(b) The execution and delivery of the Buyer Documents, the
fulfillment of and the compliance with the respective terms and provisions of
each, and the consummation of the transactions provided for in each, do not and
will not (i) conflict with or violate any Law, regulation, order, award,
judgment, injunction or decree applicable to or affecting the Buyer, (ii)
conflict with or result in any breach of or constitute any default (or an event
which with notice or the lapse of time or both would become a default) under
any contract to which the Buyer is a party or by which the Buyer is bound or to
which any of Buyer's assets are subject or affected, or result in the
acceleration of any indebtedness of Buyer, or (iii) conflict with or violate
the organizational documents of Buyer, except as would not materially affect
Buyer's ability to consummate the transactions provided for in the Buyer
Documents.
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4.9 FINANCING.
Buyer will have available on the Closing Date sufficient
funds to enable it to consummate the transactions provided for in this
Agreement and to pay all related fees and expenses.
ARTICLE 5
PRE-CLOSING FILINGS AND UNDERTAKINGS
5.1 APPLICATIONS FOR FCC CONSENT.
As promptly as practicable and no later than five (5)
Business Days following the execution of this Agreement, Seller and Buyer shall
jointly file one or more applications with the FCC requesting the FCC's consent
to the assignment of the FCC Licenses for the Station from Seller to Buyer as
provided for in this Agreement (the "Assignment Applications"). 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,
and use their respective reasonable best efforts to resolve objections that may
be asserted by the FCC or any third party, in order to obtain promptly the
requested consent and approval of the Assignment Applications by the FCC.
5.2 HART-SCOTT-RODINO.
As promptly as practicable and no later than ten (10)
Business Days following the execution of this Agreement, 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. The
parties hereto shall use their reasonable best efforts to resolve objections,
if any, that may be asserted under Hart-Scott-Rodino or any other antitrust Law
in connection with the transactions provided for in this Agreement.
5.3 SHARING INFORMATION.
Each party hereto shall as promptly as possible, and in any
event within five (5) Business Days, inform the other of any material
communications between such party and the Federal Trade Commission, the
Department of Justice, the Federal Communications Commission or any other
Governmental Authority regarding this Agreement or the transactions
contemplated hereby. If any party receives a request for additional information
or documentary material from any such Governmental Authority, then such party
shall endeavor in good faith to make, or cause to be made, as promptly as
practicable and after consultation with the other parties, an appropriate
response to such request.
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ARTICLE 6
COVENANTS AND AGREEMENTS OF SELLER
Subject to Section 8.1 below, Seller covenants and agrees with Buyer
as follows:
6.1 NEGATIVE COVENANTS.
Pending and prior to the Closing, Seller will not, without
the prior written consent or approval of Buyer, do or agree to do any of the
following, as such actions relate to the Station:
6.1(a) Dispositions; Mergers. Sell, assign, lease or
otherwise transfer or dispose of any of the Elcom Assets, or merge or
consolidate with or into any other entity or enter into any Contracts or
agreements relating thereto; provided, however, that Seller may sell, assign,
lease or otherwise transfer or dispose of any Elcom Asset at substantially fair
market value and in the Ordinary Course of Business, provided that either (i)
it is replaced or (ii) the sale proceeds in respect of such Elcom Asset are
held for the benefit of the Buyer.
6.1(b) Accounting Principles and Practices. Change or modify
any of Seller's accounting principles or practices or any method of applying
such principles or practices, except as required by GAAP.
6.1(c) Additional Agreements. Acquire or enter into any
Additional Agreements, except in the Ordinary Course of Business, or renew,
extend, amend, alter, modify, replace or otherwise change any Material
Contract, except (i) in the Ordinary Course of Business or, (ii) as otherwise
permitted by Section 6.1(e) and Section 6.1(f); provided, however, under no
circumstance shall Seller renew, extend, amend, alter, modify, replace,
otherwise change or enter into (a) any Program Contract requiring the payment
of cash for the Station which will be binding on Buyer after the Closing Date,
or (b) any other Contract requiring payments by Seller (i) under each such
Contract in excess of $25,000, and (ii) under all such Contracts requiring
aggregate payments of more than $75,000.
6.1(d) Employee Matters. Except as required by Law or as
disclosed in Schedule 6.1(d), (i) enter into, become subject to or amend or
modify any existing employment, labor, union, or professional service Contract
not terminable at will, or any Plan or Benefit Arrangement or other bonus,
pension, insurance, profit sharing, incentive, deferred compensation, severance
pay, retirement, hospitalization, employee benefit, or other similar plan,
other than the Elcom Employee Benefit Plans or (ii) increase the compensation
payable or to become payable to any employee, or pay or arrange to pay any
bonus payment to any employee or increase any amounts payable pursuant to any
severance arrangements for officers or employees of Seller. Notwithstanding the
foregoing, Seller may pay its employees prior to Closing a ratable portion of
the bonuses that would normally be paid following the end of Seller's fiscal
year; provided, however, that Seller shall inform Buyer in writing of any such
payments at Closing and provided further that Seller shall not receive any
proration or other adjustment to the Purchase Price as the result of any such
payments.
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6.1(e) Actions Affecting FCC Licenses or Contracts. Take any
action which may jeopardize the validity or enforceability of or rights under
the FCC Licenses, or take any action under any Material Contract which would
result in a material breach or default thereof.
6.1(f) Trade-Out Agreements. Enter into or renew any
Trade-out Agreement that would be binding on Buyer after the Closing Date,
except in the Ordinary Course of Business and which requires the provision of
broadcast time having a value of less than $15,000 individually, and $75,000 in
the aggregate as of the Closing Date for the Station. All outstanding positive
and negative trade balances of the Station shall be prorated pursuant to
Section 2.4(b) hereof. As of the Closing Date, the total outstanding negative
balance under all Trade-out Agreements of the Station shall not exceed
$100,000.
6.1(g) Broadcast Time Sales Agreements. Enter into or renew
any time sales agreement except in the Ordinary Course of Business and which
are for cash at prevailing rates for a term not exceeding six (6) months.
6.1(h) Network Affiliation Agreements, TBAs and LMAs. Acquire
or enter into or renew any time brokerage agreement, local marketing agreement,
or network affiliation agreement for the Station.
6.1(i) Programming. Program or broadcast any Program Contract
or syndicated program, except in the Ordinary Course of Business.
6.1(j) Encumbrances. Create, assume or permit to exist any
Encumbrances upon any of the Elcom Assets except for Permitted Encumbrances and
Encumbrances that will be discharged prior to or on the Closing Date.
6.1(k) Transactions With Affiliates. Enter into any
transaction with any Affiliate of Seller that will be binding upon Buyer, the
Elcom Assets or the Station on or after the Closing Date.
6.1(l) Waivers. Waive any material right relating to the
Station or the Elcom Assets, except in the Ordinary Course of Business.
6.2 AFFIRMATIVE COVENANTS.
Pending and prior to the Closing Date, Seller will:
6.2(a) Preserve Existence. Preserve its existence as a
corporation and keep Seller's business organization intact, maintain Seller's
existing franchises and licenses in accordance with this Agreement, and use
Seller's commercially reasonable efforts to preserve for Buyer the
relationships of the Station with suppliers, customers, employees and others
with whom the Station has business relationships, and keep all of the Elcom
Assets substantially in their present condition.
6.2(b) Normal Operations. Subject to the terms and conditions
of this Agreement (including, without limitation, Section 6.1) (i) carry on the
businesses and activities
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of the Station, including without limitation, promotional activities, the sale
of advertising time, entering into other contracts and agreements, or
purchasing and scheduling of programming, in the Ordinary Course of Business;
(ii) pay or otherwise satisfy all obligations (cash and barter) of the Station
as they come due and payable as originally contracted; (iii) maintain all Elcom
Assets in customary repair, maintenance and condition; and (iv) maintain its
books of account, records, and files in substantially the same manner as
heretofore maintained.
6.2(c) Interruption of Broadcast Operations. Seller will
promptly notify Buyer in writing if the Station ceases to broadcast at the
Station's authorized power for more than twenty-four (24) consecutive hours.
Such notice shall specify the reason or reasons for such cessation and the
corrective measures taken or to be taken by Seller.
6.2(d) FCC Matters. (i) 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 (ii) deliver to Buyer,
within ten (10) Business Days after filing, copies of any reports, applications
or responses to the FCC related to the Station that are filed between the date
of this Agreement and the Closing Date.
6.2(e) Network Affiliation. Use Seller's best 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).
6.2(f) Taxes. Pay or discharge when due and payable all
Taxes payable by Seller or the Station
6.2(g) Contracts. Pay and perform Seller's obligations in the
Ordinary Course of Business under the Contracts to which it is a party and
under any Additional Agreements that shall be entered into by Seller between
the date hereof and the Closing in accordance with the respective terms and
conditions of such Contracts.
6.2(h) Actions. Take all corporate and other actions
(including, without limitation, all shareholder action) under the applicable
Laws and regulations of any state having jurisdiction over Seller necessary to
effectuate the transactions contemplated by this Agreement and by the other
Seller Documents.
6.2(i) Access. (i) Give to Buyer and Buyer's authorized
representatives access upon reasonable prior notice during normal business
hours to offices, properties, assets, books and records, employment files,
Contracts and reports, commitments, facilities, premises, and equipment of the
Station and to Seller's respective directors, officers and employees, agents
and representatives (including, without limitation, the independent accountants
of Seller); (ii) cooperate in all reasonable respects with Buyer's request to
conduct an audit of the Sellers' financial information as Buyer may reasonably
determine is necessary to satisfy Buyer's senior lenders and Buyer's public
company reporting requirements pursuant to the Securities Act of 1933 or the
Securities Exchange Act of 1934 including, without limitation, (A) using
commercially reasonable efforts to obtain the consent of Sellers' auditors to
permit Buyer and Buyer's auditors to have access to such auditors' work papers,
(B) consenting to such access by Buyer and (C) executing and delivering to
Buyer's independent auditors such customary
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management representation letters as the auditors may require as a condition to
such auditors ability to deliver an unqualified report upon the audited
financial statements of the Station; and (iii) on five (5) Business Days prior
notice, permit Buyer and Buyer's consulting engineers and independent
contractors, at Buyer's expense, to conduct engineering and other inspections
of the Station and the Elcom Assets, provided that all access under
subparagraphs (i), (ii) and (iii) shall be upon reasonable prior notice and in
a manner that will not interfere with any of the Station's operations.
6.2(j) Encumbrances. Pay in full all Liabilities associated
with the business and operations of the Station and use Seller's reasonable
commercial efforts to obtain discharges of all Encumbrances and similar claims
by third parties (other than Permitted Encumbrances) encumbering the Elcom
Assets at or prior to the Closing Date.
6.2(k) Insurance. Maintain in full force and effect all of
Seller's 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(l) Financial Statements. Commencing with the calendar
month of June, 1998, and for each calendar month, fiscal quarter and fiscal
year thereafter, provide Buyer with copies of unaudited balance sheets and
income statements of Seller relating to the business and operations of the
Station, substantially in the form currently generated employing the principles
currently used for such statements, within twenty (20) days after the end of
each such period. Seller further agrees to provide Buyer with weekly sales
pacing reports for the Station within ten (10) days after the end of each such
week.
6.2(m) Violations. Upon receiving notice or otherwise
becoming aware of any violation relating to the FCC Licenses, any violation by
the Station of any rules and regulations of the FCC, or any material violations
under any other applicable Laws and regulations, promptly notify Buyer and, at
Seller's expense, use reasonable commercial efforts to cure all such violations
prior to the Closing Date.
6.2(n) Environmental Matters. (i) Promptly furnish to Buyer
written notice of any discharge of any Hazardous Materials or of any actions or
notices described in Section 3.16; and (ii) any material change in the
information set forth in Section 3.16 or Schedule 3.16(e). Seller shall permit
Buyer and Buyer's agents, as soon as practical after the date hereof and upon
Buyer's request therefor, access to the Real Property and the leased Real
Property for the purpose of conducting, at Buyer's expense, (x) a Phase I
environmental audit, and (y) a Phase II environmental audit, should the Phase I
environmental audit recommend that such Phase II environmental audit be
performed. Any such environmental audits shall be conducted by a reputable
environmental investigatory firm of Buyer's choice subject to the reasonable
approval of Seller and in a manner as will not unreasonably interfere with the
normal business and operations of the Station. Seller shall permit Buyer and
Buyer's agents to discuss with the Station's management, environmental engineer
and environmental consultants any environmental matters concerning the Station
which are raised (i) in the Phase I reports provided to Buyer, and (ii) in any
Phase I or Phase II environmental audits conducted pursuant to this Section
6.2(n).
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6.2(o) Signal Strength and Contour. Seller shall permit Buyer
and Buyer's agents to conduct, at Buyer's expense, (i) tests of the Station's
signal strength, and (ii) a contour study of the Station's signal.
6.2(p) Updating. At reasonable intervals following the date
hereof, use reasonable efforts to provide Buyer with documentation regarding
any material changes to the Schedules hereto including, without limitation,
copies of Additional Agreements. No such updating to the Schedules shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Article 9 hereof, or the compliance by the Seller with the Seller's
covenants and agreements set forth herein.
6.2(q) Books and Records. Seller agrees to (i) maintain books
and records included in Excluded Assets pursuant to Section 2.2(d) hereof for a
period of ten (10) years following the Closing Date, unless earlier released by
Buyer and (ii) give Buyer and Buyer's authorized representatives full and
complete access upon reasonable notice during normal business hours to such
books and records, to the extent such books and records reasonably relate to
the Elcom Assets or the ownership or operation of the Station.
6.2(r) Employee List. At least fifteen (15) days prior to
Closing, Seller will provide Buyer with a true and complete updated list of all
Station employees, including each such employee's position, title, salary and
date of hire.
6.2(s) News Service Agreement. Seller shall use its
reasonable best efforts to take all actions necessary to extend the termination
of the Program License Agreement until March 31, 1999.
6.2(t) Consents. Seller shall use its best efforts to take
all actions necessary 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 Contracts which require prior consent to
assignment in order to consummate the transactions contemplated hereby.
6.3 CONFIDENTIALITY.
Seller shall maintain strict confidentiality with respect to
all documents and information furnished to Seller by or on behalf of Buyer or
retained by Seller pursuant to Section 2.1(g). 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 as clearly
evidenced by its records. 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 and
regulations, (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 are informed of the
confidentiality of such information), and (z) to any Governmental Authority in
connection with the transactions contemplated hereby. In the event this
Agreement is terminated, Seller will
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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.
ARTICLE 7
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Seller as follows:
7.1 CONFIDENTIALITY.
Buyer shall 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 as clearly evidenced by its records. Notwithstanding the foregoing
provisions of this Section 7.1, (i) Buyer may disclose such confidential
information (x) to the extent required or deemed advisable to comply with
applicable Laws and regulations, (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 are
informed of the confidentiality of such information), and (z) to any
Governmental Authority in connection with the transactions contemplated hereby,
and (ii) following the Closing Date, Buyer may disclose such confidential
information to the extent that relates solely to Seller or the Station. 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 hereunder, whether obtained before or after the execution of this
Agreement.
7.2 ACTIONS.
Prior to the Closing, Buyer shall take all corporate and
other action under the applicable Laws and regulations of any state having
jurisdiction over Buyer necessary to effectuate the transactions provided for
in this Agreement and the other Buyer Documents.
7.3 ACCESS.
Buyer agrees to (i) hold either (x) all of the books and
records of the Station existing on the Closing Date or (y) copies of all such
books and records until the date which is ten (10) years from the Closing Date,
unless earlier released by Seller and (ii) give Seller and Seller's authorized
representatives full and complete access upon reasonable notice during normal
business hours to such books and records or copies of such books and records,
as the case may be, of the Station existing on the Closing Date.
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7.4 NOTICE OF CERTAIN EVENTS.
Buyer agrees to promptly notify Seller of any fact or
circumstance of which Buyer becomes aware after the date of this Agreement
which would cause it not to meet any qualification to be the assignee of and in
control of the FCC Licenses or which it believes may delay a routine grant of
the Assignment Applications. Buyer will use its best efforts to remedy such
fact or circumstance. Buyer will not take any action that Buyer knows, or has
reason to believe, would result in the occurrence of any such fact or
circumstance.
7.5 COMPLIANCE WITH LAWS.
Buyer shall use its best efforts to obtain and hold all
permits, licenses and approvals from all Governmental Authorities necessary in
order to conduct the operations of the Station in accordance with applicable
Law, as presently conducted, and to own, use and maintain the Elcom Assets.
7.6 USE OF NAME AND LOGO.
Buyer will cease using, as soon as is practicable following
the Closing Date but in no event later than ninety (90) days thereafter, any
trademark or tradename using the word "Elcom" or any name confusingly similar
thereto in any written or other communication.
ARTICLE 8
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLER AND BUYER
8.1 POSSESSION AND CONTROL.
Notwithstanding any other provision of any Seller Document or
Buyer Document, 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,
finances and employment, shall be the sole responsibility of Seller; provided,
however, that Buyer shall be entitled to inspect the Elcom Assets as provided
in Section 6.2(f). 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.
8.2 RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause
to the Elcom Assets until the Closing Date shall be upon Seller. In the event
of such loss or damage prior to the Closing Date, Seller shall use reasonable
commercial efforts to restore, replace or repair the damaged Elcom Assets at
Seller's sole cost and expense. In the event such loss or damage shall not be
restored, replaced, or repaired as of the Closing Date, Buyer shall proceed
with the Closing and receive at Closing a reduction of the Purchase Price in an
amount which, net of any
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insurance proceeds paid by Seller to Buyer is sufficient to pay for such
restoration, replacement or repair.
8.3 PUBLIC ANNOUNCEMENTS.
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 consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that a party may, without the prior
consultation with or 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 (or any
Affiliate of Seller 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(a) In addition to the assumption by Buyer at Closing of
all of Seller's obligations under each employment agreement to which Seller is
a party, at least five (5) days prior to the Closing Date, Buyer shall
designate in writing which employees of the Station Buyer shall offer
employment after the Closing Date (all such employees who accept such offers of
employment shall be referred to herein as the "Designated Employees"; all
employees who do not receive an offer of employment from Buyer and all
employees who receive an offer, but such offer is not on terms substantially
similar to their employment with Seller (substantially similar shall be deemed
to mean comparable job description, location and salary) and do not accept the
offer shall be referred to herein as the "Non-Transferred Employees", it being
understood and agreed that employees receiving an offer of employment from
Buyer on substantially similar terms to their employment with Seller but who
choose not to accept such offer shall not be deemed "Non-Transferred Employees"
for purposes of Section 8.4(e) below). Such employment by Buyer of the
Designated Employees shall be subject to the terms, conditions and policies of
employment established by Buyer. Nothing in this Section 8.4 is intended to
guarantee employment for any Designated Employee for any length of time after
the Closing Date and Buyer shall not assume any Elcom Employee Benefit Plans as
listed on Schedule 3.14(a).
8.4(b) Except as provided otherwise in this Section 8.4,
Seller shall pay, discharge and be responsible for (a) all salary and wages
arising out of or relating to the employment of the employees of the Station
prior to the Closing Date, (b) all accrued and unpaid vacation pay, (c) any
employee benefits arising under the Elcom Employee Benefit Plans during the
period prior to the Closing Date and (d) all severance Liabilities and all
COBRA Liabilities for any Non-Transferred Employees (subject to the Buyer's
reimbursement obligation set forth in Section 8.4(e)). Buyer acknowledges and
agrees that if the Closing is effective on or after January 1, 1999, Seller
shall have no Liability for any accrued vacation of the employees of the
Station for the calendar year 1999 which accrues during calendar year 1999.
From and after the Closing Date, the Buyer shall pay, discharge and be
responsible for all salary, wages and benefits arising out of or relating to
the employment of the Designated Employees on and after the
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Closing Date. The Buyer shall be responsible for all severance Liabilities, and
all COBRA Liabilities for any Designated Employees terminated by Buyer on or
after the Closing Date.
8.4(c) For purposes of any length of service requirements,
waiting periods, vesting periods or differential benefits based on length of
service pursuant to any employment program provided by the Buyer in any such
plan for which a Designated Employee may be eligible after the Closing, the
Buyer shall ensure that, to the extent permitted by Law, service by such
Designated Employee with the Station shall be deemed to have been service with
the Buyer.
8.4(d) Except as otherwise provided in this Section 8.4 or in
any employment, severance or retention agreements of any Designated Employees,
all Designated Employees shall be at-will employees, and the Buyer may
terminate their employment or change their terms of employment at will. No
employee (or beneficiary of any employee) of the Station may sue to enforce the
terms of this Agreement, including specifically this Section 8.4, and no
employee or beneficiary shall be treated as a third party beneficiary of this
Agreement. Except to the extent provided for herein, the Buyer may cover the
Designated Employees under existing or new benefit plans, programs, and
arrangements, and may amend or terminate any such plans, programs, or
arrangements at any time.
8.4(e) Buyer agrees (i) to reimburse Seller for all severance
Liabilities and COBRA Liabilities for Non-Transferred Employees which are paid
by the Buyer pursuant to Section 8.4(b) and which are consistent with the
Seller's severance practices in effect as of the date hereof as described in
writing to Buyer; plus whatever additional consideration would be necessary to
secure the release referenced below provided, however, the reimbursement
obligation described herein shall be conditioned upon the execution of a
release from each of the Non-Transferred Employees which releases Seller and
Buyer from all such Liabilities; and (ii) to indemnify and hold Seller harmless
from and against any and all claims made against or any Liabilities of Seller
or any Affiliate of Seller as a result of the termination of any
Non-Transferred Employees, including, but not limited to any claims by
Non-Transferred Employees alleging discrimination or violation of any
employment Laws in the Buyer's hiring process or the Seller's termination
process in accordance with the terms of this Agreement.
8.5 COLLECTION OF ACCOUNTS RECEIVABLE.
The Accounts Receivable are and shall remain at all times an
Excluded Asset and shall not become the property of Buyer at the Closing. Buyer
agrees, for a period of 180 days following the Closing Date, to use Buyer's
commercially reasonable efforts to collect the Accounts Receivable in the
normal and Ordinary Course of Business as Seller's agent for collection and
will apply all such amounts collected to the debtor's oldest account receivable
(unless and only to the extent that such debtor disputes that such account
receivable is properly due); provided, however, that such obligation and
authority shall not extend to the institution of litigation, employment of
counsel or a collection agency, or any other extraordinary means of collection,
unless authorized in writing by Seller. Buyer agrees to cooperate fully with
Seller as to any litigation or other collection efforts instituted by Seller to
collect delinquent Accounts Receivable and Seller agrees to consult with Buyer
prior to instituting any litigation or other collection efforts and thereafter
to take only such actions as are commercially reasonable. On or before the
fifteenth (15th) day of each month, Buyer shall deliver to Seller a statement
or report
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showing all such collections effected since the last report delivered and all
commissions with respect thereto, together with a check or draft for the amount
of such collections. If authorized by Seller, and at Seller's expense, Buyer
shall have full power and authority as Seller's agent for collection to settle
disputes, effect compromises, institute and terminate suits relating thereto,
and generally to pursue such collections in accordance with Buyer's customary
collection procedures, including employment of counsel or a collection agency
or any other extraordinary means, in all instances acting as agent for Seller,
but without any necessity to disclose that fact. If at any time Buyer in good
faith determines that any of the Accounts Receivable are uncollectible, Buyer
shall notify Seller of such determination and upon Seller's written request
shall furnish or make available to Seller all records, files, and data relating
to such accounts and Buyer's determination of uncollectibility. Buyer's
obligation to collect the Accounts Receivable as Seller's agent shall expire at
the end of the sixth (6th) full month following the Closing Date and, within
fifteen (15) days after the end of such month, Buyer shall render a final
statement or report showing Accounts Receivable collected and uncollected.
Seller may terminate Buyer's right to collect any or all of the Accounts
Receivable upon written notice delivered to Buyer, at any time that Seller
determines in good faith that Buyer is not pursuing the collection of the
Accounts Receivable in a commercially reasonable manner consistent with Buyer's
customary collection procedures with respect to its accounts receivable, in
which event the collection of such account or accounts shall be Seller's sole
responsibility.
8.6 PRESERVATION OF BOOKS AND RECORDS.
For a period of three (3) years after the Closing Date, the
Seller agrees not to dispose of, and agrees to provide Buyer reasonable access
to, any material books or records in such Seller's possession immediately after
the Closing Date that relate to the business or operations of the Station prior
to the Closing Date.
ARTICLE 9
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Elcom 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.
Each of the representations and warranties (other than those
representations and warranties which by their terms are as of a specific date)
of Seller made in this Agreement or in any other Seller Document 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 or
as of the Closing Date (except for representations and warranties that speak 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 Seller
shall have performed and complied in all material respects, with all covenants
and agreements required by this Agreement or any other Seller Document to be
performed or complied with by Seller on or prior to the Closing.
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9.2 CONSENTS.
Seller shall have obtained prior to the Closing Date the
following Consents:
9.2(a) All Consents, authorizations or approvals of any
Governmental Authorities necessary to effect the transfer of the Elcom Assets,
except for the FCC Order, which shall be governed by Section 9.4 and except for
any HSR Filing, which shall be governed by Section 9.6.
9.2(b) All Consents, authorizations and approvals from third
parties for the transfer to Buyer of (i) all leases or subleases of Real
Property, (ii) the network affiliation agreement of the Station, and (iii) all
syndicated Program Contracts and programming agreements which are listed in
Schedule 9.2(b).
9.3 DELIVERY OF DOCUMENTS.
Seller shall have delivered to Buyer the Seller Documents and
all other 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 and any terms
and conditions required as a result of such order shall have been satisfied.
9.5 LEGAL PROCEEDINGS.
No court or Governmental Authority shall have enacted,
enforced, issued or entered any Law, rule, regulation, injunction, restraining
order or decree of any nature, including in connection with any action or
proceeding brought by a third party, (not subsequently dismissed, settled or
otherwise terminated) which restrains, prohibits or invalidates the
transactions contemplated by this Agreement or any other Seller Document or
prevents, materially limits, restricts or impairs the ownership, use or
operation of the Elcom Assets or the Station by Buyer following the transfer of
the Elcom Assets to Buyer, other than an action or proceeding instituted by
Buyer. Notwithstanding anything to the contrary contained in this Agreement,
Buyer shall not have the right to refuse to close the transactions provided for
in this Agreement on the grounds of an adverse development relating to the
FCC's proceedings concerning television ownership rules, other than changes
that have become effective that would make ownership of the Elcom Assets by
Buyer unlawful.
9.6 HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
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9.7 TITLE INSURANCE; SURVEY
Buyer shall have received the Title Insurance Commitment and
the Survey with respect to the Real Property described in Schedule 2.1(b), in
form and substance reasonably satisfactory to Buyer.
9.8 TOWER LEASE.
The Tower Lease (the "Tower Lease") dated as of December 7,
1990 by and between Toledo Television Limited Partnership and Toledo
Telecasting, Inc. for the Station's transmitter tower shall have been amended
to provide Buyer with a guaranteed remaining term of not less than twenty (20)
years and such other terms as are specified on Schedule 9.8.
9.9 MATERIAL ADVERSE EFFECT.
There shall not have occurred, between the date of this
Agreement and the Closing Date, any condition or event that has had a Material
Adverse Effect, or any condition or event that is likely to result in a
Material Adverse Effect.
ARTICLE 10
CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey and deliver the
Elcom 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.
Each of the representations and warranties of Buyer made in
this Agreement or in any other Buyer Document shall be true and correct in all
material respects as though made on or as of the Closing Date; and Buyer shall
have performed and complied in all material respects with all covenants and
agreements required to be performed or complied with by Buyer on or prior to
the Closing.
10.2 DELIVERY BY BUYER.
Buyer shall have delivered to Seller the Purchase Price and
all Buyer Documents and all other contracts, agreements, instruments and other
documents required to be delivered by Buyer to Seller pursuant to Section 11.3.
10.3 FCC ORDER.
The FCC Order shall have been issued and become a Final Order
and any terms and conditions required as a result of such order shall have been
satisfied.
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10.4 LEGAL PROCEEDINGS.
No Governmental Authority shall have enacted, enforced,
issued or entered any Law, rule, regulation or order, including in connection
with any action or proceeding brought by a third party, enacted, enforced,
issued or entered any Law, rule, regulation or order (not subsequently
dismissed, settled, or otherwise terminated) which prohibits or invalidates the
transactions contemplated by this Agreement or any other Buyer Document, other
than an action or proceeding instituted by Seller.
10.5 HART-SCOTT-RODINO.
All applicable waiting periods under Hart-Scott-Rodino shall
have expired or terminated.
ARTICLE 11
THE CLOSING
11.1 CLOSING.
The Closing hereunder shall take place at the offices of
Raycom Media Inc., Montgomery, Alabama on the later to occur of January 1, 1999
and the last Business Day during the month in which the FCC Order shall have
become a Final Order, or on such other date or at such other time and place as
the parties shall mutually agree in writing (the "Closing Date"). If the
Closing occurs on January 1, 1999, Seller shall be entitled to interest of Ten
and 55/100 percent (10.55%) on the Purchase Price for the period from January
1, 1999 until the date Seller receives the Purchase Price. The Closing shall be
deemed effective as of the Effective Time. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed to have been taken and executed simultaneously and no proceedings shall
be deemed to have been taken nor documents executed or delivered until all have
been taken, executed and delivered.
11.2 DELIVERY BY SELLER.
At or before the Closing, Seller shall deliver to Buyer the
following:
11.2(a) Agreements and Instruments. The following agreements
and instruments of transfer, dated as of the Closing Date, duly executed by
Seller:
(i) the Bill of Sale;
(ii) the Assignment of FCC Licenses;
(iii) certificates of title with respect to the
motor vehicles listed on Schedule 2.1(f) or if any such motor vehicles are
leased by Seller, an assignment of such lease;
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(iv) special or limited warranty deeds for all
Real Property owned by Seller in the form appropriate to the jurisdictions in
which such Real Property is located;
(v) memoranda of assignment for all Real
Property leased by Seller in a recordable form appropriate to the jurisdictions
in which the Real Property is located;
(vi) all such other general instruments of
transfer, assignment and conveyance, certificates of title, assignments,
evidences of consent or waiver, and other instruments or documents in form and
substance reasonable satisfactory to Buyer and Buyer's lenders, as shall be
necessary to evidence or perfect the sale, assignment, transfer and conveyance
of the Elcom Assets to Buyer and effectively vest in Buyer all right, title and
interest in the Elcom Assets free and clear of any and all Encumbrances (other
than Permitted Encumbrances) and other restrictions in accordance with the
terms of this Agreement, together with possession (or constructive possession,
in the case of intangibles) thereof;
(vii) estoppel certificates from all landlords or
lessors under leases of Real Property under which Seller is tenant or lessee,
all in a form and substance reasonably acceptable to Buyer; and
(viii) a lien search report dated not more than
fifteen (15) Business Days prior to the Closing Date of the appropriate filing
offices in the applicable jurisdictions where the Seller does business
evidencing no judgments, financing statements, tax liens, mechanics',
materialmen's or other statutory liens on file with respect to the Elcom
Assets, subject to such requests for updated information relating to any of the
foregoing kinds of liens for the period between the date of such report and the
Closing Date as Buyer may reasonably request and which Seller shall use
commercially reasonable efforts to deliver to Buyer. If the lien search report
or any update thereto evidences that judgments, financing statements, tax
liens, mechanics', materialmen's, or other statutory liens are on file with
respect to any of the Elcom Assets, prior to or on the Closing Date, Seller
shall deliver or cause to be delivered to Buyer a termination statement or
other appropriate document signed by the secured party or lienholder evidencing
the release or termination of such financing statement or such lienholder
evidencing the release or termination of such financing statement or such lien
or a pay-off letter from such secured party or lienholder indicating that such
party or lienholder will provide such release or termination statement upon
receipt of payment from the proceeds of the sale contemplated herein.
11.2(b) Consents. Copies of all Consents Seller has been able
to obtain to effect the assignment to Buyer of the Contracts listed on Schedule
2.1(e).
11.2(c) Seller Documents. Such certificates, opinions,
instruments or documents, including any Seller Documents not previously
delivered, as Buyer may reasonably request in order to effect and document the
transactions provided for herein.
11.2(d) Certified Resolutions. A copy of (i) the resolutions
of the board of directors 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 the other Seller Documents, and the
consummation of the transactions contemplated hereby and thereby and (ii)
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a copy of the Certificate of Incorporation and Bylaws of Seller, certified by a
duly authorized officer of Seller as being true, correct and complete as of the
Closing Date.
11.2(e) Officers' Certificates.
(i) A certificate of Seller signed by a duly
authorized officer of Seller certifying that all conditions set forth in Section
9.1 have been satisfied, that there has been no material adverse change in the
condition of the Station or the Elcom Assets as of the date of this Agreement.
(ii) A certificate of Seller signed by a duly
authorized officer of Seller certifying that Seller has performed in all
material respects all of its obligations and agreements and complied in all
material respects with all of its covenants set forth in this Agreement to be
performed and complied with on or prior to the Closing Date.
(iii) A certificate signed by the Secretary of Seller
as to the incumbency of the officers executing this Agreement and any other
Seller Document on behalf of the Seller.
(iv) A certificate of the Chief Financial Officer of
Seller certifying to Buyer that all amounts outstanding under any Program
Contracts of the Station shall have been paid in full as of the Closing Date.
11.2(f) Raycom Joinder Agreement. The Raycom Joinder
Agreement, duly executed by an executive officer of Raycom Media, Inc.
11.2(g) Good Standing Certificates. To the extent available
from the applicable jurisdictions, certificates as to the formation and/or good
standing of the Seller issued by the appropriate governmental authorities in the
states of organization and each jurisdiction in which Seller is qualified to do
business, each such certificate (if available) to be dated a date not more than
a reasonable number of days prior to the Closing Date.
11.2(h) Other Documents. Such other documents to be delivered
by Seller hereunder as are reasonably necessary for Buyer to effectuate and
document the transactions contemplated hereby.
11.3 DELIVERY BY BUYER.
At or before the Closing, Buyer shall deliver (or take all
actions necessary to cause to be delivered) to Seller the following:
11.3(a) Purchase Price. The Purchase Price, payable in the
amount and manner set forth in Section 2.5 hereof. ------------
11.3(b) Bill of Sale. The Bill of Sale, dated as of the
Closing Date and duly executed by Buyer pursuant to which Buyer will assume and
undertake to perform Seller's obligations arising after the Effective Time under
the Contracts.
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11.3(c) Buyer Documents. Such certificates, opinions,
instruments or documents, including any Buyer Documents not previously
delivered, as Seller may reasonably request in order to effect and document the
transactions provided for herein.
11.3(d) Certified Resolution. Copies of (i) the resolutions of
the board of 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 and (ii) a copy
of the Certificate of Incorporation and Bylaws of Buyer, certified by the
Secretary of Buyer as being true, correct and complete as of the Closing Date.
11.3(e) Officers' Certificate.
(i) A certificate of Buyer signed by a duly
authorized officer certifying that all conditions set forth in Section 10.1 have
been satisfied and that all conditions to Seller's obligations hereunder have
been satisfied; and
(ii) 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 the Buyer.
11.3(f) Other Documents. Such other documents to be delivered
by Buyer hereunder as are reasonably necessary for Seller to effectuate the
transactions contemplated herein.
ARTICLE 12
SURVIVAL; INDEMNIFICATION
12.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations, warranties, covenants or agreements made
by the parties in this Agreement or in documents and instruments delivered
pursuant hereto shall survive the Closing as follows: (a) the agreements
specified in Sections 2.4, 2.6, 6.3, 7.1, 7.3, 7.6, 8.4, 8.5, 12.1, 15.1, 15.2,
15.3, 15.4 and 15.11 shall survive the Closing and shall continue in full force
and effect until fully discharged or performed, (b) the representations and
warranties specified in Article 3 and Article 4, and the indemnities specified
in Section 12.2(a)(iii) and Section 12.2(b)(iii), shall survive the Closing for
a period of twelve (12) months, and (c) the indemnities set forth in clauses
(i), (ii) and (iv) of Section 12.2(a) and clauses (i), (ii) and (iv) of Section
12.2(b) shall survive indefinitely. Except in respect of the agreements that
survive the Closing as provided for in the preceding sentence (and with respect
to the breach thereof, the non-breaching party shall have all rights available
at law or equity for such breach), after the Closing neither the Buyer, on the
one hand, nor Seller, on the other hand, shall have any recourse against the
other as a result of the breach of any representation, warranty, covenant or
agreement contained herein, any certificate, document or instrument delivered
in connection herewith or otherwise arising out of or in connection with the
transactions provided for in this Agreement. Notwithstanding anything herein to
the contrary, any representation, warranty, covenant, or agreement which is
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the subject of a claim which is asserted in writing within twelve (12) months
after the Closing Date shall survive with respect to such claim or dispute
until the final resolution thereof.
12.2 INDEMNIFICATION.
12.2(a) Indemnification by Seller. Subject to the conditions
and provisions of Section 12.4 and Section 12.5, from and after the Closing
Date, Seller agrees to indemnify, defend and hold harmless Buyer and its
respective officers, directors, employees, agents and shareholders (the "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 Party, directly or indirectly, by reason of or resulting from: (i)
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; (ii) the business or operations of the Station during the period
prior to the Closing Date; (iii) 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 (iv) any breach by Seller of any
covenants of Seller contained in or made pursuant to this Agreement or any
other Seller Document.
12.2(b) Indemnification by Buyer. Subject to the conditions
and provisions of Section 12.4 and Section 12.5, from and after the Closing
Date, Buyer hereby agrees to indemnify, defend and hold harmless Seller, its
officers, directors, employees, agents and shareholders (the "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 Party, directly or indirectly, by reason of or resulting from: (i)
any failure by Buyer to pay, perform or discharge any Liabilities assumed by
Buyer pursuant to Section 2.6 hereof hereto or pursuant to any Buyer Document;
(ii) the business or operations of the Station during the period from and after
the Closing Date; (iii) 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 (iv) any breach by Buyer of any covenants of Buyer
contained in or made pursuant to this Agreement or any other Buyer Document.
12.2(c) Limitations on Indemnification. Notwithstanding any
other provision of this Agreement to the contrary, (i) neither party hereto
shall be liable to the other party in respect of any indemnification hereunder
pursuant to Section 12.2(a)(iii) or Section 12.2(b)(iii) except to the extent
that the aggregate amount of Losses of the party seeking indemnification (the
"Indemnified Party") from the other party (the "Indemnifying Party") under this
Agreement exceeds One Hundred Thousand Dollars ($100,000)(the "Basket Amount");
provided, however, the Basket Amount shall not be applicable (A) to any amounts
owed in connection with the determination of the prorations pursuant to Section
2.4(b), or (B) any amounts owed by Buyer pursuant to Section 8.4(e)(ii) hereof
and (ii) the maximum liability of any party for indemnification pursuant to
Section 12.2(a)(iii) or Section 12.2(b)(iii) shall be Two Million and No/100
Dollars ($2,000,000.00).
12.2(d) Conditions on 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:
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(i) The Indemnified Party must give 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.
(ii) The Indemnifying Party shall have the right
to undertake, by counsel or other representatives of its own choosing, the
defense of such Losses at the Indemnifying Party's risk and expense.
(iii) 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). 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.
(iv) Anything in this Section 12.2 to the
contrary notwithstanding, (A) if there is a reasonable possibility 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 and (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.
(v) 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.
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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
12.2.(d)(v) 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.
ARTICLE 13
TERMINATION
13.1 TERMINATION.
This Agreement may be terminated at any time prior to the
Closing by:
13.1(a) the mutual consent of Seller and Buyer;
13.1(b) Buyer, by written notice of termination delivered to
Seller, if Seller is in material default of its obligations hereunder and has
failed to cure such default to Buyer's reasonable satisfaction within thirty
(30) days following written notice of such default sent by Buyer to Seller;
13.1(c) Seller, by written notice of termination delivered to
Buyer, if Buyer is in material default of its obligations hereunder and has
failed to cure such default to Seller's reasonable satisfaction within thirty
(30) days following written notice of such default sent by Seller to Buyer; or
13.1(d) By either Buyer or Seller upon written notice of
termination delivered to the other in the event the conditions precedent to
such party's obligations to close have not been satisfied or the closing has
otherwise failed to occur within nine (9) months from the date hereof.
13.2 EFFECT OF TERMINATION.
In the event this Agreement is terminated as provided in this
Section 13.1(a), or (d), 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 with respect to the Station; provided, however,
that the obligations of Buyer and Seller as in Sections 6.3, 7.1, 13.2, 15.2
and 15.3, shall survive such termination. If this Agreement is subject to
termination as provided in Sections 13.1(b) or (c), the rights of the parties
shall be governed by Article 14.
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ARTICLE 14
REMEDIES
14.1 DEFAULT BY SELLER.
If this Agreement is terminated by Buyer pursuant to
Section 13.1(b), Buyer shall be entitled as so:
(i) by written notice to Seller, to terminate
this Agreement, and to instruct the Escrow Agent to disburse the Escrow Deposit
and earnings thereon in the manner provided in the Escrow Agreement; and
(ii) to pursue any and all remedies against
Seller available at law or in equity.
14.2 DEFAULT BY BUYER; LIQUIDATED DAMAGES.
If this Agreement is terminated by Seller pursuant to Section
13.1(c), Seller, as Seller's sole and exclusive remedy, shall be entitled to
receive the Letter of Credit from the Escrow Agent in accordance with the terms
of the Escrow Agreement. Seller and Buyer have provided for the amount of the
Escrow Deposit to be liquidated damages as the sole and exclusive 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
Buyer's obligations to consummate the transactions 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.
14.3 REMEDIES NOT EXCLUSIVE.
Except as otherwise provided in Section 14.2, the remedies
provided in this Article 14 shall be cumulative and not exclusive.
14.4 SPECIFIC PERFORMANCE.
Seller and Buyer acknowledge that the Elcom Assets to be sold
and delivered to Buyer pursuant to this Agreement are unique and that Buyer has
no adequate remedy at law if Seller shall fail to perform any of Seller's
obligations hereunder, and Seller therefore confirms and agrees that Buyer's
right to specific performance is essential to protect the rights and interests
of Buyer. Accordingly, in addition to any other remedies which Buyer may have
hereunder or at law or in equity or otherwise, Seller hereby agrees that Buyer
shall have the right to have all obligations, undertakings, agreements and
other provisions of this Agreement specifically performed by Seller and that
Buyer 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.
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<PAGE> 53
14.5 OTHER TERMINATION.
In the event this Agreement shall not be consummated for any
reason other than as specified in Section 14.2, Buyer shall be entitled to
receive the immediate return of the Letter of Credit from the Escrow Agent.
ARTICLE 15
GENERAL PROVISIONS
15.1 FURTHER ASSURANCES.
Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its commercially reasonable efforts to take or
cause to be taken all such further actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the transactions provided for in this Agreement
or in order to fully effectuate the purposes, terms and conditions of this
Agreement (including, without limitation, (i) effecting the calculations and
payments contemplated by Section 2.4(b) and (ii) executing, delivering and
filing or causing to be executed, delivered and filed such further documents
and instruments and obtaining such consents (including governmental approvals),
as may be necessary or reasonably requested in connection with the consummation
of the transactions provided for herein). In case at any time after the Closing
Date any further action is necessary to carry out the purposes of this
Agreement, each party hereto shall use its best efforts to take all such
necessary action.
15.2 BROKERS.
Seller represents to Buyer that except for Media Venture
Partners (whose fee shall be paid solely by Seller), Seller has not engaged, or
incurred any 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 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 agrees 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 (including, without limitation, the fee of Media Venture Partners).
Notwithstanding any other provision of this Agreement, this Section 15.2 shall
survive the Closing without limitation and shall not be subject to the Basket
Amount contained in Section 12.1(c)(i).
15.3 EXPENSES.
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, Buyer and
Seller shall each pay one half of all expenses with respect to all sales, use,
documentary, stamp, gross receipts, registration, conveyance, excise,
47
<PAGE> 54
recording, license, filing or use Taxes or other similar Taxes and fees
applicable to, imposed upon or arising out of the transactions contemplated
hereby including, without limitation, any transfer Tax or filing fee relating
to the assignment of the FCC Licenses, or the transfer of Real Property or
personal property ("Transfer Taxes"), whether now in effect or hereinafter
adopted and regardless of which party such Transfer Tax is imposed upon, but
excluding any Tax on or measured by net or gross income or gain of Seller
(which Tax or fee shall be paid by Seller). Buyer shall pay all costs and
expenses with respect to any HSR Filings and any title commitments, surveys or
environmental site assessments Buyer elects to obtain in connection with the
transaction provided for herein.
15.4 MAIL.
Seller hereby authorizes and empowers Buyer from and after
the Closing Date (a) to receive and open mail addressed to Seller and (b) to
deal with the contents thereof in any manner Buyer sees fit, provided such mail
and the contents thereof relate to Seller or the Elcom Assets (other than the
Excluded Assets). Seller agrees to deliver to Buyer any mail, checks or other
documents received by it pertaining to Seller or the Elcom Assets. Buyer agrees
to deliver to Seller any mail which it receives to which it is not entitled by
reason of the Agreement or otherwise and to which Seller is entitled.
15.5 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
facsimile transmission addressed as follows:
(i) If to Buyer:
STC Broadcasting, Inc.
3839 4th Street North
Suite 420
St. Petersburg, Florida 33703
Attn: David A. Fitz
Fax: (727) 821-8092
with copies (which shall not constitute
notice) to:
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
Attn: William S. Reyner, Jr.
Fax: (202) 637-5910
48
<PAGE> 55
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Fax: (214) 740-7355
(ii) If to Seller:
Raycom Media, Inc.
201 Monroe Street
Montgomery, Alabama 36104
Attention: John E. Hayes
Fax: (334) 206-1555
with a copy (which shall not constitute
notice) to:
Raycom Media, Inc.
201 Monroe Street
Montgomery, Alabama 36106
Attention: Rebecca Bryan, Esq.
General Counsel
Fax: (334) 206-1554
with a second copy (which shall not
constitute notice) to:
Gregory S. Curran
Maynard, Cooper & Gale, P.C.
1901 Sixth Avenue North
2400 AmSouth/Harbert Plaza
Birmingham, Alabama 35203-2618
Fax: (205) 254-1999
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, or the affidavit of messenger being
deemed conclusive but not exclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
15.6 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
49
<PAGE> 56
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.
15.7 BENEFIT AND ASSIGNMENT.
15.7(a) Except as hereinafter specifically provided in this
Section 15.7, 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
Seller (if the assignor is Buyer) or Buyer (if the assignor is Seller); and any
purported assignment contrary to the terms hereof shall be null, void and of no
force and effect; provided, however, Buyer shall have the right to assign this
Agreement, in whole or in part, to any Affiliate so long as any such assignment
will not delay in any material respect the processing by the FCC of the
application for the assignment of the FCC Licenses. Any assignment in
accordance with the terms hereof shall become effective upon delivery of
written notice in accordance with Section 15.5.
15.7(b) 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 or entity 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.
15.8 ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the Escrow Agreement, including the
Schedules and Exhibits hereto or thereto and the other instruments and
documents referred to herein or therein or delivered pursuant hereto or thereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede 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 parties hereto.
15.9 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.
50
<PAGE> 57
15.10 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.
15.11 GOVERNING LAW.
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.
15.12 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.
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<PAGE> 58
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.
SELLER
ELCOM OF OHIO, INC.
By: /s/ John E. Hayes
-----------------------
John E. Hayes
Its President
BUYER
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------------
David A. Fitz
Its Chief Financial
Officer
52
<PAGE> 1
EXHIBIT 10.12
A G R E E M E N T
BETWEEN
WDTN
AND
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, AFL-CIO
LOCAL NO. 1266
EFFECTIVE JULY 3, 1998
THROUGH JULY 2, 2003
(subject to adjustment
as of date of closing)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - DURATION............................................................
ARTICLE II - ASSURANCES..........................................................
ARTICLE III - RECOGNITION.........................................................
ARTICLE IV - MANAGEMENT RIGHTS...................................................
ARTICLE V - HOURS OF WORK.......................................................
ARTICLE VI - RATES OF PAY........................................................
ARTICLE VII - OVERTIME
ARTICLE VIII - VACATIONS AND PERSONAL DAY..........................................
ARTICLE IX - PERSONAL ILLNESS....................................................
ARTICLE X - LEAVES OF ABSENCE...................................................
ARTICLE XI - GRIEVANCE PROCEDURE AND ARBITRATION.................................
ARTICLE XII - DISCIPLINE AND DISCHARGE............................................
ARTICLE XIII - LAYOFF AND RECALL...................................................
ARTICLE XIV - OTHER CONDITIONS OF EMPLOYMENT......................................
ARTICLE XV - 401K PLAN...........................................................
ARTICLE XVI - RESTRICTION ON OPERATIONS...........................................
ARTICLE XVII - INSURANCE...........................................................
</TABLE>
<PAGE> 3
A G R E E M E N T
This Agreement made and entered into as of this 3rd of July, 1998, by
and between STC Broadcasting, Inc. as the owner and operator of Station WDTN
(hereinafter called the "Station"), and Radio and Television Broadcast Engineers
Local Union 1266 of the International Brotherhood of Electrical Workers,
AFL-CIO, (hereinafter called the "Union").
WITNESSETH:
WHEREAS, both the Station and the Union have a sympathetic interest in
the radio and television broadcasting industry, harmonious understandings are
necessary to improve the relationship between the Station, the Union and the
Public, and all will be benefited by continuous peace and by adjusting any
differences by rational common sense methods, and to these ends this Agreement
is made:
NOW, THEREFORE, in consideration of the promises and agreements of each
party hereto mutually given and bargained in exchange for the promises and
agreements of the other party hereto, the Station and Union promise and agree as
follows:
ARTICLE I - DURATION
SECTION 1.
(a) This Agreement constitutes the entire contract between the Station
and the Union and settles all demands and issues with respect to all matters
subject to collective bargaining. Therefore, the Station and the Union, for the
duration of this Agreement, waive the right, and each agrees that the other
shall not be obligated to bargain collectively with respect to any subject or
matter which is subject to collective bargaining whether or not such subject or
matter is specifically referred to herein.
The parties agree that in interpreting the terms of this Agreement, the
Employer shall not be bound to any claims of past practices which may have
existed under the ownership and operation of WDTN-TV by prior owner before the
commencement of this Agreement.
(b) Changes in, or amendments to, the terms of this Agreement may be
made at any time by mutual agreement of the Station and the Union. When
amendments or revisions are so made, they shall be reduced to writing and
executed in the same manner as this Agreement.
<PAGE> 4
(c) This Agreement shall be binding upon the parties' successors and
assigns.
SECTION 2.
(a) This Agreement shall become effective as of July 3, 1998, and shall
remain in effect up to and including July 2, 2003, and shall automatically renew
itself from year to year thereafter unless written notice to terminate or amend
the Agreement is given by either party to the other at least ninety (90) days
prior to its expiration or the expiration date of any annual renewal thereof.
(b) If notice of termination shall be given, negotiations for a new
Agreement shall take place during the ninety (90) days prior to its expiration.
(c) If notice to amend shall be given, such notice shall set forth the
proposed amendments and the parties shall promptly meet to negotiate with
respect to the proposed amendments. In the event that negotiations for an
amended Agreement shall continue beyond the expiration of the term of this
Agreement, this Agreement shall continue in full force and effect, provided,
however, that either party may then terminate this Agreement upon ten (10) days'
written notice to the other party.
ARTICLE II - ASSURANCES
SECTION 1.
The Union agrees that there shall be no general or partial strike,
direct or sympathy, or other form of work stoppage of any or all of the
employees, or picketing, boycotts directed against the Station or any other
interruptions or delays of work or any other interruptions of the Station's
normal operations during the term of this Agreement.
SECTION 2.
The Station agrees that no lockout against any or all of its employees
shall take place during the term of this Agreement.
SECTION 3.
If any strike or work stoppage occurs in violation of this Agreement,
the Union and its local officers, business agents and representatives agree
immediately to disavow such strike or work stoppage and to use all reasonable
means to prevent the conduct and continuance of such strike or work stoppage.
2
<PAGE> 5
SECTION 4.
In the event of such strike or work stoppage, any employee or employees
found guilty of instigating, fomenting, actively supporting, or condoning such
illegitimate strike or work stoppage, shall be subject to immediate discipline,
including discharge. Such disciplinary action by the Company shall not be
subject to the grievance and arbitration provisions of this Agreement except as
to the questions of whether or not such violation in fact occurred and whether
or not the employees who were discharged in fact instigated, fomented, actively
supported or condoned any activities herein prohibited.
ARTICLE III - RECOGNITION
SECTION 1.
The Station recognizes the Union as the sole and exclusive bargaining
agent for all Producer/Directors, News Photographers, Production Technicians,
Maintenance Engineers, and Broadcast Engineers who are referred to by the terms
"Employee" or "Employees" in all other places in this Agreement, employed at
Television Station WDTN at Dayton, Ohio in its programming and production
departments excluding the Production Manager and all office clerical employees,
professional employees, guards, managers, building maintenance janitors, and all
other news, production, promotion, traffic, administrative and sales department
employees including announcers, and supervisors as defined by the Act, and all
other employees.
SECTION 2.
For the first one hundred twenty (120) days of their employment, all
employees covered by this Agreement will be considered probationary employees
and not subject to the terms of this Agreement except as to rates of pay and
hours of work. The Station shall be the sole judge of the requirements and
qualifications of such probationary employees for retention in the employ of the
Station.
SECTION 3.
In the event that an employee is retained as a regular employee after
the completion of his/her probationary period, his/her length of service will be
computed as of the first day of his/her employment in the unit of employees
covered by this Agreement. Successful completion of the probationary employment
shall not be considered as an offer by the Employer of any employment contract
except as otherwise provided herein.
3
<PAGE> 6
SECTION 4.
(a) The responsibilities of the Producer/Directors covered by this
Agreement will primarily consist of the directing of: programs, commercials,
sales and/or vendor presentations, public service announcements, news
reproduction, assistant directing, and public service programs consistent with
the professional standards established by management. Producer/Directors may
also be assigned remote tape shootings of: video tape programs, commercials,
promotional announcements, and creative unit productions.
(b) The responsibilities of Photographers covered by this Agreement
will primarily consist of: operating electronic cameras and related equipment
for the purpose of news gathering, sports, weather, and other duties as assigned
within the News Department.
Photographer's duties will also include shooting and editing
news and sports stories, and doing live shots for news, weather and sports
segments of newscasts and other programs.
The Station recognizes the professionalism and craftsmanship
of the Photographers. The Station reserves the right for the purpose of
operational necessity or cost effectiveness, as determined by the News Director,
to utilize personnel other than members of the bargaining unit to perform work
which is normally assigned to Photographers, provided that in so doing they do
not cause the layoff of photographers covered by this Agreement and provided
that said assignments are not permanent.
(c) The responsibilities of Maintenance Engineers covered by this
Agreement will primarily consist of: operation, construction, installation,
maintenance and repair of all technical equipment and facilities of the Station
requiring the application of electricity in the transmission of voice, sound and
sight, whether the same is of an experimental or commercial nature, or whether
not used for public consumption, including network originations, recordings,
transcriptions, film and tape, including also the recording and playback,
cutting and splicing of video tape on or off the air when done on the Station's
equipment.
(d) The responsibilities of Broadcast Engineers covered by this
Agreement will primarily consist of: operation of technical equipment for any
purpose under this Agreement (as distinguished from the troubleshooting and
repair of such equipment).
4
<PAGE> 7
(e) The responsibilities of Production Technicians covered by this
Agreement will primarily consist of: performing the work required in the
receiving, shipping, handling, moving, preparation, erection, operation,
dressing and striking of stage sets, supplies and commercial and other props
used on shows originated by the Station; performing the work required in caring
for all props and stage sets so that they are kept in good operating condition;
assisting in the procurement of props and the pulling of cables as directed;
operating dollies, rigging and counterweight systems, flying operating drops,
curtains and similar devised and camera cues, as directed; holding cue cards and
performing similar related duties such as operating prompting devices for
talent, as directed. Production Technicians may also be assigned to operate TV
cameras, place microphones, light sets and replace lamps.
Production Technicians who are deemed qualified by the Station
may also be assigned to do pre-production work, assistant directing, simple
commercial mixes, directing taped news updates and public affairs programs.
Production Technicians may be assigned to shoot remote video tape outside the
studio. Production Technicians may be assigned to shoot remote video tape
outside the studio. Production Technicians will be compensated at the entry
level Producer/Directors rate while performing such work. While assigned such
work, Production Technicians shall not be paid less than two (2) hours at the
applicable Producer/Director rate. In order to be eligible for such higher rate
of pay, a Production Technician must be assigned and working independently in
such duties.
Production Technicians who are deemed qualified by the
Station, may be assigned audio production, including recording, mixing and
related production.
(f) Employees within the bargaining unit may be assigned to
perform any work of the Employer including work outside of the bargaining unit
provided no reduction in their rate of pay occurs and said assignments are not
permanent.
Bargaining unit employees may be assigned to perform the
duties of any bargaining unit positions, provided that said assignment shall be
under the general direction and control of appropriate Station supervision and
provided further, that the employee is capable of performing such assignments.
In the event of any emergency, as defined by the Employer,
persons other than members of the bargaining unit may perform the duties (other
than the routine direction of regularly scheduled newscasts) of a bargaining
unit position as set forth in this Agreement, so long as such performance does
not cause the layoff of any bargaining unit employees.
5
<PAGE> 8
(g) Bargaining unit employees may be assigned the call up to air of
character generating equipment. When assigned such work, employees will be
compensated at the broadcast engineer's rate, if greater than the employee's
rate of pay.
(h) Employees may be required to perform work not covered in this
Section 4 of this Article III, provided that while performing such work all
terms of this Agreement shall apply and be binding.
(i) Bargaining unit employees may be required to perform snow removal
duties in the event of an emergency. The Station may utilize subcontractors to
perform snow removal work.
SECTION 5.
(a) All Employees covered by this Agreement and hired after the
effective date of this Agreement shall become members of the Union on the
thirty-first (31st) day following date of employment and shall remain members as
a condition of continued employment, to the extent of paying periodic membership
dues uniformly required of all Union members. The Union will furnish Employer
with a copy of the Union's written notice of dues delinquency to employee. The
Union shall advise each new hire of the Union membership requirements of this
Agreement.
(b) During the term of this Agreement, the Station agrees to deduct
Union membership dues levied by the International Union or Local Union in
accordance with the Constitution and Bylaws of the Union, from the pay of each
employee who executes or has executed the following "Authorization for Check-off
of Dues".
6
<PAGE> 9
AUTHORIZATION FOR CHECK-OFF OF DUES
Date
--------------------------
"To WDTN Division of STC Broadcasting, Inc. I hereby assign to Local union No.
1266, International Brotherhood of Electrical Workers, AFL-CIO from any wages
earned or to be earned by me as your Employee such sums as the Financial Officer
of said Local Union No. 1266 may certify as due and owing from me as membership
dues, in such sum as may be established from time to time by said Local Union in
accordance with the Constitution of the International Union. I authorize and
direct you to deduct such amounts from my pay and to remit same to the Union at
such times and in such manner a may be agreed upon between you and the Union at
any time while this authorization is in effect. Union dues shall be collected
bi-weekly in advance.
This assignment and authorization, upon acceptance by the Station, shall become
effective in accordance with and subject to the applicable provisions of the
Collective Bargaining Agreement now in effect between the Station and the Union,
provided this assignment and authorization has been delivered to the Station on
or before the tenth (10th) day of the month in which deductions are to be made,
and may be revoked by me at any time by written notice by me to WDTN Division of
STC Broadcasting, Inc."
---------------------------------------------------
(Signature of Employee Here)
---------------------------------------------------
(Address of Employee)
---------------------------------------------------
(Type- or Print Name of Employee Here)
---------------------------------------------------
(City) (State)
---------------------------------------------------
(Date of Signature) (Social Security No.)
---------------------------------------------------
(Date of Acceptance by WDTN)
---------------------------------------------------
(By)
7
<PAGE> 10
The Union agrees to indemnify and save the Company harmless against any
and all claims, demands, suits and other forms of liability, including without
limitations, liability under the provisions of any Federal or State statute,
that shall arise out of or by reason of action taken or not taken by the Company
for the purpose of complying with any of the provisions of this Section 5 of
Article III.
SECTION 6.
When the Employer requires additional personnel, it shall make
reasonable effort to offer available opportunities to current qualified
employees. Furthermore, the Employer shall notify the Union for the purpose of
providing equal opportunity with all other sources to furnish suitable
applicants. This provision shall not interfere with the Employer's right, in its
discretion, to select the new employee, regardless of source.
Within ten (10) calendar days after the hiring of any new bargaining
unit employee, the Employer shall furnish in writing to the Union the name, date
of hire and job classification of the new employee.
SECTION 7.
For the purposes of administering this Agreement, an authorized agent
of the Union shall have reasonable rights of visitation and inspection at the
Station and its facilities during normal working hours; provided, however, that
the exercise thereof shall not interfere with, nor interrupt the Employer's
normal course of business and operations.
SECTION 8.
The Employer shall recognize the Union Steward as the on-site
representative of the Union. It shall be the responsibility of the Steward to
ensure compliance with the terms and conditions of this Agreement on the part of
both the Employer and employees. The Steward shall receive the cooperation of
all Supervisors in so doing and shall be permitted reasonable opportunity to
fulfill that responsibility without disrupting the operation of the Station.
8
<PAGE> 11
SECTION 9.
The Employer shall designate where, and grant permission to the Union,
to place one bulletin board at the Station for the posting of information
pertaining to its members.
SECTION 10.
Part-time employees may be utilized to perform bargaining unit work on
a daily basis. Individual part-time employees may not be normally scheduled to
work more than twenty-four (24) hours in any seven (7) day period commencing
with such employee's first work day in that period. Such part-time employees
shall not be scheduled to work beyond twelve (12) consecutive hours on any day.
The above limitation on maximum hours per week shall not apply to
part-time employees who performed services at WDTN prior to the commencement of
this Agreement.
ARTICLE IV - MANAGEMENT RIGHTS
So long as the provisions of this Article IV are not inconsistent with
the terms of this Agreement, the Management of the Station's operations and the
direction of the working force including, among others, the right to hire,
promote or transfer, to suspend or discharge for proper cause, the right to
relieve employees from duty because of lack of work or for other legitimate
reasons and the right to subcontract work performed by employees covered by this
Agreement is vested exclusively in the management of the Station.
The right of the Company to program its air time in such manner as it
may determine and to establish or to modify standards of performance for all
activities is specifically reserved to the Company. Nothing in this Agreement
shall be construed to limit or in any way restrict the right of the Company to
modify, adopt, install or operate existing, new or improved equipment or methods
of operation. Nothing herein contained shall be intended or shall be considered
as a waiver of any of the usual inherent and fundamental rights of Management,
whether the same were exercised heretofore or not; and the same are hereby
expressly reserved to the Station.
9
<PAGE> 12
ARTICLE V - HOURS OF WORK
SECTION 1.
Employees covered by this Agreement shall be paid only for hours worked
in each regular work week except as provided in Article IX hereof. The Station
reserves the right to establish and adjust working hours in accordance with the
requirements of operations and the schedule of work hours shall not be
considered a guarantee of employment.
SECTION 2.
The normal schedule of hours shall consist of:
(a) Eight (8) consecutive hours per day, exclusive of unpaid lunch
period.
(b) Five (5) consecutive days per week. Employees shall be granted two
(2) consecutive days off each week, provided that this requirement may be varied
only when days off follow commencement or conclusion of a week, so that one (1)
day may be the end of the one (1) week and the second (2nd) day, the
commencement of the next week.
(c) In addition to the above schedule of hours, the Station may provide
such other combinations of work days and hours (i.e., 4 days of 10 hour shifts)
as deemed appropriate by the Station, provided that under such alternate 40 hour
shift, the employee is not required to work split shifts and, further; that the
Employee is scheduled so as to receive at least two (2) consecutive days off.
Additionally, should any such alternate combination of work days call for more
than ten (10) hours work in a day, such alternate schedule must have the
agreement of the affected employee(s).
SECTION 3.
A one-half (1/2) hour unpaid lunch period shall be scheduled by the
Station for each employee at approximately the midpoint of the workday. By
mutual agreement with the Employer, employees may receive a one (1) hour unpaid
lunch period.
SECTION 4.
The regular work week shall begin at 12:01 a.m. Monday and end at 12:00
a.m. on the following Monday.
SECTION 5.
(a) Employees' days off may be nonconsecutive upon agreement of the
Station and the employee involved.
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<PAGE> 13
(b) The Station shall establish and post a regular daily schedule
starting time for each employee at least seven (7) days in advance. Any changes
in such schedule shall be posted at least seven (7) days in advance, except in
cases involving the cancellation of special events, changes in network schedules
or sporting events, or other unforeseen circumstances or emergencies which are
beyond the control of the Station.
SECTION 6.
A day shall consist of twenty-four (24) consecutive hours starting at
the beginning of the regularly scheduled shift in which the employee starts to
work but this definition shall not apply when a shift change is involved and
shall not carry over from one regular work week into the next regular work week.
Forty-eight (48) hours' advance notice of any shift change will be given
whenever possible to regular full-time employees.
SECTION 7.
Scheduling of shift assignments and the days of regular work weeks for
the various employees shall be within the Station's management rights. The
Employer, in doing so, shall take into consideration, the preferences of the
employees within the classifications based upon seniority in such
classification. However, it is understood and agreed that the efficiency of the
operations as determined by the Employer will be the controlling factor as to
whether the individual employee's preferences for shift assignments and work
week designations will be granted.
ARTICLE VI - RATES OF PAY
(a) MINIMUM STARTING SALARIES
During the term of this Agreement, minimum annual starting salaries for
employees hired after the commencement of this Agreement shall be as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ANNUAL SALARY PRO RATA ANNUAL SALARY PRO RATA
CLASSIFICATION YEARS 1, 2, 3 HOURLY RATE YEARS 4 AND 5 HOURLY RATE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Producers/Directors $20,000.00 $9.58 $21,000.00 $ 10.06
- ---------------------------------------------------------------------------------------------------------------
Photographer 15,000.00 7.18 16,500.00 7.90
- ---------------------------------------------------------------------------------------------------------------
Broadcast Engineer 15,000.00 7.18 16,500.00 7.90
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Maintenance Engineer 22,000.00 10.54 23,000.00 11.02
- ---------------------------------------------------------------------------------------------------------------
Production Technicians 14,000.00 6.70 15,000.00 7.18
- ---------------------------------------------------------------------------------------------------------------
Part-time 6.70 7.25
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Nothing in this Agreement shall prevent the Employer and new employee from
agreeing to a higher entry level. Any increases thereafter acquired by virtue of
the terms of this Agreement shall be added to the higher entry level wage so
agreed upon.
(b) MAINTENANCE ENGINEERS, PRODUCTION TECHNICIANS AND PRODUCERS/DIRECTORS
Full-time employees shall receive an increase to their pre-existing base wage as
follows:
<TABLE>
<S> <C>
Effective 6/1/1998 2.5%
Effective 6/1/1999 2.5%
Effective 6/1/2000 3.0%
Effective 6/1/2001 3.0%
Effective 6/1/2002 3.0%
</TABLE>
PHOTOGRAPHER AND BROADCAST ENGINEERS
Full-time employees making more than $35,000 on an annual basis, exclusive of
overtime, shall receive an increase to their pre-existing base wage as follows:
<TABLE>
<S> <C>
Effective 6/1/1998 1.0%
Effective 6/1/1999 1.5%
Effective 6/1/2000 2.5%
Effective 6/1/2001 2.5%
Effective 6/1/2002 2.5%
</TABLE>
Full-time employees making less than $35,000 on an annual basis, exclusive of
overtime, shall receive an increase to their pre-existing base wage as follows:
<TABLE>
<S> <C>
Effective 6/1/1998 2.5%
Effective 6/1/1999 2.5%
Effective 6/1/2000 3.0%
Effective 6/1/2001 3.0%
Effective 6/1/2002 3.0%
</TABLE>
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<PAGE> 15
PART-TIME
Part-time employees shall receive an increase to their pre-existing base wage as
follows:
Existing part-time employees who earn less than $6.70 per hour prior to the
commencement of this Agreement, shall have their wage rates raised to $6.70 per
hour and thereafter receive increases as noted below. Part-time employees who
receive greater than $6.70 per hour prior to commencement of this Agreement
shall have their wage rates increased as follows:
<TABLE>
<S> <C>
Effective 6/1/1998 2.5%
Effective 6/1/1999 2.5%
Effective 6/1/2000 2.5%
Effective 6/1/2001 3.0%
Effective 6/1/2002 3.0%
</TABLE>
Effective June 1, 2001, the minimum starting hourly rate for part-time employees
shall be $7.25 per hour.
(c) CONTRACT SIGNING BONUS
In addition to other forms of compensation and adjustments to be received under
this Agreement, each full-time employee shall receive a one-time bonus, which
shall not be added to such employee's base wage, in the amount of 3% of the
employee's annual base rate prior to this Agreement. This bonus will be paid
within fifteen (15) days of the effective date of this Agreement. All part-time
employees will receive a $100 bonus (or 3% of the employee's annual base rate,
whichever is higher) payable within fifteen (15) days of the effective date of
this Agreement.
SECTION 1.
It is understood that the reclassification, assignment, promotion or
reassignment of any employee in any job classification set forth herein shall be
at the sole discretion of Management. It is also understood that in considering
bargaining unit employees for promotion within the unit, the Station will take
qualifications and ability into account and if such factors are considered
equal, then seniority shall be the determining factor.
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<PAGE> 16
SECTION 2.
If the Station (in writing) assigns a Producer/Director to temporarily
function as the Production Manager for a period of one (1) week or more, the
Producer/Director shall be paid an additional 10% of pay for each full week
while assigned.
SECTION 3 - HEALTH INSURANCE, VACATION LEAVE AND SICK LEAVE BENEFITS FOR
PART-TIME EMPLOYEES.
During the term of this Agreement, part-time employees who are
regularly scheduled to work more than 30 hours per week shall be entitled to
participate in the medical insurance programs made available to the full-time
bargaining unit employees, subject to the same participation and contribution
standards as such other employees. Such part-time employees shall also be
entitled to vacation leave and sick leave on a pro rata basis depending upon
their hours worked, in accordance with Articles VII and XI of this Agreement.
Part-time employees regularly scheduled to work 24 hours or less per
week shall receive vacation leave and sick leave on a pro rata basis depending
on the average hours worked, in accordance with the above noted Articles. Such
part-time employees shall not be entitled to participate in the Employer's
medical insurance programs.
Part-time employees employed at WDTN prior to commencement of this
Agreement, who participated in and received health insurance under the prior
owner's health plans, shall be eligible to participate in the Employer's medical
insurance plans as noted in Article XVII of this Agreement at the same rates of
contribution as such other employees covered by the Employer medical insurance
plans.
ARTICLE VII - OVERTIME
SECTION 1.
All overtime payments shall be computed at the employee's basic
straight-time hourly rate of pay.
SECTION 2.
Employees shall be paid overtime as follows:
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<PAGE> 17
(a) One and one-half (1 1/2) times the employee's basic straight-time
hourly rate for all hours worked in excess of the Employee's scheduled hours in
any one (1) day, or
(b) One and one-half (1 1/2) times the employee's basic straight-time
hourly rate for all hours worked in excess of forty (40) hours in any one (1)
work week.
(c) An employee who is called back to work after he/she has completed
at least a normal day's schedule of work and has left the premises, shall be
paid no less than four (4) hours at one and one-half (1 1/2) times his/her basic
straight-time hourly rate.
(d) An employee who has worked at least a normal work week of his or
her scheduled days and who is called in to work on a normal day off shall be
paid for no less than four (4) hours at one and one-half (1 1/2) times his/her
basic straight-time hourly rate.
(e) There shall be a break of at least ten (10) hours between the
termination of the employee's last work shift and the commencement of his/her
next work shift. Employees who are required to work during their turnaround
period will receive time and one-half (1 1/2) compensation for the hours worked
by them during the turnaround period.
(f) An additional two dollars per hour ($2.00/hr.) shall be added to
the basic straight-time hourly rate for work performed between the hours of 1:00
a.m. and 4:00 a.m.
(g) A regular full-time employee will receive double time for work
performed on the seventh (7th) day. It is understood this provision requires an
employee to actually work seven (7) consecutive days.
(h) The requirements for the payment of overtime set forth in this
Section 2 shall not be cumulative so that if the Station pays overtime or a
premium under one of the foregoing subparagraphs of this Section 2, it shall not
be required to pay for overtime work performed in the same period of time under
any other subparagraphs.
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<PAGE> 18
ARTICLE VIII - VACATIONS, HOLIDAYS AND PERSONAL DAYS
SECTION 1.
Vacations will be granted to employees as provided in Section 4 of this
Article VIII. Vacations will, so far as possible, be granted at times most
desired by employees, but the right to schedule an employee's vacation period is
reserved by the Station in order to insure the orderly and efficient operation
of the Station.
SECTION 2.
The "vacation year" which shall be used in computing the amount of
vacation time shall begin on January 1 of each calendar year in which this
Agreement is in effect and shall end on December 31 of the following calendar
year. (See Section 6, item (d) for the transition period from date of Agreement
to December 31, 1998.)
SECTION 3.
The "vacation season" in which vacations may be granted shall be from
January 1 to December 31, inclusive, of each year. Vacation schedule sign-up
lists will be posted on December 15, of each year or on such earlier date as
mutually agreed upon. Employees within each classification may sign up for
proposed vacation scheduling, to the extent reasonably possible and in
accordance with the Station's coverage requirements.
SECTION 4.
All employees employed on a regular full-time basis who have been in
the continuous full-time employment of the Station for less than one (1) year as
of January 1 of any year, shall receive eight-tenths (8/10) of one day of
vacation with pay for each full month of such full-time service to be taken
during the current vacation season.
All regular, full-time employees who have been in the continuous
full-time employment of the Station for more than one (1) year but less than
five (5) years as of January 1 of each year, shall receive two (2) calendar
weeks vacation with pay during the current vacation season.
All regular, full-time employees who have been in the continuous
full-time employment of the Station for more than five (5) years as of January I
of each year, shall receive three (3) calendar weeks vacation with pay during
the current vacation season.
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<PAGE> 19
SECTION 5.
Each regular, full-time employee entitled to an annual vacation in
accordance with the provisions of this Article, shall be paid his/her regular
straight-time weekly salary for each week of such vacation.
SECTION 6.
(a) Vacations may not be accumulated from year to year, nor may
vacation be postponed from one vacation season to another, unless the failure to
utilize the vacation leave by December 31 was a result of Station scheduling
requirements which made it impossible for the employee to utilize his or her
remaining vacation.
(b) Vacations must be taken in 40-hour blocks, however, by mutual
agreement one (1) week of an employee's leave vacation may be split when
approved in advance by the Station.
(c) As of January 1, 1999, all employees will be credited with vacation
according to length of service with the Station. Vacation will be credited in
the same manner on January 1 of each succeeding year of this Agreement.
(d) For the period commencing with the beginning of this Agreement and
ending on December 31, 1998, Employees will be granted 7/12ths of the annual
vacation leave based upon the following schedule:
As of January 1, 1998:
Less than 1 year of completed service:
1 wk. (40 hours) x 7/12ths = 24 hours (3 days)
More than 1 year of completed service but less than 5 years of
completed service:
2 wks. (80 hours) x 7/12ths = 48 hours (1 week plus 1 day)
More than 5 years of completed service:
3 wks. (120 hours) x 7/12ths = 72 hours (1 week plus 4 days)
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<PAGE> 20
SECTION 7.
Employees who resign with two (2) weeks' notice or who are laid off or
are terminated for any reason other than just cause, during the year and who
have not yet enjoyed their vacation privileges to which they are entitled, shall
be paid for any such unused vacation.
Employees who have completed their probationary employment and who
resign with at least two (2) weeks' advance notice, or are terminated by the
Company due to a reduction in staff shall receive pro-rata accrued vacation pay
equal to 1/12th of their unused vacation allowance for each full month of
service since the preceding January 1st, less any leave time used as of the
resignation date.
In the event an Employee terminates employment and has utilized
vacation time in excess of the amount earned for that year on a pro-rata basis,
the employee will be required to make reimbursement for the vacation paid but
not earned from his/her final paycheck.
Employees who are discharged for cause shall not be entitled to accrued
pro-rata vacation pay.
SECTION 8 - HOLIDAYS AND PERSONAL DAYS.
Except as noted below, during each calendar year of this Agreement,
each regular full-time employee shall be entitled to three (3) paid holidays:
New Year's Day, Thanksgiving Day and Christmas Day plus 6 paid personal leave
days which can be scheduled as noted below in Section 10. Except in emergencies,
personal leave days must be approved by the employee's supervisor at least seven
(7) days in advance and are subject to the orderly and efficient operational
requirements of the Station.
If a full-time employee has completed ten (10) years of continuous
service at WDTN on January 1 of any contract year, he or she shall receive one
(1) additional paid personal leave day. If such employee has completed twenty
(20) years or more continuous service, he or she shall receive two additional
paid personal leave days.
During the period commencing with the beginning of this Agreement and
ending on December 31, 1998, each regular full-time employee shall be entitled
to two (2) holidays: Thanksgiving and Christmas day plus 3.5 paid personal leave
days subject to the same scheduling requirements as noted below.
18
<PAGE> 21
When any of the fixed holidays fall on a full-time employee's day off,
or during the employee's vacation or while such employee is on an ordered
military leave for reserve duty, and such holiday is not worked, the employee
shall receive the holiday allowance for that day (one (1) full day's pay at
straight-time rate).
SECTION 9 - WORK ON FIXED HOLIDAYS.
(a) An employee required to work on a fixed holiday falling on his/her
scheduled day off shall be paid at the rate of one and one-half (1 1/2) times
his/her straight-time rate for the work so performed, plus a holiday allowance
for all such hours worked at his/her straight-time rate of pay.
(b) An employee required to work on a fixed holiday falling on his/her
regular scheduled workday shall be paid at time and one-half (1 1/2) his/her
straight-time rate for work so performed, plus a holiday allowance for all such
hours worked at his/her straight-time rate of pay.
(c) If an employee is required to work on his or her previously
scheduled personal leave day, such employee can work said day as a holiday or
work the day and take another personal holiday to be scheduled in the future as
a holiday.
SECTION 10 - PERSONAL DAYS SCHEDULING.
A personal holiday schedule sign-up list will be posted on December 15
of each year or such other earlier date as mutually agreed. Employees in each
classification may sign up for proposed personal holiday scheduling, to the
extent reasonably possible and in accordance with the Station's coverage
requirements. In the event that selected days are contrary to the operational
needs of the Station, seniority shall prevail. In utilizing the six (6) personal
holidays, at least two (2) days must be taken in each of the first and second
quarters of the calendar year. The employee's remaining personal holidays can be
utilized at any time during the remainder of the calendar year.
SECTION 11 - ELIGIBILITY.
To be eligible for holiday pay, an employee must have worked, unless
specifically excused by the Employer, his or her last scheduled work day
immediately preceding and immediately following the holiday.
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<PAGE> 22
ARTICLE IX - PERSONAL ILLNESS
SECTION 1.
(a) A regular full-time employee who is compelled to be absent from
work temporarily-because of a legitimate illness or disability and who has at
least one hundred twenty (120) days of continuous service with the Station as of
the date of such illness or disability, shall receive full pay for the period of
illness or disability not to exceed ten (10) days (eighty (80) hours) in any one
calendar year.
(b) In addition to the ten (10) working days compensable sick leave
with which he/she will be credited, an eligible regular full-time employee may
accumulate and carry over from year to year any unused compensable sick leave
accrued from the prior calendar year up to a maximum of twenty (20) days at the
start of any calendar year.
Furthermore, during the term of this Agreement, if an employee(s)
with less than (10) years continuous service utilizes less than five (5) sick
leave days during the calendar year, the Employer shall contribute an additional
one (1) day of leave to such employee's accumulated sick leave. If the
employee(s) has more than ten (10) years continuous service and utilizes less
than five (5) sick leave days during the calendar year, the Employer shall
contribute an additional two (2) days of leave to such employee's accumulated
sick leave. Such additional leave days contributed by the Employer pursuant to
this paragraph shall not be counted against the maximum employee accumulation of
twenty (20) days permitted in the preceding paragraph.
(c) The Station shall have the right to require any employee absent
from work due to sickness, illness or accident to be examined by a physician,
and may require a physician's certificate as to the existence of such illness or
disability.
(d) During the term of this Agreement, the Station shall provide, at no
cost to the employee, long and short-term disability insurance coverage for each
full-time employee. Such coverage shall be in accordance with the Station's
disability insurance plans afforded to nonbargaining unit employees at the
Station.
SECTION 2 - FUNERAL AND BEREAVEMENT LEAVE.
An Employee compelled to be absent from work because of a death in
his/her immediate family shall not suffer any reduction in pay provided that the
absence for such reason does not exceed three (3) days.
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<PAGE> 23
SECTION 3 - ILLNESS IN FAMILY
The Station reserves the right to consider on their merits, and in
accordance with the Station's policy under the Family Medical Leave Act (FMLA),
individual cases of absence due to illness of a member of the immediate family
of an employee, and individual cases of absence in excess of three (3) days
because of a death in the immediate family of the employee.
If in the sole judgement of the Station a particular case warrants the
granting of such time off or excess time off without reduction of pay, the
Station may do so without such action constituting a precedent which shall apply
with respect to the same situation or similar cases arising in the future.
Whenever the Station may grant time off without reduction in pay in a
case arising under this Section 3, the Union shall furnish to the Station upon
request, a written statement that the Station's action in the case does not
constitute a precedent.
SECTION 4 - DEFINITIONS OF IMMEDIATE FAMILY
For the purposes of this Article, the term "immediate family" shall be
deemed to include an Employee's spouse, children, parents, brothers, sisters,
brothers-in-law, sisters-in-law, father-in-law, mother-in-law and grandparents.
ARTICLE X - LEAVES OF ABSENCE
SECTION 1 - MILITARY LEAVE OF ABSENCE.
Employees shall have the right to take military leave in accordance
with the provisions for military leaves provided to nonbargaining unit employees
as per the Employee Handbook.
SECTION 2 - OTHER LEAVES OF ABSENCE.
(a) Illness Leave of Absence
An employee who has exhausted his/her authorized compensable sick leave
allowance may request an illness leave of absence for a period not to exceed six
(6) months. Such leave of absence request must be accompanied by medical
evidence satisfactory to the Station that the employee is unable to work because
of illness or pregnancy related conditions. All illness and maternity leaves of
absence will be without pay.
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<PAGE> 24
(b) Application for Leave of Absence
All illness leaves of absence should be applied for in advance, in
writing, with the reasons for and the duration of such leave detailed by the
employee. All leave of absence requests must be approved by the Station Manager.
(c) Re-Employment
Consideration for re-employment following the expiration of an illness
leave of absence will be based on submission of medical evidence satisfactory to
the Station as to the physical fitness of the employee and in accordance with
the Station policy pursuant to the Family Medical Leave Act (FMLA), if
applicable. If re-employed, the employee's length-of-service date shall not be
reduced by the length of the leave of absence. An employee who makes application
for re-employment at the commencement of the leave of absence if it is open or
available, or another job for which he or she is qualified, if such other job is
available. The employee will be terminated if there is no suitable opening at
the time application for re-employment is made, or if application for
re-employment is not made within seven (7) days after the expiration of the
leave of absence.
(d) Jury Duty
Employees shall receive jury duty pay in accordance with the schedule
for jury duty pay provided to nonbargaining unit employees as per the Employee
Handbook.
(e) Union Leaves
The Union may designate an employee who shall be granted a reasonable
short-term unpaid leave of absence for the purpose of attending to Union
business, subject to the operational needs of the Station.
(f) Other Personal Leaves
Should urgent circumstances arise, employees may request an unpaid
leave for personal reasons. All earned vacation time must be taken before any
leave begins. Personal leaves are limited to a maximum of thirty (30) days after
the full use of vacation time.
(g) Child Rearing Leave
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<PAGE> 25
Employees shall have the right to take child rearing leave in
accordance with the provisions for such leave provided to nonbargaining unit
employees as per the Employee Handbook.
(h) Prohibition of Other Work During Approved Leave of Absence
During the period of approved leave of absence afforded by this
Section, employees shall not be permitted to perform work or services for wages
or other remuneration for any other entity or person(s). Any waiver of this
provision must be approved in advance, in writing, by the General Manager.
ARTICLE XI- GRIEVANCE PROCEDURE AND ARBITRATION
SECTION 1.
A Grievance is defined as a dispute an employee or the Union may have
with the Station relating to the interpretation, application or violation of the
express terms of this Agreement. Should any grievance arise, an effort will be
made to adjust such grievance in the following manner:
SECTION 2.
All disputes shall first be taken up for adjustment between the
immediate supervisor and the Employee, either individually or together with the
Union Representative. Disposition of any grievance at this level shall be
without precedent to either the Station or the Union for any purpose whatsoever.
Step 1 - The aggrieved employee(s) shall present his/her grievance in
writing, with specific Article and Section of Agreement in dispute, to the
supervisor or his/her designated representative, who will answer the grievance
within seven (7) days after receipt. This written presentation of the grievance
to the Department Supervisor or his/her designated representative must take
place within ten (10) days after the employee has knowledge of the facts which
gave rise to the grievance or with reasonable diligence should have knowledge of
such facts and must set forth the specific provision(s) allegedly violated. A
Union representative shall be given the opportunity to be present and
participate in any meetings and/or adjustments if made during Step 1.
Step 2 - If the grievance is to be processed further, the Grievance
Committee of the Union and the Department Supervisor shall meet and discuss the
grievance within seven (7) days after the completion of Step 1. The Station
shall give its answer within seven (7) days following the date of such meeting.
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<PAGE> 26
Step 3 - Within seven (7) days after completion of Step 2, the
grievance, if it is to be processed further, shall be taken up between the
President of the Union or his/her designated representative, and the General
Manager or his/her designated representative.
Step 4 - If not settled in Step 3, the grievance may be referred to
arbitration in writing by the Union under the Voluntary Labor Arbitration Rules
of the American Arbitration Association, then obtaining. A copy of such referral
shall be sent to the Station.
SECTION 3.
Grievances of a general nature may be initiated by the Union in Step 2
of the grievance procedure. However, grievances involving discipline or
discharge may be initiated by the Union in Step 2 or Step 3 of the grievance
procedure, provided that the grieving party clearly indicates in the written
grievance which Step is requested.
SECTION 4.
Grievances shall be filed promptly. No grievances shall be valid unless
submitted within ten (10) days after the employee or Local Union 1266 of the
IBEW knew, or by reasonable diligence could have known, of the facts giving rise
to the grievance. In no event shall the Station be liable for back pay for any
period prior to fifteen (15) days before the grievance is taken up in Step 1. If
it is established that the employee was not properly compensated in accordance
with the provisions of this Agreement, the maximum back pay period for which the
Company may be held liable shall be thirty (30) days prior to the date on which
the grievance was called to the attention of the Station as provided in Step 1
of Section 2 of Article XI.
SECTION 5.
(a) A grievance shall be deemed to have been settled on the basis of
the disposition given in accordance with the procedure set forth in Section 2
hereof it if is not appealed in writing to the next Step within seven (7) days
following date of such disposition, unless the time for such appeal shall be
extended by agreement of the Station and the Union.
(b) The Station or the Union, as the case may be, shall give its answer
to all grievances submitted or appealed in accordance with the procedures set
forth
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<PAGE> 27
in Section 2 of Article XI within seven (7) days following the date of such
submission or appeal.
(c) Response by the Station to all Second and Third Step grievance
meetings shall be in writing.
SECTION 6.
Any grievance properly referred to the arbitration as provided in
Section 2 of Article V shall be considered by an Arbitrator, who shall be
selected under the Voluntary Labor Arbitration Rules, the obtaining, of the
American Arbitration Association ("AAA"), provided, however, in the event the
parties are unable to select an Arbitrator from any list furnished by the AAA,
notwithstanding any provision in the AAA rules to the contrary, the AAA shall
not have the authority to independently appoint an Arbitrator, but shall submit
additional lists, as required, until an Arbitrator can be selected from a list
furnished by the AAA.
The Arbitrator shall proceed to consider the grievance without delay,
and shall render his/her decision promptly, following the conclusion of his/her
taking of evidence in the case.
The jurisdiction of any Arbitrator to whom a grievance may be referred
under the provisions of this Article, shall be limited to determining questions
involving the interpretation, application or alleged violation of the terms of
this Agreement, and in no event shall any such Arbitrator be empowered to add
to, subtract from, or change any of the provisions of this Agreement. Not more
than one (1) grievance shall be referred to an Arbitrator in the same
proceeding. The decision of the Arbitrator shall be final and binding upon the
Station and the Union.
The fees and/or expenses of the America Arbitration Association shall
be borne equally by the parties.
SECTION 7.
The Station agrees to meet and confer with representatives of the Union
at reasonable times on any and all questions or matters relative to the terms
and conditions of this Agreement. Except during arbitration on proceedings and
during negotiations with respect to the amendment or notification of this
Agreement or the terms and provisions of a new Agreement, as provided in Article
1, Section I hereof, any Employee acting in an official capacity as a
representative of the Union; may confer with the Station during regular working
hours without loss of time or pay subject to prior approval of Management.
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<PAGE> 28
SECTION 8.
As of the date of the execution of this Agreement there are no
outstanding grievances which remain to be settled after the signing. Any
grievances raised by the Union after its execution which relate to or arise from
events which predate the execution are of no force and effect.
ARTICLE XII - DISCIPLINE AND DISCHARGE
The Station shall have the right to discharge or discipline any regular
employee covered by this Agreement for just cause.
Except for intoxication while on duty (illegally prescribed drugs
and/or alcohol), or deliberate and aggravated misconduct, sabotage or deliberate
insubordination, discharges shall be preceded by two (2) weeks' written notice
or two (2) weeks pay in lieu thereof. The written notice of discharge shall
state the reason therefor. The written notice of discharge shall state the
reason therefor.
The Union may inquire as to the causes of such discharge, and, if after
a fair and impartial investigation it believes the discharge to be unfair and
capricious and/or unjustified, the Union shall make known to the Station its
findings and beliefs, and if the Station refuses to reinstate the discharged
bargaining unit member, the discharge shall then become subject to the Grievance
and Arbitration Procedure as provided in this Agreement and shall enter the
Grievance Procedure at the Third Step.
XIII - LAYOFF AND RECALL
SECTION 1.
When it becomes necessary for the station to lay off bargaining
employees, such layoffs will be by classifications, and consideration will be
given to the following factors in the following order:
(a) Qualifications to perform the work required.
(b) Length of continuous service in the classification by
inverse seniority order.
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<PAGE> 29
SECTION 2.
(a) Should it become necessary at any time for the Station to lay off a
regular, full-time employee, the Station shall give him at least two (2) weeks'
notice, in writing, or pay in lieu thereof, of every such layoff.
(b) A regular, full-time employee who is laid off in accordance with
this Article, and who has at least one (1) full year of seniority on the date
thereof, may receive severance pay as hereinafter specified. The amount of
severance pay due to an eligible employee shall be equal to one (1) week of pay
at this regular straight-time rate for each full year of continuous
length-of-service with the Station, provided that the maximum amount of
severance pay hereunder shall be eight (8) weeks of pay; and provided, further,
that if a laid-off employee is recalled by the Company under the provisions of
Section 3 of this Article, and is subsequently again laid off under this Section
2, he shall receive no credit (in computing severance pay for such subsequent
layoff) for any period or periods of service with the company credited toward
the computation of severance pay on the occasion of any prior layoff.
(c) If a Maintenance Engineer is subject to layoff due to reduction in
force in the Engineering Department, and elects to displace a Broadcast Engineer
by virtue of qualifications and prior seniority in that classification, he shall
receive as his rate of pay 1.2 times the average base salary of the Broadcast
Engineers employed by the prior owner of WDTN as of the date of the transfer of
ownership to STC Corporation.
SECTION 3.
A regular full-time employee who is laid off in accordance with this
Article and who elects not to receive severance pay, shall be offered a vacancy,
if one occurs, in order of his seniority, provided that he has performed the
duties of the position while employment at WDTN and he/she is able to do the job
and provided further that:
(a) This right to re-employment, together with any applicable seniority
rights, shall continue for a period of one (1) year following the date of the
last layoff.
(b) If after having been laid off for a period of one (1) year, an
employee reports at the Station for employment and no work is available, the
employee will be paid the severance pay that he would otherwise have been
eligible to receive on his date of layoff.
27
<PAGE> 30
SECTION 4.
An Employee on layoff shall forfeit his re-employment rights and shall
be considered as having quit if he fails to report for work within fourteen (14)
calendar days following notice of recall sent by the Station to his last-known
address appearing on the Station's records.
The Station shall be entitled to rely on the last residence address
which the employee has furnished in writing to the Station.
SECTION 5.
If a full-time bargaining unit member is to be laid off as a result of
the above process, he/she shall have the right to elect to take a part-time
position for which he or she is qualified. In such case, the Station will have
the right to terminate or further reduce the hours of the adversely affected
part-time employee.
SECTION 6.
Whenever any layoff results from the introduction of any process,
equipment or device not now in use and within Union jurisdiction, the employee
to be laid off will be given at least two (2) months' notice in advance of the
effective date of the layoff or two (2) months' pay in lieu thereof.
ARTICLE XIV - OTHER CONDITIONS OF EMPLOYMENT
SECTION 1.
Upon submission of appropriate documentation, pursuant to IRS
requirements, the Company shall reimburse or advance employees in the bargaining
unit for all meal and lodging and other reasonable related expenses incurred or
to be incurred by such employees who are required to perform services outside
the Dayton, Ohio DMA.
Prior approval of the Employer is required for allowances under this Section.
SECTION 2.
The Station and IBEW affirm their intentions to continue to adhere to
and support a policy which affords equal opportunity to qualified individuals
regardless of their race, creed, color, handicap, national origin, age, sex or
membership in any other legally protected classification.
28
<PAGE> 31
SECTION 3.
In the event that now or hereafter there is any State or Federal Law or
any Directive, Order, or Rule or Regulation made pursuant thereto, which is in
conflict with the provisions of this Agreement, the same shall supersede any
provision or provisions of any agreement between the parties which is in
conflict therewith and shall thereafter govern and control the relations and
conduct of the parties so long as such Law, Directive, Order, Rule or Regulation
shall remain in effect. All provisions of this Agreement not so affected shall
remain in full force and effect during the term of this Agreement.
SECTION 4.
Time spent in traveling on Station assignments, for purposes of
determining hours worked, will be computed in accordance with the regulations
and provisions of the Fair Labor Standards Act.
SECTION 5.
Trainees employed by the Station may be assigned to perform work
covered by the Collective Bargaining Agreement between the Company and the Union
as part of their on-the-job training program, provided such Trainees do not
replace or displace an employee covered by the Agreement and provided further
that the Trainees will work under the general supervision of a bargaining unit
employee and such Trainees will be in addition to the assigned employees
required.
Such Trainees employed by the Company shall not be covered by any of
the provisions of this Agreement.
ARTICLE XV - 401K PLAN
Employees covered by this Agreement shall be eligible to participate in
the Employer's 401(k) Plan at the same rate and benefit levels provided to
non-bargaining unit employees. All administrative costs and expenses associate
with this Plan shall be borne by the Employer.
29
<PAGE> 32
ARTICLE XVI - RESTRICTION ON OPERATIONS
The parties mutually recognize the necessity of remaining competitive
by adopting technological advancements. Therefore, nothing in this Agreement
shall be construed to limit or in any way restrict the Station from introducing,
modifying, installing, revamping or utilizing new or improved equipment and/or
methods of operation.
ARTICLE XVII - INSURANCE
SECTION 1.
(a) During the term of this Agreement, regular full-time employees
shall be entitled to participate in the medical insurance programs generally
made available to management and salaried employees at WDTN-TV, including major
medical, vision and dental, subject to the same eligibility, participation and
contribution standards as such as other employees.
(b) During the term of this Agreement, the Employer agrees to
contribute 60% of the cost of employee health insurance costs covering health,
dental and vision care. If an employee chooses an Employer controlled plan, the
contribution by the Employer will increase to 70% of such costs.
(c) During the term of this Agreement, the Employer agrees to meet with
a Union designated committee to review the various plans offered and discuss,
where appropriate, suggestions on improvements.
SECTION 2.
Individuals returning to work after an illness, disability or other
leave granted under the Employee Assistance Program for treatment or
rehabilitation related to alcohol or substance abuse may be required to sign a
re-entry agreement as previously utilized by the Station as a condition of
return to work. The Station may limit any such leave to one (1) occurrence, in
its discretion.
SECTION 3.
During the term of this Agreement, all full-time employees shall
receive, at no cost of the employee, life insurance coverage in accordance with
the Employer's plan in effect as of the execution of this Agreement. Such plan
shall provide a death benefit of one and one-half (1 1/2) times the individual
employee's salary.
30
<PAGE> 33
SECTION 4.
During the term of this Agreement, the Employer shall provide, at no
cost to the employee, the benefits of the long-term care coverage plan for each
full-time employee. Such coverage shall be in accordance with the Employer's
coverage plans afforded to nonbargaining unit employees at the Station.
SECTION 5.
During the term of this Agreement, the Employer shall provide, at no
cost to the employee, the benefits of the travel accident benefit plan for each
full-time employee. Such coverage shall be in accordance with the Employer's
coverage plans afforded to nonbargaining unit employees at the Station.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
Officers and Representatives, have caused this Agreement to be executed on the
day and year first above written.
RADIO AND TELEVISION BROADCAST WDTN
ENGINEERS, LOCAL UNION 1266 OF ---------------------------
THE INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, AFL-CIO
By /s/ Don Kuykendall By /s/ David LaFrance
------------------------- ------------------------------
Don Kuykendall, President David LaFrance, Vice President
IBEW Local 1266 and General Manager, WDTN
By /s/ Fred L. Schoenhofer By /s/ Steve Fischer
------------------------- --------------------------------
Union Steward Station Manager, WDTN
31
<PAGE> 1
EXHIBIT 10.13
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
JULY 2, 1998
AMONG
SUNRISE TELEVISION CORP.,
STC BROADCASTING, INC.,
AS BORROWER,
THE LENDERS PARTY HERETO,
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT,
AS ISSUING LENDER
AND AS SWINGLINE LENDER,
SALOMON BROTHERS HOLDING COMPANY INC,
AS SYNDICATION AGENT
AND
NATIONSBANK, N.A.,
AS DOCUMENTATION AGENT
--------------------
CHASE SECURITIES INC.,
AS ARRANGER
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS..................................................................... 3
1.1 Defined Terms................................................................. 3
1.2 Other Definitional Provisions................................................. 30
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................................. 31
2.1 Term Commitments.............................................................. 31
2.2 Procedure for Term Loan Borrowing............................................. 31
2.3 Repayment of Term Loans....................................................... 32
2.4 Revolving Credit Commitments.................................................. 33
2.5 Procedure for Revolving Credit Borrowing...................................... 35
2.6 Commitment Fees, etc.......................................................... 35
2.7 Termination or Reduction of Commitments....................................... 36
2.8 Optional Prepayments.......................................................... 36
2.9 Mandatory Prepayments and Commitment Reductions............................... 37
2.10 Conversion and Continuation Options.......................................... 39
2.11 Minimum Amounts and Maximum Number of Eurodollar Tranches.................... 40
2.12 Interest Rates and Payment Dates............................................. 40
2.13 Computation of Interest and Fees............................................. 41
2.14 Inability to Determine Interest Rate......................................... 41
2.15 Pro Rata Treatment and Payments.............................................. 41
2.16 Requirements of Law.......................................................... 43
2.17 Taxes........................................................................ 45
2.18 Indemnity.................................................................... 46
2.19 Change of Lending Office..................................................... 46
2.20 Replacement of Lenders under Certain Circumstances........................... 47
2.21 Notice of Certain Costs...................................................... 47
SECTION 3. LETTERS OF CREDIT....................................... 48
3.1 L/C Commitment................................................................ 48
3.2 Procedure for Issuance of Letter of Credit.................................... 48
3.3 Commissions, Fees and Other Charges........................................... 48
3.4 L/C Participations............................................................ 49
3.5 Reimbursement Obligation of the Borrower...................................... 50
3.6 Obligations Absolute.......................................................... 50
3.7 Letter of Credit Payments..................................................... 50
3.8 Applications.................................................................. 50
SECTION 4. REPRESENTATIONS AND WARRANTIES ................................ 50
4.1 Financial Condition........................................................... 51
4.2 No Change..................................................................... 51
4.3 Corporate Existence; Compliance with Law...................................... 51
4.4 Corporate Power; Authorization; Enforceable Obligations....................... 51
</TABLE>
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<TABLE>
<S> <C> <C>
4.5 No Legal Bar.................................................................. 52
4.6 No Material Litigation........................................................ 52
4.7 No Default.................................................................... 52
4.8 Ownership of Property; Liens.................................................. 52
4.9 Intellectual Property......................................................... 52
4.10 Taxes........................................................................ 53
4.11 Federal Regulations.......................................................... 53
4.12 Labor Matters................................................................ 53
4.13 ERISA........................................................................ 53
4.14 Investment Company Act; Other Regulations.................................... 54
4.15 Subsidiaries................................................................. 54
4.16 Use of Proceeds.............................................................. 54
4.17 Environmental Matters........................................................ 54
4.18 Accuracy of Information, etc................................................. 55
4.19 Security Documents........................................................... 56
4.20 Solvency..................................................................... 56
4.21 Senior Indebtedness.......................................................... 56
4.22 Station Licenses............................................................. 56
4.23 Year 2000 Matters............................................................ 57
SECTION 5. CONDITIONS PRECEDENT ..................................... 57
5.1 Conditions to Initial Extension of Credit..................................... 57
5.2 Conditions to Each Extension of Credit........................................ 60
SECTION 6. AFFIRMATIVE COVENANTS .................................... 60
6.1 Financial Statements.......................................................... 61
6.2 Certificates; Other Information............................................... 61
6.3 Payment of Obligations........................................................ 63
6.4 Conduct of Business and Maintenance of Existence, etc......................... 63
6.5 Maintenance of Property; Insurance............................................ 63
6.6 Inspection of Property; Books and Records; Discussions........................ 64
6.7 Notices....................................................................... 64
6.8 Environmental Laws............................................................ 65
6.9 Interest Rate Protection...................................................... 65
6.10 Additional Collateral, etc................................................... 65
6.11 Changes in Locations, Name, etc.............................................. 67
6.12 Mortgages.................................................................... 67
SECTION 7. NEGATIVE COVENANTS ...................................... 68
7.1 Financial Condition Covenants................................................. 68
7.2 Limitation on Indebtedness.................................................... 69
7.3 Limitation on Liens........................................................... 70
7.4 Limitation on Fundamental Changes............................................. 72
7.5 Limitation on Sale of Assets.................................................. 73
7.6 Limitation on Dividends....................................................... 74
7.7 Limitation on Investments, Loans and Advances................................. 75
7.8 Limitation on Optional Payments and Modifications of Debt Instruments, etc.... 76
7.9 Limitation on Transactions with Affiliates.................................... 77
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
7.10 Limitation on Sales and Leasebacks........................................... 77
7.11 Limitation on Changes in Fiscal Periods...................................... 78
7.12 Limitation on Negative Pledge Clauses........................................ 78
7.13 Limitation on Lines of Business.............................................. 78
7.14 Limitation on Amendments to Constituent and Transaction Documents............ 78
7.15 Limitations on Changes in Holding Company Status............................. 78
7.16 Limitation on Changes in Station Affiliation................................. 78
7.17 Limitation on LMA Stations................................................... 78
SECTION 8. EVENTS OF DEFAULT ...................................... 79
SECTION 9. THE ADMINISTRATIVE AGENT ................................... 83
9.1 Appointment................................................................... 83
9.2 Delegation of Duties.......................................................... 83
9.3 Exculpatory Provisions........................................................ 83
9.4 Reliance by Administrative Agent.............................................. 84
9.5 Notice of Default............................................................. 84
9.6 Non-Reliance on the Administrative Agent and Other Lenders.................... 84
9.7 Indemnification............................................................... 85
9.8 Agent in Its Individual Capacity.............................................. 85
9.9 Successor Administrative Agent................................................ 85
SECTION 10. MISCELLANEOUS ........................................ 86
10.1 Amendments and Waivers....................................................... 86
10.2 Notices...................................................................... 87
10.3 No Waiver; Cumulative Remedies............................................... 88
10.4 Survival of Representations and Warranties................................... 88
10.5 Payment of Expenses and Taxes................................................ 88
10.6 Successors and Assigns; Participations and Assignments....................... 89
10.7 Adjustments; Set-off......................................................... 92
10.8 Counterparts................................................................. 92
10.9 Severability................................................................. 92
10.10 Integration................................................................. 92
10.11 GOVERNING LAW............................................................... 93
10.12 Submission To Jurisdiction; Waivers......................................... 93
10.13 Acknowledgments............................................................. 93
10.14 WAIVERS OF JURY TRIAL....................................................... 94
10.15 Confidentiality............................................................. 94
10.16 FCC Compliance.............................................................. 94
</TABLE>
<PAGE> 5
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Properties
1.1C Network Affiliation Agreements
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
4.22 Station Licenses
5.1(s) Broadcast Licenses
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.7(g) Existing Investments
EXHIBITS:
A-1 Form of Guarantee and Collateral Agreement
A-2 Form of SAC 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 LLP
G Form of Incremental Term Loan Activation Notice
H Form of Swingline Loan Participation Certificate
I-1 Form of Revolving Credit Note
I-2 Form of Term Loan Note
I-3 Form of Swingline Note
J Form of Borrowing Notice
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
July 2, 1998, among SUNRISE TELEVISION CORP., ("Holdings"),
STC BROADCASTING, INC. (the "Borrower"), the several banks and
other financial institutions or entities from time to time
parties to this Agreement (the "Lenders"), THE CHASE MANHATTAN
BANK, as administrative agent (in such capacity, the
"Administrative Agent"), as issuing lender (in such capacity,
the "Issuing Lender"), and as swingline lender (in such
capacity, the "Swingline Lender"), NationsBank, N.A., as
documentation agent (in such capacity, the "Documentation
Agent"), and Salomon Brothers Holding Company Inc, as
syndication agent (in such capacity, the "Syndication Agent").
The Borrower, certain of the Lenders, the Administrative Agent
and the Documentation Agent are parties to the Credit Agreement, dated as of
February 28, 1997 (the "Existing Credit Agreement").
Pursuant to the Asset Purchase Agreement, dated as of February
3, 1998 (the "Purchase Agreement"), by and among Tuscaloosa Broadcasting, Inc.,
WPTZ Licensee, Inc. and WNNE Licensee, Inc. (collectively, the "Sinclair Subs")
and STC Broadcasting of Vermont, Inc. ("STCBV"), the Sinclair Subs have agreed
to assign, transfer and convey to STCBV (i) all of their right, title and
interest in the assets of television stations WPTZ-TV, Channel 5, North Pole,
New York (the "North Pole Station") and WNNE-TV, Channel 31, Hartford, Vermont
(the "Hartford Station") and (ii) certain assets and rights of television
station WFFF-TV, Channel 44, Burlington, Vermont (the "Burlington Station" and,
collectively with the North Pole Station and the Hartford Station, the "Sinclair
Stations") and STCBV has agreed to pay to the Sinclair Subs $72,000,000 (subject
to certain adjustments) as consideration for the purchase of the assets of the
Sinclair Stations under the Purchase Agreement (all of the foregoing
transactions, collectively, the "Purchase Transactions").
Pursuant to the Assignment and Assumption Agreement, dated as
of April 20, 1998 (the "Assignment and Assumption Agreement"), STCBV has
assigned all of its rights and obligations under the Purchase Agreement to its
wholly-owned subsidiary, STC Broadcasting of Vermont Subsidiary, Inc. ("STCBV
Sub").
The closing of the Purchase Transactions shall take place in
two stages as follows: (i) on April 24, 1998, (A) the Sinclair Subs transferred
the non-license assets relating to the Sinclair Stations to STCBV Sub (such
transfer, the "Sinclair Non-License Transfer") in return for consideration from
STCBV Sub of $70,000,000 (subject to certain adjustments) and (B) STCBV Sub
entered into a time brokerage agreement (the "Sinclair Time Brokerage
Agreement") with the Sinclair Subs, which provides for STCBV Sub to operate the
Sinclair Stations for the Sinclair Subs and (ii) on and as of the date hereof,
the Federal Communications Commission (the "FCC") has granted initial approval
for the transfer of the licenses relating to the North Pole Station and the
Hartford Station from the Sinclair Subs to STCBV Sub, and on the date hereof the
licenses relating to those stations will be so transferred and the balance of
the consideration owing under the Purchase Agreement will be paid (the "Sinclair
License Transfer").
Pursuant to the Letter Agreement by and between STCBV Sub and
Smith Broadcasting of Vermont LLC ("Smith VT"), dated as of April 24, 1998,
STCBV Sub has
<PAGE> 7
2
transferred to Smith VT all of STCBV Sub's right, title and interest in and to
the Burlington Station.
Pursuant to the Asset Exchange Agreement, dated as of February
18, 1998 (the "Exchange Agreement"), among the Borrower, STCBV, STCBV Sub and
STC License Company ("STC License" and, collectively with the Borrower, STCBV
and STCBV Sub, the "STC Parties") and Hearst-Argyle Stations, Inc. ("Hearst")
(i) the STC Parties have agreed to assign, transfer and convey to Hearst all of
their right, title and interest in the North Pole Station, the Hartford Station
and television station KSBW-TV, Channel 8, Salinas, California (collectively,
the "STC Transferred Assets") and (ii) Hearst has agreed to (x) assign, transfer
and convey to the STC Parties all of its right, title and interest in (A)
television stations WNAC-TV, Channel 64, Providence, Rhode Island (the
"Providence Station") and WDTN-TV, Channel 2, Dayton, Ohio (the "Dayton
Station") and (B) a Joint Marketing and Programming Agreement, dated as of June
10, 1996 (the "Joint Marketing Agreement"), between Clear Channel Television,
Inc. ("Clear Channel") and Hearst and a Reciprocal Right of First Refusal, dated
June 10, 1996 (the "Right of Refusal" and, collectively with the Joint Marketing
Agreement, the Providence Station and the Dayton Station, the "STC Acquired
Assets"), between Clear Channel and Hearst and (y) pay to the STC Parties
$21,366,650 (subject to certain adjustments) (the "Cash Consideration") (all of
the foregoing transactions, collectively, the "Exchange Transactions").
Pursuant to the Assignment and Assumption Agreement by and
between the STC Parties and SAC, dated as of May 29, 1998, the STC Parties have
assigned to SAC all of their rights and obligations under the Exchange Agreement
which relate to (i) the HAT Non-License Assets (as defined in the Exchange
Agreement) for the Providence Station and (ii) the Joint Marketing Agreement and
the Right of Refusal. Pursuant to the Assignment and Assumption Agreement by and
between the STC Parties and Smith Acquisition License Company, dated as of May
29, 1998, the STC Parties have assigned to Smith Acquisition License Company all
of their rights and obligations under the Exchange Agreement which relate to the
HAT License Assets (as defined in the Exchange Agreement) for the Providence
Station.
Upon the consummation of the Sinclair Non-License Transfer (i)
pursuant to the Exchange Agreement, Hearst made a loan to STCBV Sub on terms set
forth in the credit agreement attached as Exhibit E to the Exchange Agreement
(the "STCBV Sub Credit Agreement") in an aggregate principal amount equal to
$70,000,000, the proceeds of which were used to finance the purchase by STCBV
Sub of the non-license assets of the Sinclair Stations pursuant to the Purchase
Agreement, which loan (the "Hearst Loan") is secured on a non-recourse basis by
all of STCBV's right, title and interest in the capital stock of STCBV Sub and
(ii) upon the consummation of the Exchange Transactions on the date hereof, the
Hearst Loan is repayable in full pursuant to the terms of the STCBV Sub Credit
Agreement.
In order to finance the repayment of the Hearst Loan less the
Cash Consideration, the Borrower has requested the Lenders, the Administrative
Agent and the Documentation Agent to amend and restate the Existing Credit
Agreement to provide, among other things, for the extension of additional term
loans and an increase in the revolving credit commitments thereunder.
The Lenders, the Administrative Agent and the Documentation
Agent are willing to so amend and restate the Existing Credit Agreement and to
extend such credit to the Borrower on the terms and subject to the conditions
set forth herein.
<PAGE> 8
3
The parties hereto hereby agree to amend and restate the
Existing Credit Agreement as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Abilene Station": television station KRBC-TV, Channel 9,
Abilene, Texas.
"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 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.
"Adjustment Date": as defined in the Pricing Grid.
<PAGE> 9
4
"Administrative Agent": Chase, together with its affiliates,
as the arranger of the Commitments and as the administrative agent for
the Lenders under this Agreement and the other Loan Documents, together
with any of its successors.
"Affected Eurodollar Loans": as defined in subsection 2.9(f).
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) 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.
"Agreement": this Amended and Restated Credit Agreement, as
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": (a) for all Loans, other than Incremental
Term Loans, the Applicable Margin as determined pursuant to the Pricing
Grid and (b) with respect to Incremental Term Loans, the rate per annum
for Incremental Term Loans agreed to, or the rate per annum determined
pursuant to a pricing grid agreed to, by the Borrower and the
applicable Incremental Lenders in the applicable Incremental Term Loan
Activation Notice.
"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.
"Approved Fund": with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in bank loans
and is advised or managed by the same investment advisor as such Lender
or by an affiliate of such investment advisor.
"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))
and (c) through (g).
<PAGE> 10
5
"Asset Swap Transaction": a substantially concurrent purchase
and sale, or exchange, of a Broadcasting Asset of the Borrower or all
the Capital Stock of, or other equity interests in, a Subsidiary owning
a Broadcasting Asset, for a Broadcast Station or Broadcast Enterprise
of another Person or group of affiliated Persons, or all the Capital
Stock of, or other equity interests in, a Person or group of affiliated
Persons owning a Broadcast Station or Broadcast Enterprise (or such
lesser amount as shall be determined by the Board of Directors of the
Borrower or such Subsidiary as fair consideration), including, without
limitation, the Exchange Transactions, provided that (a) the Borrower
shall receive, in exchange for such Broadcasting Asset, Capital Stock
of, or other equity interests in, such Subsidiary owning a Broadcasting
Asset, a Broadcast Station or Broadcast Enterprise, or Capital Stock
of, or other equity interests in, a Person or group of affiliated
Persons owning a Broadcast Station or Broadcast Enterprise, (b) on a
pro forma basis for the most recently completed four-fiscal-quarter
period for which financial statements are available on the date of such
Asset Swap Transaction, no Default or Event of Default will have
occurred and be continuing (including, without limitation, pursuant to
subsection 7.1), provided that for purposes of calculating Consolidated
EBITDA pursuant to this clause (b), the Consolidated EBITDA of such
Broadcast Station or Broadcast Enterprise being acquired for such
four-fiscal-quarter period shall equal the Consolidated EBITDA of such
Broadcast Station or Broadcast Enterprise, as applicable, for the
12-month period preceding such Asset Swap Transaction, (c) (i) the
Consolidated EBITDA of the Broadcasting Asset being sold or exchanged
plus the Consolidated EBITDA of all Broadcasting Assets that were sold
pursuant to subsection 7.5(h) or exchanged pursuant to subsection
7.5(i) in such fiscal quarter and in the immediately preceding
four-fiscal-quarter period shall not exceed 25% of the Consolidated
EBITDA of the Borrower for such immediately preceding
four-fiscal-quarter period and (ii) the Consolidated EBITDA of the
Broadcasting Asset being sold or exchanged plus the Consolidated EBITDA
of all Broadcasting Assets that were sold pursuant to subsection 7.5(h)
or exchanged pursuant to subsection 7.5(i) in such fiscal quarter and
in the preceding twenty-fiscal-quarter period shall not exceed 60% of
the Consolidated EBITDA of the Borrower for such twenty-fiscal-quarter
period, (d) any Net Cash Proceeds of such Asset Swap Transaction shall
be deemed Net Cash Proceeds of an Asset Sale, and shall be applied
pursuant to subsection 2.9(d) or reinvested pursuant to subsection
2.9(b), (e) the Borrower provides the Administrative Agent with a
certificate showing compliance with all of the covenants contained in
subsection 7.1, (f) the Borrower takes such actions as may be required
or reasonably requested to ensure that the Administrative Agent, for
the ratable benefit of the Lenders, has a perfected first priority
security interest in any assets required to be secured pursuant to
subsection 6.10 or any other Loan Document, subject to Liens permitted
by subsection 7.3, and (g) the Borrower provides the Administrative
Agent with appropriate supporting documentation if reasonably requested
by the Administrative Agent, including, without limitation, any
exchange agreement in connection with such transaction, opinions of
counsel, including FCC counsel, in connection therewith and copies of
an FCC consent on Form 732 (or any comparable form issued by the FCC)
relating to the transfer of control or assignment of the Station
Licenses of the acquired Broadcast Station to the Borrower or its
Subsidiary and, unless the Administrative Agent shall otherwise agree,
such consent shall have become a Final Order.
"Assignee": as defined in subsection 10.6(c).
<PAGE> 11
6
"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.
"Benefitted Lender": as defined in subsection 10.7(a).
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrower": as defined in the introductory paragraph of this
Agreement.
"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the Lenders or Swingline
Lender to make Loans or Swingline Loans hereunder.
"Broadcast Cash Flow": for any period, Consolidated EBITDA for
such period plus Corporate Overhead for such period.
"Broadcast Enterprise": assets used and useful for the
operation of the broadcasting business, or any businesses reasonably
related thereto.
"Broadcast Station": all or substantially all the assets used
and useful for operating a full service commercial television broadcast
station pursuant to a Station License, including without limitation the
rights to use such Station License.
"Broadcasting Assets": collectively, any Stations and any
Non-Station Assets of the Borrower and its Subsidiaries.
"Broadcasting Asset Temporary Repayment": as defined in
subsection 2.8(b).
"Burlington Station": television station WFFF-TV, Channel 44,
Burlington, Vermont.
"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 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) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period). For purposes
of this definition, the following items will be excluded from the
definition of "Capital Expenditures": (a) Capital Expenditures
<PAGE> 12
7
to the extent funded by insurance proceeds, condemnation awards or
payments pursuant to a deed in lieu thereof, (b) Capital Expenditures
to the extent made through barter transactions, (c) assets acquired
pursuant to (i) Permitted Acquisitions, (ii) Asset Swap Transactions
and (iii) a reinvestment of proceeds received under subsection 7.5(c)
and (d) for purposes of the definition of "Consolidated Fixed Charges"
only, Capital Expenditures made during such period in excess of
$3,700,000, to the extent such excess Capital Expenditures are utilized
for digital television buildout or operations; provided, that the
aggregate amount which may be excluded from the definition of "Capital
Expenditures" pursuant to this clause (d) during the term of this
Agreement shall not exceed $20,000,000.
"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 on or 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 one year 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 (or
whose obligations are guaranteed by an affiliated commercial bank which
has 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; (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.
"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.
<PAGE> 13
8
"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": the earlier to occur of (a) Hicks Muse,
its principals and their 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 (i) at any time prior to the
consummation of an Initial Public Offering, and for any reason
whatever, (A) HMTF otherwise has the right to designate (and does so
designate) a majority of the board of directors of Holdings or (B) 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 (ii) at any time after the consummation of an Initial
Public Offering, and for any reason whatever, (A) 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 more than the
greater of (x) 20% of the shares outstanding or (y) the percentage of
the then outstanding voting stock of Holdings owned beneficially by the
HMTF Group and (B) the board of directors of Holdings shall consist of
a majority of Continuing Directors and (b) a Change of Control as
defined in any document pertaining to any Senior Subordinated
Indebtedness.
"Chase": The Chase Manhattan Bank.
"Closing Date": July 2, 1998.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment": as to any Lender, the sum of the Committed Term
Loan Commitments, the Revolving Credit Commitment and the Swingline
Loan Commitment of such Lender and with respect to the Issuing Lender
and L/C Participants, as applicable, their L/C Obligations.
"Commitment Fee Rate": 1/2 of 1% per annum, provided that from
and after the first Adjustment Date, the Commitment Fee Rate will be
determined pursuant to the Pricing Grid.
"Committed Term Loan Commitment": as to any Committed Term
Loan Lender, such Committed Term Loan Lender's Initial Term Loan
Commitment and Delayed Term Loan Commitment.
<PAGE> 14
9
"Committed Term Loan Facility": as defined in the definition
of the term "Facility".
"Committed Term Loan Lender": each Lender which has a
Committed Term Loan Commitment or which has made, or acquired pursuant
to an assignment made in accordance with subsection 10.6(c), a
Committed Term Loan.
"Committed Term Loan Percentage": as to any Committed Term
Loan Lender (a) at any time prior to the Closing Date, the percentage
which such Lender's Committed Term Loan Commitment then constitutes of
the aggregate Committed Term Loan Commitments, (b) at any time during
the Delayed Commitment Period, the percentage which the sum of such
Lender's Delayed Term Loan Commitment and the principal amount of such
Lender's Term Loans then outstanding constitutes of the sum of the
aggregate Delayed Term Loan Commitments and the aggregate principal
amount of the Committed Term Loans then outstanding and (c) at any time
after the end of the Delayed Commitment Period, the percentage which
the principal amount of such Lender's Committed Term Loans then
outstanding constitutes of the aggregate principal amount of the
Committed Term Loans then outstanding.
"Committed Term Loans": the Initial Term Loans and the Delayed
Term Loans.
"Committed Term Note": any Term Note evidencing Committed Term
Loans.
"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), net of cash interest income of the Borrower and its
Subsidiaries, 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). If
during any period for which Consolidated Cash Interest Expense is being
determined the Borrower or any of its Subsidiaries shall have made a
Permitted Acquisition or Permitted Disposition, then, for all purposes
of this Agreement, Consolidated Cash Interest Expense shall be adjusted
for the relevant period on a pro
<PAGE> 15
10
forma basis as if the relevant Permitted Acquisition or Permitted
Disposition had been made or consummated on the first day of such
period and assuming (i) in the case of a Permitted Acquisition, the
principal amount of any Indebtedness Incurred in connection with such
Permitted Acquisition had been outstanding for the entire duration of
such period at the rate of interest applicable to such Indebtedness at
the time of Incurrence of such Indebtedness or (ii) in the case of a
Permitted Disposition, any Indebtedness which on a pro forma basis has
been repaid or which is no longer an obligation of the Borrower or any
of its Subsidiaries as a result of such Permitted Disposition had been
repaid or was not an obligation of the Borrower or any of its
Subsidiaries as of the first day of such 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 the Borrower 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 the Borrower and its Subsidiaries at such
date, but excluding (a) the current portion of any Funded Debt 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 revenues, agency
and advertising commissions and sales representative fees) of the
Borrower 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), (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 and restructuring costs
related to Permitted Acquisitions, (v) barter and trade expenses and
(vi) any extraordinary gains or losses, and any gains or losses from
the sale or other disposition of assets plus, to the extent not
included above, Providence Consolidated EBITDA for such period. If
during any period for which Consolidated EBITDA is being determined the
Borrower 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
<PAGE> 16
11
for purposes of making the calculations to determine (x) Excess Cash
Flow or (y) 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 on a pro
forma basis 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 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 Consolidated EBITDA
for such period.
"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 by the Borrower or any of its Subsidiaries
during such period, (c) any income taxes paid by the Borrower or any of
its Subsidiaries, and any amounts paid by the Borrower to Holdings for
purposes of paying income taxes, in each case, during such period, (d)
cash dividends paid by the Borrower during such period and (e) any
increases during such period in Consolidated Working Capital (minus any
decreases during such period in Consolidated Working Capital), other
than to the extent of any such increases (or decreases) resulting
directly from a Permitted Acquisition.
"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.
"Consolidated Interest Expense": for any period, the amount of
interest expense, both expensed and capitalized, of the Borrower and
its Subsidiaries, determined on a consolidated basis in accordance with
GAAP, for such period on the aggregate principal amount of their
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 Senior Debt": Consolidated Total Debt less any
Senior Subordinated Indebtedness issued in accordance with the terms of
this Agreement.
<PAGE> 17
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"Consolidated Senior Leverage Ratio": as at the last day of
any period, the ratio of (a) Consolidated Senior Debt to (b)
Consolidated EBITDA for such period.
"Consolidated Total Debt": at any date, the difference between
(a) the aggregate principal amount of all Indebtedness of the Borrower
and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP, and (b) the amount of Unencumbered Cash on the
consolidated balance sheet of the Borrower in excess of $2,000,000 at
such date; provided, that the amount of any Unencumbered Cash which may
be deducted at any date pursuant to clause (b) shall not exceed
$5,000,000.
"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Continuing Directors": the directors of Holdings on the
Closing Date and each other director, if, in each case, such other
director's nomination for election to the board of directors of
Holdings 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 stockholders 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 7.9 and the compensation of senior
management of Holdings with respect to the management of the Stations
(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) $500,000).
"Dayton Station": television station, WDTN-TV, Channel 2,
Dayton, Ohio.
"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, unless cured or waived, has been satisfied.
"Delayed Commitment Period": the period from and including the
Closing Date to the Delayed Termination Date.
"Delayed Term Loan Commitment": as to any Committed Term Loan
Lender, the obligation of such Committed Term Loan Lender to make
Delayed Term Loans to the Borrower hereunder in an aggregate principal
amount not to exceed the amount set forth under the heading "Delayed
Term Loan 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 Delayed Term Loan Commitments is
$30,000,000.
<PAGE> 18
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"Delayed Term Loans": as defined in subsection 2.1(a)(i).
"Delayed Termination Date": the earlier of (a) the date that
is seven (7) months after the Closing Date or, if such date is not a
Business Day, the Business Day next succeeding such date and (b) the
date upon which the Delayed Term Loan Commitments shall be earlier
terminated pursuant hereto.
"Documentation Agent": as defined in the introductory
paragraph of this Agreement.
"Dollars" and "$": lawful currency of the United States of
America.
"ECF Percentage": 66_%, provided that the ECF Percentage shall
be deemed to be 50% if, on the applicable Excess Cash Flow Application
Date, the Consolidated Leverage Ratio as of the end of the last fiscal
quarter preceding such Excess Cash Flow Application Date was less than
5.50 to 1.00.
"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 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.
<PAGE> 19
14
"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 under the same Facility the then current Interest Periods with
respect to all of which begin on the same date and end 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).
"Exchange Agreement": as defined in the recitals hereto.
"Exchange Transactions": as defined in the recitals hereto.
"Facility": each of (a) the Committed Term Loan Commitments
and the Committed Term Loans made thereunder (the "Committed Term Loan
Facility"), (b) the Incremental Term Loan Amounts and the Incremental
Term Loans related thereto (the "Incremental Term Loan Facility"), (c)
the Swingline Loan Commitments and the Swingline Loans made thereunder
and (d) the Total Revolving Credit Commitments and the Revolving
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 the term "ABR".
"Film Cash Payments": for any period, the sum (determined on a
consolidated 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 which were existing as of, or have been
incurred at any time after, the Closing Date.
"Film Obligations": all obligations 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.
<PAGE> 20
15
"Final Order": with respect to the assignment or transfer of
control of the Station Licenses for any Station, an order of the FCC
approving such assignment or transfer that is final (i.e., no longer
subject to further judicial or administrative review), as to which no
requests for judicial or administrative review are pending, and that
has not been reversed, stayed, enjoined, set aside, annulled or
suspended.
"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 extendable,
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 Holdings and 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(a). 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. The term "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 or 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 Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by
Holdings, the Borrower and
<PAGE> 21
16
each Subsidiary 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, counter indemnity 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 (A) for the
purchase or payment of any such primary obligation or (B) 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.
"Guarantors": Holdings and the Subsidiary Guarantors.
"Hearst": as defined in the recitals hereto.
"Hearst Loan": as defined in the recitals hereto.
"Hicks Muse": Hicks, Muse, Tate & Furst Incorporated.
"HMTF": as defined in the definition of the term "Change of
Control".
"Holdings": Sunrise Television Corp., a Delaware corporation.
"Incremental Lenders": (a) on any Incremental Term Loan
Activation Date, the Lenders signatory to the Incremental Term Loan
Activation Notice and (b) thereafter, each Lender which has made, or
acquired pursuant to an assignment made in accordance with subsection
10.6(c), an Incremental Term Loan.
"Incremental Maturity Date": as to the Incremental Term Loans
to be made
<PAGE> 22
17
pursuant to any Incremental Term Loan Activation Notice, the maturity
date specified in such Incremental Term Loan Activation Notice, which
date shall be a date at least six months after the Committed Term Loan
Maturity Date.
"Incremental Term Loan Activation Date": each date, which
shall be a Business Day on or before the Incremental Term Loan
Termination Date, on which any Lender shall execute and deliver to the
Administrative Agent an Incremental Term Loan Activation Notice
pursuant to subsection 2.1(b).
"Incremental Term Loan Activation Notice": a notice
substantially in the form of Exhibit G.
"Incremental Term Loan Amount": as to each Incremental Lender,
on and after the effectiveness of any Incremental Term Loan Activation
Notice, the obligation of such Incremental Lender to make Incremental
Term Loans hereunder in a principal amount equal to the amount set
forth under the heading "Incremental Term Loan Amount" opposite such
Incremental Lender's name on such Incremental Term Loan Activation
Notice.
"Incremental Term Loan Closing Date": each date, which shall
be a Business Day on or before the Incremental Term Loan Termination
Date, designated as such in an Incremental Term Loan Activation Notice.
"Incremental Term Loan Facility": as defined in the definition
of the term "Facility".
"Incremental Term Loan Percentage": as to any Incremental
Lender, the percentage which such Lender's Incremental Term Loans then
outstanding constitutes of the aggregate principal amount of the
Incremental Term Loans then outstanding.
"Incremental Term Loans": as defined in subsection 2.1(b).
"Incremental Term Loan Termination Date": December 31, 2000.
"Incremental Term Note": a Term Note evidencing Incremental
Term Loans.
"Incur": as defined in subsection 7.2; and the term
"Incurrence" shall have a correlative meaning.
"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 a bankers' acceptance, letter of credit or similar
facilities, (g) the obligations of such Person under any Interest Rate
Protection Agreement, (h) all Guarantee Obligations of
<PAGE> 23
18
such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above and (i) all obligations of the kind
referred to in clauses (a) through (h) 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 (i) 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.
"Initial Public Offering": an underwritten public offering by
Holdings of Capital Stock of Holdings or any Subsidiary or parent
thereof pursuant to a registration statement filed with the Securities
and Exchange Commission in accordance with the Securities Act of 1933,
as amended.
"Initial Term Loan Commitment": as to any Committed Term Loan
Lender, the obligation of such Committed Term Loan Lender to make an
Initial Term Loan to the Borrower hereunder in a principal amount not
to exceed the amount set forth under the heading "Initial Term Loan
Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Initial Term Loan Commitments is $70,000,000.
"Initial Term Loans": as defined in subsection 2.1(a)(i).
"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.
"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 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
as determined in good faith by such Lenders) 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 as determined in good faith by such Lenders) 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:
<PAGE> 24
19
(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, in the case of
Revolving Credit Loans, or the date final payment is due, in the case
of 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 the calendar
month at the end of such Interest Period; 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 Holdings 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.
"Investment" as defined in subsection 7.7.
"Investors": as defined in the preamble of this Agreement.
"Issuing Lender": Chase or any of its affiliates, in its
capacity as issuer of any Letter of Credit.
"Johnstown Station": television station, WJAC-TV, Channel 6,
Johnstown, Pennsylvania.
"Joint Marketing Agreement": as defined in the recitals
hereto.
"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.
"Lenders": as defined in the introductory paragraph of this
Agreement.
"Letters of Credit": as defined in subsection 3.1(a), provided
that to the extent the Borrower shall have deposited amounts in a cash
collateral account for the benefit of the Lenders, the Letters of
Credit relating thereto shall be deemed not to be Letters of Credit for
purposes of this Agreement.
<PAGE> 25
20
"License Subsidiary": (a) STC License Company, (b) in the case
of the Steubenville Station and the Providence Station, Smith
Acquisition License Company and (c) in the case of any Station acquired
after the date hereof, the Subsidiary of the Borrower that shall hold
the respective Station Licenses under the authority of which such
Station is operated, provided that each such License Subsidiary shall
be a single purpose entity the sole purpose of which shall be to hold
the Station Licenses and to perform related functions with respect
thereto (except for the Stations acquired pursuant to the Meyer
Acquisition for which the License Subsidiary shall be STC License
Company).
"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, if any.
"Loan Parties": Holdings, the Borrower and each Subsidiary of
the Borrower which is a party to a Loan Document.
"Majority Committed Term Facility Lenders": the Majority
Facility Lenders in respect of the Committed Term Loan Facility.
"Majority Facility Lenders": with respect to any Facility,
Lenders which collectively are the holders of more than 50% of the
aggregate unpaid principal amount of the Committed Term Loans or the
Incremental Term Loans, or of the Total Revolving Extensions of Credit,
as the case may be, outstanding under such Facility (or, (a) in the
case of the Revolving Credit Facility, prior to any termination of the
Revolving Credit Commitments, Lenders which are collectively the
holders of more than 50% of the aggregate Revolving Credit Commitments
or, (b) in the case of the Committed Term Loan Facility, prior to the
Delayed Termination Date, Lenders which are collectively the holders of
more than 50% of the sum of the Delayed Term Loan Commitments and the
outstanding Committed Term Loans).
"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) at
the Closing Date, the Exchange Transactions and the other transactions
contemplated by this Agreement, (b) the business, assets, property,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole (other than, for purposes of the
conditions to the initial funding of Loans on the Closing Date, changes
in general economic conditions or in economic conditions generally
affecting the television broadcasting industry) or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or
the rights or remedies of the Administrative Agent, the Swingline
Lenders, the Issuing Lenders 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
<PAGE> 26
21
wastes, defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Meyer Acquisition": the purchase by the Borrower from Meyer
Broadcasting Company of two television stations and three satellite
television stations in North Dakota, pursuant to the Meyer Purchase
Agreement.
"Meyer Purchase Agreement": the Contract of Sale, dated as of
April 27, 1998, by and between Meyer Broadcasting Company and the
Borrower. Pursuant to an Assignment and Assumption Agreement dated as
of May 4, 1998, the Borrower has assigned to STC License Company, and
STC License Company has assumed from the Borrower, all of the
Borrower's right and obligations under the Meyer Purchase Agreement
with respect to the FCC Licenses (as defined in the Meyer Purchase
Agreement).
"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 and which
initial Schedule 1.1B shall include only those real properties owned by
the Borrower and its Subsidiaries at the Closing Date with a fair
market value in excess of $1,000,000.
"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.
"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,
notarial fees, accountants' fees, investment banking fees, appraisal
fees, survey costs, title insurance premiums, amounts 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, notarial fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and
expenses actually Incurred in connection therewith.
"Network Affiliation Agreements": each agreement set forth on
Schedule 1.1C and each other agreement entered into by the Borrower or
any of its Subsidiaries (including any such agreement assumed pursuant
to an Asset Swap Transaction or otherwise) pursuant to which a
television network agrees to serve as the primary source within a
designated market area for television programming for any Station.
<PAGE> 27
22
"Non-Consenting Lender": as defined in subsection 2.20.
"Non-Excluded Taxes": as defined in subsection 2.17(a).
"Non-Funding Lender": as defined in subsection 2.15(c).
"Non-Station Asset": all of the assets used and useful for the
operation of the Borrower's and its Subsidiaries' broadcasting
business, other than the Stations.
"Non-U.S. Lender": as defined in subsection 2.17(b).
"Notes": the collective reference to the Term Notes, the
Revolving Credit Notes and the Swingline Notes.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and Reimbursement 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, the Reimbursement
Obligations and all other obligations and liabilities of the Borrower
to the Administrative Agent, the Swingline Lender, the Issuing Lender
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 Notes, 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, to
the Swingline Lender, to the Issuing Lender 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).
"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
any of its Subsidiaries of one or more Broadcast Stations or Broadcast
Enterprises, or all the capital stock of, or other equity interests in,
any other Person whose primary business is the ownership and operation
of one or more Broadcast Stations or Broadcast Enterprises, in the
United States (or such lesser amount as shall be determined by the
Board of Directors of the Borrower or such Subsidiary as fair
consideration), including, without limitation, the Exchange
Transactions, provided that (a) on a pro forma basis for the most
recently completed four-fiscal-quarter period for which financial
statements are available on the date of such acquisition, no Default or
Event of Default will have occurred and be continuing (including,
without limitation, pursuant to subsection 7.1), provided that for
purposes of calculating Consolidated EBITDA pursuant to this clause
(a), the Consolidated EBITDA of such Broadcast Stations or Broadcast
Enterprises being acquired for such four-fiscal-quarter period shall be
equal to the Consolidated EBITDA of such Broadcast Stations or
Broadcast Enterprises for the 12-month period immediately preceding
such acquisition, (b) the Borrower provides the Administrative Agent
with a certificate showing
<PAGE> 28
23
compliance with all of the covenants contained in subsection 7.1 and
showing the aggregate purchase price (including the assumption of any
Indebtedness) for such Permitted Acquisition, (c) the Borrower takes
such actions as may be required or reasonably requested to ensure that
the Administrative Agent, for the ratable benefit of the Lenders, has a
perfected first priority security interest in any assets required to be
secured pursuant to subsection 6.10 or any other Loan Document, subject
to Liens permitted by subsection 7.3, and (d) the Borrower provides the
Administrative Agent with appropriate supporting documentation if
reasonably 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 (or any comparable
form issued by the FCC) relating to the transfer of control or
assignment of the Station Licenses of any acquired Broadcast Station to
the Borrower or its Subsidiary and, unless the Administrative Agent
shall otherwise agree, such consent shall have become a Final Order.
"Permitted Disposition: as defined in subsection 7.5(h).
"Permitted Issuance": (a) the issuance by Holdings of shares
of Capital Stock as dividends on issued and outstanding Capital Stock
of the same class of Holdings or pursuant to any dividend reinvestment
plan, (b) the issuance by Holdings of options or other equity
securities of Holdings to outside directors, members of management or
employees of Holdings or any Subsidiary of Holdings, (c) the issuance
of securities as interest or dividends on pay-in-kind debt or preferred
equity securities in accordance with their terms permitted hereunder
and under the other Loan Documents, (d) the issuance to Holdings or any
Subsidiary (or any director, with respect to directors' qualifying
shares) by any of its Subsidiaries of any of their respective Capital
Stock, in each case with respect to this clause (d) to the extent such
Capital Stock issued to Holdings or any Subsidiary is pledged to the
Administrative Agent pursuant to the applicable Loan Document (provided
that (i) only 65% of the voting Capital Stock of any foreign Subsidiary
of the Borrower is required to be so pledged and (ii) no voting Capital
Stock of any foreign Subsidiary of any other foreign Subsidiary is
required to be so pledged), (e) the issuance by Holdings of shares of
its common stock in connection with a Permitted Acquisition, (f) cash
payments made in lieu of issuing fractional shares of Holdings Capital
Stock in an aggregate amount not to exceed $100,000, (g) the issuance
by Holdings of shares of capital stock of Holdings to infuse additional
capital into Holdings in an aggregate amount not to exceed $2,000,000
made within 15 days after the date of borrowing of the Delayed Term
Loans and (h) the issuance by Holdings to the existing holders of the
Preferred Stock of warrants to purchase shares of the common stock of
Holdings in connection with the ultimate redemption of the Preferred
Stock.
"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.
"Pledged Notes": as defined in the Guarantee and Collateral
Agreement.
"Pledged Stock": as defined in the Guarantee and Collateral
Agreement.
"Preferred Stock": the 14% Redeemable Preferred Stock, par
value $.01 per share, liquidation preference $100.00 per share of the
Borrower.
<PAGE> 29
24
"Pricing Grid": the pricing grid attached as Annex A hereto.
"Prime Rate": as defined in the definition of the term "ABR".
"Projections": as defined in subsection 6.2(c).
"Properties": as defined in subsection 4.17(a).
"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.
"Providence Consolidated EBITDA": for any period, the
Borrower's or any of its Subsidiary's share of income and other
consideration for such period (without regard for any offsets to such
amounts for the Borrower's or its Subsidiaries' share of Capital
Expenditures) determined in accordance with the Joint Marketing
Agreement with respect to the Providence Station and the rights of
Hearst under the Joint Marketing Agreement assigned to the STC Parties
pursuant to the Asset Exchange Agreement with respect to WPRI, in each
case, to the extent there is no encumbrance or restriction on payment
or other distribution with respect to such income or other
consideration.
"Providence Station": television station WNAC-TV, Channel 64,
Providence, Rhode Island.
"Purchase Agreement": as defined in the recitals hereto.
"Purchase Transactions": as defined in the recitals hereto.
"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 or deed in lieu thereof relating to any Property of Holdings
or any of its Subsidiaries, excluding any such settlement or payment
which, together with any related settlement or payment, yields gross
proceeds to Holdings or any of its Subsidiaries of less than
$2,500,000.
"Refunded Swingline Loans": as defined in subsection
2.4(c)(ii).
"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
Holdings or any of its Subsidiaries in connection
<PAGE> 30
25
therewith which are not applied to prepay the Term Loans or reduce the
Revolving Credit Commitments pursuant to subsection 2.9(d) 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, provided that to the extent the Net Cash
Proceeds of an Asset Sale relate to the sale of a Broadcasting Asset
sold in accordance with subsection 7.5(h) or exchanged in accordance
with subsection 7.5(i) or relate to a Recovery Event with respect to a
Broadcasting Asset, the Borrower may deliver a Reinvestment Notice with
respect to such Net Cash Proceeds only to the extent such Net Cash
Proceeds shall be used to make a Permitted Acquisition pursuant to
subsection 7.5(h) or to pay cash consideration in connection with an
Asset Swap Transaction pursuant to subsection 7.5(i).
"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.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring one year
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 (whether as a result of a Permitted Acquisition, an Asset
Swap Transaction or otherwise) and the Borrower or such Subsidiary has
filed within one year of the Reinvestment Event an application with the
FCC for the approval of the transfer of control or assignment of the
Station License of such acquired Station, the period specified in
paragraph (a) shall be extended to a period equal to five Business Days
after the time required for the FCC to issue a Final Order relating to
the transfer of control of such Station License.
"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": Lenders, other than Non-Funding Lenders,
which collectively are the holders of more than 50% of the sum of (i)
the Loans, (ii) the unused Committed Term Loan Commitments and (iii)
the aggregate unused Revolving Credit Commitments (excluding
commitments to issue Letters of Credit or make Swingline Loans) or, if
the Revolving Credit Commitments have been terminated, the Total
Revolving Extensions of Credit (other than Swingline Loans).
"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,
<PAGE> 31
26
whether addressed to Holdings, the Borrower or any of its Subsidiaries,
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 (or officer having comparable duties) 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(d) whether or
not such person holds any of the foregoing positions).
"Restricted Payment" as defined in subsection 7.6.
"Revolving Credit Commitment": as to any Revolving Credit
Lender, the obligation of such Revolving Credit Lender, if any, to make
Revolving Credit Loans, and to participate in Swingline 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
$40,000,000.
"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
the term "Facility".
"Revolving Credit Lender": each Lender which has a Revolving
Credit Commitment or which has made, or acquired pursuant to an
assignment made in accordance with subsection 10.6(c), Revolving Credit
Loans or has participations in outstanding Letters of Credit or
Swingline Loans.
"Revolving Credit Loans": as defined in subsection 2.4(a).
"Revolving Credit Note": as defined in subsection 10.6(f).
"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 earlier 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, (b) such Lender's Revolving Credit Percentage of the L/C
Obligations then outstanding and (c) such Lender's Swingline Exposure
at such time.
<PAGE> 32
27
"Rochester Station": television station WROC-TV, Channel 8,
Rochester, New York.
"SAC": Smith Acquisition Company, a Delaware corporation.
"SAC Pledge Agreement": the Amended and Restated Pledge
Agreement to be executed and delivered by SBP with respect to the SBP
Stock, substantially in the form of Exhibit A-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"San Angelo Station": television station, KACB-TV, Channel 3,
San Angelo, Texas.
"SBP": Smith Broadcasting Partners, L.P., a Delaware limited
partnership.
"SBP Stock": the voting common stock of SAC, which represents
1% of the equity of SAC, but which entitles SBP to 100% of voting power
in the election of the directors of SAC.
"Scheduled Revolving Credit Termination Date": June 30, 2006.
"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the SAC 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 Indebtedness": the Senior Subordinated
Notes and any unsecured senior subordinated Indebtedness of the
Borrower the proceeds of which shall be used to refinance in full all
of the Senior Subordinated Notes, or other Senior Subordinated
Indebtedness outstanding, provided such refinancing Indebtedness has
(a) no maturity, amortization, mandatory redemption or purchase option
(other than with asset sale proceeds, subject to the provisions of this
Agreement, or following a change of control) or sinking fund payment
prior to the tenth anniversary of the Closing Date, (b) no financial
maintenance covenants, (c) such other terms and conditions (including
without limitation, interest rate, events of default, subordination and
covenants) as shall be reasonably satisfactory to the Administrative
Agent and (d) any permanent refinancing shall not be less favorable to
the Borrower and the Lenders as the Senior Subordinated Notes taken as
a whole.
"Senior Subordinated Note Indenture": the Indenture, dated as
of March 25, 1997, entered into by the Borrower and certain of its
Subsidiaries in connection with the issuance of the Senior Subordinated
Notes, and any other indenture entered into by the Borrower in
connection with any other issuance of Senior Subordinated Indebtedness
to the extent permitted hereunder, together with all instruments and
other agreements entered into by the Borrower and such Subsidiaries in
connection therewith, all in form and substance reasonably satisfactory
to the Administrative Agent, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with subsection
7.8.
"Senior Subordinated Notes": the Borrower's 11% Senior
Subordinated Notes due March 15, 2007 issued pursuant to the Senior
Subordinated Note Indenture.
"Sinclair License Transfer": as defined in the recitals
hereto.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
<PAGE> 33
28
"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 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": (a) with respect to the Borrower or any of
its Subsidiaries (or, with respect to the Steubenville Station and the
Providence Station, SAC or any of its Subsidiaries), all
authorizations, licenses or permits issued by the FCC and granted or
assigned to the Borrower or any of its Subsidiaries (or, with respect
to the Steubenville Station and the Providence Station, SAC or any of
its Subsidiaries), or under which the Borrower or any of its
Subsidiaries (or, with respect to the Steubenville Station and the
Providence Station, SAC or any of its Subsidiaries) has the right to
operate any Station, together with any extensions or renewals thereof
and (b) with respect to any other Person, all authorizations, licenses
or permits issued by the FCC and granted or assigned to such Person, or
under which such Person has the right to operate any Broadcast Station,
together with any extensions or renewals thereof.
"Stations": collectively, (a) the Michigan Station, (b) the
Steubenville Station, (c) the Rochester Station, (d) the Providence
Station, (e) Dayton Station, (f) the Abilene Station, (g) the San
Angelo Station, (h) the Johnstown Station and (i) any additional
Broadcast Station acquired after the date hereof.
"STCBV": as defined in the recitals hereto.
"STCBV Sub": as defined in the recitals hereto.
"STCBV Sub Credit Agreement": as defined in the recitals
hereto.
"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 Purchase Transactions and the Exchange
Transactions and notwithstanding the foregoing shall be deemed to
include SAC and its Subsidiaries.
"Subsidiary Guarantor": each Subsidiary of the Borrower party
to the Guarantee and Collateral Agreement.
"Swingline Exposure": at any time, the aggregate principal
amount of all outstanding Swingline Loans at such time. The Swingline
Exposure of any Revolving Credit Lender at any time shall mean its
Revolving Credit Percentage of the aggregate Swingline Exposure at such
time.
<PAGE> 34
29
"Swingline Lender": as defined in the introductory paragraph
of this Agreement.
"Swingline Loan Participation Certificate": a certificate in
substantially the form of Exhibit H.
"Swingline Loan Commitment": the obligation of the Swingline
Lender to make Swingline Loans to the Borrower hereunder. The original
amount of the Swingline Loan Commitment is $2,500,000.
"Swingline Loans": as defined in subsection 2.4(c)(i).
"Swingline Note": as defined in subsection 10.6(f).
"Syndication Agent": as defined in the introductory paragraph
of this Agreement.
"Term Loans": the Committed Term Loans and the Incremental
Term Loans made by the Lenders to the Borrower pursuant to subsection
2.1.
"Term Notes": as defined in subsection 10.6(f).
"Test Period": any period of four consecutive fiscal quarters
of the Borrower most recently ended.
"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.
"Transaction Documents": the Purchase Agreement, the Exchange
Agreement and the other documents relating to the Purchase Transactions
and the Exchange Transactions.
"Transferee": as defined in subsection 10.6(g).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Unencumbered Cash": cash owned and held by or on behalf of
the Borrower or any of its Subsidiaries which is not subject to the
Lien of another Person, it being agreed that any such cash subject to
any depositary bank set-off rights or any depositary agreements with
such bank shall be deemed "Unencumbered Cash" for purposes of this
Agreement.
"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.
"WPRI": television station WPRI-TV, Channel 12, Providence,
Rhode Island.
<PAGE> 35
30
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 Holdings 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 Commitments. (a) Subject to the terms and conditions
hereof, each Committed Term Loan Lender severally agrees (A) to make a term loan
(an "Initial Term Loan") to the Borrower on the Closing Date in a principal
amount not to exceed the amount of the Initial Term Loan Commitment of such
Lender and (B) to make a term loan (a "Delayed Term Loan") to the Borrower at
any one time during the Delayed Commitment Period in a principal amount not to
exceed the Delayed Term Loan Commitment of such Lender.
(b) The Borrower and all or certain of the Lenders may, up to
five times during the period from and including the Closing Date to but
excluding the Incremental Term Loan Termination Date, agree that such Lenders
shall become Incremental Lenders or increase the principal amount of their
Incremental Term Loans by executing and delivering to the Administrative Agent
an Incremental Term Loan Activation Notice specifying (i) the respective
Incremental Term Loan Amount of such Incremental Lenders, (ii) the applicable
Incremental Term Loan Closing Date, (iii) the applicable Incremental Maturity
Date, (iv) the amortization schedule for the applicable Incremental Term Loans,
which shall comply with subsection 2.3(b) and (v) the Applicable Margin for the
Incremental Term Loans to be made pursuant to such Incremental Term Loan
Activation Notice, and which shall be otherwise duly completed. Each Incremental
Lender that is a signatory to an Incremental Term Loan Activation Notice
severally agrees, on the terms and conditions of this Agreement, to make a term
loan (an "Incremental Term Loan") to the Borrower on the Incremental Term Loan
Closing Date specified in such Incremental Term Loan Activation Notice in a
principal amount not to exceed the amount of the Incremental Term Loan Amount of
such Incremental Lender specified in such Incremental Term Loan Activation
Notice. Subject to the terms and conditions of this Agreement, the Borrower may
convert Incremental Term Loans of one Type into Incremental Term Loans of
another Type (as provided in subsection 2.10) or continue Incremental Term Loans
of one Type as Incremental Term Loans of the same Type (as provided in
subsection 2.10). Incremental Term Loans that are prepaid may not be reborrowed.
Nothing in this subsection 2.1(b) shall be construed to obligate any Lender to
execute an Incremental Term Loan Activation Notice. Notwithstanding the
foregoing, (a) without the consent of the Required Lenders the Borrower shall
not solicit any Incremental Term Loan Activation Notice after December 31, 2000
and (b) the aggregate amount of Incremental Term Loans shall not exceed
$100,000,000.
(c) 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.
<PAGE> 36
31
2.2 Procedure for Term Loan Borrowing. (a) The Borrower shall
give the Administrative Agent irrevocable written (or telephonic promptly
confirmed in writing) notice (which notice must be received by the
Administrative Agent prior to 12:00 noon, New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Committed Term Loan
Lenders make the Initial Term Loans on the Closing Date and specifying the
amount to be borrowed. Each such notice shall be given by the Borrower in the
form of Exhibit J. The Initial Term Loans made on the Closing Date shall
initially be ABR Loans. Upon receipt of such notice the Administrative Agent
shall promptly notify each Committed Term Loan Lender thereof. Not later than
12:00 Noon, New York City time, on the Closing Date each Committed 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 Initial
Term Loans to be made by such Lender. The Administrative Agent 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 Committed Term Loan Lenders in like funds as received by the Administrative
Agent.
(b) The Borrower shall give the Administrative Agent
irrevocable written (or telephonic promptly confirmed in writing) notice of each
borrowing of Delayed Term Loans or Incremental Term Loans (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City time,
(i) three Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans, or (ii) one Business Day prior to the requested Borrowing
Date, in the case of ABR Loans), specifying (A) the amount and Type of Delayed
Term Loans or Incremental Term Loans to be borrowed, (B) the requested Borrowing
Date and (C) 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 such notice shall be given by the Borrower in the form of Exhibit
J. There shall be only one borrowing under the Delayed Term Loan Commitment and
no more than five borrowings under the Incremental Term Loan Facility. The
borrowing under the Delayed Term Loan Commitment and each borrowing under the
Incremental Term Loan Facility shall be in an amount equal to (x) in the case of
ABR Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof and (y)
in the case of Eurodollar Loans, $2,000,000 or a whole multiple of $200,000 in
excess thereof. Upon receipt of any such notice with respect to a Delayed Term
Loan or Incremental Term Loan from the Borrower, the Administrative Agent shall
promptly notify each Committed Term Loan Lender or Incremental Lender, as the
case may be, thereof. Each Committed Term Loan Lender will make the amount of
its pro rata share of each borrowing available to, and each Incremental Lender
will make its respective Incremental Term Loan Amount 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 applicable Lenders and in like
funds as received by the Administrative Agent.
2.3 Repayment of Term Loans. (a) The Committed Term Loans of
each Committed Term Loan Lender shall mature in 28 consecutive quarterly
installments, commencing on September 30, 1999 and ending on June 30, 2006, each
of which installments in any calendar year specified below shall be in an amount
equal to the product of (i) one quarter of the amount set forth opposite such
calendar year (except with respect to 1999 and 2006, during which there will be
two installments (with the installments in the same year being equal in amount)
made on September 30, 1999 and December 31, 1999, and March 31, 2006 and June
30, 2006, respectively, and with respect to the installment due on June 30, 2006
in the lesser of the amount of Committed Term Loans then outstanding and
one-half the amount set forth below opposite the year 2006) and (ii) such
Lender's Committed Term Loan Percentage:
<PAGE> 37
32
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1999 $ 1,500,000
2000 $ 5,000,000
2001 $ 8,000,000
2002 $12,500,000
2003 $17,500,000
2004 $20,000,000
2005 $20,000,000
2006 $15,500,000
</TABLE>
(b) The Incremental Term Loans, if any, of each Incremental
Lender shall mature in consecutive quarterly installments as specified in the
Incremental Term Loan Activation Notice pursuant to which such Incremental Term
Loans were made, provided that prior to the date that is six months following
the Committed Term Loan Maturity Date the amounts of such installments for any
four consecutive fiscal quarters shall not exceed 1% of the aggregate principal
amount of such Incremental Term Loans on the date such Loans were first made.
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 Swingline
Exposure at such time and 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 and reborrowing the
Revolving Credit Loans in whole or in part, 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 and all outstanding Swingline
Loans on the earlier of the Revolving Credit Termination Date and the first date
after such Swingline Loan is made that is the 15th or last day of a calendar
month and is at least two Business Days after such Swingline Loan is made.
(c)(i) Subject to the terms and conditions hereof, the
Swingline Lender agrees to make swingline loans ("Swingline Loans") to the
Borrower from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding not to exceed the
Swingline Loan Commitment then in effect, provided that at no time may the Total
Revolving Extensions of Credit exceed the aggregate Revolving Credit
Commitments. During the Revolving Credit Commitment Period, the Borrower may use
the Swingline Loan Commitment by borrowing, prepaying, in whole or in part, and
reborrowing the Swingline Loans, all in accordance with the terms and conditions
hereof. All Swingline Loans shall be ABR Loans. The Borrower shall give the
Swingline Lender irrevocable written (or telephonic promptly confirmed in
writing) notice (which notice must be received by the Swingline Lender prior to
12:00 noon New York City time) on the requested Borrowing Date specifying the
amount of the requested Swingline Loan which shall be in an aggregate minimum
amount of $100,000, or a whole multiple of $25,000 in excess thereof. Each such
notice shall be given by the Borrower in the form of Exhibit J. The proceeds of
the Swingline Loan will be made available by the Swingline Lender to the
Borrower at the office of the Swingline Lender by 2:00 p.m. New York City time
on the Borrowing Date by crediting the account of the Borrower at such office
with such proceeds. The Borrower may, at any time and from time to time, prepay
the Swingline Loans, in whole or in part,
<PAGE> 38
33
without premium or penalty, by notifying the Swingline Lender prior to 12:00
noon New York City time on any Business Day of the date and amount of
prepayment. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein. Partial prepayments
shall be in an aggregate principal amount of $100,000, or a whole multiple of
$25,000 in excess thereof.
(ii) The Swingline Lender, at any time in its
sole and absolute discretion, may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), and without
regard to the minimum amounts in subsection 2.5, request each Revolving Credit
Lender including the Swingline Lender to make a Revolving Credit Loan in an
amount equal to such Lender's Revolving Credit Percentage of the amount of the
Swingline Loans outstanding on the date such notice is given (the "Refunded
Swingline Loans"). Unless any of the events described in paragraph (f) of
Section 8 shall have occurred with respect to the Borrower (in which event the
procedures of subparagraph (iii) of this subsection 2.4(c) shall apply), each
Revolving Credit Lender shall make the proceeds of its Revolving Credit Loan
available to the Administrative Agent for the account of the Swingline Lender at
the office of the Administrative Agent specified in subsection 10.2 prior to
1:00 p.m. New York City time in immediately available funds on the Business Day
next succeeding the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the Refunded Swingline Loans.
Effective on the day such Revolving Credit Loans are made, the portion of such
Loans so paid shall no longer be outstanding as Swingline Loans, shall no longer
be due under any Swingline Note and shall be Revolving Credit Loans made by the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Percentages. The Borrower authorizes the Swingline Lender to charge its accounts
with the Administrative Agent (up to the amount available in each such account)
in order to immediately pay the amount of such Refunded Swingline Loans to the
extent amounts received from the Revolving Credit Lenders are not sufficient to
repay in full such Refunded Swingline Loans.
(iii) If prior to the making of a Revolving Credit
Loan pursuant to subparagraph (ii) of this subsection 2.4(c) one of the events
described in paragraph (f) of Section 8 shall have occurred and be continuing
with respect to the Borrower, each Revolving Credit Lender will, on the date
such Revolving Credit Loan was to have been made pursuant to the notice in
subsection 2.4(c)(ii), purchase an undivided participating interest in the
Refunded Swingline Loan in an amount equal to (i) its Revolving Credit
Percentage times (ii) the Refunded Swingline Loans. Each Revolving Credit Lender
will immediately transfer to the Swingline Lender, in immediately available
funds, the amount of its participation, and upon receipt thereof the Swingline
Lender will deliver to such Revolving Credit Lender a Swingline Loan
Participation Certificate dated the date of receipt of such funds and in such
amount.
(iv) Whenever, at any time after any Revolving
Credit Lender has purchased a participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Revolving Credit Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Credit Lender's
participating interest was outstanding and funded); provided, however, that in
the event that such payment received by the Swingline Lender is required to be
returned, such Revolving Credit Lender will return to the Swingline Lender any
portion thereof previously distributed by the Swingline Lender to it.
(v) Each Revolving Credit Lender's obligation to
make the Loans referred to in subsection 2.4(c)(ii) and to purchase
participating interests pursuant to subsection 2.4(c)(iii) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Revolving Credit Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(B) the occurrence or continuance of a Default or an Event of Default; (C) any
adverse
<PAGE> 39
34
change in the condition (financial or otherwise) of the Borrower; (D) any breach
of this Agreement or any other Loan Document by Holdings, the Borrower or any of
its Subsidiaries or any other Lender; or (E) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
2.5 Procedure for Revolving Credit Borrowing. Subject to
subsection 2.8(b), 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
written (or telephonic promptly confirmed in writing) 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 such notice
shall be given by the Borrower in the form of Exhibit J. Each borrowing under
the Revolving Credit Commitments shall be in an amount equal to (A) in the case
of ABR Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof (or,
if the then aggregate Available Revolving Credit Commitments are less than
$1,000,000, such lesser amount) and (B) in the case of Eurodollar Loans,
$2,000,000 or a whole multiple of $200,000 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. For purposes of calculating commitment fees under
this subsection 2.6(a) only, no portion of the Revolving Credit Commitments
shall be deemed utilized as a result of outstanding Swingline Loans.
(b) The Borrower agrees to pay to the Administrative Agent for
the account of each Committed Term Loan Lender a commitment fee for the period
from and including the Closing Date to the Delayed Termination Date, computed at
the Commitment Fee Rate on the average daily amount of the Delayed Term Loan
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 Delayed Termination Date, commencing on the first of such dates to
occur after the date hereof.
(c) 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 July 1,
1998, in writing among the Borrower, the Administrative Agent, the Documentation
Agent, the Syndication Agent and Chase Securities Inc.
<PAGE> 40
35
2.7 Termination or Reduction of Commitments.
(a) The Initial Term Loan Commitments shall be automatically
and permanently terminated at 5:00 p.m., New York City time, on the Closing
Date. The Delayed Term Loan Commitments shall be automatically and permanently
terminated at 5:00 p.m., New York City time, on the Delayed Termination Date.
(b) Notwithstanding any other provision of this Agreement,
each Revolving Credit Lender's Revolving Credit Commitment shall automatically
be permanently reduced on September 30 of each calendar year (except with
respect to 2006, during which there will be one reduction on Revolving Credit
Termination Date in an amount equal to the lesser of the amount set forth below
opposite the year 2006 and the Revolving Credit Commitments in effect at such
time) by the product of (x) the amount set forth opposite such calendar year and
(y) such Lender's Revolving Credit Percentage:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
2001 $ 2,000,000
2002 $ 2,000,000
2003 $ 4,000,000
2004 $ 4,000,000
2005 $ 8,000,000
2006 $20,000,000
</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, Swingline 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 and Swingline
Lines (and to the extent necessary cash collateralize any outstanding Letters of
Credit) in the amount of such excess, together with accrued interest thereon to
the date of payment.
(c) 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 the Delayed Term Loan Commitments or, from time
to time, to reduce the amount of the Revolving Credit Commitments or the Delayed
Term Loan Commitments, provided that no such termination or reduction with
respect to Revolving Credit Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Swingline Loans and the Revolving
Credit Loans made on the effective date thereof, the Total Revolving Extensions
of Credit would exceed the Revolving Credit Commitments then in effect. Any
reduction pursuant to this subsection 2.7(c) shall be in an amount equal to
$1,000,000, or a whole multiple of $500,000 in excess thereof, and shall reduce
permanently the Revolving Credit Commitments or the Delayed Term Loan
Commitments, as applicable, then in effect. Upon receipt of any notice pursuant
to this subsection 2.7(c), the Administrative Agent shall promptly notify each
Committed Term Loan Lender or each Revolving Credit Lender and the Swingline
Lender, as applicable, of the contents thereof).
2.8 Optional Prepayments. (a) 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 written (or telephonic promptly confirmed in writing)
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
<PAGE> 41
36
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 (other than as
contemplated in subsection 2.8(b)) of Eurodollar Loans shall be in an aggregate
principal amount of $2,000,000 or a whole multiple of $200,000 in excess
thereof. Partial prepayments (other than of a Swingline Loan or as contemplated
by subsection 2.8(b)) of ABR Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $100,000 thereof. At the election of the
Borrower, the first $15,000,000 in aggregate amount of optional prepayments on
account of the Term Loans shall be applied to the then remaining installments
thereof as the Borrower elects and thereafter optional prepayments of the Term
Loans shall be allocated among the Term Loans under the Committed Term Loan
Facility and the Incremental Term Loan Facility ratably based on the outstanding
principal amount of the Term Loans under each such Facility and applied to the
then remaining installments of the Term Loans under each such Facility ratably
based on the number of then remaining installments under such Facility (i.e.
each then remaining installment of the applicable Term Loans shall be reduced by
an amount equal to the aggregate amount to be applied to such Term Loan divided
by the number of the then remaining installments for such Term Loans), provided
that if the amount to be applied to any installment required by this Agreement
would exceed the then remaining amount of such installment, then an amount equal
to such excess shall be applied to the remaining installments in the order of
maturity after giving effect to all prior reductions thereto (including the
amount of prepayments theretofore allocated pursuant to the preceding portion of
this sentence).
(b) In the event that the Borrower specifies in the
Reinvestment Notice with respect to the sale of any Broadcasting Asset that the
Borrower will apply the Net Cash Proceeds of such sale to the temporary
repayment of Revolving Credit Loans pursuant to this subsection 2.8(b), the
Borrower shall apply such Net Cash Proceeds to the repayment of Revolving Credit
Loans as provided in subsection 2.8(a), without giving effect to any minimum
repayment amounts set forth therein. Any such repayment is referred to herein as
a "Broadcasting Asset Temporary Repayment". The Borrower may from time to time
up to the date which is one year after the date of such prepayment reborrow all
or a portion of the amount prepaid pursuant to any Broadcasting Asset Temporary
Repayment if (i) such borrowing complies with all the procedures for borrowing
set forth in subsection 2.5 and (ii) promptly upon the receipt of the proceeds
of such borrowing, the Borrower (A) applies such proceeds to make a Permitted
Acquisition, (B) deposits such proceeds in a cash collateral account with the
Administrative Agent as contemplated by subsection 2.9(b) or (C) applies such
proceeds to the prepayment of Term Loans and the permanent reduction of
Revolving Credit Commitments in the manner specified in such subsection 2.9(d).
So long as any portion of any Broadcasting Asset Temporary Repayment has not
been reborrowed, the Borrower shall not be entitled to borrow, and no Lender
shall be entitled to make, Revolving Credit Loans or Swingline Loans if after
giving effect thereto the aggregate amount of outstanding Revolving Extensions
of Credit at such time would exceed an amount equal to (i) the aggregate amount
of the Revolving Credit Commitments at such time minus (ii) the aggregate amount
of all Broadcasting Asset Temporary Repayments that have not been reborrowed at
such time.
<PAGE> 42
37
2.9 Mandatory Prepayments and Commitment Reductions. (a) If
any Capital Stock (other than a Permitted Issuance) or Indebtedness shall be
issued or Incurred by Holdings, the Borrower or any of its Subsidiaries
(excluding any Incurrence of Indebtedness in accordance with subsection 7.2), 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 reduction of the Revolving Credit Commitments
as set forth in subsection 2.9(d), provided that if, at the time of such
issuance or Incurrence, the Consolidated Leverage Ratio as of the last day of
the most recent Test Period is (i) less than 5.00 to 1.00 and greater than or
equal to 4.00 to 1.00, an amount equal to 50% of the Net Cash Proceeds thereof
shall be applied on the date of such issuance or Incurrence first, toward the
prepayment of the Term Loans, and second, to the reduction of the Revolving
Credit Commitments as set forth in subsection 2.9(d) and (ii) less than 4.00 to
1.00, no such prepayment or reduction shall be required in respect of such
issuance or Incurrence.
(b) If on any date Holdings, 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(d), provided that if a
Reinvestment Notice shall be delivered in respect thereof (i) 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 reduction of the Revolving Credit
Commitments as set forth in subsection 2.9(d) and (ii) if such Net Cash Proceeds
relate to an Asset Sale pursuant to subsection 7.5(h) or an Asset Swap
Transaction pursuant to subsection 7.5(i) and a Reinvestment Notice has been
delivered in connection therewith, pending such Reinvestment Prepayment Date,
such Net Cash Proceeds shall be (A) applied to the repayment of Revolving Credit
Loans pursuant to subsection 2.8(b) to be reborrowed by the Borrower, subject to
compliance by the Borrower at the time of such reborrowing with the terms and
conditions of this Agreement, to make a Permitted Acquisition or as cash
consideration in connection with an Asset Swap Transaction or (B) 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 make a Permitted Acquisition
or as cash consideration in connection with an Asset Swap Transaction, provided
further, that, notwithstanding subsection 2.9(d), if, at the time of receipt of
such Net Cash Proceeds, the Consolidated Leverage Ratio as of the last day of
the most recent Test Period is (i) less than 5.00 to 1.00 and greater than or
equal to 4.00 to 1.00, an amount equal to 50% of the Net Cash Proceeds thereof
shall be applied as set forth in subsection 2.9(d) and (ii) less than 4.00 to
1.00, no such prepayment or reduction shall be required in respect of such Net
Cash Proceeds.
(c) If, for any fiscal year of the Borrower commencing with
the fiscal year ending December 31, 1999, 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 reduction of the Revolving Credit Commitments as set forth in subsection
2.9(d). 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
delivered.
<PAGE> 43
38
(d) Subject to the other provisions of this subsection 2.9,
(i) 100% of the Net Cash Proceeds of the issuance of any Capital Stock (other
than a Permitted Issuance) or the issuance or Incurrence of any Indebtedness as
provided in subsection 2.9(a), (ii) 100% of the Net Cash Proceeds of any Asset
Sale or Recovery Event, unless a Reinvestment Notice shall be delivered in
respect of any Asset Sale or Recovery Event (in which case the terms of
subsection 2.9(b) shall apply) as provided in subsection 2.9(b) and (iii) the
Excess Cash Flow to be applied pursuant to subsection 2.9(c) shall be applied
first, to the prepayment of the Term Loans, and second, to the permanent
reduction of the Revolving Credit Commitments. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of first, the
Swingline Loans, and second, 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 the Swingline Loans and 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, 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 reasonably 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. Subject to subsection 2.9(e),
amounts prepaid on account of the Term Loans (i) shall be allocated among the
Term Loans under the Committed Term Loan Facility and the Incremental Term Loan
Facility ratably based on the outstanding principal amount of the Term Loans
under each such Facility and applied to the then remaining installments of the
Term Loans under each such Facility ratably based on the number of such
installments under such Facility and (ii) may not be reborrowed.
(e) Any Lender holding Incremental Term Loans may, to the
extent Committed Term Loans are outstanding, elect on not less than one Business
Day's prior written notice to the Administrative Agent with respect to any
mandatory prepayment made pursuant to this subsection 2.9, not to have such
prepayment applied to such Lender's Incremental Term Loans, as applicable, until
all Committed Term Loans shall have been paid in full, in which case the amount
not so applied shall be applied to prepay Committed Term Loans and shall reduce
the then remaining installments of the Committed Term Loans ratably based on the
number of such installments.
(f) Notwithstanding the foregoing provisions of this
subsection 2.9, if at any time the mandatory prepayment of any Loans pursuant to
this Agreement would result, after giving effect to the procedures set forth in
this Agreement, in the Borrower incurring costs under subsection 2.16, 2.17 or
2.18 as a result of Eurodollar Loans ("Affected Eurodollar Loans") being prepaid
other than on the last day of an Interest Period applicable thereto, which costs
are required to be paid pursuant to subsection 2.18, then, the Borrower may, in
its sole discretion, initially deposit a portion (up to 100%) of the amounts
that otherwise would have been paid in respect of the Affected Eurodollar Loans
with the Administrative Agent (which deposit must be equal in amount to the
amount of the Affected Eurodollar Loans not immediately prepaid) to be held as
security for the obligations of the Borrower to make such mandatory prepayment
pursuant to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Administrative Agent, with such cash collateral
to be directly applied upon the first occurrence (or occurrences) thereafter of
the last day of an Interest Period applicable to the relevant Loan that is a
Eurodollar Loan (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such Loan equal to the
Affected Eurodollar Loans not initially repaid pursuant to this sentence.
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 written (or
telephonic promptly confirmed in writing) 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
<PAGE> 44
39
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 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 written (or telephonic promptly
confirmed in writing) notice of such election by 12:00 Noon, New York City time
(which notice shall specify the length of the initial Interest Period therefor),
provided that no ABR Loan may be converted into a Eurodollar Loan (i) when any
Event of Default has occurred and is continuing and the Administrative Agent or
the Required Lenders 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 may be continued as such (i) when
any Event of Default has occurred and is continuing and the Administrative Agent
has or the Required Lenders 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 any 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 $2,000,000 or a whole multiple of
$200,000 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.
(c) Upon the occurrence and during the continuance of an Event
of Default under subsection 8(a), (i) all outstanding Loans and any overdue
amounts hereunder shall bear interest at a rate per annum which is (A) 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 (B) in the case
of Reimbursement Obligations, overdue interest, commitment fee or other amount
payable 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 (after judgment as well as before judgment).
<PAGE> 45
40
(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.
2.14 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(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 Required Lenders 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 requested to be made on the first day
of such Interest Period shall be made as ABR Loans, (y) any Loans 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 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 when 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 Committed Term Loan Percentages, Incremental 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
<PAGE> 46
41
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 subsection 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 subsections 2.6 and 3.3, ratably among the Revolving
Credit Lenders in accordance with the Revolving Credit Commitment of each
Revolving Credit Lender, the Committed Term Loan Lenders in accordance with the
Delayed Term Loan Commitments of each Committed Term Loan Lender, if applicable,
and, in the case of the Issuing Lender, the amount retained by the Issuing
Lender for its own account pursuant to subsection 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 or Committed Term Loan
Lender (each, a "Non-Funding Lender") has (x) failed to make a Revolving Credit
Loan or Delayed Term Loan, as applicable, required to be made by it hereunder,
and the Administrative Agent has determined that such Revolving Credit Lender or
Committed Term Loan Lender, as applicable, is not likely to make such Revolving
Credit Loan or Delayed Term Loan, as applicable, 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 or
Delayed Term Loans, as applicable, 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 or Committed Term Loans, as applicable, outstanding shall
be made as follows:
(i) with respect to Revolving Credit Loans, 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 subsection 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 or Committed Term Loans, as
applicable, held by the Revolving Credit Lenders or Committed Term Loan
Lenders, as applicable, pro rata according to the respective
outstanding principal amounts of such Revolving Credit Loans or
Committed Term Loans, as applicable; and
(iii) any payment made on account of interest on the
Revolving Credit Loans or Committed Term Loans, as applicable, shall be
made pro rata according to the respective amounts of accrued and unpaid
interest due and payable on the Revolving Credit Loans or Committed
Term Loans, as applicable, with respect to which such payment is being
made.
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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.
(d) Subject to subsection 2.15(c) and subsection 2.9(e), each
payment (including each prepayment) by the Borrower on account of principal of
and interest on the Committed Term Loans and the Incremental Term Loans shall be
made pro rata according to the respective outstanding principal amounts of the
applicable Term Loans then held by the applicable Term Loan Lenders.
(e) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Loans (other than the Term Loans)
shall be made first to the Swingline Loans and then 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.
Payments received by the Administrative Agent after such time shall be deemed to
have been received on the next Business Day. 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 greater of the daily average Federal
Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation 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(g) 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.
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:
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(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 net income of such Lender and changes in the rate of
tax on the 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 if 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 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.
(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.
(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
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44
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
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
or to the extent such failure to establish a complete exemption from such
withholding thereafter is attributable to the actions of such Lender. 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 United States
person within the meaning of Section 7701(a)(30) of the Code (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.
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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 by the Borrower or the Administrative Agent for filing and
completing such forms. Each Non-U.S. Lender (and, if applicable, any other
Lender or Transferee) 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. If the
Administrative Agent or any Lender (or Transferee) receives a refund in respect
of Non-Excluded Taxes paid by the Borrower, it shall promptly pay such refund,
together with any other amounts paid by the Borrower in connection with such
refunded Non-Excluded Taxes, to the Borrower, net of all out-of-pocket expenses
of such Lender incurred in obtaining such refund, provided that the Borrower
agrees to promptly return such refund to the Administrative Agent or the
applicable Lender if it receives notices from the Administrative Agent or
applicable Lender that such Administrative Agent or Lender is required to repay
such refund.
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 actually incurs as a consequence of (a) withdrawal of
notice given 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)
failure by the Borrower to make 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 that such
designation is made on terms that in the reasonable 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).
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2.20 Replacement of Lenders under Certain Circumstances. If at
any time (a) the Borrower becomes obligated to pay additional amounts described
in subsection 2.16 or 2.17 as a result of any condition described in such
subsections or any Lender ceases to make Eurodollar Loans pursuant to subsection
2.16, (b) any Lender becomes insolvent and its assets become subject to a
receiver, liquidator, trustee, custodian or other Person having similar powers,
(c) any Lender becomes a "Non-Consenting Lender" (as defined below in this
subsection 2.20) or (d) 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 be obligated to) assign pursuant to subsection 10.6(c) all of its
rights and obligations under this Agreement to a Lender or other entity selected
by the Borrower and reasonably acceptable to the Administrative Agent (and in
the case of Revolving Credit Commitments or Revolving Loans, reasonably
acceptable to the Issuing Lender and the Swingline Lender) 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 subsection 2.18 as though such Loans were being paid instead of being
purchased), provided that (i) neither the Administrative Agent nor any Lender
shall have any obligation to the Borrower to find a replacement Lender or other
such entity, (ii) in the event of a replacement of a Non-Consenting Lender or a
Lender to which the Borrower becomes obligated to pay additional amounts
pursuant to clause (a) of this subsection 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 (A) the date the Non-Consenting Lender shall have notified
the Borrower and the Administrative Agent of its failure to agree to any
requested consent, waiver or amendment or (B) the Lender shall have demanded
payment of additional amounts under one of the subsections described in clause
(a) of this subsection 2.20, as the case may be, and (iii) 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. In the event
that (x) the Borrower or the Administrative Agent has requested the Lenders to
consent to a departure or waiver of any provisions of the Loan Documents or to
agree to any amendment thereto, (y) the consent, waiver or amendment in question
requires the agreement of all Lenders in accordance with the terms of subsection
10.1 or all the Lenders with respect to a certain class of the Loans and (z)
Required Lenders or more than 50% of the class of such Lenders have agreed to
such consent, waiver or amendment, then any Lender who does not agree to such
consent, waiver or amendment shall be deemed a "Non-Consenting 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.
2.21 Notice of Certain Costs. Notwithstanding anything in this
Agreement to the contrary, to the extent any notice required by subsection 2.15
through and including subsection 2.18 is given by any Lender more than 90 days
after such Lender has knowledge (or should have had knowledge) of the occurrence
of the event giving rise to the additional cost, reduction in amounts, loss, tax
or other additional amounts described in such subsections, such Lender shall not
be entitled to compensation under such subsections for any such amounts incurred
or accruing prior to the giving of such notice to the Borrower.
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
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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.
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 the average daily face amount of each Letter 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.
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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
greater of the daily average Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation 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 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 Dollars 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).
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
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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 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, the Lenders, the Swingline
Lender and the Issuing Lender to enter into this Agreement and to make the Loans
and issue or participate in the Letters of Credit, Holdings and the Borrower
hereby represent and warrant to the Administrative Agent, the Swingline Lender,
the Issuing Lender and each Lender that:
4.1 Financial Condition. (a) The audited consolidated
financial statements of the Borrower as of and for the fiscal year ending
December 31, 1997, reported on by Arthur Andersen, present fairly the
consolidated financial condition of the Borrower and the results of operations
and cash flows as of such date and for such period. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the period
involved (except as approved by the relevant firm of accountants and disclosed
therein). The balance sheet contained in the financial statements referred to
above reflects, 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 sheet.
(b) The unaudited projected pro forma consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at April 30, 1998
(including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, have each been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Purchase Transactions and the Exchange Transactions, (ii) the Loans to be
made hereunder on the Closing Date and the use of
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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
April 30, 1998 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.
4.2 No Change. Since December 31, 1997, there has been no (a)
development or event which has had or could reasonably be expected to have a
Material Adverse Effect or (b) sale, transfer or other disposition by the
Borrower or any of its Subsidiaries of any material part of its business or
property, other than as contemplated in the Exchange Transactions.
4.3 Corporate Existence; Compliance with Law. Each of Holdings
and its Subsidiaries (a) is duly organized or formed, as the case may be,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation, (b) has the requisite 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 (or had) the requisite power and authority, and the legal
right, to make, deliver and perform the Loan Documents, the Purchase Agreement
and the Exchange Agreement to the extent a party thereto and, in the case of the
Borrower, to borrow and obtain other extensions of credit hereunder. Each Loan
Party has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Loan Documents and the Transaction
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. Other than consents from the FCC as required pursuant to the
Purchase Agreement and the Exchange 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 Purchase
Transactions and the Exchange Transactions and the borrowings and other
extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement, any of the other Loan Documents or
the Transaction 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 and (iii) the filings referred
to in subsection 4.19. Each Loan Document and each Transaction Document has been
duly executed and delivered on behalf of each Loan Party thereto. This Agreement
and each Transaction Document constitutes, and each Loan Document upon execution
will constitute, a legal, valid and binding obligation of each Loan 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, the Transaction Documents and the 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, 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).
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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 Holdings or 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, (b) as of
the Closing Date, with respect to the Transaction Documents or any of the
transactions contemplated thereby or (c) which, if adversely determined, 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 (including the Transaction
Documents) 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 material real
property, and good title to, or a valid leasehold interest in, all its other
material 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 for those the failure to own or license which could not reasonably be
expected to have a Material Adverse Effect. Except as, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect and to the
knowledge of Holdings and the Borrower (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 Holdings or 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 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 material assessments made against it or any of its property and all other
material taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than (a) 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 (b)
taxes, assessments, fees or other charges imposed by any 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 Holdings and the Borrower, no material claim is being asserted,
with respect to any such material tax, fee or other charge, other than those
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
Loan Parties.
4.11 Federal Regulations. No Letters of Credit and no part of
the proceeds of any Loans will be used for "buying" 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.
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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 Holdings and the Borrower,
threatened that (individually or in the aggregate) could reasonably be expected
to have a Material Adverse Effect. Hours worked by and payments 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 Holdings and the
Borrower, 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: (a) 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; (b) each Plan (other than
a Multiemployer Plan) has complied in all material respects with the applicable
provisions of ERISA and the Code; (c) 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; (d) 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
in an amount that could reasonably be expected to have a Material Adverse
Effect; (e) none of the Loan Parties nor any Commonly Controlled Entity has had
a complete or partial withdrawal from any Multiemployer Plan, and, to the
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; (f) no such Multiemployer
Plan is in Reorganization or Insolvent; (g) 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(l) 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 after the completion of the Purchase Transactions and the Exchange
Transactions 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 Loans and the
issuances of Letters of Credit shall be used solely for the purposes specified
in the preamble of this Agreement.
4.17 Environmental Matters. Except as set forth on Schedule
4.17:
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(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"), the Properties and all operations at the
Properties are, and to the knowledge of Holdings and the Borrower have been, in
compliance in all respects with all applicable Environmental Laws except for
noncompliance which is not reasonably likely to result in a Material Adverse
Effect.
(c) Neither Holdings, the Borrower 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 result in the Borrower or
any of its Subsidiaries incurring 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 result in the Borrower or any of its Subsidiaries
incurring 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, the Borrower 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.
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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 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 Administrative Agent and 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 (a)
of STCBV in the Purchase Agreement are true and correct in all material
respects, (b) of the STC Parties in the Exchange Agreement are true and correct
in all material respects and (c) of all other parties to the Purchase Agreement
and the Exchange Agreement, to the knowledge of Holdings and the Borrower, 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 and the Pledged Notes, when stock
certificates representing such Pledged Stock or certificates representing such
Pledged Notes are delivered to the Administrative Agent, or when financing
statements in appropriate form are filed in the offices specified on Schedule
4.19(a), 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 and the Pledged Notes,
to Liens permitted by subsection 7.3.
(b) Each of the Mortgages when executed and delivered will be
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 Mortgage), in each case
prior and superior in right to any other Person, subject to Liens permitted by
subsection 7.3.
4.20 Solvency. Each Loan Party is, and after giving effect to
the Purchase Transactions and the Exchange Transactions 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
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"Guarantor Senior Indebtedness" of such Subsidiary Guarantor or Holdings under
and as defined in the Senior Subordinated Note Indenture.
4.22 Station Licenses. Schedule 4.22 accurately and completely
lists as of the date hereof (after giving effect to the Purchase Transactions
and the Exchange Transactions), 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 and the Providence Station, to SAC or any of its
Subsidiaries), or under which the Borrower and its Subsidiaries (or, in the case
of the Steubenville Station and the Providence Station, to SAC or any of its
Subsidiaries), have the right to operate such Station. As of the Closing Date,
the Station Licenses listed on Schedule 4.22 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 SAC and its Subsidiaries) with
respect to such Station, as now conducted or proposed to be conducted. The
Station Licenses listed on Schedule 4.22 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 Station Licenses and validly
issued and in full force and 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,
except as described in Schedule 4.22 hereto, all consents to the transfer of
control of the principal broadcasting licenses and any other material Station
Licenses in connection with the transactions contemplated hereby and in the
Transaction Documents shall have been granted by the FCC, provided that such
consents will not be required to have become Final Orders.
4.23 Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by Holdings, the Borrower or any of
its Subsidiaries or used or relied upon in the conduct of their business
(including any such systems and other equipment supplied by others or with which
the computer systems of Holdings, the Borrower or any of its Subsidiaries
interface) and the testing of all such systems and other equipment as so
reprogrammed, will be completed in sufficient time for Holdings, the Borrower
and its Subsidiaries to be year 2000 compliant. The costs to Holdings, the
Borrower and its Subsidiaries that have not been incurred as of the date hereof
for such reprogramming and testing and for the other reasonably foreseeable
consequences to them of any improper functioning of other computer systems and
equipment containing embedded microchips due to the occurrence of the year 2000
could not reasonably be expected to result in a Default or Event of Default or
to have a Material Adverse Effect.
4.24 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.
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 Responsible
Officer of the Borrower and Holdings, (ii) the Guarantee and Collateral
Agreement, executed and delivered by a Responsible Officer of
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Holdings, the Borrower and each Subsidiary Guarantor, (iii) the SAC
Pledge Agreement, executed and delivered by a duly authorized officer
of the parties thereto, and (iv) a notice of borrowing pursuant to
subsection 2.2 and subsection 2.5 of this Agreement.
(b) Lien Searches. The Administrative Agent shall have
received the results of a recent lien, tax and judgment search in each
of the jurisdictions and offices where assets of the Loan Parties are
located or recorded, and such search shall reveal no Liens on any of
the assets of Holdings or its Subsidiaries except for Liens permitted
by subsection 7.3 and Liens that will be removed prior to the Closing
Date.
(c) Closing Certificate. The Administrative Agent shall have
received, with a copy 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.
(d) 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, substantially in the form of
Exhibit F; and
(ii) the legal opinion of Hogan & Hartson LLP,
special FCC counsel to the Loan Parties.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement and the Transaction
Documents as the Administrative Agent may reasonably require.
(e) 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 Responsible Officer of the pledgor thereof and the
Pledged Notes pledged pursuant to the Guarantee and Collateral
Agreement endorsed in blank by a Responsible Officer of the pledgor
thereof.
(f) 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.
(g) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of subsection 6.5 of
this Agreement.
(h) 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.
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(i) The Transactions. The Sinclair License Transfer and the
Exchange Transactions shall have been consummated or shall be
consummated substantially simultaneously with the initial borrowing of
Loans under this Agreement in accordance with all applicable
Requirements of Law and the terms of the Purchase Agreement and the
Exchange Agreement, respectively, (without giving effect to any
amendments or waivers to the Transaction Documents that could
reasonably be expected adversely to impact the Facilities and are not
reasonably satisfactory to the Lenders).
(j) Repayment of Hearst Loan and Release of Pledge. The Hearst
Loan shall have been repaid in full substantially simultaneously with
the initial borrowing of Loans under this Agreement in accordance with
all applicable Requirements of Law and the terms of the STCBV Sub
Credit Agreement and Hearst shall have released the pledge by STCBV of
all of its right, title and interest in the capital stock of STCBV Sub.
(k) Equity Contribution. The Borrower shall have received cash
proceeds from the issuance of its Capital Stock in an amount sufficient
to remain in compliance with all of the covenants contained in
subsection 7.1 after giving effect to the Purchase Transactions, the
Exchange Transactions and the borrowings made on the Closing Date and
the Borrower shall provide the Lenders with satisfactory evidence of
such compliance (including supporting calculations).
(l) Pro Forma Financial Information and Reconciliation. The
Lenders shall have received (i) a projected pro forma consolidated
balance sheet of Holdings and its Subsidiaries as of April 30, 1998,
after giving effect to the Exchange Transactions and (ii) a
reconciliation of pro forma Consolidated EBITDA on a last 12-month
basis, and such balance sheet and reconciliation shall not, in the
reasonable judgment of the Lenders, reflect any material adverse change
in the consolidated financial condition of the Borrower as reflected in
the financial statements or projections previously furnished to the
Lenders.
(m) Capital Structure. The capital structure of each Loan
Party, after giving effect to the Acquisitions shall be reasonably
satisfactory to the Administrative Agent.
(n) Judicial Actions. (i) There shall be in effect no
temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Purchase Transactions, the Exchange Transactions or the borrowings and
other transactions contemplated by the Loan Documents, nor shall any
proceeding by any Governmental Authority seeking any of the foregoing
be pending.
(ii) There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed
applicable to the Purchase Transactions, the Exchange Transactions or
the borrowings and other transactions contemplated by the Loan
Documents, that makes the consummation of such transactions illegal.
(o) Solvency Opinion. The Lenders shall have received a
solvency certificate in form and substance reasonably satisfactory to
the Lenders from the Chief Financial Officer of Holdings, which shall
certify as to the solvency of Holdings and its Subsidiaries, taken as a
whole, after giving effect to the Purchase Transactions, the Exchange
Transactions, the borrowings hereunder and the other transactions
contemplated hereby.
(p) Consummation of the Transactions. The consummation of the
Purchase Transactions, the Exchange Transactions, the borrowings
hereunder and the other transactions contemplated hereby and by the
other Loan Documents shall not (i) violate any material
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Requirement of Law or (ii) conflict with, or result in a default or
event of default under, any material Contractual Obligation of Holdings
or any of its Subsidiaries.
(q) Governmental Approvals. All requisite Governmental
Authorities and third parties shall have approved or consented to the
Purchase Transactions, the Exchange Transactions, the borrowings
hereunder and the other transactions contemplated by the Loan Documents
to the extent required (including the grant of all required consents of
the FCC (which shall not be required to have become Final Orders) and
other applicable material consents including with respect to the
Network Affiliation Agreements and local marketing agreements of
Holdings and its Subsidiaries, but excluding approvals or consents that
reasonably could not be expected to have a Material Adverse Effect),
all applicable appeal periods shall have expired and there shall be no
action, actual or threatened, of any Governmental Authority that could
reasonably be expected to restrain, prevent or impose materially
burdensome conditions on the Purchase Transactions, the Exchange
Transactions, the borrowings hereunder or the other transactions
contemplated by the Loan Documents.
(r) Certificate as to Network Affiliation Agreements. The
Administrative Agent shall have received a certificate of the chief
executive, chief operating or chief financial officer (or any officer
having comparable duties) of the Borrower to the effect that such
officer has no reason to believe either (i) that the Network
Affiliation Agreements and local marketing agreements of the Borrower
and its Subsidiaries will not remain in full force and effect for the
remaining stated term thereof (other than, with respect to the local
marketing agreements, as a result of any action by any Governmental
Authority affecting the television industry as a whole) or (ii) that
any such Network Affiliation Agreement of the Borrower and its
Subsidiaries will not be renewed upon expiration thereof (it being
understood that such statement shall not relate to the terms of such
renewal).
(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 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 (which
shall not be required to have become Final Orders).
5.2 Conditions to Each Extension of Credit. The agreement of
each Lender and the Swingline 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.
(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) Delayed Term Loans. In the case of any Delayed Term Loans
(i) the consummation of the Meyer Acquisition simultaneously with such
borrowing in accordance with all applicable
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Requirements of Law and the terms of the Meyer Purchase Agreement, (ii)
the Borrower having received cash proceeds from the issuance of its
capital stock in an amount sufficient to remain in compliance with the
covenants contained in subsection 7.1 after giving effect to the
Delayed Term Loans and (iii) the Borrower having provided satisfactory
evidence (including supporting calculations) that on a pro forma basis
as of the date of borrowing of and after giving effect to the Delayed
Term Loans and the Meyer Acquisition the Borrower is in compliance with
the covenants contained in subsection 7.1.
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
Each of Holdings and the Borrower hereby agree 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, the Swingline Lender, the
Issuing Lender or the Administrative Agent hereunder, each of Holdings and the
Borrower shall and (except in the case of delivery of financial information
reports and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent
which shall in turn be promptly distributed by the Administrative Agent to the
Lenders or, in the case of clause (c) hereof, upon the request of any Lender):
(a) as soon as available but in any event within 90 days after
the end of each fiscal year of Holdings and the Borrower, as
applicable, (i) a copy of the audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such year
and the related audited consolidated statements of operations and of
cash flows for such year, and (ii) the annual operating statements of
each Station, in each case setting forth in comparative form the
figures for the previous year, and, in the case of clause (i), 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 the Borrower (i) the unaudited consolidated balance
sheet of each of the Borrower and its consolidated Subsidiaries as at
the end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter and the portion
of the fiscal year through the end of such quarter, and (ii) the
quarterly operating statements of each Station, in each case setting
forth in comparative form the figures for the corresponding period in
the previous year, 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
the Borrower, the unaudited consolidated and consolidating balance
sheet of the Borrower 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).
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All such financial statements shall fairly present in all material respects the
financial position of Holdings and its Subsidiaries or the Borrower and its
Subsidiaries, as applicable, 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).
6.2 Certificates; Other Information. Furnish to the
Administrative Agent (which shall in turn be promptly distributed by the
Administrative Agent to the Lenders) or, in the case of clause (g), to the
relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a)(i), 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 subsections 7.1, except as specified in such
certificate;
(b) concurrently with the delivery of any financial statements
pursuant to subsection 6.1(a) and 6.1(b),(i) a certificate of a
Responsible Officer stating that, to such Responsible Officer's
knowledge, each Loan Party during such period has 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) (A) 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
(B) to the extent not previously disclosed to the Administrative Agent,
a listing of any state 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 (B) (or, in the case of the first
such list so delivered, since the Closing Date) and (iii) any final
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 budget for (i) Holdings and its consolidated Subsidiaries
and (ii) each Station, in each case for such fiscal year (including a
projected consolidated balance sheet of Holdings and its Subsidiaries,
as applicable, as of the end of such 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) 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
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61
equity securities and within five days after the same are filed, 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;
(e) promptly, at the request of the Administrative Agent or
the Required Lenders, a schedule setting forth, for each Station on a
program-by-program basis, the respective Film Cash Payments for each
fiscal year requested by the Administrative Agent or the Required
Lenders, as the case may be;
(f) promptly following their submission with the FCC or any
other Federal, state or local Governmental Authority, copies of any and
all periodic or special reports filed by Holdings or any of its
Subsidiaries (or, with respect to the Steubenville Station and the
Providence Station, SBP), if such reports are publicly available and
indicate any material adverse change in the business, operations or
financial condition of Holdings or any of its Subsidiaries or if copies
thereof are requested by any Lender or the Administrative Agent (but
only to the extent such reports are publicly available), 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 any Station; and
(g) 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 Holdings or its Subsidiaries, as the case may be,
provided that notwithstanding the foregoing, Holdings 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)
Except as contemplated by subsection 7.4, (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 existence and (iii) take all reasonable action to
preserve and maintain all rights, privileges, licenses and franchises necessary
or desirable in the normal conduct of its business, except (other than with
respect to the Station Licenses), in the case of this clause (iii), 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
Holdings, the Borrower or such Subsidiary, as the case may be, it is in its best
economic interest not to preserve and maintain such privileges, rights or
franchises (other than the Station Licenses), and (B) such failure to preserve
and maintain such privileges, rights or 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; (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 and (c) comply in all material respects with
the terms of all Station Licenses.
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 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 or as otherwise reasonably requested by the Administrative Agent; and
furnish to the Administrative Agent, upon written request, information in
reasonable detail as to the
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insurance carried except to the extent that the failure to do any of
the foregoing with respect to any such property could not reasonably be
expected to materially adversely affect the value or usefulness of such
property.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least thirty (30) days after receipt by the Administrative
Agent of written notice thereof, (ii) name the Administrative Agent as insured
party or loss payee and (iii) if reasonably requested by the Administrative
Agent, include a breach of warranty clause.
6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and accounts in accordance with sound business
practices 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 Holdings and its
Subsidiaries with officers and employees of Holdings and its Subsidiaries and
with its independent certified public accountants, provided that the
Administrative Agent or such Lender shall notify Holdings and the Borrower prior
to any contact with such accountants and give Holdings and 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 Holdings or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between
Holdings 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 Holdings 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;
(d) the following events, as soon as possible and in any event
within 30 days after Holdings or the Borrower knows or has reason to
know thereof and if, individually or in the aggregate, the liability
that could reasonably be expected to result would be material to
Holdings and its Subsidiaries taken as a whole: (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;
(e) any development or event which has had or could reasonably
be expected to have a Material Adverse Effect; and
(f) the receipt by Holdings or any of its Subsidiaries of any
complaint, order, citation, notice or other written communication from
any Person with respect to the existence or alleged existence of a
violation of any Environmental Laws or Materials of Environmental
Concern or
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any other environmental matter including the occurrence of any spill,
discharge or release in a quantity that is reportable under any
Environmental Laws on any Mortgaged Properties or any other property
owned, leased or utilized by Holdings or any of its Subsidiaries but
only to the extent that such complaint, order, citation, notice or
written communication individually could reasonably be expected to
result in liability or an obligation under any Environmental Law that
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 Holdings 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
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 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 (or cause to be conducted and
completed) in all material respects 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 failure to do so 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 making of the Delayed Term Loan, enter into Interest
Rate Protection Agreements to the extent necessary to provide that at least 50%
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 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 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 $500,000 (other than (i) any Property described in
paragraph (b), (c) or (d) below and (ii) 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
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Trademark Office and 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), (j) or (q) (but in the case of clause (q), only to the extent
of such Lien)), promptly (i) execute and deliver a first priority Mortgage
(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,
(ii) if reasonably requested by the Administrative Agent, provide the Lenders
with a title report as well as a current ALTA survey thereof, together with a
surveyor's certificate, in each case in form and substance reasonably
satisfactory to the Administrative Agent. Notwithstanding the foregoing, the
Borrower and its Subsidiaries shall only be required to execute and deliver
Mortgages and/or provide title reports and current ALTA surveys covering fee
properties acquired after the Closing Date by the Borrower or its Subsidiaries
with a fair market value at the time of such acquisition in excess of
$1,000,000.
(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 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 and
debt securities of such new Subsidiary which are owned by the Borrower or any of
its Subsidiaries and required to be pledged pursuant to the Guarantee and
Collateral Agreement, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock and debt securities, together with (A) in the
case of such Capital Stock, undated stock powers endorsed in blank, and (B) in
the case of such debt securities, endorsed in blank, in each case executed and
delivered by a Responsible 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 opinion shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent, provided that
notwithstanding the foregoing, only 65% of the voting Capital Stock of any
direct foreign Subsidiary of Holdings, the Borrower or any domestic Subsidiary
need be pledged under this clause (c), no voting Capital Stock of any foreign
Subsidiary of any other foreign Subsidiary need be pledged under this clause (c)
and no direct or indirect foreign Subsidiary shall become a Guarantor hereunder
or shall be required to pledge any of its assets.
(d) Upon the request of the Administrative Agent, to the
extent permitted by applicable Requirements of Law at the time of such request,
grant or cause its Subsidiaries to grant, to the Administrative Agent, a direct
security interest in the Station Licenses within 30 days after receipt of such
request, provided that to the extent FCC consent shall be required in connection
with granting such security interest, such consent shall be requested within 30
days after receipt of such request and upon receipt of such FCC consent, such
security interest shall be granted within 10 Business Days thereof.
(e) Upon the occurrence and during the continuance of (i) any
Event of Default or (ii) any payment default with respect to any Senior
Subordinated Indebtedness, promptly, but in any event not more than 30 Business
Days (subject to necessary approvals by the FCC), following the request of the
Administrative Agent, (A) cause the assets relating to each Station (other than
the Station License
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with respect to such Station) held by the Borrower or any of its Subsidiaries to
be transferred to a separate Subsidiary which shall have no other assets or
liabilities other than those associated with the transferred assets, (B) cause
each Station License for each Station to be transferred to a separate License
Subsidiary which shall have no other assets other than the individual Station
License and no liabilities and (C) with respect to each such newly-formed
Subsidiary, comply with the provisions of subsection 6.10(c).
6.11 Changes in Locations, Name, etc. The Borrower shall 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 in the Guarantee and Collateral Agreement:
(a) permit any of the Inventory or Equipment (each as defined
in the Guarantee and Collateral Agreement) (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 of
the Guarantee and Collateral Agreement;
(b) change the location of its chief executive office or sole
place of business from that referred to in Section 4.4 of the Guarantee and
Collateral Agreement; or
(c) change its name, identity or corporate structure to such
an extent that any financing statement filed by the Administrative Agent in
connection with the Guarantee and Collateral Agreement would become misleading.
6.12 Mortgages, etc. Within 30 days after the Closing Date
(which period may be extended by the Administrative Agent for up to an
additional 30 days):
(i) The Administrative Agent shall have received
a Mortgage with respect to each Mortgaged Property, executed and
delivered by a Responsible Officer of each party thereto.
(ii) The Administrative Agent shall have received
maps or plats of an as-built survey of the sites of the Mortgaged
Properties certified to the Administrative Agent in a manner reasonably
satisfactory to them, dated a recent date by an independent
professional licensed land surveyor reasonably satisfactory to the
Administrative Agent, which maps or plats and the 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; and
(F) if the site is described as being on a filed map, a legend relating
the survey to said map.
(iii) The Administrative Agent shall have received
in respect of each Mortgaged Property a title report in form and
substance reasonably satisfactory to the Administrative Agent.
<PAGE> 71
66
(iv) The Administrative Agent shall have received
a copy of all recorded documents referred to, or listed as exceptions
to title, in the title report referred to in subsection 6.12(iii).
SECTION 7. NEGATIVE COVENANTS
Each of Holdings and 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, neither Holdings nor the Borrower shall, or shall permit (except with
respect to subsection 7.1) any of its Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the
Consolidated Leverage Ratio as of the last day of any Test Period set
forth below to exceed the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Period Consolidated Leverage Ratio
------ ---------------------------
<S> <C>
Closing Date to 6/30/00 7.00x
7/01/00 to 6/30/01 6.75x
7/01/01 to 6/30/02 6.25x
7/01/02 to 6/30/03 6.00x
7/01/03 and thereafter 5.75x
</TABLE>
<PAGE> 72
67
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio as of the last day of any Test
Period set forth below to be less than the ratio set forth below
opposite such period:
<TABLE>
<CAPTION>
Period Consolidated Interest
------ ---------------------
Coverage Ratio
--------------
<S> <C>
Closing Date to 12/31/99 1.35x
1/01/00 to 12/31/00 1.50x
1/01/01 to 12/31/01 1.75x
1/01/02 and thereafter 2.00x
</TABLE>
(c) Consolidated Fixed Charge Coverage Ratio. Permit
the Consolidated Fixed Charge Coverage Ratio as at the completion of
any Test Period to be less than 1.05x.
(d) Consolidated Senior Leverage Ratio. Permit the
Consolidated Senior Leverage Ratio as of the last day of any Test
Period set forth below to exceed the ratio set forth below opposite
such period:
<TABLE>
<CAPTION>
Period Consolidated Senior
------ -------------------
Leverage Ratio
--------------
<S> <C>
Closing Date to 12/31/01 5.00x
1/01/02 and thereafter 4.75x
</TABLE>
(e) Corporate Overhead. Permit Corporate Overhead for
any fiscal year to exceed 10% of Broadcast Cash Flow for such fiscal
year.
7.2 Limitation on Indebtedness.7.2 Limitation on
Indebtedness. Create, incur, assume or suffer to exist (in each case,
to "Incur") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any
Loan Document;
(b) Indebtedness among the Loan Parties (other than
Holdings) arising as a result of intercompany loans;
(c) purchase money Indebtedness and Capital Lease
Obligations, provided that the aggregate principal amount of
Indebtedness and Capital Lease Obligations incurred pursuant
to this subsection 7.2(c) shall not exceed $10,000,000 at any
one time outstanding;
(d) Indebtedness (other than the Senior Subordinated
Notes) outstanding on the date hereof and listed on Schedule
7.2(d) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal
amount thereof other than pursuant to the instrument creating
such Lien without any modification thereof after the date
hereof);
<PAGE> 73
68
(e) (i) indemnities and guarantees (including
guarantees of Indebtedness if such Indebtedness is otherwise
permitted hereunder) made in the ordinary course of business
by the Borrower or any of its Subsidiaries, provided that such
indemnities and guarantees could not individually or in the
aggregate have a Material Adverse Effect, (ii) guarantees by
Holdings or any of its Subsidiaries of (A) real property
leases and (B) personal property operating leases, in each
case entered into in the ordinary course of business by the
Borrower or any of its Subsidiaries and (iii) indemnities in
favor of the Persons issuing title insurance policies insuring
the title to any property;
(f) (i) Indebtedness of the Borrower in respect of
the Senior Subordinated Notes in an aggregate principal amount
not to exceed $100,000,000 and (ii) Guarantee Obligations of
any Subsidiary Guarantor in respect of such Indebtedness;
(g) Indebtedness resulting from the endorsement of
negotiable instruments in the ordinary course of business;
(h) Indebtedness in respect of any Interest Rate
Protection Agreements entered into for legitimate hedging
purposes;
(i) Indebtedness (i) of the Borrower or any of its
Subsidiaries to the seller on an unsecured basis representing
the purchase price in a Permitted Acquisition or any Asset
Swap Transaction in an aggregate amount for all Permitted
Acquisitions and Asset Swap Transactions not to exceed
$15,000,000 and (ii) of the Borrower or any of its
Subsidiaries that is not subordinated to the Obligations,
assumed in connection with any Permitted Acquisition or any
Asset Swap Transaction in an aggregate amount for all
Permitted Acquisitions and Asset Swap Transactions not to
exceed $10,000,000;
(j) Indebtedness of any Loan Party (other than
Holdings) to any other Loan Party from intercompany transfers
of assets made in the ordinary course of business or to the
extent permitted under subsections 7.5 and 7.8;
(k) Indebtedness subject to Liens permitted under
subsections 7.3(a), (b), (c) and (d);
(l) indemnities made in (i) the Loan Documents, the
Transaction Documents or in any of the agreements contemplated
hereby and thereby and (ii) the monitoring and oversight
agreement and financial advisory agreement described in
subsection 7.6(a)(iv), and in the corporate charter and/or
bylaws or other comparable constituent documents of Holdings
and its Subsidiaries; and
(m) additional Indebtedness of the Borrower or any of
its Subsidiaries in an aggregate principal amount (for the
Borrower and all Subsidiaries) not to exceed $18,000,000 at
any one time outstanding.
7.3 Limitation on Liens.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 to contested taxes are
maintained on the books of Holdings or one of its
Subsidiaries, as the case may be, in conformity with GAAP;
<PAGE> 74
69
(b) carriers', 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) previously or hereinafter incurred in the
ordinary course of business which, in the aggregate, are not
material in amount and which, in the case of such encumbrances
on any of the Mortgaged Properties, do not in the aggregate
materially detract from the value of the Property subject
thereto or, in the case of such encumbrances on other
property, 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 title reports delivered to the
Administrative Agent on or prior to the Closing Date pursuant
to subsection 5.1(g)(iii) or after the Closing Date pursuant
to subsection 6.10(b);
(f) Liens in existence on the date hereof listed on
Schedule 7.3(f), securing Indebtedness permitted by subsection
7.2(d) (including refinancings, refundings, renewals and
extensions of such Indebtedness as permitted by subsection
7.2(d)), provided that no such Lien is spread to cover any
additional property (other than after acquired title in or on
such property and proceeds of the existing collateral in
accordance with the instrument creating such Lien) after the
Closing Date and that the amount of Indebtedness secured
thereby is not increased except pursuant to the instrument
creating such Lien (without any modification thereof after the
date hereof);
(g) (i) Liens securing Indebtedness of the Borrower
or any of its Subsidiaries permitted pursuant to subsections
7.2(c) (provided that (A) such Liens shall be created
substantially simultaneously with the acquisition of such
fixed or capital assets, (B) such Liens do not at any time
encumber any property other than the property financed by such
Indebtedness and (C) the amount of Indebtedness secured
thereby is not increased except pursuant to the instrument
creating such Lien (without any modification thereof after the
date hereof)) 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;
<PAGE> 75
70
(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) 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;
(m) Liens arising from precautionary Uniform
Commercial Code financing statement filings with respect to
operating leases or consignment arrangements entered into by
the Borrower or any of its Subsidiaries in the ordinary course
of business;
(n) 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;
(o) licenses (other than Station Licenses), leases or
subleases permitted hereunder granted to others not
interfering in any material respect with the business of
Holdings or any of its Subsidiaries;
(p) Liens on property of the Borrower or any of its
Subsidiaries in favor of landlords securing licenses (other
than Station Licenses), subleases and leases permitted
hereunder and granted to others and not interfering in any
material respect in the business of Holdings or any of its
Subsidiaries; and
(q) Liens not otherwise permitted by this subsection
7.3 so long as the aggregate outstanding principal amount of
the obligations secured thereby does not exceed $5,000,000 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 convey,
sell, lease, assign, transfer or otherwise 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:
<PAGE> 76
71
(a) any Subsidiary of the Borrower (other than,
except as set forth below, any License Subsidiary or, at any
time after any of the conditions set forth in subsection
6.10(e)(i) or (ii) shall have occurred, any Subsidiary holding
the assets and liabilities of any Station) 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 (other
than, except as set forth below, any License Subsidiary or, at
any time after any of the conditions set forth in subsection
6.10(e) (i) or (ii) shall have occurred, any Subsidiary
holding the assets and liabilities of any Station) (provided
that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation); provided, however, that
(i) a License Subsidiary and any Subsidiary holding the assets
and liabilities of any Station may take any actions otherwise
prohibited by this clause (a) to the extent such merger or
consolidation occurs in contemplation of, and immediately
preceding, a sale, transfer or other disposition (including an
Asset Swap Transaction) of such License Subsidiary or other
Subsidiary and (ii) any Subsidiary may take any actions
otherwise prohibited by this clause (a) to the extent
necessary to comply with the requirements of subsection
6.10(e);
(b) any Subsidiary of the Borrower (other than,
except as set forth below, any License Subsidiary or, at any
time after any of the conditions set forth in subsection
6.10(e)(i) or (ii) shall have occurred, any Subsidiary holding
the assets and liabilities of any Station) 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; provided, however, that
(i) a License Subsidiary and any Subsidiary holding the assets
and liabilities of any Station may take any actions otherwise
prohibited by this clause (b) to the extent any sale, transfer
or other disposition occurs in contemplation of, and
immediately preceding, a sale, transfer or other disposition
(including an Asset Swap Transaction) of such License
Subsidiary or other Subsidiary and (ii) any Subsidiary may
take any actions otherwise prohibited by this clause (b) to
the extent necessary to comply with the requirements of
subsection 6.10(e); and
(c) the Borrower may be merged or consolidated with
or into a newly formed limited liability company with no
assets or liabilities that is a Subsidiary of Holdings solely
for the purposes of realizing certain tax benefits so long as
Holdings shall take such actions as would be required under
subsection 6.10(c) if such limited liability company were a
Subsidiary of the Borrower.
7.5 Limitation on Sale of Assets. Convey, sell,
lease, assign, transfer or otherwise dispose of any of its property,
business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, 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;
(b) transfers resulting from any casualty or
condemnation of property or assets;
<PAGE> 77
72
(c) any sale or other transfer at fair market value
of any property or assets constituting fixed assets for at
least 75% 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 $3,000,000 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 each case 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;
(h) the sale of any Broadcasting Asset for aggregate
consideration equal to the fair market value of such
Broadcasting Asset (as determined in good faith by the board
of directors of the Borrower or the applicable Subsidiary),
provided that (i) after giving effect to such sale, no Default
or Event of Default exists or shall be continuing, (ii) at
least 75% of such consideration received by the Borrower in
respect thereof shall be in the form of cash and Cash
Equivalents, (iii) the Net Cash Proceeds of such sale shall be
applied in the manner prescribed by subsection 2.9(d) and (iv)
(A) the Consolidated EBITDA of the Broadcasting Asset being
sold plus the Consolidated EBITDA of all Broadcasting Assets
that were sold pursuant to this subsection 7.5(h) or exchanged
pursuant to subsection 7.5(i) in such fiscal quarter and in
the immediately preceding four-fiscal-quarter period shall not
exceed 25% of the Consolidated EBITDA of the Borrower for such
immediately preceding four-fiscal-quarter period and (B) the
Consolidated EBITDA of the Broadcasting Assets being sold plus
the Consolidated EBITDA of all Broadcasting Assets that were
sold pursuant to this subsection 7.5(h) or exchanged pursuant
to subsection 7.5(i) in such fiscal quarter and in the
preceding twenty-fiscal-quarter period shall not exceed 60% of
the Consolidated EBITDA of the Borrower for such
twenty-fiscal-quarter period (a "Permitted Disposition"); and
(i) Asset Swap Transactions.
7.6 Limitation on Dividends. Declare or pay any
dividend (other than dividends payable solely in common stock) 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 Holdings or any of its Subsidiaries 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 Holdings or any of its Subsidiaries (such declarations, payments,
setting apart, purchases, redemptions, defeasance, retirements,
acquisitions and distributions being herein called "Restricted
Payments"), except that:
(a) the Borrower may make Restricted Payments to
Holdings, so long as no Event of Default (or with respect to
clause (vi) below, any interest payment Default) has occurred
and is continuing or would be continuing after giving effect
to such
<PAGE> 78
73
Restricted Payment, provided that the Borrower shall be
permitted to make the Restricted Payments in clauses (iii) and
(iv) below notwithstanding any such Event of Default, unless,
in the case of clause (iv), such Event of Default relates to a
payment Default under subsection 8(a):
(i) the proceeds of which shall be applied
by Holdings directly to pay out of pocket expenses,
for administrative, legal and accounting services
provided by third parties that are reasonable and
customary and incurred in the ordinary course of
business for such professional services, or to pay
franchise fees and similar costs; provided, however,
any such administrative expenses shall not exceed an
aggregate amount of $1,000,000 per fiscal year;
(ii) payments, the proceeds of which will be
used to repurchase the Capital Stock or other
securities of Holdings from outside directors,
employees or members of the management of Holdings, or
any Subsidiary of Holdings, at a price not in excess
of fair market value, in an aggregate amount not in
excess of $7,500,000, net of the proceeds received by
Holdings as a result of any resales of any such
Capital Stock or other securities;
(iii) payments, the proceeds of which will
be used to pay taxes of Holdings, the Borrower and its
Subsidiaries as part of a consolidated, combined or
unitary tax filing group or of the separate operations
of Holdings; and
(iv) payments, the proceeds of which will be
used to pay management fees to Hicks Muse in
accordance with the terms of its monitoring and
oversight agreement and the financial advisory
agreement contemplated by subsection 7.9(b)(ii).
(b) any Subsidiary may make Restricted Payments to
the Borrower or any Wholly Owned Subsidiary Guarantor; and
(c) Permitted Issuances may be made.
7.7 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
("Investments"), 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(e);
(d) the Exchange Transactions and, subject to the
proviso set forth in the definition of the term "Permitted
Acquisition", the Meyer Acquisition in accordance with all
material applicable Requirements of Law and the terms of the
Meyer Purchase Agreement;
(e) Investments (other than Permitted Acquisitions)
by Holdings and its Subsidiaries in any of the Loan Parties,
including any new Subsidiary which becomes a Loan Party;
<PAGE> 79
74
(f) loans and advances by Holdings or its
Subsidiaries to their respective directors, officers and
employees in an aggregate principal amount not exceeding
$1,000,000 at any one time outstanding;
(g) loans, advances or Investments in existence on
the Closing Date and listed on Schedule 7.7(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 material respect;
(h) Investments permitted by subsections 7.2(b), (e)
and (k) and subsections 7.4 and 7.6;
(i) promissory notes and other similar non-cash
consideration received by the Subsidiaries of Holdings in
connection with the dispositions permitted by subsection 7.5,
including equity interests received in connection with Asset
Swap Transactions permitted by subsection 7.5(i);
(j) Investments in Interest Rate Protection
Agreements in the ordinary course of the business of the
Borrower or any of its Subsidiaries and not for purposes of
speculation;
(k) 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;
(l) in addition to the foregoing, Investments by the
Borrower and its Subsidiaries in an aggregate amount not
exceeding $15,000,000 (valued at cost, without regard to any
write down or write up thereof) 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);
(m) Investments after the Closing Date by the
Borrower and its Subsidiaries constituting Permitted
Acquisitions or Asset Swap Transactions;
(n) in addition to the foregoing, the Subsidiaries of
Holdings may make additional Investments (which shall not be
counted in the limitations set forth above) as follows: (i)
Investments consisting of the Investment of Net Cash Proceeds
not required to be applied pursuant to subsection 2.9,
including (A) with respect to the Investment of proceeds of
the insurance and condemnation proceeds not required to be
applied pursuant to subsection 2.9 and (B) with respect to the
Investment of proceeds of the sale of assets which are
permitted pursuant to subsection 7.5; and (ii) Investments
consisting of the Investment of Excess Cash Flow generated
during prior fiscal years (beginning with Excess Cash Flow
generated in the fiscal year ended in December 1998 but, in
each case, including the retained portion of the respective
Excess Cash Flow for only those periods where the respective
Excess Cash Flow payment has theretofore occurred) and not
required to be applied pursuant to subsection 2.9(c).
<PAGE> 80
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7.8 Limitation on Optional Payments and Modifications
of Debt Instruments, etc. (a) Make or offer to make any optional
payment or prepayment on or redemption of or any payments in
redemption, defeasance or repurchase of any Senior Subordinated
Indebtedness (except pursuant to a permanent refinancing of Senior
Subordinated Indebtedness);
(b) amend, supplement, waive or otherwise modify any
of the provisions of any Senior Subordinated Indebtedness, the Senior
Subordinated Note Indenture or the monitoring and oversight agreement
and financial advisory agreement described in subsection 7.6(a)(iv)
(other than changes to such agreements that do not increase the amount
or affect the timing of payments by Holdings, the Borrower or any of
their Subsidiaries thereunder):
(i) which amends or modifies any subordination
provisions contained therein;
(ii) which shortens the fixed maturity, or increases
the rate or shortens the time of payment of interest on, or
increases the amount or shortens the time of payment of any
principal or premium payable whether at maturity, at a date
fixed for prepayment or by acceleration or otherwise of such
Indebtedness, or increases the amount of, or accelerates the
time of payment of, any fees payable in connection therewith;
(iii) which relates to the affirmative or negative
covenants, events of default or remedies under the documents
or instruments evidencing such Indebtedness and the effect of
which is to subject Holdings or any of its Subsidiaries to any
more onerous or more restrictive provisions; or
(iv) which otherwise adversely affects the interests
of the Lenders as senior creditors or the interests of the
Lenders under this Agreement or any other Loan Document in any
respect;
(c) make any payment in cash on any equity or debt
security that may be made under the terms thereof by the issuance of
any security of the same nature; or
(d) designate any Indebtedness (other than the Loans)
as "Designated Senior Indebtedness" under any Senior Subordinated
Indebtedness (including, without limitation, under the Senior
Subordinated Note Indenture).
7.9 Limitation on Transactions with Affiliates. (a)
Enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any
service, with any Affiliate unless such transaction is (i) otherwise
permitted under this Agreement, (ii) in the ordinary course of business
of Holdings or the relevant Subsidiary of Holdings, as the case may be,
and (iii) upon fair and reasonable terms no less favorable to Holdings
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.
(b) In addition, notwithstanding the foregoing,
Holdings and its Subsidiaries shall be entitled to make the following
payments and/or to enter into the following transactions:
(i) the payment of reasonable and customary fees and
reimbursement of expenses payable to directors of Holdings;
<PAGE> 81
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(ii) the payment to Hicks Muse of fees and expenses
pursuant to a monitoring and oversight agreement and a
financial advisory agreement 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; and
(iii) the employment arrangements with respect to the
procurement of services of directors, officers and employees
in the ordinary course of business and the payment of
reasonable fees in connection therewith.
7.10 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, immovable or movable,
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,
provided that this subsection 7.10 shall not prohibit any sale and
leaseback resulting from the incurrence of any lease in respect of any
capital asset entered into within 120 days of the acquisition of such
capital asset for the purpose of providing permanent financing of such
capital asset.
7.11 Limitation on Changes in Fiscal Periods. Permit
the fiscal year of Holdings or the Borrower to end on a day other than
December 31, provided that Holdings and the Borrower may change such
fiscal year upon the approval of the Administrative Agent or change
Holdings's or the Borrower's method of determining fiscal quarters.
7.12 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 any other agreement evidencing Senior
Subordinated Indebtedness, and (c) in the case of clause (i) below
only, any agreements governing any purchase money Liens Capital Lease
Obligations, Liens permitted under subsection 7.3(j) or any other
similar agreement or transaction 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.
7.13 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which 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, Asset Swap Transaction or otherwise).
7.14 Limitation on Amendments to Constituent and
Transaction Documents. (a) Amend, supplement or otherwise modify its
certificate of incorporation or by-laws unless such amendment,
supplement or other modification does not adversely affect the
interests of any Lender in any material respect or (b) amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the
Network Affiliation Agreements.
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7.15 Limitations on Changes in Holding Company
Status. Permit Holdings to engage in any activities or incur any
Indebtedness or Guarantee Obligations other than (i) owning the stock
of the Borrower, (ii) its activities incident to the performance of the
Loan Documents, including its guarantee thereunder and (iii)
transactions pursuant to or expressly permitted by this Agreement.
7.16 Limitation on Changes in Station Affiliation.
Permit any Station to change its network affiliation if the percentage
represented by such Station of Consolidated EBITDA for the twelve month
period preceding the date of the proposed change (giving pro forma
effect to any acquisitions or dispositions that have occurred since the
beginning of such twelve month period as if such acquisitions or
dispositions had occurred at the beginning of such twelve month
period), together with the percentage represented by each such other
Station that previously changed its network affiliation after the date
hereof of the Consolidated EBITDA for the twelve month period preceding
the date of such previous change (determined on a pro forma basis as
aforesaid), would exceed 40%.
7.17 Limitation on LMA Stations. Other than the
Providence Station, permit any Station owned by the Borrower or any of
its Subsidiaries to be operated by any other Person other than the
Borrower or any other Subsidiary pursuant to local marketing agreements
(or similar arrangements).
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 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) Holdings, the Borrower or any of their
Subsidiaries shall default in the observance or performance of
any agreement contained in subsection 6.4(a)(ii) (with respect
to Holdings, the Borrower or any License Subsidiary),
subsection 6.7(a), subsection 6.10(d) or (e), subsection 6.11,
subsection 6.12 or Section 7 of this Agreement; or
(d) Holdings, the Borrower or any Subsidiary 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 after notice thereof from
the Administrative Agent to the Borrower (which notice will be
given at the request of any Lender); or
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(e) Holdings, the Borrower or any of its Subsidiaries
shall (i) default in making any payment of any principal of or
interest on any Indebtedness (other than pursuant to the Loan
Documents) 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 amount of which
exceeds in the aggregate $5,000,000; or
(f) (i) Holdings, 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 Holdings, 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 Holdings, 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 Holdings,
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) Holdings, 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) Holdings, 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
(other than intercompany debt) 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
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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
(h) One or more judgments or decrees shall be entered
against Holdings, the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not paid or fully
covered by insurance) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 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 (including, without limitation, any Mortgage
filed pursuant to subsection 10.17) 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 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,
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redemption, retirement, defeasance or other acquisition of,
any of the Senior Subordinated Notes; or
(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) The principal broadcasting licenses of any
Station, or any other material authorizations, licenses or
permits issued by the FCC, shall be revoked or canceled or
expire by its terms and not be renewed, or shall be modified
in each case in a manner which would have a Material Adverse
Effect; or
(n) The Borrower or any of its Subsidiaries (or, with
respect to the Steubenville Station and the Providence
Station, SAC) shall have received a notice of termination with
respect to any Network Affiliation Agreements (or any
alternative network affiliation agreement in compliance with
this clause (n)) if the percentage represented by such Network
Affiliation Agreement (for the Station in question) of
Consolidated EBITDA for the 12-month period preceding the date
of the termination (giving pro forma effect to any
acquisitions or dispositions that have occurred since the
beginning of such 12-month period as if such acquisitions or
dispositions had occurred at the beginning of such 12-month
period), would exceed 15%, unless, within 30 days after
receipt of such termination notice, an alternative network
affiliation agreement in form and substance reasonably
satisfactory to the Required Lenders 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
(o) 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 $1,000,000 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
(p) 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
Holdings or 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 immediately become due and payable, and (B) if such
event is any other Event of Default, either or any 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; (ii) with the
consent of the Majority Committed Term Facility Lenders, the
Administrative Agent may, or upon the request of the Majority Committed
Term Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Delayed Term Loan Commitments to be terminated
forthwith,
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whereupon the Delayed Term Loan Commitments shall immediately terminate
and (iii) 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 ADMINISTRATIVE AGENT
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.
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 the
Administrative Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (a) liable for any
action lawfully taken or omitted to be taken by it or such Person under
or in connection with
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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 (b) 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 Administrative Agent 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 Administrative Agent 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 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 the Administrative Agent and
Other Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the
Administrative Agent hereafter taken,
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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 the Administrative Agent to any Lender. Each Lender
represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative 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 the Administrative 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
the Administrative 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 pro rata share of the
aggregate Revolving Credit Exposure, Term Loans outstanding and unused
Commitments 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 share
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 the Administrative 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 the Administrative 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 the
Administrative 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. The
Administrative 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 the Administrative 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, the Administrative
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 the Administrative Agent in its individual capacity.
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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.
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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 to the relevant Loan Documents may, or, with the written consent
of the Required Lenders, the Administrative Agent and each Loan 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 or Delayed Term Loan
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 Holdings or
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 other than pursuant to a transaction permitted by
this 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 Committed Term Loan Facility and the Incremental Term Loan
Facility, as applicable, specified in subsection 2.15(b) or the
allocation of payments between the Facilities pursuant to subsection
2.9(d), in each case without the consent of the Majority Facility
Lenders in respect of each Facility adversely affected thereby; (v)
amend the definition of the term "Majority Facility Lenders", "Majority
Revolving Credit Facility Lenders" or "Majority Committed Term Facility
Lenders" or modify in any other manner the number, percentages or class
of Lenders required to make any determinations or waive any rights
hereunder or to modify any provision hereof without the consent of each
Lender directly affected thereby; (vi) amend, modify or waive any
provision of Section 9 without the written consent of the
Administrative Agent; (vii) amend, modify or waive any provision of
Section 3 without the written consent of the Issuing Lender or (viii)
amend, modify or waive any provision of subsection 2.4(c) without the
written consent of the Swingline Lender. In furtherance of clause (iii)
of this subsection 10.1, no amendment to or waiver of any
representation or warranty or any covenant contained in this Agreement
or any other Loan Document, or of any Default or Event of Default,
shall be deemed to be effective for purposes of determining whether the
conditions precedent set forth in subsection 5.2 to the making of any
Revolving Credit Loan have been satisfied unless the Majority Revolving
Credit Facility Lenders shall have consented to such amendment or
waiver. Any waiver and any amendment, supplement or modification in
accordance with this subsection 10.1 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 continuing; but no such
waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.
<PAGE> 91
86
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, Holdings and the Administrative
Agent, and as set forth on the signature pages hereto or in any
Assignment and Acceptance 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
and: Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Glenn D. West, Esq.
Telecopy: 214-746-7777
Holdings: 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 to: Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Glenn D. West, Esq.
Telecopy: 214-746-7777
The Administrative
Agent: Chase Agency Services
1 Chase Manhattan Plaza
New York, New York 10081
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: 212-270-4164
<PAGE> 92
87
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 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 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 similar 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
<PAGE> 93
88
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 willful
misconduct of such indemnitee or, in the case of indemnified
liabilities arising under this Agreement, any Notes and the other
documents, from material breach by the indemnitee of this Agreement,
any Notes or the other Loan Documents, as the case may be. 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 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. No Lender shall permit any
Participant to have (and no participant shall have) the 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.
(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, affiliate or Approved
Fund 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
<PAGE> 94
89
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, an affiliate thereof or an Approved Fund, 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 or an Approved Fund) 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,
(A) 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 (B) 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, 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.
(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, an affiliate thereof or an Approved
Fund, by the Borrower and the Administrative Agent) together with
payment to the Administrative Agent of a registration and processing
fee of $3,500, 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, upon request the
Borrower, at its own expense, shall execute and deliver to the
Administrative Agent (in exchange for any Revolving Credit Note, Term
Note or Swingline Note of the assigning Lender) a new Revolving Credit
Note, Term Note or Swingline Note, as the case may be, to the order of
such Assignee in an amount equal to the Revolving Credit Commitment,
Delayed Term Loan Commitment or portion of the Committed Term Loans or
Incremental Term Loans, 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 Delayed Term Loan Commitment
or portion of a Committed Term Loan or Incremental Term Loan hereunder,
a new Revolving Credit Note,
<PAGE> 95
90
Committed Term Note or Incremental Term Note, as the case may be, to
the order of the assigning Lender in an amount equal to the Revolving
Credit Commitment or Delayed Term Loan Commitment or Committed Term
Loan or Incremental Term Loan, as the case may be, retained by it
hereunder. Such new Notes shall be in the form of the Note replaced
thereby.
(f) The Borrower agrees that, upon request to the
Administrative Agent by any Lender, the Borrower will execute and
deliver to such Lender (i) a promissory note of the Borrower evidencing
the Revolving Credit Loans of such Lender, substantially in the form of
Exhibit I-1 (each as amended, supplemented, replaced or otherwise
modified from time to time, a "Revolving Credit Note"), and/or (ii) a
promissory note of the Borrower evidencing the applicable Term Loan of
such Lender, substantially in the form of Exhibit I-2 (each as amended,
supplemented, replaced or otherwise modified from time to time, a "Term
Note"), and/or (iii) a promissory note of the Borrower evidencing the
Swingline Loans of the Swingline Lender, substantially in the form of
Exhibit I-3) (as amended, supplemented, replaced or otherwise modified
from time to time, the "Swingline Note").
(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 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
<PAGE> 96
91
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.
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 Holdings, 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. Each of
Holdings and 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
<PAGE> 97
92
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
(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 Acknowledgments. Each of Holdings and 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 Holdings
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
Holdings and the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. HOLDINGS, 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 or to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be
bound by the provision of this Section 10.15), (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
(including the Securities
<PAGE> 98
93
Valuation Office of the National Association of Insurance
Commissioners) 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
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.
<PAGE> 99
94
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.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
-----------------
Name: David A. Fitz
Title: CFO
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------
Name: David A. Fitz
Title: CFO
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Ann B. Kerns
----------------
Name: Ann B. Kerns
Title: Vice President
NATIONSBANK, N.A., as Documentation Agent
and as a Lender
By: /s/ Julie A. Schell
-------------------
Name: Julie A. Schell
Title: Vice President
SALOMON BROTHERS HOLDING COMPANY INC, as
Syndication Agent and as a Lender
By: /s/ Richard H. Ivers
--------------------
Name: Richard H. Ivers
Title: Managing Director
<PAGE> 100
95
SCHEDULE 1.1A
REVOLVING CREDIT COMMITMENTS
<TABLE>
<CAPTION>
Lender Revolving Credit Commitment
------ ---------------------------
<S> <C>
The Chase Manhattan Bank $20,000,000
NationsBank, N.A. $10,000,000
Salomon Brothers Holding Company Inc $10,000,000
</TABLE>
TERM LOAN COMMITMENTS
<TABLE>
<CAPTION>
Initial Term Delayed Term
Lender Loan Commitment Loan Commitment
------ --------------- ---------------
<S> <C> <C>
The Chase Manhattan Bank $35,000,000 $15,000,000
NationsBank, N.A. $17,500,000 $ 7,500,000
Salomon Brothers Holding $17,500,000 $ 7,500,000
Company Inc
</TABLE>
<PAGE> 101
96
Annex A
PRICING GRID FOR LOANS
<TABLE>
<CAPTION>
Applicable Margin Applicable
Consolidated Leverage Ratio for Eurodollar Loans Margin for ABR Commitment Fee
Loans Rate
<S> <C> <C> <C>
Greater than or equal to 6.50 to 1.0 2.125% 0.875% 0.50%
Greater than or equal to 6.00 to 1.0 and 1.875% 0.625% 0.375%
less than 6.50 to 1.0
Greater than or equal to 5.50 to 1.0 and 1.625% 0.375% 0.375%
less than 6.00 to 1.0
Greater than or equal to 5.00 to 1.0 and 1.375% 0.125% 0.375%
less than 5.50 to 1.0
Greater than or equal to 4.50 to 1.0 and 1.125% 0% 0.25%
less than 5.00 to 1.0
Less than 4.50 to 1.0 0.875% 0% 0.25%
</TABLE>
Changes in the Applicable Margin or in the Commitment Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the first
day (the "Adjustment Date") of the month following the month in which financial
statements are delivered to the Lenders pursuant to subsection 6.1 (but in any
event not later than the 45th day after the end of each of the first three
quarterly periods of each fiscal year or the 90th day after the end of each
fiscal year, as the case may be) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
referred to above are not delivered within the time periods specified above,
then, until such financial statements are delivered, the Consolidated Leverage
Ratio as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 6.50 to
1. Each determination of the Consolidated Leverage Ratio pursuant to this
paragraph shall be made with respect to the period of four consecutive fiscal
quarters of the Borrower ending at the end of the period covered by the relevant
financial statements.
<PAGE> 1
Exhibit 10.14
FIRST AMENDMENT and ASSIGNMENT AND ACCEPTANCE, dated as of July 27,
1998 (this "First Amendment"), among: (i) SUNRISE TELEVISION CORP. ("Holdings");
(ii) STC BROADCASTING, INC., a Delaware corporation (the "Borrower"); (iii) the
several banks and other financial institutions or entities listed on the
signature pages of this First Amendment (individually, a "Lender," and
collectively, the "Lenders"); (iv) NATIONSBANK, N.A. ("Nations"), as
documentation agent (in such capacity, the "Documentation Agent"); (v) SALOMON
BROTHERS HOLDING COMPANY INC ("SB"), as syndication agent (in such capacity, the
"Syndication Agent") and (vi) THE CHASE MANHATTAN BANK, as administrative 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 Amended and Restated Credit Agreement, dated
as of July 2, 1998 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") the Lenders have agreed to make, and have made,
certain Loans to the Borrower;
WHEREAS, the Borrower has requested that the Lenders amend, and the
Lenders have agreed to amend, certain of the provisions of the Credit Agreement
to, among other things, add certain of the Lenders as parties to 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. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Credit Agreement.
2. Amendment to Definitions. The definition of the term "Revolving
Credit Commitment" in subsection 1.1 of the Credit Agreement is hereby amended
by deleting the number "$40,000,000" and substituting in lieu thereof the number
"$65,000,000".
3. Amendment to Section 2.7. Section 2.7 of the Credit Agreement is
hereby amended by (i) deleting the amount "$2,000,000," set forth opposite the
year 2001, and substituting in lieu thereof the amount "$3,250,000," (ii)
deleting the amount "$2,000,000," set forth opposite the year 2002, and
substituting in lieu thereof the amount "$3,250,000," (iii) deleting the amount
"$4,000,000," set forth opposite the year 2003, and substituting in lieu thereof
the amount "$6,500,000," (iv) deleting the amount "$4,000,000," set forth
opposite the year 2004, and substituting in lieu thereof the amount
"$6,500,000," (v) deleting the amount "$8,000,000," set forth opposite the year
2005, and substituting in lieu thereof the amount "$13,000,000" and (vi)
deleting the amount "$20,000,000," set forth opposite the year 2006, and
substituting in lieu thereof the amount "$32,500,000."
4. Replacement of Schedule 1.1A. Schedule 1.1 of the Credit Agreement
is hereby amended by deleting such schedule in its entirety and substituting in
lieu thereof the new
<PAGE> 2
2
Schedule 1.1A attached hereto.
5. Effectiveness. This First Amendment shall become effective on the
date on which the following conditions precedent shall have been satisfied (such
date, the "Effective Date"):
(a) the Administrative Agent shall have received counterparts
of this First Amendment, duly executed and delivered by Holdings, the
Borrower and each of the other parties hereto;
(b) the Administrative Agent shall have received a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Boards of Directors of each of Holdings and the Borrower
authorizing the execution, delivery and performance of the Credit
Agreement as amended by this First Amendment and, in the case of the
Borrower, the borrowings under the Revolving Credit Commitments as
increased hereby, certified by the Secretary or an Assistant Secretary
of each such party as of the date hereof, which certificate shall state
that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate;
(c) the Administrative Agent shall have received a certificate
of the Secretary or Assistant Secretary of each of Holdings and the
Borrower as to the incumbency and signature of each of the officers
signing this First Amendment, and any other instrument or document
delivered by any of such parties in connection herewith, together with
evidence of the incumbency of such Secretary or Assistant Secretary;
(d) the Administrative Agent shall have received for each
Lender which so requests a Revolving Credit Note executed and delivered
by a duly authorized officer of the Borrower representing the amount of
such Lender's Revolving Credit Commitment after giving effect to this
First Amendment (and if such Lender has previously received a Revolving
Credit Note, such Lender shall return such existing Revolving Credit
Note to the Borrower for cancellation); and
(e) all corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this First Amendment shall be satisfactory in form and
substance to the Administrative Agent.
6. Addition of Lenders. By their signature below each of the Lenders
(other than Chase, Nations and SB which are already Lenders) shall become a
Lender party to the Credit Agreement and the other Loan Documents with all
rights, powers and obligations of a Lender thereunder and with an Initial Term
Loan Commitment, a Delayed Term Loan Commitment and a Revolving Credit
Commitment as set forth on Schedule 1.1A attached hereto. All notices to the
Lenders under the Credit Agreement shall be given to the Lenders at the address
specified on Schedule 1.1B attached hereto. On the Effective Date each of the
Lenders shall transfer in immediately available funds to Chase at an account
previously instructed by Chase to each such Lender the amount set forth opposite
its name under the headings Initial Term Loan Commitment and Delayed Term Loan
Commitment on Schedule 1.1A hereto and a ratable portion of the then outstanding
Revolving Credit Loans, based on the
<PAGE> 3
3
Revolving Credit Commitment of such Lender as set forth on Schedule 1.1A hereto.
7. Representations and Warranties. On and as of the date hereof after
giving effect to this First Amendment, each of Holdings and 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 material respects as of such earlier
date; provided that the references to the Credit Agreement therein
shall be deemed to include this First Amendment; and
(b) No Default or Event of Default has occurred and is
continuing.
8. Continuing Effect; No Other Amendments. Except as expressly amended
or waived hereby, all of the terms and provisions of the Credit Agreement and
the other Loan Documents are and shall remain in full force and effect. The
amendments and waivers contained herein shall not constitute an amendment or
waiver of any other provision of the Credit Agreement or the other Loan
Documents or for any purpose except as expressly set forth herein.
9. GOVERNING LAW; Counterparts. (a) THIS FIRST AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
(b) This First Amendment may be executed in any number of
counterparts, all of which counterparts, taken together, shall constitute one
and the same instrument. This First Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.
<PAGE> 4
4
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
---------------------------
Title: CFO
STC BROADCASTING, INC.
By: /s/ David A. Fitz
---------------------------
Title: CFO
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a
Lender
By: /s/ Lawrence Palumbo, Jr.
---------------------------
Title: Vice President
NATIONSBANK, N.A., as Documentation
Agent and as a Lender
By: /s/ Julie Schell
---------------------------
Title: Vice President
SALOMON BROTHERS HOLDING COMPANY INC,
as Syndication Agent and as a
Lender
By: /s/ Mavis Taintor
---------------------------
Title: Managing Director
<PAGE> 5
5
FINOVA CAPITAL CORPORATION,
as a Lender
By: /s/ David Alexander
------------------------------
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING,
INC., as a Lender
By: /s/ J.E. Palmer
------------------------------
Title: Asst. Vice President
PARIBAS, as a Lender
By: /s/ William B. Schink
------------------------------
Title: Director
By: /s/ Salo Aizenberg
------------------------------
Title: Vice President
NATEXIS BANQUE BFCE, as a Lender
By: /s/ Jordan Sadler
------------------------------
Title: Associate
By: /s/ William O. Maier
------------------------------
Title: VP - Group Manager
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By: /s/ Thomas Waters
------------------------------
Title: Senior Vice President
SUMMIT BANK, as a Lender
By: /s/ Henry G. Kush, Jr.
------------------------------
Title: Vice President
<PAGE> 6
6
CREDIT LYONNAIS, as a Lender
By: /s/ John P. Judge
------------------------------
Title: Vice President
BANK OF HAWAII, as a Lender
By: /s/ Eric Pelletier
------------------------------
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD. NEW YORK BRANCH,
as a Lender
By: /s/ Ken Yoshizaki
------------------------------
Title: Deputy General Manager
SUNTRUST BANK, as a Lender
By: /s/ Kimberly Evans
------------------------------
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH,
as a Lender
By: /s/ W. Jeffrey Vellack
------------------------------
Title: Senior Vice President
By: /s/ Angela R. Reilly
------------------------------
Title: Vice President
THE FUJI BANK, LIMITED,
NEW YORK BRANCH,
as a Lender
By: /s/ Teiji Teramoto
------------------------------
Title: Vice President & Manager
<PAGE> 7
7
FIRST HAWAIIAN BANK, as a Lender
By: /s/ James C. Polk
------------------------------
Title: Assistant Vice President
BHF-BANK AKTIENGESELLSCHAFT,
as a Lender
By: /s/ Hans J. Scholz
------------------------------
Title: Assistant Vice President
By: /s/ Thomas Scifo
------------------------------
Title: Assistant Vice President
<PAGE> 8
8
SCHEDULE 1.1A
REVOLVING AND TERM LOAN CREDIT COMMITMENTS
<TABLE>
<CAPTION>
Revolving Credit Term Loan Term Loan
Lender Commitment Initial Draw Delayed Draw
------ ---------- ------------ ------------
<S> <C> <C> <C>
The Chase Manhattan Bank $ 4,727,272.73 $ 5,090,909.09 $ 2,181,818.18
NationsBank, N.A. $ 4,727,272.73 $ 5,090,909.09 $ 2,181,818.18
Salomon Brothers Holding
Company Inc $ 4,727,272.73 $ 5,090,909.09 $ 2,181,818.18
Finova Capital
Corporation $ 4,727,272.73 $ 5,090,909.09 $ 2,181,818.18
The CIT Group/Equipment
Financing, Inc. $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Paribas $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Natexis Banque BFCE $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
General Electric
Capital Corporation $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Summit Bank $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Credit Lyonnais $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Bank of Hawaii $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
The Long-Term Credit Bank
of Japan, Ltd.
New York Branch $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
SunTrust Bank $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
Cooperatieve Centrale
Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland",
New York Branch $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
The Fuji Bank, Limited,
New York Branch $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
First Hawaiian Bank $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
BHF-Bank Aktiengesellschaft $ 3,545,454.55 $ 3,818,181.82 $ 1,636,363.64
</TABLE>
<PAGE> 9
SCHEDULE 1.1B
Addresses for Notices
<TABLE>
<S> <C>
THE CHASE MANHATTAN BANK NATEXIS BANQUE BFCE
270 Park Avenue 645 Fifth Avenue, 20th Floor
New York, NY 10017 New York, NY 10022
Attn: Attn: Cynthia Sachs
Fax# 212-270-3897 Tel#
Fax#
SALOMON BROTHERS HOLDING COMPANY INC
Seven World Trade Center GENERAL ELECTRIC CAPITAL CORPORATION
New York, NY 10048 3379 Peachtree Road, NE, Suite 600
Attn: Atlanta, GA 30326
Fax# 212-783-2823 Attn: Michael McHuge
Tel# 404-814-3117
NATIONSBANK, N.A. Fax# 404-842-1533
901 Main Street, 64th Flr.
Dallas, TX 75202 SUMMIT BANK
Attn: Julie Schell 301 Carnegie Center
Tel# 214-508-0924 Princeton, NJ 08543
Fax# 214-508-9390 Attn: Catherine O'Brien
Tel# 609-987-3615
FINOVA CAPITAL CORPORATION Fax# 609-734-9125
311 South Wacker Drive, Suite 4400
Chicago, IL 60606-6618 CREDIT LYONNAIS
Attn: David Alexander 1301 Avenue Of The Americas
Michael G. Rogers New York, NY 10019
Tel# 312-322-7228 Attn: Patrick McCarthy
Fax# 312-322-3530 Tel# 212-261-7263
Fax# 212-261-3288
THE CIT GROUP/EQUIPMENT FINANCING, INC.
900 Ashwood Parkway, Suite 600 BANK OF HAWAII
Atlanta, GA 30338 1850 North Central Avenue
Attn: Joe O'Laughlin Phoenix, AZ 85004
Tel# 770-677-3471 Attn: Eric Pelletier
Fax# 770-551-7867 Tel# 602-257-2485
Fax# 602-257-2235
PARIBAS
787 Seventh Avenue THE LONG-TERM CREDIT BANK OF
New York, NY 10019 JAPAN, LTD. NEW YORK BRANCH
Attn: Frank Miele 165 Broadway, 49th Floor
Tel# 212-841-2952 New York, NY 10006
Fax# 212-841-2369 Attn: Jeffrey Kaufman
Tel# 212-335-4561
Fax# 212-608-2371
</TABLE>
<PAGE> 10
SUNTRUST BANK
200 South Orange Avenue - Tower 4
Orlando, FL 32802
Attn: Chris Aguilar
Tel# 407-237-5210
Fax# 407-237-5126
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
300 South Wacker Drive, Suite 3500
Chicago, IL 60606-6610
Attn: Marie Kramer
Tel# 312-408-8248
Fax# 312-766-0052
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
Two World Trade Center, 79-81 Flrs.
New York, NY 10048
Attn: Mark Gronich
Tel# 212-898-2082
Fax# 212-898-2399
FIRST HAWAIIAN BANK
999 Bishop Street, 11th Floor
Honolulu, HI 96813
Attn: Jim Polk
Tel#
Fax#
BHF-BANK AKTIENGESELLSCHAFT
590 Madison Avenue
New York, NY 10022-2540
Attn: Thomas Scifo
Tel# 212-756-5912
Fax# 212-756-5536
<PAGE> 1
Exhibit 10.15
June 5, 1998
PRIMARY TELEVISION AFFILIATION AGREEMENT
STC Broadcasting, Inc.
TELEVISION STATION: WDTN - Dayton, ON
Gentlemen:
The following shall constitute the agreement between American Broadcasting
Companies, Inc. ("ABC" or "we") and STC Broadcasting, Inc. ("You"), in order
that your station may continue to serve the public interest, convenience and
necessity. We and you hereby mutually agree upon the following plan of network
cooperation which shall replace, effective on the effective date of this
Agreement pursuant to the provisions herein, any and all affiliation agreements
previously in force with respect to your station.
You represent, warrant and agree that (i) the broadcast license of Your station
is held by STC License Company ("Licensee"), a direct wholly-owned subsidiary of
you; and (ii) the sole purpose of Licensee is to hold the broadcast license of
your station; (iii) in the event your stock, partnership interests, assets or
the operating equipment and facilities of your station are transferred or
assigned to a third party ("Transferee"), all of the stock, partnership
interests and assets, including the broadcast license, of Licensee shall be
simultaneously transferred or assigned to Transferee so that the transaction
shall result in the transfer or assignment of your station as a single entity
with all its licenses, authorities, equipment and facilities necessary to
operate a television broadcast station, subject to prior approval of the FCC,
ABC and any other third party as required by FCC regulations, the terms of this
Agreement or otherwise. You further agree that during the term of this Agreement
you shall (i) cause Licensee to perform all acts necessary for you to perform
fully all of the obligations undertaken by you in this Agreement, and (ii) cause
Licensee to forbear from acting in any manner forbidden by, or inconsistent
with, the terms of this Agreement.
1. NETWORK AFFILIATION AND PROGRAM SERVICE
A. PRIMARY AFFILIATION. You agree to serve as our primary affiliate to
broadcast Network Television Programs, in the community to which your station is
licensed by the Federal Communications Commission, subject to the conditions and
limitations set forth herein. As used in this Agreement, Network Television
Programs means television programs which are part of the network schedule for
the then current September to September television season, broadcast on a
national television basis and in
<PAGE> 2
the time period established for such broadcast by ABC. (Network Television
Programs will also be referred to herein as "network programs," "television
programs," "programs" or "programming" or in the singular of such terms.)
B. FIRST CALL RIGHTS. To enable you to serve as our primary affiliate,
we agree to offer you first call on the right to broadcast Network Television
Programs, in the time period established by ABC for their broadcast, in the
community to which your station is licensed by the Federal Communications
Commission ("First Call Rights"), for reception by the general public in places
to which no admission is charged. Notwithstanding the foregoing, ABC shall have
the right to authorize any television broadcasting station regardless of the
community to which it is licensed by the FCC, to broadcast any network
presentation of a subject we deem to be of immediate national significance
including, but not limited to, a Presidential address.
1. You agree that, within 15 days of the date of our offer of a First Call
Right to a regularly scheduled network program, you will advise us of your
acceptance (if requested to do so by the terms of our offer) or rejection.
With respect to any network program not regularly scheduled, you will
advise us of your acceptance or rejection of our offer of a First Call
Right within 72 hours (exclusive of Saturdays, Sundays and holidays) after
such offer has been received at your station. However, if the first
broadcast referred to in our offer is scheduled to occur within less than
15 days after the date of our offer with respect to regularly scheduled
network programs or less than 72 hours after our offer has been received at
your station with respect to network programs not regularly scheduled, you
shall notify us of your acceptance or rejection of such offer as promptly
as possible, but in no event after the first broadcast time specified in
such offer. Acceptance by you of our offer of a First Call Right shall
constitute your agreement to broadcast subject network program in
accordance with the terms of this Agreement and of our offer to you. As an
ABC primary affiliate, you are obligated to accept the substantial majority
of the ABC network programs offered to you. Your failure to do so shall
constitute a material breach of this Agreement entitling ABC, in addition
to all other remedies, to terminate this Agreement on fourteen (14) days
written notice to you.
2. You will be offered "First Call Rights" with respect to:
a. Network Sponsored Programs. "Network sponsored programs," as used in
this Agreement, shall mean those Network Television Programs which contain
one or more commercial announcements paid for by or on behalf of one or
more ABC Network advertisers.
<PAGE> 3
You agree to broadcast network sponsored programs in their entirety,
including but not limited to the network commercial announcements ordered
for your Station, network identifications, program promotional material or
credit announcements contained in such programs which you accept, without
interruption or deletion or addition of any kind. Notwithstanding the
foregoing, you may substitute other ABC-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.
b. Network Sustaining, Cooperative and Spot Carrier Programs.
i) We will from time to time offer you live or recorded Network Television
Programs identified as sustaining programs, cooperative programs or spot
carrier programs. Except as set forth below in subparagraphs (ii) and
(iii), you agree to broadcast such programs which you accept in their
entirety without interruption or deletion or addition of any kind.
ii) The network sustaining programs which we may offer to you may not,
without our prior written consent, be sold by your station for commercial
sponsorship or interrupted for commercial announcements or used for any
purpose other than sustaining broadcasting.
iii) You may carry the cooperative or spot carrier programs on the same
basis as regular sustaining programs or you may offer them for commercial
sponsorship on terms and conditions specified by us at the time such
programs are offered to you.
c. PROGRAM DELIVERY. By means satisfactory to us, we will arrange, at our own
expense, for programs to be delivered to your station.
II TERM
This agreement shall become effective upon the effective date of your
acquisition (directly or through a wholly-owned subsidiary) of WDTN, Dayton,
Ohio, and shall continue until 3:00 AM, NYT, on the 29th day of August, 2004.
III. NETWORK STATION COMPENSATION
A. You will be entitled to receive an annual compensation guarantee of Two
Million Dollars ($2,000,000) Dollars (net of affiliation fees and payable
monthly in equal installments) for (i) the first year of this agreement and (ii)
for each year thereafter during the term hereof
<PAGE> 4
provided that the following conditions are satisfied in the year immediately
preceding each such year including the first year:
1. your station maintains the same level of clearances of ABC
network programs as it maintained in the 1996-1997 television
season (i.e., the last two quarters of 1996 and the first two
quarters of 1997);
2. your station's preemption levels for prime-time network
programming do not exceed fifty-eight (58) half hours for
each calendar year of the term of this Agreement or any pro
rata portion thereof.
B. Your entitlement to the annual compensation guarantee in any
particular year after the first year hereof is dependent on your satisfaction
for the immediately preceding year (including the first year hereof) of the
conditions set out immediately above in subparagraph A. For any year following a
year in which such conditions have been satisfied, your compensation will be in
the amount of the guarantee (plus any additional compensation due under
subparagraph C below). For any year following a year in which such conditions
have not been satisfied, your compensation will be determined instead solely by
the formula set forth in Schedule A attached hereto and made a part hereof.
C. For any year (including the first year hereof) in which your annual
compensation will be in the amount of the guarantee, your compensation under the
formula set forth in Schedule A will be compared with the guarantee and if such
compensation is greater than such guarantee, you will be paid the difference as
additional compensation for that year.
D. During any year in which the annual compensation guarantee set forth
in subparagraph A and 2 above does not apply, we reserve the right to reevaluate
and change at any time (a) the network station rate set forth in Schedule A, (b)
the percentage(s) set forth in the Table in Schedule A, or (c) your network
weekly deduction, by notice to you in writing to such effect ninety (90) days
prior to the effective date of any such change. If the effect of such changes
would be to decrease your annual network compensation under Schedule A by more
than 25%, you may, if you so elect, terminate this affiliation agreement by
giving us prior written notification within forty-five (45) days after the date
of our notice to you.
E. If you fail to satisfy any of the conditions set forth in
subparagraphs A (1), (2) and (3) above, and we give you written notice of such
failure, you shall have ninety (90) days from receipt of such notice to return
to complying fully with such conditions. If by the end of such ninety (90) day
period, you fail to return to complying fully with such conditions, we shall
have
<PAGE> 5
the right, in our sole discretion, to terminate this agreement upon two
hundred seventy (270) days written notice to you.
IV. NETWORK NON-DUPLICATION PROTECTION
You shall be entitled to network non-duplication protection provided as
and to the extent set forth in Rider One to this Agreement, which is attached
hereto and made a part hereof.
V. CUT-IN ANNOUNCEMENTS AND LOCAL TAG SERVICES
A. CUT-IN ANNOUNCEMENTS. "Cut-In Announcements", as used herein, shall
mean the substitution of a special commercial in place of a regularly scheduled
network commercial.
1. Upon at least twenty-four (24) hours, notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to
(a) broadcast cut-in announcements from your station alone, or (b)
originate from your station cut-in announcements to one or more other
stations, without regard to whether or not your station is requested to
broadcast said cut-in announcement(s). Notwithstanding anything
contained in this Agreement, you may refuse to broadcast any such
cut-in announcement in the community to which your station is licensed
by the FCC if, in your opinion, it is not in the public interest,
convenience or necessity, but you shall nevertheless furnish such
personnel and equipment as may be necessary to originate such cut-in
announcement(s) from your station to one or more other stations.
2. Cut-in announcements shall be broadcast only when authorized by us
and then only in accordance with the instructions furnished to you. You
will be supplied, as promptly as possible, with the material and
instructions for these announcements.
3. We may cancel any order for cut-in announcements without liability
on our part, provided we do so upon not less than twenty-four (24)
hours, notice to you, failing which, we will pay you the compensation
you would have received if the announcement(s) had continued as
scheduled for twenty-four (24) hours following receipt by you of such
notice of cancellation.
4. For each program during which such cut-in announcements are
included, we shall pay you in accordance with the applicable table set
forth in Schedule B hereto and hereby made a part hereof.
<PAGE> 6
B. LOCAL TAG-SERVICES. "Local Tag Announcements", as used herein, shall
mean a visual commercial announcement, made by you on behalf of a local dealer
of a network advertiser, not exceeding ten seconds of a one-minute network
commercial announcement or five seconds of a thirty-second network commercial
announcement projected by means of a slide and not utilizing more than two (2)
slides.
1. Upon at least twenty-four (24) hours' notice, you shall, at our
request, furnish such personnel and equipment as may be necessary to
broadcast "local tag announcements".
2. Local tag announcements shall be broadcast in accordance with our
instructions. The network advertiser shall supply to you or purchase
from you, as promptly as possible, the slide(s) for each local tag
announcement. Local tag announcements shall not be accompanied by oral
announcements unless the network advertiser shall make direct requests
of you therefor and shall have assumed role 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 2 hereto and hereby made a part hereof.
VI GENERAL
A. We may at any time, upon notice to you, substitute for any scheduled
network program another network program, except that if such other network
program in our judgment involves a special event of public interest or
importance, no such notice is required. No compensation will be paid to you for
the scheduled program or for the substitute program unless such substitute
program is a network sponsored program in which event you shall be compensated
in accordance with Section III of this Agreement.
B. Nothing contained in this Agreement shall be construed to prevent or
hinder us, at any time upon notice to you as soon as practicable, from canceling
one or more network programs, whether sponsored or sustaining, in which event
you shall receive no compensation for any such canceled network sponsored
program(s).
C. With respect to network programs offered or already accepted
pursuant to this Agreement, nothing herein contained shall
<PAGE> 7
be construed to prevent or hinder you from exercising your rights under Federal
Communications Commission rules to;
a) reject or refuse network programs which you reasonably believe to be
unsatisfactory, unsuitable or contrary to the public interest; or
b) substitute a program, which in your good faith opinion, is of
greater local or national importance.
We shall not compensate you for any such program you have refused or rejected or
for which you have substituted a program which is of greater local or national
importance, provided that no such preemption shall act to reduce your annual
compensation guarantee except as set forth in Section III above. With respect to
programs already accepted hereunder, you shall give us prompt telegraphic
notification of any such refusal, rejection or substitution no later than
fourteen (14) days prior to the air date of such programming, except where the
nature of the substitute program makes such notice impracticable (e.g., coverage
of breaking news or other unscheduled events), in which case you agree to give
us as much advance notice as possible under the circumstances. Such notice shall
include a statement of the reason(s) you believe that a rejected or refused
network program is unsatisfactory, unsuitable or contrary to the public
interest, and/or that a substituted program is of greater local or national
importance.
In addition to all other remedies, we shall have the right, upon thirty
(30) days, notice, to terminate your "First Call Rights" on any series of
Network programs already accepted hereunder and withdraw all future episodes of
that series if one or more individual program episode(s) is preempted by you for
any reason other than those set forth in (a) and (b) above and in violation of
Section III(A)(2) above.
We shall also have the right, upon thirty (30) days, notice, to
terminate your "First Call Rights" concerning any series of Network programs
already accepted hereunder and to withdraw all future episodes of that series if
three or more individual program episodes are pre-empted by you during a single
television season (September through September), whether or not such
pre-emptions are for the reasons set forth in (a) and (b) above.
We reserve the right not to offer you the "First Call Rights" for the
next broadcast season on any series of Network program as to which we have
terminated your "First Call Rights" and withdrawn future episodes of that series
pursuant to this Paragraph and which has been placed by ABC on another station
serving your market.
D. You will submit to us in writing, upon forms provided by us for that
purpose, such reports covering network programs broadcast by your station as ABC
may request from time to time. To
<PAGE> 8
verify your carriage of network commercial announcements, identifications and
program promotional material, if we have reasonable grounds for believing that
you have not done so, we may require delivery by you, within five (5) days of
our request, copies of your official station logs, air checks or broadcast
tapes.
E. Neither you nor we shall incur any liability hereunder because of
our failure to deliver, or your failure to broadcast, any or all network
programs due to:
(a) failure of facilities
(b) labor disputes, or
(c) causes beyond the control of the party so failing
to deliver or broadcast.
F. You agree to notify us of any application made to the Federal
Communications Commission to modify your station's transmitter location, power,
frequency or hours of operation within ten (10) days of the filing of such
application. In the event that the transmitter location, power, frequency or
hours of operation of your station are changed at any time so that your station
is of significantly less value to us as a network outlet than it is as of the
effective date of this agreement, including but not limited to, as a result of
additional overlap of your station's broadcast signal with that of another ABC
affiliate, we will have the right to terminate this Agreement upon thirty (30)
days' advance written notice.
G. Unless we exercise our right of termination set forth in this
paragraph, this Agreement shall be binding on any assignee or transferee of your
station's license. You agree not to assign or 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(f) of the Rules and
Regulations of the Federal Communications Commission, we shall have the
unilateral right to terminate this Agreement effective as of the effective date
of any assignment or transfer of control (voluntary or involuntary) of your
license or any interest therein, provided ABC shall have given you notice in
writing of such termination within ninety (90) days after we have been advised
that such application for assignment or transfer has been filed with the Federal
Communications Commission. If you fail to notify us of the assignment or
transfer of control of your station's license, we shall have the unilateral
right, as a non-exclusive remedy, to terminate this Agreement within ninety (90)
days of receiving notice of said assignment or transfer or control.
<PAGE> 9
You agree that you shall not consummate any assignment or transfer of
control of your station's license until you have procured and delivered to us,
in form satisfactory to us, the acknowledgment of the proposed assignee or
transferee that, upon consummation of the assignment or transfer of control of
your station's license, the assignee or transferee will assume and perform this
Agreement in its entirety without limitation of any kind. You agree that in view
of the uniqueness of the plan of network cooperation set forth in this Agreement
and the fact that money damages would be inadequate to compensate ABC for the
breach of your obligations hereunder, in addition to all other remedies, ABC
shall be entitled to obtain equitable relief to enforce the obligations set
forth in this paragraph.
H. Your rights under this Agreement are limited to the First Call
Rights to Network Television Programs pursuant to the terms herein. Except for
grants by your station of retransmission consent to cable systems pursuant to
our retransmission consent policy (which we may amend from time to time), you
agree not to authorize, cause, permit or enable the use of any program which we
supply to you herein for any purpose other than broadcasting by your station
pursuant to the terms herein, in the community to which your station is licensed
by the Federal Communications Commission, for reception by the general public in
places to which no admission is charged. You agree when you are authorized to
tape a program for subsequent broadcast that the recording will be broadcast not
more than once in its entirety and will be erased within six (6) hours of use.
All rights not specifically granted to you by this Agreement shall be retained
by ABC.
I. Except upon our prior written consent, you agree that your station
will not enter into any local marketing or time brokerage agreement whereby
another television station or other third party (excepting suppliers of
syndicated programming or nonnews local programming unique to the station's
community) supplies programming to your station. If you enter into such an
agreement without our written consent, we shall have the right to terminate this
Agreement upon fourteen (14) day's notice to you.
J. Except with our prior written consent and except upon such terms and
conditions as we may impose, you agree not to authorize, cause, permit or enable
anything to be done whereby a recording on film, tape or otherwise is made or a
recording is broadcast, of a program which has been, or is being, broadcast on
our network, or a rebroadcast is made of the broadcast transmission of your
station during any hours when your station is broadcasting a program provided by
ABC.
K. With respect to any and all promotional material issued by you or
under your direction or control, you agree to abide by any and all restrictions
of which we advise you pertaining to the
<PAGE> 10
promotion of a network program(s) scheduled to be broadcast by you in your
community, including, but without limitation, on-the-air promotion, billboards,
and newspaper or other printed advertisements, announcements or promotions.
L. You agree to maintain for your television station such licenses,
including performing rights licenses as now are or hereafter may be in general
use by television broadcasting stations and necessary for you to broadcast the
television programs which we furnish to you hereunder. We will clear all music
in the repertory of ASCAP and of BMI used in our network programs, thereby
licensing the broadcasting of such music in such programs over your station. You
will be responsible for all music license requirements for any commercial or
other material inserted by you within or adjacent to our network programs in
accordance with this agreement.
M. The furnishing of film or tape recorded programs hereunder is
contingent upon our ability to make arrangements satisfactory to us for the film
or tape recordings necessary to deliver the programs to you. Such film or tape
recorded programs shall be used only for a single television broadcast over your
station. Positive prints of film or tape recorded programs are to be shipped by
us, shipping charges prepaid, and you agree to return to us or to forward to
such television station as we designate, shipping charges prepaid, each print or
copy of said film or tape recording received by you hereunder, together with the
original reels and containers furnished therewith. You will return or forward
all prints in the same condition as received by you, ordinary wear and tear
excepted, immediately after a single TV broadcast over your station. In the
event you damage a print of any film or tape recorded program which is delivered
to you, or fail to return or forward the original reels and containers furnished
therewith, as aforesaid, you agree to pay the cost of replacing the complete
print, original reels and/or containers as and when billed by us.
N. No inducements, representations or warranties except as
specifically set forth herein have been made by any of the parties to this
Agreement. This Agreement constitutes the entire contract between the parties
hereto and no provision thereof shall be changed or modified, nor shall this
Agreement be discharged in whole or in part, except by an agreement in writing,
signed by the party against whom the change, modification or discharge is
claimed or sought to be enforced; nor shall any waiver of any of the conditions
or provisions of this Agreement be effective and binding unless such waiver
shall be in writing and signed by the party against whom the waiver is asserted,
and no waiver of any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same or of any other provision.
O. All notices, demands, requests or other communications which may be
or are required to be given or made by ABC or you
<PAGE> 11
pursuant to this Agreement (except for our program offers and your notices of
acceptance or rejection, if required, of such offers and any other program
information or program administration communications) shall be delivered
(postage or fee prepaid) by first-class mail, express mail, express delivery
service or by facsimile transmission addressed as follows:
(a) If to you:
General Manager
WDTN
4595 S. Dixie Avenue
Dayton, OH 45439
Phone: 937-293-2101 / Fax: 937-294-6542
with copies (which shall not constitute notice) to:
Mr. Robert Smith
STC Broadcasting, Inc.
3839 Fourth Street North
Suite 420
St. Petersburg, FL 33703
Phone: 813-821-7900 / Fax: 813-821-8092
William S. Reyner, Esq.
Hogan & Hartson
555 Thirteenth Street
Washington, D.C.
Phone: 202-637-6510 / Fax: 202-637-5910
(b) If to ABC:
Mr. John Rouse
Senior Vice President
Affiliate Relations
ABC Television Network
77 West 66 Street, 2nd Floor
New York, NY 10023-6298
Phone: 212-456-6493 / Fax: 212-456-7450
with a copy (which shall not constitute notice) to:
Roger Goodspeed, Esq.
ABC, Inc.
Law & Regulation Department
77 West 66 Street, 16th Floor
New York, NY 10023-6298
Phone: 212-456-7593 / Fax: 212-456-6202
<PAGE> 12
or to such other person, address or facsimile number as you or ABC may designate
by written notice.
P. This Agreement and all questions relating to its validity,
interpretation, performance, and enforcement (including, without limitation,
provisions concerning limitations of action), shall be governed by and construed
in accordance with the laws of the State of New York, notwithstanding
conflict-of-laws doctrines of any state or other jurisdictions to the contrary.
Q. Upon termination of this Agreement, the consent theretofore granted
to broadcast our network programs or use ABC logos or trademarks shall be deemed
immediately withdrawn and you shall have no further rights of any nature
whatsoever in such programs, logos or trademarks.
R. You acknowledge that, in view of the uniqueness of the plan of
network cooperation set forth in this Agreement, in the event that your
obligations under this Agreement are not performed in accordance with its terms,
ABC would not have an adequate remedy at law and therefore agree that ABC shall
be entitled to specific performance of the terms hereof in addition to any other
remedy to which it may be entitled at law or in equity.
S. You agree to indemnify and hold ABC and its parent corporation,
subsidiaries and their respective officers, directors, agents and employees,
successors and assigns harmless from and against any and all claims made against
us and all damages, liabilities, costs and expenses incurred as a result of such
claims, including reasonable attorney's fees, arising out of the broadcast by
ABC of any material supplied by you to ABC in accordance with this Agreement,
and we agree to indemnify and hold you harmless from and against any and all
claims made against you and all damages, liabilities, costs and expenses
incurred as a result of such claims, including reasonable attorney's fees,
arising out of the broadcast by you of any material provided by ABC to you in
accordance with this Agreement. It is understood that the foregoing indemnities
shall apply only with respect to materials that are broadcast without change
from the form and content in which such materials were originally provided and
in strict conformance to any instructions or limitations given by the party
providing the material. Each party will notify the other promptly of any
litigation or claim to which such indemnity applies and will cooperate fully in
the defense at the other party's request. The provisions of this paragraph shall
survive the expiration or sooner termination of this agreement.
T. Nothing in this Agreement shall create any partnership,
association, joint venture, fiduciary or agency relationship between ABC and
you.
<PAGE> 13
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/ Michael Nissenblatt
-------------------------------
Accepted this 2nd day of
July, 1998
Station: WDTN - Dayton, Ohio
Parent: STC Broadcasting, Inc
Licensee: STC License Company
By: /s/ David A. Fitz
----------------------------
Name: David A. Fitz
Title: Chief Financial Officer
<PAGE> 14
RIDER ONE
You shall be entitled to network non-duplication protection, as defined
by Rule 76.92 of the Federal Communications Commission Rules, as follows:
a. The geographic zone of network non-duplication protection shall be
the Area of Dominant Influence ("ADI") (as defined by Arbitron) in
which your station is located, or any lesser zone pursuant to any
geographic restrictions contained in the Federal Communications
Commission rules and regulations, now or as subsequently modified.
b. Network non-duplication protection shall extend to all ABC
television network programs that you broadcast in accordance with
this agreement. Protection shall not extend to individually
pre-empted programs of an otherwise cleared series.
c. Network non-duplication protection shall extend only from the start
of the live time period designated by us for broadcast of that
network program by your station to the end of that designated time
period.
You are under no obligation to exercise in whole or in part the network
non-duplication rights granted under this agreement.
<PAGE> 15
SCHEDULE-A
STATION COMPENSATION
(a) We will pay you within a reasonable period of time after the close of
each four or five week accounting period, as the case may be, for
broadcasting each network sponsored program or portion thereof
hereunder, except those specified in paragraph (b) hereof, which is
broadcast over your station during the live time period* therefor, the
amount resulting from multiplying the following:
(i) Your network station rate of $4,824.00 or such
other rate applicable pursuant to the terms of Section
III of the Agreement; by
(ii) the percentage set forth in the table below opposite such
applicable time period or such other percentage applicable
pursuant to the terms of Section III of the Agreement; by
(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***.
* Live time period, as used herein, means the time period or
periods as specified by us in our initial offer of a network
program for the broadcast of such program over your station.
** Commercial availability, as used herein, means a period of
time made available by us during a network sponsored program
for one or more network commercial announcements or local
cooperative commercial announcements.
*** Network commercial announcement, as used herein, means a
commercial announcement broadcast over your station during a
commercial availability and paid for by or on behalf of one or
more of our network advertisers, not including, however,
announcements consisting of billboards, credits, public
service announcements, promotional announcements, and
announcements required by law.
<PAGE> 16
For each network sponsored program or portion thereof, except those specified in
paragraph (b) hereof, which is broadcast by your station with our consent during
a time period other than the live time period therefor, we will pay you as if
your station had broadcast such program or portion thereof during such live time
period, except that:
(i) if the percentage set forth above opposite the time period
during which your station broadcast such program or portion
thereof is less than that set forth opposite such live time
period, then we will pay you on the basis of the time period
during which your station broadcast such program or portion
thereof.
(b) Payment For Other Programs. We will establish such compensation
arrangements as we and you shall agree upon prior to the expiration of the
applicable periods of time for program acceptance, as set forth in Section I.C.
of this affiliation agreement, for all network sponsored programs broadcast by
your station consisting of:
(i) Sports programs;
(ii) special events programs (including, but not
limited to, special news Programs, awards
programs, entertainment specials and miniseries);
(iii) programs for which we specified a live time period,
which time period straddles any of the
time period categories in the table in
paragraph (a) above; and
(iv) any other programs which we may designate from
time to time.
(c) Deductions
(i) From the amounts we are to pay you for station
compensation hereunder, we shall throughout the term
of this affiliation agreement deduct during each
accounting period a sum equal to 168% of your
station's network rate for each week of said period.
(ii) We will deduct a sum equal to the total of whatever
fees, if any, may have mutually been agreed upon by
you and us with respect to local cooperative
commercial announcements broadcast during the
applicable accounting period for which your station
is being compensated.
<PAGE> 17
TABLE
EASTERN
MONDAY through FRIDAY
---------------------
Sign-on to 11:00 AM - 7%
11:00 AM to 1:00 PM - 18.25%
1:00 PM to 4:00 PM - 6%
4:00 PM to 8:00 PM - 10%
8:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15%
SATURDAY SUNDAY
-------- ------
Sign-on to 9:00 AM - 5% Sign-on to 9:00 AM - 5%
9:00 AM to 2:00 PM - 8% 9:00 AM to 2:00 PM - 6%
2:00 PM to 6:00 PM - 15% 2:00 PM to 6:00 PM - 15%
6:00 PM to 8:00 PM - 10% 6:00 PM to 7:00 PM - 10%
8:00 PM to 11:00 PM - 30% 7:00 PM to 11:00 PM - 30%
11:00 PM to Sign-off - 15% 11:00 PM to Sign-off - 15%
All times in this paragraph are expressed in terms of your station's then
current local time.
<PAGE> 18
SCHEDULE B
COMPENSATION FOR CUT-IN AND LOCAL TAG ANNOUNCEMENT(S)
A. CUT-IN ANNOUNCEMENTS
I. With-respect to programs broadcast by you during the time
period(s) specified by us in our initial offer for-such
programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast during the time period(s)
specified by us in our initial offer for such program, we
will pay you the amount resulting from multiplying your
network station rate (set forth in Section II of the
agreement) by the percentage for cut-in announcement(s) set
forth in the applicable Table in Section C below opposite
such applicable time period.
II. With respect to programs broadcast by you with our consent
during time period(s) other than that specified
by us in our initial offer of such programs.
For each local cut-in announcement you broadcast within a
program, which program is broadcast by you with our consent
during a time period other than that specified by us in our
initial offer of such program, we will pay you an amount as
set forth in Section A.I. above, except that:
(i) if the percentage set forth in the applicable
Table in Section C below for cut-in announcement(s)
opposite the time period during which your station
actually broadcast the program in which you broadcast
or originated such cut-in announcement(s) is less
than that set forth opposite the applicable time
period specified in our initial offer of such
program, then we will pay you for each cut-in
announcement(s) on the basis of the time period
during which your station actually broadcast such
program.
III. With respect to programs broadcast by you in a time period
which straddles any of the time period categories set
forth in the applicable Table in Section C below.
In the event that we offer you a program for broadcast in a
time period which straddles any of the time period categories
set forth in the applicable Table in Section C below, and you
broadcast such program within which you also
<PAGE> 19
broadcast or originate one or more cut-in
announcement(s), we will pay you such amounts as we
and you shall have agreed upon prior to your
broadcast or origination of such cut-in
announcement(s).
B. LOCAL TAG ANNOUNCEMENTS
I. With respect to programs broadcast by you during the
time period(s) - specified by us in our initial
offer for such programs.
For each local tag announcement you broadcast within
a program, which program is broadcast during the time
period(s) specified by us in our initial offer for
such program, we will pay you the amount resulting
from multiplying your network station rate (set forth
in Section II of the agreement) by the percentage for
each local tag announcement set forth in the
applicable Table in Section C below opposite such
applicable time period.
II. With respect to programs broadcast by you with our
consent during time periods(s) other than that
specified by us in our initial offer of such
programs.
For each local tag announcement you broadcast within
a program, which program is broadcast by you with our
consent during a time period other than that
specified by us in our initial offer of such program,
we will pay you an amount as set forth in Section
B.I. above, except that:
(i) if the percentage set forth in the
applicable Table in Section C below for each
local tag announcement opposite the time
period during which your station actually
broadcast the program in which you broadcast
such local tag announcement is less than
that set forth opposite the applicable time
period specified in our initial offer of
such program, then we will pay you for each
local tag announcement on the basis of the
time period during which your station
actually broadcast such program.
III. With respect to programs broadcast by you in a time
period which straddles any of the time period
categories set forth in the applicable Table
in Section C below.
<PAGE> 20
In the event that we offer you a program for
broadcast in a time period which straddles any of the
time period categories set forth in the applicable
Table in Section C below, and you broadcast such
program within which you also broadcast one or more
local tag announcement(s), we will pay you such
amounts as we and you shall have agreed upon prior to
your broadcast of such local tag announcement(s).
C. COMPENSATION TABLE FOR CUT-IN OR LOCAL TAG ANNOUNCEMENTS
EASTERN
Cut-In Announcements
Monday through Sunday 6:00 PM to 11:00 PM - 18.75%
All other times - 7.50%
Local Tag Announcements
Monday through Sunday 6:00 PM to 11:00 PM - 9.38%
All other times - 3.75%
All times in this paragraph are expressed in terms of your station's then
current local time.
<PAGE> 1
Exhibit 10.16
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Before the
Federal Communications Commission
Washington, D.C. 20554
In re Application
WNNE LICENSEE, INC. (Assignor)
and
STC BROADCASTING OF VERMONT SUBSIDIARY, INC. (Assignee)
For Consent to the Assignment of License of Stations WNNE(TV), Hartford,
Vermont, and W65AM, White River Junction, Vermont
WPTZ LICENSEE, INC. (Assignor)
and
For Consent to the Assignment of License of) Station WPTZ(TV), North Pole, New
York )
STC BROADCASTING OF VERMONT SUBSIDIARY, INC. (Assignee)
STC BROADCASTING OF VERMONT SUBSIDIARY, INC. (Assignor)
and
HEARST-ARGYLE STATIONS, INC.
File Nos. BALCT/BALTT-98021OIA-IB
File No. BALCT-980210IC
File Nos. BALCT/BALTT-980226IE-IG
(Assignee)
For Consent to the Assignment of License of) Stations WNNE(TV), Hartford,
Vermont; ) W65AM, White River Junction, Vermont; and) WPTZ(TV), North Pole, New
York
<PAGE> 2
STC LICENSE COMPANY (Assignor)
and
HEARST-ARGYLE STATIONS, INC. (Assignee)
For Consent to the Assignment of License of) Stations KSBW(TV), Salinas,
California, and) K13GS, Carmel Valley Village, California)
HEARST-ARGYLE STATIONS, INC. (Assignor)
and
STC LICENSE COMPANY
(Assignee)
For Consent to the Assignment of License of Station WDTN(TV), Dayton, Ohio
HEARST-ARGYLE STATIONS, INC. (Assignor) and
SMITH ACQUISITION LICENSE COMPANY (Assignee)
For Consent to the Assignment of License of) Station WNAC-TV, Providence, Rhode
Island)
File Nos. BALCT/BALTTV-98022GIA-IB
File No. BALCT-980226IC
File No. BALCT-9802261D
MEMORANDUM OPINION AND ORDER
Adopted: July 1, 1998
By the Chief, Mass Media Bureau:
Released: July 1, 1998
1. The Commission, by the Chief, Mass Media Bureau, acting pursuant to
delegated authority, has before it for consideration the above-captioned
applications for assignment of license of WNNE(TV), Channel 31 (NBC), Hartford,
Vermont, WPTZ(TV), Channel 5 (NBC), North Pole, New York, and associated
translator facility, from wholly-owned subsidiaries of Sinclair Broadcast
Group, Inc. ("Sinclair") to STC Broadcasting of Vermont Subsidiary, Inc.
("STC-Vermont") (collectively, the "Sinclair applications"), and from
STC-Vermont to Hearst Argyle Stations, Inc. ("Hearst-Argyle"). Both sets of
applications are opposed by Mount Mansfield Television Inc. ("Mt. Mansfield"),
the licensee of WCAX-TV, Channel 3 (CBS), Burlington, Vermont. Also under
consideration are the unopposed applications to assign the license of station
KSBW (TV), Channel 8 (NBC), Salinas, California, and associated translator
facility, from STC License Company to Hearst-Argyle, as well as the unopposed
application to assign the license of station WNAC-TV, Channel 64 (FOX),
Providence, Rhode Island, from Hearst-Argyle to Smith Acquisition License
Company ("Smith"). Finally,
<PAGE> 3
we have under Mansfield Television consideration the unopposed application to
assign the license of station WDTN (TV), Channel 2 (ABC), Dayton, Ohio, from
Hearst-Argyle to STC License Company ("STC").
2. The Grade B contour of WNNE(TV) overlaps the Grade B contour of
WPTZ(TV). Common ownership of stations with such Grade B overlap violates the
Commission's television duopoly rule, 47 C.F.R. 73.3555(b). Accordingly,
Hearst-Argyle has requested a permanent waiver of the television duopoly rule
to permit common ownership of WNNE(TV) and WPTZ(TV). The Grade B contour of
WNNE(TV) also overlaps the Grade B contour of WCVB TV, Boston, Massachusetts,
whose licensee WCVB Hearst-Argyle Television, Inc. is a sister company of
Hearst-Argyle. Accordingly, Hearst-Argyle seeks a temporary, conditional waiver
of the duopoly rule to allow common ownership of WNNE(TV) and WCVB-TV, subject
to the outcome of the pending television ownership rulemaking in Review of the
Commission's Regulations Governing Television Broadcasting, Second Further
Notice of Proposed Rule Making in MM Docket Nos. 91-221 and 87-8, 11 FCC Rcd
21655 (1996) ("Television Ownership Second Further Notice").
3. Thomas O. Hicks ("Hicks") ultimately controls STC Broadcasting Company,
which in turn owns 99% of the equity of the parent company of Smith, the
proposed assignee of WNAC-TV, but has no voting rights in the parent company.
Hicks also indirectly controls the licensees radio stations WHJJ(AM) and
WHJY(FM), Providence, Rhode Island, and WSNE(FM), Taunton, Massachusetts
(collectively, the "Providence radio stations"). See SFX Broadcasting, Inc.,
D98-970 (released May 21, 1998) . Hicks' indirect equity interest in WNAC-TV is
deemed nonattributable under the Commission's multiple ownership rules and
would therefore not invoke the commission's one-to-a-market proscription. 47
C.F.R. 73.3555(c). Rather, the proposed assignment implicates the Commission's
cross-interest policy, which generally focuses on the potential adverse effects
on competition and diversity in situations where a party owns an attributable
interest in one media outlet and enjoys a "meaningful relationship" with
another media outlet serving "substantially the same area." Reexamination of
the Commission's Cross Interest Policy, 2 FCC Rcd 3699, 3700 (1989). As a
general rule, the larger the nonattributable equity interest, the more
heightened is the Commission's concern regarding that relationship its effect
upon competition and diversity. See Cleveland Television Corp., 91 FCC 2d 1129,
1(Rev.Bd. 1972), rev. denied, FCC 83-235 (May 18, 1983), aff'd, 732 F.2d 962
(D.C. Cir. 1984) However, as suggested by Smith, we believe that a
television-radio combination which satisfies the diversity and competition
standards for a one-to-a-market waiver would be consistent with the concerns
underlying the Commission's cross-interest policy. Cf. Kern Broadcasting
Corporation, 10 FCC *Rcd 6584, 6587-68 (1995). Accordingly, we will analyze the
proposed television-radio combination based upon the showing submitted by
Smith, which it maintains would justify a waiver of the one-to-a-market rule.
4. Hicks ultimately controls STC Broadcasting Company, which has 100%
ownership and voting interest in the proposed assignee of WDTN(TV) . Hicks also
has a non-controlling attributable interest in Chancellor Media License
Company, the licensee of stations WYGY(FM), Hamilton, Ohio and WUBE(AM) and
WUBE-FM in nearby Cincinnati, Ohio. Since the Grade A contour of WDTN(TV), the
television station to be acquired by STC, completely
<PAGE> 4
encompasses the community of license of WYGY(FM), the proposed assignment of
WDTN(TV) triggers the one-to-a-market rule. STC has therefore requested waiver
of the one-to-a-market rule to allow common ownership of WDTN(TV) and WYGY(FM).
5. STC's proposed acquisition of WDTN(TV) also violates the television
duopoly rule, 47 C. F. R. 73.3555 (b) . The predicted Grade B contour of
WDTN(TV) overlaps that of WISH-TV, Channel 8 (CBS) , Indianapolis, Indiana,
whose licensee is controlled by LIN Television Corporation, another entity in
which Hicks has an attributable interest. STC has requested a permanent waiver
of the duopoly rule to permit common ownership of WDTN(TV) and WISH-TV or, in
the alternative, a temporary duopoly waiver conditioned upon the outcome of the
pending broadcast television ownership rulemaking concerning the duopoly and
other multiple ownership rules. See Television ownership Second Further Notice.
6. In sum, we have before us the following requests: (1) permanent waiver
of the duopoly rule to allow common ownership by Hearst-Argyle of WNNE(TV) and
WPTZ(TV), North Pole, New York; (2) temporary, conditional waiver of the
duopoly rule to allow common ownership by Hearst-Argyle of WNNE(TV), Hartford,
Vermont and WCVB-TV, Boston, Massachusetts, subject to the outcome of the
television ownership rulemaking proceeding; (3) permanent waiver of the duopoly
rule to allow common ownership by STC of WDTN(TV), Dayton, Ohio and WISH-TV,
Indianapolis, Indiana; (4) approval for Hicks to control the licensees of
WHJJ(AM) and WHJY(FM), Providence, Rhode Island, and WSNE(FM) , Taunton,
Massachusetts, and to hold a 99% nonattributable equity interest in the entity
controlling the licensee of station WNAC TV, Providence, Rhode Island; and (5)
waiver of the one-to-a-market rule to allow common ownership by STC of
WDTN(TV), Dayton, Ohio and WYGY(FM), Hamilton, Ohio.
DUOPOLY WAIVERS
WNNE(TV), Hartford, Vermont and WPTZ(TV), North Pole, New York
7. Hearst-Argyle requests a permanent waiver of the television duopoly
rule, 47 C.F.R. 73.3555(b), to permit common ownership of WNNE(TV) and
WPTZ(TV). Hearst-Argyle contends that Commission precedent supports grant of
its waiver request because the terrain adjusted Grade B contour overlap between
the stations is de minimis.
8. In adopting the duopoly rule's fixed standard of a prohibited overlap
of Grade B service contours, the Commission expressly acknowledged the need for
"flexibility" in that rule's application, noting that waivers should be granted
where rigid conformance to the rule would be "inappropriate." Multiple
Ownership of Standard, FM and Television Broadcast Stations, 45 FCC 2d at 1479
n. 12. Accordingly, the Commission has granted waivers of the duopoly rule
where Grade B signal overlap is de minimis. See, e.g., Hubbard Broadcasting,
Inc., 2 FCC Rcd 7374 (1987). Our past waiver cases have characterized de
minimis overlap as encompassing less than one percent of both the area and the
population of the Grade B contour of each station. See, e.g., Hubbard
Broadcasting, 2 FCC Rcd at 7374; KSOO-TV, Inc., 43 FCC 2d 879, 880 (1973).
<PAGE> 5
9. With respect to WNNE(TV) and WPTZ(TV), the staff previously granted a
waiver of the duopoly rule to permit their common ownership because the Grade B
contour overlap between the stations is de minimis. See Letter to Heritage
Media and Trustee (Aug. 19, 1997). Utilizing the Irregular Terrain Model to
evaluate the waiver request, the staff determined that the terrain adjusted
Grade B contour overlap between WNNE(TV) and WPTZ (TV) encompasses 218 square
kilometers of land area and a population of 1,500, representing 0.83% of the
land area and 0.23% of the population within the Grade B service contour of
WNNE(TV), and 0.50% of the land area and 0.26% of the population within the
Grade B contour of WPTZ(TV). On appeal, the Commission affirmed the staff's use
of the terrain-limited analysis to evaluate the overlap area. Heritage Media
Services, Inc., 13 FCC Rcd 5644, 5648 (1998). The Commission noted that Section
73.684(f) of our rules permits the filing of terrain-limited analyses under
certain circumstances, such as those presented in this case, and further
observed that the Commission has previously used terrain-limited analyses to
conclude that no actual overlap exists. Id. at 5649; 47 C.F.R. 73.684(f).
Accordingly, the Commission found that the staff acted in accordance with
Commission precedent and policy by granting a duopoly waiver.
10. As to Hearst-Argyle's request for a duopoly waiver to continue common
ownership of WNNE(TV) and WPTZ(TV), the record before us presents no basis for
revisiting this matter. Based upon the engineering analysis performed in
connection with Heritage Media, we conclude that the overlap between WNNE(TV)
and WPTZ(TV) is well within the Commission's de minimis standard. Accordingly,
we believe that grant of the requested permanent waiver of the duopoly rule is
appropriate.
11. Informal objection. Mt. Mansfield has filed an informal objection
against the assignment of WNNE(TV) and WPTZ(TV), raising two basic arguments.
First, Mt. Mansfield contends that the proposed assignments will perpetuate a
"triopoly" in the Plattsburgh, New York-Burlington, Vermont Nielsen Designated
Market Area ("DMA") . Mt. Mansfield maintains that pursuant to the Asset
Exchange Agreement between the parties, it appears that Hearst-Argyle will not
only acquire WNNE(TV) and WPTZ(TV), but also become the time broker for
WFFF(TV), Channel 44, Burlington, Vermont, for a period of up to two years.
According to Mt. Mansfield, the Commission has proposed to attribute television
time brokerage agreements to the brokering station, and therefore any grant of
the subject transaction should be conditioned on the outcome of the pending
television ownership rulemaking proceeding.
12. Mt. Mansfield raised -- and the Commission rejected -- a nearly
identical argument in connection with the prior sale of WNNE (TV) and WPTZ
(TV). See Heritage Media, supra. Earlier, the staff found that Mt. Mansfield
had presented no evidence that the time brokerage agreement between WFFF(TV)'s
permittee and the applicant failed to comply with the Commission's rules and
Policies, or that WFFF(TV)'s permittee had surrendered control of its station to
the applicant. The staff further noted that time brokerage agreements are
nonattributable interests for the purposes of the television multiple ownership
rules. The Commission affirmed the staff's decision, finding that the staff had
thoroughly considered all relevant information and that its decision was
adequately supported and consistent with Commission precedent and policy.
Heritage Media, 13 FCC Rcd at 5647-48. Mt. Mansfield has presented no new facts
or
<PAGE> 6
arguments to warrant revisiting this matter. In any event, the record before
us demonstrates that Hearst-Argyle will not program WFFF(TV) pursuant to a time
brokerage agreement.
13. Second, Mt. Mansfield argues that, because WNNE(TV) and WPTZ(TV) are
located in the same DMA, the requested waiver is inconsistent with the interim
policy articulated in the Commission's pending television ownership rulemaking
proceeding, and should be conditioned on the outcome of that proceeding. We
disagree. The Commission has proposed to allow common ownership of television
stations in different DMA's with no overlapping Grade A contours. Television
Ownership Second Further Notice, 11 FCC Rcd at 21665. Additionally, the
commission acknowledged that the policy, as proposed, would prohibit common
ownership of two stations situated in the same DMA, even if the stations did
not have overlapping Grade B contours, and invited comment on the issue. Id. at
21667. However, the Commission also explicitly stated that "[o]ur current
television duopoly rule will, of course, remain in place pending the outcome of
this proceeding . . . ." Id. at 21681. Moreover, the Commission did not suggest
that, during the pendency of the proceeding, it would adopt a more restrictive
approach toward common ownership of stations in the same DMA with little or no
Grade B contour overlap. we believe that the imposition of the condition
requested by Mt. Mansfield is unnecessary based on our existing Grade B signal
contour test and our long-standing policy of granting waivers where the Grade B
overlap is de minimis. As the Commission stated in Heritage Media, "[w]e
presume that, when the overlap area between two television stations is de
minimis, the common ownership of the stations will not result in their serving
common areas and populations to any significant degree and, therefore, that
such common ownership will not undermine the concerns that form the basis of
our duopoly policy." Heritage Media, 13 FCC Rcd at 5649 (citing Hubbard
Broadcasting, Inc., 2 FCC Rcd 7374).
14. Based on our review of the record, we conclude that Mt. Mansfield has
not raised a substantial and material question of fact as to whether the grant
of the subject assignment should be conditioned on the outcome of the
Commission's rulemaking proceeding.
WDTN(TV), Dayton, Ohio and WISH-TV, Indianapolis, Indiana WNNE(TV), Hartford,
Vermont and WCVB-TV, Boston, Massachusetts
15. STC seeks a permanent waiver of the duopoly rule, 47 C.F.R. 73.3555(b),
to allow the common ownership of WDTN(TV), Dayton, Ohio and WISH-TV,
Indianapolis, Indiana, while Hearst-Argyle seeks a temporary, conditional
waiver of that rule to allow the common ownership of WNNE(TV), Hartford,
Vermont and WCVB-TV, Boston, Massachusetts, subject to the outcome of the
Commission's rulemaking proceeding in Television Ownership Second Further
Notice. As set forth below, we will grant both parties a temporary, conditional
waiver of the duopoly rule.
16. As stated above, in adopting the duopoly rule's fixed standard of
prohibiting overlap of Grade B service contours, the Commission also
acknowledged the need for "flexibility" in that rule's application, noting that
waivers should be granted where rigid conformance to the rule would be
"inappropriate." Multiple Ownership of Standard, FM and Television Broadcast
Stations, 45 FCC 2d 1476, 1479 n.12, recon. granted in part, 3 RR 2d 1554
(1964). To that end, the Commission has developed the
<PAGE> 7
following set of factors to be considered when evaluating an applicant's
request for waiver of the duopoly rule: the extent of the overlap, the number
of media voices available in the overlap area, the distinctiveness of the
respective markets, the independence of the stations' operations, and the
concentration of economic power resulting from the combination.' See Iowa State
University Broadcasting Corporation, 9 FCC Rcd 481, 487-88 (1993), aff1d sub
nom. Iowans for WOI-TV, Inc. v. FCC, 50 F.3d 1096 (D.C. Cir. 1995); H&C
Communications, Inc., 9 FCC Rcd 144, 146 (1993). After weighing the factors,
the Commission considers any public interest benefits proposed by the applicant
to determine whether, in light of the overlap, the benefits outweigh any
detriment which may occur from grant of the waiver. See, e.g., Iowa State
University, 9 FCC Rcd at 487-88. As with any waiver, it will only be granted if
the Commission concludes that the waiver is in the public interest.
17. Currently, the Commission is reexamining its broadcast television
ownership policies, including the duopoly rule. In January 1995, the commission
proposed a new analytical framework within which to evaluate its broadcast
television ownership rules. See Review of the Commission's Regulations
Governing Television Broadcasting, Further Notice of Proposed Rule Making, 10
FCC Rcd 3524 (1995) ("Television ownership Further Notice"). Subsequent to the
release of the Television ownership Further Notice, Congress directed the
Commission to conduct a rulemaking proceeding to determine whether to retain,
modify or eliminate existing limitations on the number of television stations
that an entity may control within the same television market. See Section
202(c) of the Telecommunications Act of 1996, Pub. L. No. 104 104, 110 Stat.
56 (Feb. 8, 1996) ("Telecom Act"). In response to this Congressional directive
in the Telecom Act and to update the record, the Commission released the
Television Ownership Second Further Notice.
18. The Commission stated in the Television Ownership Second Further Notice
that it will be inclined, during the pendency of the television ownership
proceeding, to grant temporary duopoly waivers to authorize common ownership of
television stations that are in separate DMA's and whose Grade A contours do
not overlap, conditioned on coming into compliance with the outcome of the
proceeding within six months of its conclusion. Television ownership Second
Further Notice, 11 FCC Rcd at 21681. It also noted there its tentative
conclusion that the record in that proceeding "supports relaxation of the
geographic scope of the duopoly rule from its current Grade B overlap standard
to a standard based on DMA's supplemented with a Grade A overlap criterion."
The Commission further stated that "we do not believe granting waivers
satisfying the proposed standard, and conditioning them on the outcome of this
proceeding, will adversely affect our competition and diversity goals in the
interim." Id.
19. STC and Hearst-Argyle have each submitted a showing in support of their
respective duopoly waiver requests. According to STC's engineering report, the
population within the Grade B overlap area of WDTN(TV) and WISH-TV consists of
88,783 individuals, representing 2.5% of the population within the Grade B
contour of WDTN(TV), and 3.8% of the population within the Grade B contour of
WISH-TV. According to STC, there is no Grade A overlap between the stations.
Additionally, the WDTN(TV)/WISH-TV overlap covers an area of 2,384 square
kilometers, comprising 7.0% of the area
<PAGE> 8
within the Grade B contour of WDTN(TV), and 8.3% of the area within the Grade B
contour of WISH-TV. With respect to the WNNE(TV)/WCVB-TV Grade B overlap,
Hearst-Argyle's engineering report states that the overlap area encompasses
62,330 individuals, representing 10.0% of the population within the Grade B
contour of WNNE(TV) and 0.9% of the population within the Grade B contour of
WCVB-TV, and covers an area of 1,9780 square kilometers, comprising 8.6% and
8.0% of the land area within the WNNE(TV) and WCVB-TV Grade B contours,
respectively. Hearst-Argyle states that the Grade A contours of the stations do
not overlap.
20. Regarding the number of media voices available in the WDTN(TV)/WISH-TV
overlap area, STC claims that 24 television stations (19 commercial, five
non-commercial) provide Grade B or better service to all or part of the area.
No part of the area will receive Grade B service from fewer than four other
commercial television stations. The overlap area is also served by 34
commercial radio stations (13 AM, 21 FM), according to STC's engineering
report. Additionally, STC states that cable penetration is 69% in the Dayton
DMA and 65% in the Indianapolis DMA. STC also notes that MMDS services are also
available in both markets. The markets are also served by print media,
including one daily newspaper published in the Dayton DMA (circulation
158,295), and two daily newspapers published in the Indianapolis DMA
(circulation 284,625). As to the WNNE(TV)/WCVB-TV overlap area, Hearst-Argyle
asserts that viewers in the overlap area are served by 17 other television
stations (12 commercial, five non commercial) and 57 radio stations (25 AM, 32
FM). Numerous non-broadcast media outlets serve the markets as well.
Hearst-Argyle notes that the Boston DMA (the market in which WCVB-TV is
located) has a cable penetration rate of 77%, while the Plattsburgh, New York
Burlington, Vermont DMA (the market in which WNNE(TV) is located) has a
penetration rate of 63%. Additionally, Hearst-Argyle states that 11 daily
newspapers and 35 weekly newspapers serve the overlap area.
21. Addressing the next element of the duopoly analysis, STC and
Hearst-Argyle maintain that the stations involved in the waiver requests serve
separate and distinct markets. STC asserts that the WDTN(TV)/ WISH-TV
combination does not create a "dangerous concentration" of economic power
because the stations are located in separate DMA's (WDTN(TV) in the Dayton DMA,
ranked 53rd, and WISH-TV in the Indianapolis DMA, ranked 25th), and therefore
do not compete with respect to programming, viewers or advertisers. According
to STC, the stations do not and will not engage in joint or combined
advertising sales; their news departments do not cover events in the other
station's market; and the stations, public affairs programming and community
service campaigns are designed for different audiences. STC asserts that
program suppliers are able to sell the same programming separately in
Indianapolis and Dayton, and station owners may not broadcast programming
purchased for one market in the other. Finally, STC notes that the two cities
are separated by more than 100 miles. With respect to the WNNE(TV)/WCVB-TV
combination, Hearst-Argyle maintains that the stations serve separate and
distinct markets because they are located in separate DMA's: WNNE(TV) is in the
Plattsburgh, New York-Burlington, Vermont DMA (ranked 91st DMA), while WCVB-TV
is in the Boston DMA (ranked 6th).
22. Lastly, STC and Hearst-Argyle each pledge to operate the subject
television stations independently of one another. Noting that separate
<PAGE> 9
station operations are required as a business matter to meet the needs of two
distinct markets, STC asserts that WDTN(TV) and WISH-TV will have separate
operations with respect to management, programming, traffic and advertising
sales. Similarly, Hearst-Argyle states that it will operate WNNE(TV) and
WCVB-TV as separate and independent stations, with each station having its own
programming, sales and news staffs.
Discussion
23. With respect to STC's request for permanent waiver of the duopoly rule
to allow common ownership of WDTN(TV) and WISH-TV, we do not believe that an
unconditional grant is appropriate given the clearly articulated policy in the
Television ownership Second Further Notice. See WHOA-TV, Inc., 11 FCC Rcd
20041, 20046-47, 20051. However, we believe that grant of a temporary waiver of
the duopoly rule, subject to the outcome of the pending television ownership
proceeding, is justified. Likewise, we believe that grant of Hearst-Argyle's
request for a temporary, conditional waiver of the duopoly rule to allow common
ownership of WNNE(TV) and WCVB-TV is warranted. The temporary common ownership
of WDTN(TV) and WISH-TV, and WNNE(TV)-and WCVB-TV, would be consistent with the
interim policy set forth in the Television Ownership Second Further Notice, as
the stations are in separate DMA's and there is no Grade A overlap between
them. Moreover, our examination of the record presented here reveals nothing
suggesting that we should not follow the established interim policy in this
case. The extent of the Grade B overlap in both duopoly situations, although
not de minimis, falls well within the range of those we have approved in
previous cases. See, e.g., NWCG Holdings Corp., 11 FCC Rcd 16318 (1996)
(granting waiver where Grade B population overlap was 29.4% and 10.2% and area
overlap was 14.7% and 16.5%); Benedek Broadcasting Corporation, 11 FCC Rcd 6319
(1997) (granting waiver where Grade B population overlap was 10.5% and 24.6%
and area overlap was 10.8% and 27.2%). We note also that the stations serve
different markets, and that STC and Hearst-Argyle have pledged to operate the
stations independently. Additionally, a numerous broadcast stations will
continue to provide service to the overlap areas after the proposed
assignments. Accordingly, we conclude that grant of temporary waivers,
conditioned on the applicants coming into compliance with the outcome of the
pending television ownership rulemaking proceeding within six months of its
conclusion, will serve the public interest, convenience and necessity. Any
requests to extend these conditional waivers should be filed at least 45 days
prior to the end of the six-month period and would be closely scrutinized.
ONE-TO-A-MARKET WAIVERS
WNAC-TV, Providence, Rhode Island
WHJJ(AM)/WHJY(FM), Providence, Rhode Island
WSNE(FM), Taunton, Massachusetts
24. The Grade A contour of WNAC-TV, the station to be acquired by Smith,
completely encompasses the communities of license of WHJJ(AM) and WHJY(FM),
Providence, Rhode Island, and WSNE(FM), Taunton, Massachusetts (the "Providence
radio stations"). Smith bases its request to acquire WNAC-TV on the waiver
standards adopted in the second Report and Order in MM Docket 87-7, 4 FCC Rcd
1741 (1989) ("Second Report and Order"), recon. granted in part and denied in
part, 4 FCC Rcd 6489 (1989) ("Second Report and Order
<PAGE> 10
Recon."). In accordance with these standards, the Commission presumptively
favors waiver requests involving: (a) stations serving the top 25 markets where
at least 30 separately owned, operated and controlled stations will remain
following the proposed combination ("top 25 market/30 voice standard"); or (b)
"failed" stations, i.e., stations which have not been operating for a
substantial period of time (four months or more) or are involved in bankruptcy
proceedings. Otherwise, waiver requests must be evaluated under the more
rigorous case-by-case standard. See 47 C.F.R. 73.3555(c), Note 7. Smith
submits its request pursuant to the case-by-case standard since neither WNAC-TV
nor any of the subject radio stations are failed stations, and the Providence,
Rhode Island-New Bedford, Massachusetts DMA (the "Providence DMA"), is not
among the top 25 markets.
25. Under the case-by-case approach, the Commission makes a public
interest determination by weighing five factors: (1) the potential public
benefits of joint operation of the facilities, such as economies of scale, cost
savings, and programming and service benefits; (2) the types of facilities
involved; (3) the number of media outlets owned by the applicant in the
relevant market; (4) the financial difficulties of the stations involved; and
(5) the nature of the relevant market in light of the level of competition and
diversity after the joint operation is implemented. See Second Report and
Order, 4 FCC Rcd at 1753-54. Not all five factors are necessarily relevant in
each case. Id. at 1761. Smith has submitted a showing which addresses each of
these factors.
26. Benefits of joint operation. According to Smith, WNAC-TV and the
Providence radio stations will be operated under entirely separate management.
In light of this arrangement, Smith acknowledges that the stations "will not be
able to demonstrate all of the efficiencies, such as staff reduction, typically
cited in requests for waivers of the [one-to-a-market rule]." Nonetheless,
Smith states that the proposed combination will result in efficiencies and
other public interest benefits sufficient to justify waiver. Eric S. Neuman,
senior vice president of HM3/Capstar, Inc., a Hicks-controlled entity which
controls the licensees of the Providence radio stations, represents that the
stations will engage in cross-promotions, resulting in significant cost
savings. By advertising on WNAC-TV, radio stations WSNE(FM) and WHJY(FM) each
will save approximately $35,000 annually in television advertising time and
agency fees. Neuman further states that by using the television station's
production facilities, WSNE(FM) and WHJY(FM) will each save $10,000 in
television advertising production costs. Conversely, David A. Fitz, senior vice
president of Smith, represents that by advertising on the Providence radio
stations, WNAC-TV will save $100,000 annually in radio advertising time and
associated fees. The parties state that additional savings will be realized by
the radio stations through rebroadcast of the television station's programming.
The Providence radio stations will each broadcast the audio feed of the
television station's weekly public interest programming, and WHJJ(AM) also
plans to broadcast the audio feed of the television station's daily morning
news program. Additionally, WNAC-TV will provide the radio stations with access
to its news gathering and broadcast operations. The total savings to WNAC-TV
and to the Providence radio stations with regard to the rebroadcast of the
television station's weekly public affairs programming and access to the news
operations are projected to exceed $50,000 per year. All together, Smith
estimates that the proposed transaction will result in savings of $240,000.
<PAGE> 11
27. Furthermore, Smith asserts that the television-radio combination will
allow the television and radio stations to co-sponsor a number of community
activities. For example, the parties state that WNAC-TV and one or more of the
Providence radio stations will work together to promote "Kids Fest," an annual
weekend event. WNAC-TV and WHJY(FM) also anticipate renewing a telethon project
which raises money for sick children.
28. Types of Facilities. Smith states that WNAC-TV operates on UHF channel
64, with 3720 kW horizontal visual power and a height above average terrain
(11HAAT11) of 1033 feet. With respect to the Providence radio stations,
WHJJ(AM) is a Class B station, operating on 920 kHz, with a daytime and
nighttime power of 5.0 kW; WHJY(FM) is a Class B station with a maximum power
of 50 kW, operating on 94.1 MHz from a HAAT of 440; and WSNE(FM) is a Class B
station with a maximum power of 30 kW, operating on 93.3 MHz, from a HAAT of
620 feet. Smith maintains that these facilities are comparable to many other
stations in the market. According to Smith, two other UHF television stations
and three more powerful VHF television stations are licensed to communities in
the Providence DMA. Additionally, Smith states that 17 other AM stations and
six other commercial FM stations are located in the Providence metro market,
including two FM stations that are licensed at lower classes.
29. Other media outlets. According to Smith, after consummation of the
proposed transaction, Smith will have a nonattributable interest in one
television station and an attributable interest in one AM station and two FM
stations in the Providence market.
30. Financial difficulties. Smith states that WNAC-TV is not in financial
distress, but notes that the Commission has granted one-to-a-market waivers in
the absence of financial difficulties.
31. Effect on diversity and competition. Smith represents that WNAC-TV will
be operated as an entity separate from the Providence radio stations, noting
that the television and radio stations will not share employees, collectively
sell advertising, or collectively buy programming. Moreover, WNAC-TV will
continue to be programmed by Clear Channel pursuant to an existing LMA.
32. Smith also points out that Providence is a relatively large television
market, well-served by numerous broadcast outlets. Smith notes that the
Providence DMA, ranked 49th in the country, contains 559,080 television
households. According to Smith, the market is served by seven commercial and
noncommercial television stations (including WNAC-TV), and 33 commercial and
noncommercial radio stations (18 AM, 15 FM, including the Providence radio
stations). By Smith's count, 29 separate broadcast voices will serve the
Providence market after the proposed transaction. Smith further asserts that an
abundance of non-broadcast media serve the market, including 10 daily
newspapers, nine cable operators, and two MMDS operators.
Discussion
33. The Commission's goal in evaluating a case-by-case request for waiver
<PAGE> 12
of the one-to-a-market rule is "to permit the public to benefit from such
efficiencies of operation as may be achieved through the use of common
facilities and staff, consistent with the maintenance of diversity and vigorous
competition within the market areas involved." Second Report and order Recon.,
4 FCC Rcd at 6491. For the reasons set forth below, we are persuaded that the
proposed radio-television combination would serve the public interest without
adversely affecting competition and diversity in the Providence market.
34. We turn to Smith's showing under the first prong of our five-factor
analysis, the potential public benefits of joint ownership. In connection with
this factor, the Commission considers the public service benefits that could
result from the proposed television-radio combination, such as projected
economies of scale, cost savings and program and service benefits. Second
Report and Order, 4 FCC Rcd at 1753. As an initial matter, we recognize that
Smith neither controls the Providence radio stations nor proposes to completely
consolidate the operations of the television and radio stations. The radio
stations are controlled by Hicks, the television station will be controlled by
Smith but operated by Clear Channel pursuant to an existing LMA, and the
television and radio stations do not and will not share employees, collectively
sell advertising, or collectively buy programming. Nonetheless, based on the
representations made by the senior vice president of Smith, the senior vice
president of Hicks-controlled HM3/Capstar, Inc., and the general manager of
WPRI-TV, we are persuaded that the proposed combination will result in
significant efficiencies and cost savings. Two of the Providence radio stations
will save $35,000 each by advertising on WNAC-TV, and another $10,000 each by
using the television station's production facilities. Likewise, WNAC-TV will
save $100,000 by advertising on the Providence radio stations. The Commission
has recognized cross-promotions as "one of the most significant benefits of
joint ownership of radio and television stations in the same market." Second
Report and Order, 4 FCC Rcd at 1747 (footnote omitted). In addition, as a
result of the proposed combination, the Providence radio stations will be able
to take advantage of the television station's news and programming resources.
For example, the radio stations will rebroadcast WNAC-TV's weekly public
affairs programming and have access to the television station's news gathering
and broadcast operations.
35. The second factor in our analysis addresses the types of facilities
involved in the one to a market waiver. The Commission's concern with the
strength of the technical facilities of the stations at issue reflects a
continuing concern regarding the potential impact the proposed combination may
have on diversity and competition in the affected market. See, e.g., Louis C.
DeArias, Receiver, 11 FCC Rcd 3G62, 3G66 (1996). In evaluating this factor, we
must "consider such factors as whether the proposed radio-television
combination involves a UHF or VHF TV station or an AM or FM radio station, as
well as the size or class of the stations involved. Second Report and Order, 4
FCC Rcd at 1753. Our independent review reveals that WNAC-TV is a 3720 kW UHF
station which competes with three network-affiliated VHF stations. In addition,
our analysis confirms that WHJJ(AM), a Class B station which operates at 5.0
kW, faces
<PAGE> 13
competition from at least seven AM stations in the market with comparable or
superior facilities. The subject FM stations, WHJY(FM) and WSNE(FM), are both
Class B stations which operate at 50 kW and 30 kW, respectively. WSNE(FM)
competes with five more powerful Class B FM stations, while WHJY(FM) faces
competition from three Class B stations with comparable facilities. In this
instance, we find that while the technical facilities of the stations involved
are significant, there are comparable or more powerful facilities in the market
such that the proposed combination does not present issues of market dominance
inconsistent with the public interest.
36. As to the number of media outlets owned by Smith in the
relevant market, we note that "applicants who already own a number of media
outlets in the relevant market will face a higher hurdle than those . . .
applicants with few outlets." Second Report and Order, 4 FCC Rcd at 1753.
Upon consummation, Hicks' media holdings in the Providence market will consist
of three Providence radio stations and a nonattributable equity interest in
WNAC-TV. We therefore not believe that Smith faces a "higher hurdle" in this
regard.
37. With respect to the fourth factor of our analysis, Smith states that
WNAC-TV is not in financial distress. However, the Commission has held that
"not all of the [five] factors mentioned will be relevant in every case"
(Second Report and Order, 4 FCC Rcd at 6491), and has granted one-to-a-market
waivers in the absence of a showing of financial distress. See, e.g., S.E.
Licensee G.P., 11 FCC Rcd 16727, 16734 (1996); Stockholders of Infinity
Broadcasting, 12 FCC Rcd 5012, S052 (1996).
38. The final factor of our case-by-case analysis relates to the level of
diversity and competition in the market. Indicia of the level of diversity
include the number of broadcast outlets, the number of separately-owned and
operated "voices" in the market, and the presence of cable and non-broadcast
media. We find that the proposed combination would not create undue
concentration of ownership and control in the Providence market, the 49th
largest DMA. We have independently verified that there are seven television
stations (three VHF, four UHF) in the Providence DMA and 33 radio stations (18
AM and 10 FM, plus five noncommercial educational stations) in the Providence
television metro market, including the television and radio stations which are
the subject of Smith's request. Taking into account the proposed television
radio combination, we have confirmed that 29 independent "voices" will continue
to serve the Providence market after consummation of the proposed transaction.
We believe that there are sufficient independent broadcast voices in Providence
to assuage concern over the impact of the subject transaction on diversity and
competition in the market. In addition, Providence is well served by
non-broadcast media, including cable (77% penetration) and daily and weekly
newspapers.
39. With respect to economic concentration and competition, we have
examined the advertising revenue attributable to the subject television and
radio stations in the Providence market. Our independent study of the market
indicates that the Providence radio stations have a 30% share of the radio
advertising revenue. While this is a significant percentage, we note that
WNAC-TV lags behind the three VHF stations in the Providence DMA in terms of
advertising revenue, and accounts for only 10.1% of the television advertising
revenue in the market. Moreover, the proposed television-radio combination
receives a combined television and radio advertising share of 16.9%, well
within the concentration levels approved in several one-to-a-market waiver
requests. See, e.g., Concrete River Associates, L.P., 12 FCC Rcd 6614 (1997)
(one-to-a-market waiver granted where stations received
<PAGE> 14
combined advertising share of 25%).
40. Overall, we are satisfied that the public interest benefits that will
result from the proposed television-radio combination outweigh any concerns
regarding the effect of the transaction on diversity and competition in the
market. We are persuaded that, following consummation, the applicant will not
be able to exert undue influence over the market insofar as Providence will
continue to be served by numerous independent broadcast outlets, including
several radio and television stations with facilities comparable or superior to
the stations at issue. We are also convinced that the proposed combination will
result in significant cost savings and enhanced public interest programming. We
conclude, based on the record, that approval of the proposed combined ownership
of stations WNAC-TV, WHJJ(AM), WHJY(FM), and WSNE(FM), is appropriate.
WDTN(TV), Dayton, Ohio and WYGY(FM), Hamilton, Ohio
41. We turn now to the one-to-a-market waiver request submitted by STC to
allow common ownership of WDTN(TV), Dayton, Ohio and WYGY(FM), Hamilton, Ohio.
47 C.F.R. 73.3555(c). STC has submitted a showing which addresses each of the
five factors to be considered in our case-by-case analysis. See discussion
supra at 25. In this regard, STC explains that its request focuses on the
Cincinnati market, where the radio station is located, as opposed to the Dayton
market, where the television station is located, because the contour overlap
between WDTN-TV and WYGY(FM) occurs in the Cincinnati DMA (citing Letter to
Pyramid Communications, Inc., 10 FCC Rcd 4274 (1995)).
42 . Benefits of joint operation. STC states that it is "difficult to show
economic efficiencies" arising from the proposed transaction because the
stations are located in different markets and will be operated autonomously
under entirely separate management. Nonetheless, STC claims that the
television-radio combination will result in significant public benefits. STC
asserts that common ownership of the stations would enable the stations to
engage in cross-promotion. John Rohm, the general manager of WYGY(FM),
represents that the radio station will save approximately $40,000 annually in
the cost of television advertising time and advertising commission fees by
shifting segments of its television advertising to WDTN(TV). In addition, the
radio station will save $30,000 to $60,000 annually in television advertising
production costs through the use of WDTN(TV)'s production facilities; $4,100
through access to WDTN(TV)'s news and information reporting resources; and
$12,000 through access to WDTN(TV)'s Job Connection service. Likewise, Larry
Ryan, citing general manager of WDTN (TV), declares that the television station
will save approximately $10,000 to $15,000 annually in the cost of radio
advertising time and advertising agency commissions by shifting segments of its
radio advertising to WYGY(FM), and an additional $4,000 annually in radio
advertising production costs through the use of WYGY(FM)'s audio production
facilities. In all, the proposed combination will result in cost savings of as
much as $135,000 annually for the two stations. According to STC, these
projected cost efficiencies are comparable to those in previously-approved
one-to-a-market waiver requests involving larger combinations (citing KKSN,
Inc., DA 98-223 (released Feb. 5, 1998) STC states that the cost savings will
"facilitate the stations' enhancement of their programming." In particular,
STC intends to produce and broadcast an additional half-hour of
<PAGE> 15
local public interest programming weekly on WDTN(TV), and states that the
television-radio combination will enable the stations to pool their access to
(including interviews of) regional or state political figures of interest to
both of the stations' communities.
43. Additionally, STC claims that the proposed combination will inure to
the Public benefit by assisting the stations' equal employment opportunity
efforts. According to the acting general manager of WDTN(TV) and the general
manager of WYGY(FM), both stations have had difficulty in identifying and
hiring qualified minority candidates, despite considerable outreach efforts.
Upon consummation of the transaction, the stations intend to share Community
contacts that may lead to minority hires. According to STC, the sharing of such
information will increase the likelihood that the stations will identify
qualified minority or women applicants, and will provide greater employment
opportunities for these applicants. STC also proposes to institute a program in
which each station's student interns would spend a week of their internships at
the other station, thereby exposing them to a different media market and a
different broadcast service. Lastly, STC states that the television and radio
stations will work together on a variety of local community activities, and are
exploring the possibility of cross-promoting charitable events.
44. Types of Facilities. STC reports that WDTN(TV) operates on VHF channel
2, with 100 kW peak visual power and a height above average terrain of 1,000
feet. STC further states that WYGY(FM) is a Class B station with a maximum ERP
of 19.5 kW, operating on 96.5 MHz, from a height above average terrain of 810
feet. Many other television and radio stations in the market have comparable
facilities, says STC. According to the applicant, three VHF television stations
and 10 Class B FM stations (excluding WYGY(FM)) are licensed to communities
within the Cincinnati market.
45. Other media outlets. STC states that after consummation of the proposed
assignment, STC will own one television station and have attributable interests
in one AM and two FM stations in the Cincinnati market. STC does not own any
other media outlets in the market, and notes that there are other larger joint
media owners in the Cincinnati market. STC reports that Scripps Howard is the
licensee of a VHF television station and the publisher of the Cincinnati Post;
Gannett Co. is the licensee of a VHF television station and the publisher of
the Cincinnati Enquirer; and Jacor Communications, Inc. commonly owns four
radio stations and one television station.
46. Financial difficulties. The television station to be acquired is not in
financial distress, according to STC. However, STC notes that the Commission
has previously granted waiver requests where there was no showing of financial
difficulties.
47. Effect on diversity and competition. STC claims that the Proposed
transaction will not have a negative impact on diversity and competition in the
Cincinnati television market. The Cincinnati DMA is the 30th largest television
market in the country, with a total of 800,890 television households. Nine
commercial and noncommercial television stations, representing eight separate
"voices," are licensed to communities in the Cincinnati DMA, according to STC.
Additionally, says STC, 34 radio stations (10 AM, 24 FM) licensed to 25
separate owners are located in the
<PAGE> 16
Cincinnati television metro market. By STC's count, there will be 32 separate
broadcast voices in the Cincinnati market following consummation. The market
will also be served by an "abundance" of non-broadcast media, states STC,
including nine daily and 59 weekly newspapers, 23 cable operators (62%
penetration), and two MMDS operators.
48. STC also maintains that there should be "far less concern" regarding
the effect of the proposed television-radio combination on diversity and
competition because the stations at issue will be operated as separate entities
and are located in separate markets. STC states that WDTN(TV) and WYGY(FM) will
not share employees, collectively sell advertising, or collectively buy
programming. Consequently, says STC, neither station will be able to exert
influence in a manner contrary to the intent of the one-to-a-market rule.
Discussion is
49. For the reasons set forth below, we believe that STC's showing meets
our case-by-case criteria, and that a permanent waiver in this instance would
not adversely affect competition and diversity in the relevant market.
50. Turning to STC's case-by-case showing, we will first review the effect
of the proposed combination on diversity and competition in the market. As
stated above, in connection with this factor we consider the number of
broadcast outlets, the number of separately-owned and operated "voices," and
the presence of cable and non-broadcast media in the market. Since the subject
stations are located in separate DMA's, a threshold issue is to define the
relevant market for our analysis. STC contends that the Cincinnati DMA should
be the focus of our inquiry because the contour overlap between WDTN-TV and
WYGY(FM) occurs in that market. We disagree. An engineering exhibit submitted
as an amendment to the application reveals that the overlap area created by the
intersection of the Grade A contour of WDTN(TV) and 1 mV/m contour of WYGY(FM)
encompasses a portion of both the Cincinnati and Dayton DMA's. Accordingly, the
location of the contour overlap does not determine the focus of our
one-to-a-market analysis with respect to common ownership of WDTN(TV) and
WYGY(FM).
51. Rather, consistent with the requirements of the case-by-case standard,
we will include in the television market those television stations licensed to
the Dayton DMA, the market where WDTN(TV) is located, as well as those
television stations that place a Grade B signal over the county in which the
subject radio station is licensed, Butler County. This method for counting the
number of television stations in the relevant market is appropriate because the
Dayton DMA excludes Butler County. See James M. Ward, Trustee for Gadsden
Broadcasting Company, 10 FCC Rcd 8741, 8743 (1995). With respect to the
relevant radio market, we note that WYGY(FM) is not located in any defined
television metro market. We therefore count as market stations those radio
stations licensed to Butler County, plus those radio stations that place a
principal community service contour over Butler County. Inc., 12 FCC Rcd 6102,
6107 (1997). Id. at 8743 and n. 4; Triad Skywaves,
52. According to our independent review, in addition to WDTN(TV) there are
six television stations licensed to the Dayton DMA (one VHF, five UHF),
<PAGE> 17
plus seven television stations (three VHF, four UHF) that place a Grade B or
better signal over all or a portion of Butler County. These 13 television
stations are owned by 12 separate entities. As to the radio market, in addition
to WYGY(FM) we count seven radio stations (three AM, four FM) that are licensed
to communities within Butler County. These seven radio stations are controlled
by six different owners. Taking into account the subject television-radio
combination, we calculate that 19 independent broadcast "voices" will serve the
market after consummation of the proposed assignment. There are also numerous
other media outlets available in the Cincinnati and Dayton markets, including
cable (62% penetration in Cincinnati, 70% in Dayton) and several daily
newspapers. In all, we find that the relevant market is served by a sufficient
number of broadcast and non-broadcast voices such that the proposed combination
will not have an undue impact on diversity and competition.
53. As part of our independent analysis, we also looked at the strength of
the technical facilities of the subject broadcast stations. WDTN (TV), the
television station to be acquired, is a network- affiliated VHF station
operating at 100 kW, and WYGY(FM), the subject radio station, is a Class B
station operating at 19.5 kW. Although the stations' technical facilities are
significant, our examination reveals that comparable facilities exist in the
relevant market, as defined in the preceding paragraph. We have determined that
WDTN(TV) competes with four network- affiliated VHF stations, and WYGY(FM)
competes with at least three Class B FM stations, including one with an ERP of
34 kW. The existence of these comparable competing facilities allays our
concerns regarding the potential impact of the proposed combination on
diversity and competition in the market.
54. As to the number of other media outlets owned by STC, after consummation
of the subject transaction, STC will own one television station in the Dayton
DMA and have attributable interests in three radio stations (two FM, one AM) in
the Cincinnati DMA. We do not believe that this level of concentration will
allow STC to unduly dominate either market. Furthermore, although the stations
are not experiencing financial difficulties, this is not a barrier to grant of
a one-to-a-market waiver request. See discussion supra at 37.
55. Regarding economic concentration and competition, we have examined the
advertising revenue attributable to WDTN(TV) in the Dayton DMA, and to the
three radio stations in the Cincinnati radio market, WYGY(FM), WUBE(AM) and
WUBE-FM (the "Cincinnati radio stations"). Our independent study reveals that
WDTN(TV) has a 27% share of the television advertising revenue in the Dayton
market. Although this is a significant figure, there is another VHF station in
the market which garners an even greater share of the advertising revenue.
Additionally, the three radio stations in the Cincinnati radio market together
have only 15% of the radio advertising share, with WYGY(FM) garnering only 4%
of the radio advertising share. Moreover, WDTN(TV) and the Cincinnati radio
stations receive a combined television and radio advertising share of 21%, well
within the range of previously-approved one-to-a-market waivers. See, e.g.,
Concrete River Associates, L.P., 12 FCC Rcd 6614 (1997).
56. The remaining factor relevant to our determination is the public
interest benefits of the proposed transaction. Similar to the Providence
station combination discussed supra, STC neither controls WYGY(FM) nor
<PAGE> 18
intends to completely consolidate the operations of the stations. The radio
station is controlled by Chancellor Media License Company, in which Hicks holds
a non controlling attributable interest, and STC maintains that the television
and radio stations will be operated autonomously under entirely separate
management. However, relying on the representations of STC, as supported by the
declarations of the general manager of WYGY(FM) and the acting general manager
of WDTN(TV), we are persuaded that significant cost savings will arise from the
proposed combination and weigh in favor of a one-to-a-market waiver. The radio
station will save at least $86,100 and as much as $116,100 each year by
shifting segments of its television advertising to WDTN(TV), utilizing
WDTN(TV)'s production facilities, and having free access to the television
station's news and information reporting and Job Connection service.
Conversely, the television station will save at least $14,000 and as much as
$19,000 each year by shifting segments of its radio advertising to WYGY(FM) and
utilizing WYGY(FM)'s advertising production facilities. Moreover, STC
represents that these cost savings will facilitate the enhancement of
programming on both the television and radio stations. Notably, STC intends to
produce and air on WDTN(TV) a new weekly half-hour program dealing with issues
of local public interest. Additionally, STC states that the proposed
combination will enable the stations to pool their access to regional or state
political figures of interest to both of the stations' communities. We also
note with approval the stations' intention to work together to improve their
outreach to minority and women job applicants.
57. Although the operations of the subject television and radio stations
will not be completely consolidated following consummation, STC has
demonstrated, to our satisfaction, that the combination will create cost
savings of as much as $135,000 and the potential for enhanced programming and
service benefits. We note that "[t]here is no particular level of cost savings
that must be achieved in order to be granted under the case-by-case standard."
Gadsden, 10 FCC Rcd at 8744. In any event, we note further that a portion of
these savings will result from cross promotions, which the Commission has
recognized as "one of the most significant benefits of joint ownership of radio
and television stations in the same market." Second Report and Order, 4 FCC Rcd
at 1747 (footnote omitted). Additionally, we find that the subject broadcast
stations, while not insignificant in technical terms, face sufficient
competition such that their common ownership will not allow STC to unduly
dominate the market. Our concerns regarding any adverse impact on competition
and diversity are further mitigated by the fact that the two stations are
located in separate DMA's. On balance, we believe that a one-to-a-market waiver
to permit common ownership of WDTN(TV) and WYGY(FM) is justified.
Conclusion
58. Having determined that the applicants are qualified in all respects,
we find that grant of the above-captioned applications will serve the public
interest, convenience and necessity.
59. Accordingly, IT IS ORDERED, That the informal objections filed by Mount
Mansfield Television, Inc. ARE DENIED.
60. IT IS FURTHER ORDERED, That the applications for consent to the
assignment of license of station WNNE(TV), Hartford, Vermont, from WNNE
<PAGE> 19
Licensee, Inc. to STC Broadcasting of Vermont Subsidiary, Inc., and station
WPTZ(TV), North Pole, New York, and associated translator facility, from WPTZ
Licensee, Inc. to STC Broadcasting of Vermont Subsidiary, Inc. (File Nos.
BALCT/BALTT-980210IA-IC), ARE GRANTED, subject to the condition that
concurrently with consummation of the subject transactions, the assignment of
the license of stations WNNE(TV) and WPTZ(TV) to Hearst-Argyle Stations, Inc.
(File Nos. BALCT/BALTT-9802261E-IG) will be consummated.
61. IT IS FURTHER ORDERED, That the request for permanent waiver of the
Commission's duopoly rule, 47 C.F.R. 73.3555(b), to allow common ownership by
Hearst-Argyle Stations, Inc. of WNNE(TV), Hartford, Vermont and WPTZ(TV), North
Pole, New York, IS GRANTED.
62. IT IS FURTHER ORDERED, That the request for temporary, conditional
waiver of the Commission's duopoly rule, 47 C.F.R. 73.3555(b), to allow common
ownership by Hearst Argyle Stations, Inc. of WNNE(TV), Hartford, Vermont and
WCVB-TV, Boston, Massachusetts, IS GRANTED, subject to the outcome of the
Commission's pending broadcast television ownership rulemaking in MM Docket
Nos. 91-221 and 87-8. Should divestiture be required as a result of that
proceeding, the licensee is directed to file, within six months from the
release of the final order in MM Docket Nos. 91-221 and 87-8, an application
for Commission consent to dispose of such station as would be necessary for
Hearst-Argyle Stations, Inc. to come into compliance with the rules as
provided in the final order.
63. IT IS FURTHER ORDERED, That the applications for consent to the
assignment of license of stations WNNE(TV), Hartford, Vermont, WPTZ(TV), North
Pole, New York, and associated translator facility from STC Broadcasting of
Vermont Subsidiary, Inc. to Hearst Argyle Stations, Inc. (File Nos.
BALCT/BALTT-980226IE-IG), ARE GRANTED.
64. IT IS FURTHER ORDERED, That the request for waiver of the Commission's
one-to-a market rule, 47 C.F.R. 73.3555(c), to permit common ownership by STC
License Company of stations WDTN(TV), Dayton, Ohio and WYGY(FM), Hamilton,
Ohio, IS GRANTED.
65. IT IS FURTHER ORDERED, That the request for permanent waiver of the
Commission's duopoly rule, 47 C.F.R. 73.3555(b), to allow common ownership by
STC License Company of WDTN(TV), Dayton, Ohio and WISH-TV, Indianapolis,
Indiana, IS DENIED; however, a conditional waiver of Section 73.3555(b) IS
GRANTED, subject to the outcome of the Commission's pending broadcast
television ownership rulemaking in MM Docket Nos. 91-221 and 87-8. Should
divestiture be required as a result of that proceeding, the licensee is
directed to file, within six months from the release of the final order in MM
Docket Nos. 91-221 and 878, an application for Commission consent to dispose of
such station as would be necessary for STC License Company to come into
compliance with the rules as provided in the final order.
66. IT IS FURTHER ORDERED, That the application for consent to the
assignment of license of station WDTN(TV), Dayton, Ohio, from Hearst-Argyle
Stations, Inc. to STC License Company (File No. BALCT-980226IC), IS GRANTED.
67. IT IS FURTHER ORDERED, That the request to permit Hicks to control the
<PAGE> 20
licensees of WHJJ(AM) and WHJY(FM), Providence, Rhode Island, and WSNE(FM),
Taunton, Massachusetts, and to hold a nonattributable equity interest in the
entity controlling the licensee of station WNAC-TV, Providence, Rhode Island,
IS GRANTED.
68. IT IS FURTHER ORDERED, That the application for consent to the
assignment of license of station WNAC-TV, Providence, Rhode Island from
Hearst-Argyle Stations, Inc. to Smith Acquisition License Company (File No.
BALCT-980226ID), IS GRANTED.
69. IT IS FURTHER ORDERED, That the applications for consent to the
assignment of license of station KSBW(TV), Salinas, California, and associated
translator facility from STC License Company to Hearst-Argyle Stations, Inc.
(File Nos. BALCT/BALTTV-980226IA-IB),
FEDERAL COMMUNICATIONS COMMISSION
Roy J. Stewart
Chief, Mass Media Bureau
<PAGE> 1
Exhibit 10.17
30 Rockefeller Plaza, New York, NY 10112 212 664-4444
A Division of National Broadcasting Company, Inc.
NBC
TV NETWORK
March 2, 1998
STC Broadcasting, Inc.
c/o WJAC-TV
1949 Hickory Lane
Johnstown, Pennsylvania 15905
Re: WJAC-TV (Johnstown, Pennsylvania)
Gentlemen:
In connection with the Affiliation Agreement (the "Agreement") dated
December 16, 1994 between NBC Television Network ("NBC") and STC Broadcasting,
Inc. (as successor-in-interest to WJAC, Inc.), licensee of television broadcast
station WJAC-TV (collectively, the "Station"), NBC and the Station agree to the
following provisions and to amend the Agreement, effective as of the date
hereof, as set forth below:
1. The expiration date of the term set forth in Paragraph I of the
Agreement is hereby changed from October 31, 2004 (the "Original Expiration
Date") to December 31, 2010.
2. Notwithstanding anything to the contrary set forth in Paragraph 5 of
the Agreement, during the twelve-month period commencing on the original
Expiration Date and each subsequent twelve-month period thereafter during the
term of the Agreement, the aggregate amount of compensation payable by NBC to
the Station shall be equal to the greater of (i) the aggregate amount of
compensation actually paid by NBC to the Station during the twelve-month period
immediately preceding the Original Expiration Date and (ii) an amount equal to
(a) the Compensation Factor (as defined below) for such twelve-month period
multiplied by (b) the Station's then-current NBC Percent as determined in
accordance with Exhibit A annexed hereto and made a part hereof (the "NBC
Percent"). For purposes of this Agreement, the following definitions shall also
apply:
(a) The "Compensation Factor" for any twelve-month period
referred to above shall be an amount equal to (i) the aggregate compensation
actually paid by NBC during the immediately preceding twelve-month period to all
NBC Affiliates in the Measured Markets (as defined below) divided by (ii) the
sum of all such NBC Affiliates, respective NBC Percents.
(b) The "Measured Markets" for purposes of any calculation
hereunder shall mean the ten markets immediately above the station and the ten
markets
<PAGE> 2
immediately below the Station, when ranked on the basis of their total audience
delivery of the NBC Television Network.
3. The Station hereby agrees to enter into good faith negotiations with
NBC with respect to the appointment and authorization of NBC regarding the
negotiation of agreements related to the grant of retransmission rights to the
broadcast signal of the Station with multiple system operators ("MS0's") and
other cable television systems whose subscribers are located within or without
the ADI of the Station who would be able to receive the Station's signal.
4. In the event that at any time during the term of the Agreement, NBC
seeks to replace or supplement its current form of affiliation agreement or
arrangements with the NBC Affiliates, generally, with other contractual
arrangements, including, without limitation, participation in a joint venture or
other similar arrangement between NBC and its NBC Affiliates, Station agrees to
enter into good faith negotiations with NBC with respect to such other
arrangements, so long as the minimum number of NBC Affiliates whose consent to
such arrangements is determined to be required by NBC have agreed to so
participate.
5. Each defined term used herein without definition shall have the
meaning assigned to such term in the Agreement.
Except as provided herein, the Agreement is hereby affirmed and shall
remain in full force and effect.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Jean M. Dietze
---------------------------
Name: Jean M. Dietze
Title: Vice President Affiliate Relations EAST
The foregoing has been reviewed by, and is acceptable to:
STC BROADCASTING, INC.
By: /s/ Frederick W. Brazelton
--------------------------
Name: Frederick W. Brazelton
Title: Vice President
<PAGE> 1
Exhibit 10.18
30 Rockefeller Plaza, New York, NY 10112 212 664-4444
A Division of National Broadcasting Company, Inc.
NBC
TV NETWORK
March 2, 1998
STC Broadcasting, Inc.
c/o KRBC-TV
4510 South 14th Street
Abilene, Texas 79605
Re: KRBC-TV (Abilene, Texas)
Gentlemen:
In connection with the Affiliation Agreement (the "Agreement") dated
December 20, 1995 between NBC Television Network ("NBC") and STC Broadcasting,
Inc. (as successor-in-interest to Abilene Radio & Television Company), licensee
of television broadcast station KRBC-TV (collectively, the "Station") and the
agreement dated December 20, 1995 with respect to its satellite station KACB
(San Angelo, Texas), NBC and the Station agree to the following provisions and
to amend the Agreement, effective as of the date hereof, as set forth below;
1. The expiration date of the term set forth in Paragraph I of the
Agreement is hereby changed from July 31, 2005 (the "Original Expiration Date")
to December 31, 2010.
2. Notwithstanding anything to the contrary set forth in Paragraph 5 of
the Agreement, during the twelve-month period commencing on the original
Expiration Date and each subsequent twelve-month period thereafter during the
term of the Agreement, the aggregate amount of compensation payable by NBC to
the Station shall be equal to the greater of (i) the aggregate amount of
compensation actually paid by NBC to the Station during the twelve-month period
immediately preceding the Original Expiration Date and (ii) an amount equal to
(a) the Compensation Factor (as defined below) for such twelve-month period
multiplied by (b) the Station's then-current NBC Percent as determined in
accordance with Exhibit A annexed hereto and made a part hereof (the "NBC
Percent"). For purposes of this Agreement, the following definitions shall also
apply:
(a) The "Compensation Factor" for any twelve-month period
referred to above shall be an amount equal to (i) the aggregate compensation
actually paid by NBC during the immediately preceding twelve-month period to all
NBC Affiliates in the Measured Markets (as defined below) divided by (ii) the
sum of all such NBC Affiliates, respective NBC Percents.
<PAGE> 2
(b) The "Measured Markets" for purposes of any calculation
hereunder shall mean the ten markets immediately above the Station and the ten
markets immediately below the Station, when ranked on the basis of their total
audience delivery of the NBC Television Network.
3. The Station hereby agrees to enter into good faith negotiations with
NBC with respect to the appointment and authorization of NBC regarding the
negotiation of agreements related to the grant of retransmission rights to the
broadcast signal of the Station with multiple system operators ("MSO's") and
other cable television systems whose subscribers are located within or without
the ADI of the Station who would be able to receive the Station's signal.
4. In the event that at any time during the term of the Agreement, NBC
seeks to replace or supplement its current form of affiliation agreement or
arrangements with the NBC Affiliates, generally, with other contractual
arrangements, including, without limitation, participation in a joint venture or
other similar arrangement between NBC and its NBC Affiliates, Station agrees to
enter into good faith negotiations with NBC with respect to such other
arrangements, so long as the minimum number of NBC Affiliates whose consent to
such arrangements is determined to be required by NBC have agreed to so
participate.
5. Each defined term used herein without definition shall have the
meaning assigned to such term in the Agreement.
Except as provided herein, the Agreement is hereby affirmed and shall
remain in full force and effect.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Jean M. Dietze
--------------------
Name: Jean M. Dietze
Title: Vice President Affiliate Relations East
The foregoing has been reviewed by, and is acceptable to:
STV ACQUISITION COMPANY
By: /s/ Frederick W. Brazelton
----------------------------
Name: Frederick W. Brazelton
Title: Vice President
<PAGE> 1
Exhibit 10.19
30 Rockefeller Plaza, New York, NY 10112 212 664-4444
A Division of National Broadcasting Company, Inc.
NBC
TV NETWORK
March 2, 1998
STV Acquisition Company
c/o WEYI-TV
222S W. Willard Road
Clio, Michigan 48420
Re: WEYI-TV (Saginaw, Michigan)
Gentlemen:
In connection with the Affiliation Agreement (the "Agreement") dated
July 10, 1995 between NBC Television Network ("NBC") and STV Acquisition Company
(as successor-in-interest to Smith Television of Michigan, L.P., licensee of
television broadcast station WEYI-TV (collectively, the "Station") as amended by
letter dated September 16, 1996, NBC and the Station agree to the following
provisions and to amend the Agreement, effective as of the date hereof, as set
forth below:
1. The expiration date of the term set forth in Paragraph 1 of the
Agreement is hereby changed from January 15, 2002(the "Original Expiration
Date") to December 31, 2010.
2. Notwithstanding anything to the contrary set forth in Paragraph 5 of
the Agreement, during the twelve-month period commencing on the Original
Expiration Date and each subsequent twelve-month period thereafter during the
term of the Agreement, the aggregate amount of compensation payable by NBC to
the Station shall be equal to the greater of (i) the aggregate amount of
compensation actually paid by NBC to the Station during the twelve-month period
immediately preceding the Original Expiration Date and (ii) an amount equal to
(a) the Compensation Factor (as defined below) for such twelve-month period
multiplied by (b) the Station's then-current NBC Percent as determined in
accordance with Exhibit A annexed hereto and made a part hereof (the "NBC
Percent"). For purposes of this Agreement, the following definitions shall also
apply:
(a) The "Compensation Factor" for any twelve-month period
referred to above shall be an amount equal to (i) the aggregate compensation
actually paid by NBC during the
<PAGE> 2
immediately preceding twelve-month period to all NBC Affiliates in the Measured
Markets (as defined below) divided by (ii) the sum of all such NBC Affiliates'
respective NBC Percents.
(b) The "Measured Markets" for purposes of any calculation
hereunder shall mean the ten markets immediately above the Station and the ten
markets immediately below the Station, when ranked on the basis of their total
audience delivery of the NBC Television Network.
3. The Station hereby agrees to enter into good faith negotiations with
NBC with respect to the appointment and authorization of NBC regarding the
negotiation of agreements related to the grant of retransmission rights to the
broadcast signal of the Station with multiple system operators ("MSO's") and
other cable television systems whose subscribers are located within or without
the ADI of the Station who would be able to receive the Station's signal.
4. In the event that at any time during the term of the Agreement, NBC
seeks to replace or supplement its current form of affiliation agreement or
arrangements with the NBC Affiliates, generally, with other contractual
arrangements, including, without limitation, participation in a joint venture or
other similar arrangement between NBC and its NBC Affiliates, Station agrees to
enter into good faith negotiations with NBC with respect to such other
arrangements, so long as the minimum number of NBC Affiliates whose consent to
such arrangements is determined to be required by NBC have agreed to so
participate.
5. Each defined term used herein without definition shall have the
meaning assigned to such term in the Agreement.
Except as provided herein, the Agreement is hereby affirmed and shall
remain in full force and effect.
Very truly yours,
NBC TELEVISION NETWORK
By: /s/ Jean M. Dietze
------------------
Name: Jean M. Dietze
Title: Vice President Affiliate Relations East
The foregoing has been reviewed by, and is acceptable to:
STV ACQUISITION COMPANY
By: /s/ Frederick W. Brazelton
--------------------------
Name: Frederick W. Brazelton
Title: Vice President
<PAGE> 1
Exhibit 10.20
FIRST AMENDMENT TO ASSET EXCHANGE AGREEMENT
THIS FIRST AMENDMENT TO ASSET EXCHANGE AGREEMENT (the "Agreement") is
entered into as of April 20th, 1998 by and among STC BROADCASTING, INC., a
Delaware corporation ("STC Broadcasting"), STC BROADCASTING OF VERMONT, INC., a
Delaware corporation and a wholly-owned subsidiary of STC Broadcasting
("STCBV"), STC LICENSE COMPANY, a Delaware corporation and wholly-owned
subsidiary of STC Broadcasting ("STC License Company"), and STC BROADCASTING OF
VERMONT SUBSIDIARY, INC., a Delaware corporation and wholly-owned subsidiary of
STCBV ("STCBV Sub") (STC Broadcasting, STCBV, STC License Company and STCBV Sub
are sometimes individually referred to herein as a "STC Party" and collectively
referred to herein as "STC" or the "STC Parties"), and HEARST-ARGYLE STATIONS,
INC., a Nevada corporation ("HAT").
WHEREAS, STC and HAT are parties to that certain Asset Exchange
Agreement dated as of February 18, 1998 (the "Exchange Agreement") pursuant to
which, inter alia, STCBV Sub is to assign, transfer and convey to HAT all of
STCBV Sub's right, title and interest in the assets of television broadcast
stations WPTZ-TV, Channel 5, North Pole, New York, WNNE-TV, Channel 31,
Hartford, Vermont and KSBW-TV, Channel 8, Salinas, California, and HAT is to
assign, transfer and convey to certain affiliates of STCBV Sub all of HAT's
right, title and interest in the assets of television broadcast stations
WNAC-TV, Channel 64, Providence, Rhode Island ("WNAC") and WDTN-TV, Channel 2,
Dayton, Ohio;
WHEREAS, STC and HAT desire to make certain modifications to the
Exchange Agreement; and
WHEREAS, all capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Exchange Agreement.
NOW, THEREFORE, the parties set forth above, intending to be legally
bound by this Exchange Agreement, agree as follows:
1. Section 2.2. of the Exchange Agreement shall be amended to read in
its entirety as follows:
"2.2. TRANSFER BY HAT
<PAGE> 2
Subject to the terms and conditions hereof and in
reliance upon the representations, warranties and agreements contained herein,
(a) HAT shall assign, transfer, convey and deliver to STC Broadcasting (and in
the case of all assets associated with WNAC other than the FCC Licenses, for
assignment, transfer, conveyance and delivery by STC Broadcasting immediately
thereafter on the Closing Date to Smith Acquisition Company, a Delaware
corporation ultimately controlled by Robert N. Smith ("SAC")) free and clear of
any Encumbrances other than Permitted Encumbrances, and STC Broadcasting shall
acquire and accept from HAT, all right, title and interest of HAT in, to and
under all real, personal and mixed assets, rights, benefits and privileges, both
tangible and intangible, owned, leased, used or useful by HAT in connection with
the business and operations of the HAT Stations other than the HAT License
Assets (collectively, the "HAT Non-License Assets"); and (b) HAT shall assign,
transfer, convey and deliver to STC License Company (and in the case of the FCC
Licenses for WNAC, for assignment, transfer, conveyance and delivery by STC
License Company immediately thereafter on the Closing Date to Smith Acquisition
License Company, a wholly-owned subsidiary of SAC ("SALC")) free and clear of
any Encumbrances other than Permitted Encumbrances, and STC License Company
shall acquire and accept from HAT, all right, title and interest of HAT in, to
and under all HAT License Assets (the HAT License Assets and the HAT Non-License
Assets are collectively referred to herein as the "HAT Assets") (the STC Assets
and the HAT Assets are sometimes each individually referred to herein as
"Assets"). The HAT Assets shall exclude the HAT Excluded Assets described in
Section 2.4."
2. Except as expressly modified hereby, all other terms and conditions
of the Exchange Agreement shall remain in full force and effect in accordance
with their terms.
[SIGNATURE PAGE FOLLOWS]
2
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has executed this First
Amendment to Asset Exchange Agreement, or has caused this First Amendment to
Asset Exchange Agreement to be duly executed and delivered in its name on its
behalf, all as of the day and year first above written.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT SUBSIDIARY, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
------------------
Dean H. Blythe
Senior Vice President
3
<PAGE> 1
Exhibit 10.21
April 24, 1998
By FACSIMILE
Dean H. Blythe
Senior Vice President
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, NY 10019
RE: (A) ASSET PURCHASE AGREEMENT (THE "ASSET PURCHASE AGREEMENT"),
DATED AS OF FEBRUARY 3, 1998, BY AND AMONG STC BROADCASTING OF
VERMONT, INC. ("STCBV") AND CERTAIN SUBSIDIARIES OF SINCLAIR
BROADCAST GROUP, INC. (THE "SINCLAIR SELLERS"); (B) ASSET
EXCHANGE AGREEMENT (THE "ASSET EXCHANGE AGREEMENT"), DATED AS
OF FEBRUARY 18, 1998, BY AND AMONG CERTAIN SUBSIDIARIES OF
SUNRISE TELEVISION CORP. (COLLECTIVELY, THE "STC PARTIES") AND
HEARST-ARGYLE STATIONS, INC. ("HAT"); AND (C) CREDIT
AGREEMENT, DATED AS OF APRIL 24, 1998, BY AND BETWEEN STC
BROADCASTING OF VERMONT SUBSIDIARY, INC. ("STCBV SUB") AND HAT
(THE "CREDIT AGREEMENT")
Dear Dean:
This letter agreement sets forth the mutual understanding and agreement
between the STC Parties and HAT regarding HAT's consent to certain amendments to
the Asset Purchase Agreement, and certain amendments to the Asset Exchange
Agreement. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Asset Exchange Agreement.
1. CONSENT TO AMENDMENTS TO ASSET PURCHASE AGREEMENT. As required under
Section 7.7 of the Credit Agreement and Section 6.16 of the Asset Exchange
Agreement, HAT hereby consents to the following amendments to the Asset Purchase
Agreement: (a) First Amendment to Asset Purchase Agreement, dated April 20,
1998, by and between the parties thereto; and (b) Second Amendment to Asset
Purchase Agreement, dated April 24, 1998, by and between the parties thereto.
Copies of each of the amendments have been previously delivered to HAT.
<PAGE> 2
Dean H. Blythe
April 24, 1998
Page 2
2. WORKING CAPITAL FOR WFFF. The parties acknowledge and agree that the
Asset Exchange Agreement is hereby amended to provide that (a) all cash, cash
equivalents or deposits arising out of the business and operations of WFFF from
and after the STC Transfer Date, and all interest payable in connection with any
such cash, cash equivalents or deposits, shall be an Excluded Asset under
Section 2.4.1. of the Asset Exchange Agreement; (b) all Accounts Receivable
arising out of the business and operations of WFFF from the STC Transfer Date
under the Sinclair Agreement shall be an Excluded Asset under Section 2.4.2. of
the Asset Exchange Agreement; and (c) none of the proceeds of the Working
Capital Advances provided by HAT to STCBV Sub pursuant to Section 2.14 of the
Asset Exchange Agreement and none of the Accounts Receivable, cash, cash
equivalents or deposits arising out of the business and operations of WPTZ and
WNNE after the STC Transfer Date, and none of any interest payable in connection
with any of the foregoing, shall be used in the business and operations of WFFF
(it being intended that the operations of WPTZ and WNNE will not be used to fund
the operations of WFFF from and after the STC Transfer Date). Except as
expressly modified hereby, all other terms and conditions of the Asset Exchange
Agreement shall remain in full force and effect in accordance with their terms.
* * * * * * * * * *
<PAGE> 3
Dean H. Blythe
April 24, 1998
Page 3
Please acknowledge your understanding of and agreement with the
foregoing by signing this letter agreement in the spaces provided below.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
<PAGE> 4
Dean H. Blythe
April 24, 1998
Page 4
ACKNOWLEDGED AND AGREED:
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
------------------
Dean H. Blythe
Senior Vice President
ccs:David A. Fitz
Steven A. Hobbs
William S. Reyner, Jr.
<PAGE> 1
Exhibit 10.22
JOINT EXCHANGE AGREEMENT
This JOINT EXCHANGE AGREEMENT ("EXCHANGE AGREEMENT") is made as of this 2nd day
of July, 1998, by and among STC BROADCASTING, INC., a Delaware corporation ("STC
BROADCASTING"), STC BROADCASTING OF VERMONT, INC., a Delaware corporation and a
wholly-owned subsidiary of STC Broadcasting ("STCBV"), STC LICENSE COMPANY, a
Delaware corporation and wholly-owned subsidiary of STC Broadcasting ("STC
LICENSE COMPANY"), and STC BROADCASTING OF VERMONT SUBSIDIARY, INC., a Delaware
corporation and wholly-owned subsidiary of STCBV ("STCBV SUB"), SMITH
ACQUISITION COMPANY (d/b/a WNAC-TV), a Delaware corporation ("SAC"), SMITH
ACQUISITION LICENSE COMPANY, a Delaware corporation and wholly-owned subsidiary
of SAC ("SALC") (STC Broadcasting, STCBV, STC License Company, STCBV Sub, SAC
and SALC are collectively referred to herein as the "STC OWNERS"), HEARST-ARGYLE
STATIONS, INC., a Nevada corporation (the "HAT OWNER") and CHICAGO DEFERRED
EXCHANGE CORPORATION, 171 North Clark Street, Ninth Floor, Chicago, Illinois
60601-3294 ("EXCHANGOR").
WITNESSETH:
WHEREAS, the HAT Owner and certain of the STC Owners are parties to
that certain Asset Exchange Agreement, dated as of February 18, 1998, as
amended (the "STC/HAT EXCHANGE AGREEMENT") pursuant to which the HAT Owner and
such STC Owners agreed to exchange certain television broadcast stations; and
WHEREAS, the HAT Owner and the STC Owners desire to retain the
Exchangor as provided for herein in order to facilitate the exchanges
contemplated by the STC/HAT Exchange Agreement so that (a) all of the exchanges
by HAT under the STC/HAT Exchange Agreement shall be exchanges for other
property of like-kind and qualifying use within the meaning of Section 1031 of
the Internal Revenue Code (the "Code") and the Treasury Regulations promulgated
thereunder (the "Regulations"), and (b) certain of the exchanges by STC under
the STC/HAT Exchange Agreement shall be exchanges for other property of
like-kind and qualifying use within the meaning of Section 1031 of the Code and
the Regulations; and
WHEREAS, the HAT Owner owns the property legally described in Exhibit A
attached hereto, referred to herein as the "HAT RELINQUISHED PROPERTY," and
desires to exchange the HAT Relinquished Property, for other property of
like-kind and qualifying use within the meaning of Section 1031 of the Code and
the Regulations; and
WHEREAS, Exchangor desires to acquire the HAT Relinquished Property in
exchange for the property legally described in Exhibit B attached hereto, of
like-kind and qualifying use within the
<PAGE> 2
meaning of Section 1031 of the Code and the Regulations, referred to herein as
the "HAT REPLACEMENT PROPERTY"; and
WHEREAS, it is the intention of the HAT Owner that Exchangor, subject
to the terms and provisions of this Agreement and acting as a qualified
intermediary, shall acquire the HAT Relinquished Property and transfer it to
the STC Owners (as directed by the STC Owners), and shall acquire the HAT
Replacement Property and transfer it to the HAT Owner, as provided in the
QUALIFIED INTERMEDIARY SAFE HARBOR Regulations Section 1.1031(k)-1(g)(4);
WHEREAS, the STC Owners own the property legally described in Exhibit C
attached hereto, referred to herein as the "STC RELINQUISHED PROPERTY" and
desire to exchange the STC Relinquished Property for other property of
like-kind and qualifying use within the meaning of Section 1031 of the Code and
the Regulations; and
WHEREAS, Exchangor desires to acquire the STC Relinquished Property in
exchange for the property legally described in Exhibit D attached hereto, of
like-kind and qualifying use within the meaning of Section 1031 of the Code and
the Regulations, referred to herein as the "STC REPLACEMENT PROPERTY"; and
WHEREAS, it is the intention of the STC Owners that Exchangor, subject
to the terms and provisions of this Agreement and acting as a qualified
intermediary, shall acquire the STC Relinquished Property and transfer it to
the HAT Owner (as directed by the HAT Owner), and shall acquire the STC
Replacement Property and transfer it to the STC Owners (as directed by the STC
Owners), as provided in the QUALIFIED INTERMEDIARY SAFE HARBOR Regulations
Section 1.1031(k)-1(g)(4).
NOW, THEREFORE, in consideration of the mutual promises herein
contained, Owner and Exchangor agree as follows:
ARTICLE ONE
A. DESCRIPTION OF PROPERTIES
The parties hereto acknowledge and agree that (a) the HAT Relinquished
Property is comprised of all of the STC Replacement Property and certain
additional assets of the HAT Owner as described in the STC/HAT Exchange
Agreement, and (b) the HAT Replacement Property is comprised of all of the STC
Relinquished Property and certain additional assets of the STC Owners as
described in the STC/HAT Exchange Agreement.
B. ASSIGNMENT OF STC/HAT EXCHANGE AGREEMENT FOR RELINQUISHED
PROPERTY
1. HAT Owner agrees to transfer (as permitted in Regulations Section
1.1031(k)-1(g)(4)(iii)) the HAT Relinquished Property to Exchangor and
Exchangor agrees to acquire (as permitted in Regulations Section
1.1031(k)-1(g)(4)(iii)) the HAT Relinquished Property upon the
- 2 -
<PAGE> 3
terms and conditions set forth in this Exchange Agreement. The HAT Relinquished
Property shall be transferred to Exchangor subject to the right of the STC
Owners to acquire the HAT Relinquished Property pursuant to the STC/HAT
Exchange Agreement. The STC/HAT Exchange Agreement is attached hereto as
Exhibit E and is incorporated herein by reference.
2. HAT Owner agrees to assign to Exchangor all of the HAT Owner's
rights (but not its obligations) in the STC/HAT Exchange Agreement which relate
to the HAT Relinquished Property, and Exchangor agrees to accept assignment
from HAT Owner of HAT Owner's rights (but not its obligations) in the STC/HAT
Exchange Agreement which relate to the HAT Relinquished Property.
3. STC Owners agree to transfer (as permitted in Regulations Section
1.1031(k)-1(g)(4)(iii)) the HAT Replacement Property (including the STC
Relinquished Property) to Exchangor and Exchangor agrees to acquire (as
permitted in Regulations Section 1.1031(k)-1(g)(4)(iii)) the HAT Replacement
Property (including the STC Relinquished Property) upon the terms and
conditions set forth in this Exchange Agreement. The HAT Replacement Property
(including the STC Relinquished Property) shall be transferred to Exchangor
subject to the right of the HAT Owner to acquire the HAT Replacement Property
(including the STC Relinquished Property) pursuant to the STC/HAT Exchange
Agreement.
4. STC Owners agree to assign to Exchangor, all of the STC Owners'
rights (but not their obligations) in the STC/HAT Exchange Agreement which
relate to the HAT Replacement Property (including the STC Relinquished
Property), and Exchangor agrees to accept assignment from the STC Owners of the
STC Owners' rights (but not their obligations) in the STC/HAT Exchange
Agreement which relate to the HAT Replacement Property (including the STC
Relinquished Property).
5. Anything to the contrary contained in this Agreement
notwithstanding, immediately after the Property Closing Date, Exchangor agrees
to re-assign to HAT Owner all of the HAT Owner's remaining rights in the
STC/HAT Exchange Agreement which have been assigned to the Exchangor by the HAT
Owner, and HAT Owner agrees to accept reassignment from Exchangor of HAT
Owner's remaining rights in the STC/HAT Exchange Agreement.
Anything to the contrary contained in this Agreement
notwithstanding, immediately after the Property Closing Date, Exchangor agrees
to re-assign to STC Owners all of the STC Owners' remaining rights in the
STC/HAT Exchange Agreement which have been assigned to the Exchangor by the STC
Owners, and STC Owners agree to accept re-assignment from Exchangor of the STC
Owners' remaining rights in the STC/HAT Exchange Agreement.
C. ACKNOWLEDGMENTS
Subject to Paragraph B(5) of Article One, the STC Owners acknowledge
and agree that the HAT Owner's rights in the STC/HAT Exchange Agreement which
relate to the HAT Relinquished Property have been assigned to Exchangor.
Subject to Paragraph B(5) of Article One, the HAT Owner acknowledges and agrees
that the STC Owners' rights in the STC/HAT Exchange Agreement which relate to
the HAT Replacement Property (including the STC Relinquished
- 3 -
<PAGE> 4
Property) have been assigned to Exchangor. The parties further acknowledge and
agree that the Cash Consideration (as defined in the STC/HAT Exchange
Agreement) (i) shall not be transferred to the Exchangor, (ii) shall not be
included in the HAT Relinquished Property and/or the STC Replacement Property,
and (iii) shall be transferred directly from HAT Owner to the STC Owner
pursuant to the terms of the STC/HAT Exchange Agreement and consistent with
Regulation Section 1.1031(k)-1(g)(4)(vii). No consideration that is not like
kind property and that is allocable to the STC Relinquished Property will be
received by the STC Owners from Exchangor prior to receipt of the STC
Replacement Property.
ARTICLE TWO
A. EXCHANGE CONSIDERATION
In consideration for the transfer of the HAT Relinquished Property to
Exchangor by HAT Owner, Exchangor shall acquire the HAT Replacement Property
and transfer it to HAT Owner within the time period specified in Regulations
Section 1.1031(k)-1(b)(2)(ii). In consideration for the transfer of the HAT
Replacement Property (including the STC Relinquished Property) to Exchangor by
the STC Owners, Exchangor shall acquire the HAT Relinquished Property
(including the STC Replacement Property) and transfer it to the STC Owners
within the time period specified in Regulations Section 1.1031(k)-1(b)(2)(ii).
B. IDENTIFICATION OF REPLACEMENT PROPERTY
Pursuant to the terms and conditions hereof, (1) HAT owner hereby
identifies the property legally described in Exhibit B attached hereto as the
HAT Replacement Property, and (2) the STC Owners hereby identify the property
legally described in Exhibit D attached hereto as the STC Replacement Property.
Exchangor acknowledges and agrees that pursuant to the preceding sentence and
the terms and conditions of this Exchange Agreement: (1) HAT Owner has
identified the HAT Replacement Property in a manner described by Regulations
Sections 1.1031(k)-1(c)(1) and (2), and (2) STC Owners have identified the STC
Replacement Property in a manner described by Regulations Sections
1.1031(k)-1(c)(1) and (2).
C. ASSIGNMENT OF STC/HAT EXCHANGE AGREEMENT FOR REPLACEMENT PROPERTY
1. Subject to Paragraph B(5) of Article One, HAT Owner agrees to assign
to Exchangor, all of the HAT Owner's rights (but not its obligations) in the
STC/HAT Exchange Agreement which relate to the HAT Replacement Property within
the time period specified in Regulations Section 1.1031(k)-1(b)(2)(ii). It is
understood and agreed by HAT Owner that Exchangor shall be under no obligation
to execute or take assignment of any contract, or to do any other act or thing
contemplated by this Agreement or the STC/HAT Exchange Agreement without, in
each case, receiving a written instrument from HAT Owner in form and substance
satisfactory to Exchangor, which written instrument shall contain such
directions, releases, representations, warranties and indemnities as Exchangor
shall reasonably require.
- 4 -
<PAGE> 5
2. Subject to Paragraph B(5) of Article One, STC Owners agree to assign
to Exchangor, all of the STC Owner's rights (but not their obligations) in the
STC/HAT Exchange Agreement which relate to the HAT Relinquished Property
(including the STC Replacement Property) within the time period specified in
Regulations Section 1.1031(k)-1(b)(2)(ii). It is understood and agreed by the
STC Owners that Exchangor shall be under no obligation to execute or take
assignment of any contract, or to do any other act or thing contemplated by
this Agreement or the STC/HAT Exchange Agreement without, in each case,
receiving a written instrument from the STC Owners in form and substance
satisfactory to Exchangor, which written instrument shall contain such
directions, releases, representations, warranties and indemnities as Exchangor
shall reasonably require.
3. Subject to Paragraph B(5) of Article One, the STC Owners acknowledge
and agree that the HAT Owner's rights in the STC/HAT Exchange Agreement which
relate to the HAT Replacement Property have been assigned to Exchangor. Subject
to Paragraph B(5) of Article One, the HAT Owner acknowledges and agrees that
the STC Owners' rights in the STC/HAT Exchange Agreement which relate to the
HAT Relinquished Property (including the STC Replacement Property) have been
assigned to Exchangor.
D. ADVANCED OR LOANED FUNDS
In no event shall Exchangor be required to advance sums to purchase or
transfer the HAT Replacement Property or the STC Replacement Property.
E. EXCHANGOR FEE
As additional consideration for Exchangor's acquisition and transfer of
any Relinquished Property or any Replacement Property, Exchangor shall receive
an amount equal to $18,000. Exchangor shall also receive reasonable
compensation for any special services which may be rendered by Exchangor. Such
fees, charges and other compensation shall be paid to the Exchangor one-half by
the HAT Owner and one-half by the STC Owners.
ARTICLE THREE
A. PROPERTY CLOSING DATE
The Relinquished Property Closing and the Replacement Property Closing
shall take place on or about the date hereof (the "PROPERTY CLOSING DATE").
B. PROPERTY PRORATIONS
With respect to the HAT Relinquished Property (including the STC
Replacement Property), the same apportionments and adjustments shall be made as
of the Property Closing Date between the HAT Owner and Exchangor as are made
between Exchangor and the STC Owners pursuant to the STC/HAT Exchange
Agreement. With respect to the HAT Replacement Property (including the STC
Relinquished Property), the same apportionments and adjustments shall be made
as of the
- 5 -
<PAGE> 6
Property Closing Date between the STC Owners and Exchangor as are made between
Exchangor and the HAT Owner pursuant to the STC/HAT Exchange Agreement.
C. CLOSING ADJUSTMENTS
All adjustments and payments shall be made between the HAT Owner, STC
Owners and Exchangor as of the Property Closing Date, as appropriate, by either
(i) good and sufficient certified check of Exchangor or Owner, as the case may
be, drawn on a bank or banks which are members of the New York Clearing House,
(ii) official check or checks of such bank(s), or a combination of any such
checks, or (iii) wire transfer of immediately available funds.
D. DIRECT DEEDING
For purposes of this Exchange Agreement, a conveyance by HAT Owner to
Exchangor, or by Exchangor to HAT Owner, includes, respectively, a direct
conveyance from the HAT Owner to the STC Owners of the HAT Relinquished
Property (including the STC Replacement Property), or from the STC Owners of
the HAT Replacement Property (including the STC Relinquished Property) to HAT
Owner, at the direction of, and in satisfaction of the obligations of Exchangor
under this Exchange Agreement. The Exchangor shall for purposes of this
Exchange Agreement be considered to have acquired the HAT Relinquished Property
(including the STC Replacement Property) and transferred it to the STC Owners
and to have acquired the HAT Replacement Property (including the STC
Relinquished Property) and transferred it to the HAT Owner as provided by
Regulations Sections 1.1031(k)-1(g)(4)(iii) and 1.1031(k)-1(g)(4)(iv).
E. ACQUISITION OF REPLACEMENT PROPERTY
1. Exchangor agrees to proceed to acquire the HAT Replacement Property
by closing the acquisition of the HAT Replacement Property as of the Property
Closing Date, subject, however, at all times to all the terms of this Exchange
Agreement and the STC/HAT Exchange Agreement. HAT Owner acknowledges that in
connection with Exchangor's acquisition of the HAT Replacement Property,
Exchangor shall have the right to disclose to the STC Owners that Exchangor is,
and is only acting as, HAT Owner's qualified intermediary within the meaning of
the Regulations. HAT Owner shall indemnify and hold Exchangor harmless from any
and all liability to the STC Owners, except for any matters relating to the
willful misconduct or gross negligence of Exchangor. Exchangor shall transfer
to HAT Owner all HAT Replacement Properties prior to the end of the Closing
Date by direct deed from the STC Owners to HAT Owner.
2. Exchangor agrees to proceed to acquire the HAT Relinquished Property
(including the STC Replacement Property) by closing the acquisition of the HAT
Relinquished Property (including the STC Replacement Property) as of the
Property Closing Date, subject, however, at all times to all the terms of this
Exchange Agreement and the STC/HAT Exchange Agreement. STC Owners acknowledge
that in connection with Exchangor's acquisition of the HAT Relinquished
Property (including the STC Replacement Property), Exchangor shall have the
right to disclose to HAT Owner that Exchangor is, and is only acting as, STC
Owners' qualified intermediary within the meaning of the Regulations. STC
Owners shall indemnify and hold Exchangor harmless from any and all liability
to HAT Owner, except for any matters relating to the willful misconduct or
- 6 -
<PAGE> 7
gross negligence of Exchangor. Exchangor shall transfer to STC Owner all HAT
Relinquished Property (including the STC Replacement Properties) prior to the
end of the Property Closing Date by direct deed from the HAT Owner.
F. PARTIES INTENTIONS REGARDING "LIKE KIND" TREATMENT
The HAT Owner and STC Owners intend that the following exchanges of
assets pursuant to this Agreement and the STC/HAT Exchange Agreement shall
qualify as like-kind and qualifying use under Section 1031 of the Code and the
Regulations: (i) for the STC Owners, the exchange by the STC Owners of the STC
Relinquished Property for the STC Replacement Property, and (ii) for the HAT
Owner, the exchange by the HAT Owner of the HAT Relinquished Property for the
HAT Replacement Property. The parties acknowledge and agree that the exchange
by the STC Owners pursuant to this Agreement and the STC/HAT Exchange Agreement
of any HAT Replacement Property other than the STC Relinquished Property, is
not intended to qualify for the STC Owners as like-kind and qualifying use
under Section 1031 of the Code.
ARTICLE FOUR
A. ADVANCES AND INDEMNITIES
If for any reason whatsoever Exchangor shall make any payments or
advances or incur any expenses pursuant to this Exchange Agreement or the
STC/HAT Exchange Agreement, or shall incur any expenses by reason of being a
party to any litigation in connection with or arising out of any of the terms
and provisions of this Exchange Agreement or the STC/HAT Exchange Agreement,
whether as a tax, or for breach of contract, injury to person or property, or
fines or penalties under any law including, without limitation, under any
federal, state or local law with respect to environmental matters or hazardous
wastes, or otherwise, the STC Owners shall pay to Exchangor on demand, with
interest at the Default Rate (as hereinafter defined), the amount of all such
payments, advances or expenses made or incurred by Exchangor, plus all of
Exchangor's out-of-pocket expenses and attorneys' fees. Exchangor shall not be
obligated to pay any money under this Exchange Agreement or the STC/HAT
Exchange Agreement to prosecute or defend any legal proceeding involving this
Exchange Agreement or the STC/HAT Exchange Agreement unless it is furnished
with sufficient funds or is indemnified by the HAT Owner and the STC Owners to
Exchangor's satisfaction.
B. NO PERSONAL LIABILITY
HAT Owner and STC Owners hereby agree that Exchangor shall not be
required to assume or bear any personal obligation or liability in dealing with
any Relinquished Property, any Replacement Property, the STC/HAT Exchange
Agreement or to make itself liable for any damages, costs, expenses, fines or
penalties relating or arising out of such properties or agreements. Exchangor
shall not be liable for any loss, liability, expense or damage to any
Replacement Property occasioned by its acts or omissions in good faith and in
any event Exchangor shall be liable only for its own willful misconduct or
gross negligence, but not for honest errors of
- 7 -
<PAGE> 8
judgment. All contracts, agreements or other instruments executed by Exchangor
pursuant to this Exchange Agreement or the STC/HAT Exchange Agreement shall, as
to HAT Owner and STC Owners and any person claiming by, through or under HAT
Owner and STC Owners, be deemed to include a provision exculpating Exchangor
from any personal liability thereunder (other than by reason of Exchangor's
willful misconduct or gross negligence). STC Owners hereby agree that Exchangor
shall be held harmless and fully indemnified by STC Owners for acting on behalf
of the HAT Owner or STC Owners pursuant to the terms of this Exchange Agreement
or the STC/HAT Exchange Agreement (other than by reason of Exchangor's willful
misconduct or gross negligence) and this indemnity shall survive the
termination of this Exchange Agreement. HAT Owner's and STC Owners' designation
of Exchangor to act on HAT Owner's and STC Owners' behalf pursuant to the terms
of this Exchange Agreement is intended to conform to, and shall be construed in
a manner consistent with, Section 1031 of the Code and the Regulations
thereunder. STC Owners shall transfer such additional funds to Exchangor as
shall be necessary to protect Exchangor from any of the aforesaid liabilities
or to enable the Exchangor to complete the conveyances of any Relinquished
Property and any Replacement Property.
C. FAILURE OF REPLACEMENT PROPERTY
1. Notwithstanding anything to the contrary contained herein, Exchangor
shall not be in default under this Agreement and shall not be liable for any
damages, losses or expenses incurred by HAT Owner, if (i) Exchangor fails to
take any steps to locate or negotiate for HAT Replacement Property or borrow or
locate funds to acquire HAT Replacement Property, (ii) any HAT Replacement
Property fails to qualify as "like-kind" property, or (iii) the transaction
otherwise fails, for any reason, to afford HAT Owner the benefits of Section
1031 of the Code.
2. Notwithstanding anything to the contrary contained herein, Exchangor
shall not be in default under this Agreement and shall not be liable for any
damages, losses or expenses incurred by STC Owners, if (i) Exchangor fails to
take any steps to locate or negotiate for the HAT Relinquished Property
(including the STC Replacement Property) or borrow or locate funds to acquire
the HAT Relinquished Property (including the STC Replacement Property), (ii)
any STC Replacement Property fails to qualify as "like-kind" property, or (iii)
the transaction otherwise fails, for any reason, to afford STC Owners the
benefits of Section 1031 of the Code for the STC Relinquished Property and the
STC Replacement Property.
D. AUTHORITY
HAT Owner represents and warrants to Exchangor that HAT Owner is duly
authorized to enter into this Exchange Agreement and to consummate the proposed
transactions contemplated hereunder. STC Owners represent and warrant to
Exchangor that the STC Owners are fully authorized to enter into this Exchange
Agreement and to consummate the proposed transactions contemplated hereunder.
E. OWNER'S DUE DILIGENCE
1. Exchangor makes no representation or warranty that the exchange
contemplated by this Exchange Agreement or the STC/HAT Exchange Agreement
qualifies, in whole or in part as a
- 8 -
<PAGE> 9
like-kind exchange within the meaning of Section 1031 of the Code. HAT Owner is
solely responsible for all tax consequences arising out of this Exchange
Agreement or the STC/HAT Exchange Agreement. HAT Owner hereby represents to
Exchangor that it has obtained independent professional advice from an attorney
(or other advisor), who has reviewed this Exchange Agreement and associated
documents regarding federal, state and local tax, legal and practical
consequences of the transactions contemplated by this Exchange Agreement and
the STC/HAT Exchange Agreement, and HAT Owner expressly acknowledges and agrees
that HAT Owner is not relying on any advice of Exchangor with respect to any of
the matters set forth in this Exchange Agreement or as described under Section
1031 of the Code and the Regulations.
2. Exchangor makes no representation or warranty that the exchange
contemplated by this Exchange Agreement or the STC/HAT Exchange Agreement
qualifies, in whole or in part as a like-kind exchange within the meaning of
Section 1031 of the Code. STC Owners are solely responsible for all tax
consequences arising out of this Exchange Agreement or the STC/HAT Exchange
Agreement. STC Owners hereby represent to Exchangor that they have obtained
independent professional advice from an attorney (or other advisor), who has
reviewed this Exchange Agreement and associated documents regarding federal,
state and local tax, legal and practical consequences of the transactions
contemplated by this Exchange Agreement and the STC/HAT Exchange Agreement, and
STC Owners expressly acknowledge and agree that STC Owners are not relying on
any advice of Exchangor with respect to any of the matters set forth in this
Exchange Agreement or as described under Section 1031 of the Code and the
Regulations.
ARTICLE FIVE
NOTICES
Any notice, designation, consent, approval or other communication
required or permitted to be given pursuant to the provisions of this Exchange
Agreement ("NOTICE") shall be given in writing and shall be sent by certified
or registered mail, Federal Express, overnight courier, or telecopier,
addressed as follows:
- 9 -
<PAGE> 10
If to STC Owners:
STC Broadcasting, Inc.
3839 4th Street North, Suite 420
St. Petersburg, Florida 33703
Attn: David Fitz
Telephone: (813) 821-7346
Telecopier: (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
Attn: William S. Reyner, Jr., Esq.
Telephone: (202) 637-6510
Telecopier: (202) 637-5910
and to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7365
Telecopier: (214) 740-7355
If to HAT:
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, New York 10019
Attn: Dean H. Blythe
Telephone: (212) 649-2307
Telecopier: (212) 489-2314
with a copy (which shall not constitute notice) to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attn: Steven A. Hobbs
Telephone: (212) 878-8005
Telecopier: (212) 878-8375
- 10 -
<PAGE> 11
If to Exchangor:
Chicago Deferred Exchange Corporation
171 North Clark Street, Ninth Floor
Chicago, Illinois 60601-3294
Attn: Miriam Golden
Telephone: (312) 223-2931
Telecopier: (312) 223-3301
Either party may, by Notice given in accordance with the provisions of this
Article Six, designate any further or different address to which subsequent
Notices shall be sent pursuant to the provisions of this Exchange Agreement.
Any Notice shall be deemed to have been given on the date such Notice shall
have been delivered. If such delivery shall be made on a Saturday, Sunday or
holiday, said notice shall be deemed to have been given on the next succeeding
business day.
ARTICLE SIX
A. DEFAULT RATE
For purposes of this Exchange Agreement and where expressly set forth
herein, the term "Default Rate" shall mean the rate of interest then most
recently announced by First National Bank of Chicago, at Chicago, Illinois, as
its "prime rate" plus two percent (2%).
B. SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT
This Exchange Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors, and except as otherwise herein provided, their
assigns. This Exchange Agreement shall not be transferred or assigned by any
party hereto without the prior written consent of the other parties hereto and
any purported assignment in violation hereof shall be null and void. This
Exchange Agreement, including all exhibits attached hereto and documents to be
delivered pursuant hereto, shall constitute the entire agreement and
understanding of the parties and there are no other prior or contemporary
written or oral agreements, undertakings, promises, warranties or covenants not
contained herein.
C. GOVERNING LAW
This Exchange Agreement shall be governed by and construed under the
law of the State of Illinois. This Exchange Agreement shall not be recorded or
filed in the public records of the State of Illinois or any other government or
quasi-governmental body or office without prior written consent of Exchangor.
D. FIRPTA CERTIFICATION AND OTHER MATTERS
1. Owner hereby certifies under penalties of perjury that (i) HAT Owner
is not a "FOREIGN PERSON" as defined by Section 1445 of the Code and the
Regulations, (ii) HAT Owner's United States taxpayer identification number is
88-0326834, (iii) HAT Owner's address is
- 11 -
<PAGE> 12
1325 Airmotive Drive, Suite 130, Reno, Nevada, 89502, and (iv) HAT Owner is not
subject to backup withholding.
2. STC Owners hereby certify under penalties of perjury that (i) none
of the STC Owners is a "FOREIGN PERSON" as defined by Section 1445 of the Code
and the Regulations, (ii) each of the STC Owner's United States taxpayer
identification number is STC Broadcasting, Inc. - 75-2676358, STC License
Company - 75-2688654, Smith Acquisition Company - 75-2676359, Smith Acquisition
License Company - 75-2688660, (iii) each of the STC Owner's address is 3839 4th
Street North, St. Petersburg, Florida 33703 and (iv) each STC Owner is not
subject to backup withholding.
E. FURTHER ASSURANCES
Each of the parties hereto shall hereafter execute and deliver such
further instruments and do such further acts and things as may be required or
necessary to carry out the intent and purposes of this Exchange Agreement and
which are not otherwise inconsistent with any of the terms of this Exchange
Agreement.
F. RELATIONSHIP OF THE PARTIES
Nothing herein contained shall be construed or is intended to make
Exchangor, HAT Owner and STC Owners partners or joint venturers of or with one
another and this Exchange Agreement is not intended to and does not constitute
or result in a partnership agreement. This Exchange Agreement does not render
Exchangor liable for the debts or obligations of HAT Owner or STC Owners, and
Exchangor is acting solely on behalf of HAT Owner and STC Owners.
G. REMEDIES CUMULATIVE; WAIVER
All rights, remedies or privileges afforded the Exchangor shall be
deemed cumulative and not exclusive and the exercise of any one of such
remedies shall not be deemed to be a waiver of any other right, remedy or
privilege provided for herein or available at law or in equity. No failure by
Exchangor to exercise, or delay by Exchangor in exercising, any right, remedy
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy or privilege hereunder preclude any
other or further exercise thereof, or the exercise of any other right, remedy
or privilege. No notice to or demand on HAT Owner or STC Owners shall, in
itself, entitle HAT Owner or STC Owners to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the rights
of Exchangor under this Exchange Agreement.
H. THIRD PARTY BENEFICIARY
None of the provisions of this Exchange Agreement shall be for the
benefit of or enforceable by any creditor of the parties hereto or for the
benefit of or enforceable by any third party.
- 12 -
<PAGE> 13
I. SURVIVAL
The covenants and agreements contained in this Exchange Agreement,
including, without limitation, any indemnities contained herein shall survive
the termination of this Exchange Agreement and the consummation of the
transactions contemplated hereby. All representations, warranties, covenants
and agreements made herein or in any certificate or other document furnished to
a party hereto pursuant to or in anticipation of this Exchange Agreement shall
be deemed to have been relied upon by the party to whom such certificate or
other document is furnished notwithstanding any investigation heretofore or
hereafter made, and shall continue in full force and effect as long as there
remains unperformed any obligation hereunder.
J. ATTORNEY'S FEES
If Exchangor commences an action against or defends an action to
enforce any of the terms hereof or because of the purported breach of any of
the terms hereof, then Exchangor shall be entitled to receive from HAT Owner
and STC Owners full reimbursement of its attorneys' fees and other costs and
expenses incurred in connection with the prosecution or defense of such action.
K. LITIGATION AND OTHER DISPUTE RESOLUTION
The Circuit Court of Cook County, Illinois shall have non-exclusive
jurisdiction over any suit between the parties arising out of or in any way
relating to the subject matter of this Exchange Agreement. The parties hereby
consent to the jurisdiction of that court and waive any objection to venue in
that court. Moreover, the parties waive any right to trial by jury on any claim
or counterclaim with respect to any matter arising out of or in any way
relating to the subject matter of this Exchange Agreement.
L. FORCE MAJEURE
Exchangor shall not be liable to HAT Owner or STC Owners for any
failure or delay in performance if such failure or delay is occasioned by (i)
compliance with government regulation, request or order, or (ii) circumstances
beyond the reasonable control of Exchangor, including but not limited to, Act
of God, war, insurrection, fire, flood, earthquake, accident, strike or other
labor disturbance, interruption of or delay in transportation or power failure.
M. COUNTERPARTS
This Exchange Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
- 13 -
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto set their hand and seals as of
the day and year first above written.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
- 14 -
<PAGE> 15
SMITH ACQUISITION COMPANY
(d/b/a WNAC-TV)
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
SMITH ACQUISITION LICENSE COMPANY
By: /s/ David A. Fitz
--------------------------------
David A. Fitz
Chief Financial Officer
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
--------------------------------
Name: Dean H. Blythe
Title: Senior Vice President
CHICAGO DEFERRED EXCHANGE
CORPORATION
By: /s/ Miriam Golden
--------------------------------
Name: Miriam Golden
Title: Vice President
- 15 -
<PAGE> 16
EXHIBIT A
HAT RELINQUISHED PROPERTY
HAT Assets (as defined in the STC/HAT Exchange Agreement)
- 16 -
<PAGE> 17
EXHIBIT B
HAT REPLACEMENT PROPERTY
STC Assets (as defined in the STC/HAT Exchange Agreement)
- 17 -
<PAGE> 18
EXHIBIT C
STC RELINQUISHED PROPERTY
KSBW (as defined in the STC/HAT Exchange Agreement)
- 18 -
<PAGE> 19
EXHIBIT D
STC REPLACEMENT PROPERTY
WDTN (as defined in the STC/HAT Exchange Agreement)
- 19 -
<PAGE> 1
EXHIBIT 10.23
July 2, 1998
Dean H. Blythe
Senior Vice President
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, NY 10019
RE: ASSET EXCHANGE AGREEMENT (THE "ASSET EXCHANGE AGREEMENT"),
DATED AS OF FEBRUARY 18, 1998, AS AMENDED, BY AND AMONG STC
BROADCASTING, INC. ("STC BROADCASTING"), STC BROADCASTING OF
VERMONT, INC. ("STCBV"), STC BROADCASTING OF VERMONT
SUBSIDIARY, INC. ("STCBV SUB") AND STC LICENSE COMPANY ("STC
LICENSE COMPANY") (STC BROADCASTING, STCBV, STCBV SUB AND STC
LICENSE COMPANY SHALL BE COLLECTIVELY REFERRED TO HEREIN AS
THE "STC PARTIES") AND HEARST-ARGYLE STATIONS, INC. ("HAT")
Dear Dean:
This closing letter agreement (the "Letter Agreement") sets forth the
mutual understanding and agreement between the STC Parties, Smith Acquisition
Company ("SAC"), Smith Acquisition License Company ("SALC", and together with
SAC, the "Smith Parties") and HAT regarding certain matters in connection with
the Closing as of the date hereof under the Asset Exchange Agreement. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Asset Exchange Agreement.
1. CONSENT TO ASSIGNMENT BY STC. Pursuant to Section 12.6.1 of
the Asset Exchange Agreement (but subject to the terms and conditions of the QI
Agreement (as defined below)), STC hereby notifies HAT of, and HAT hereby
consents to, the assignment by STC of STC's rights, title and interest under the
Asset Exchange Agreement with respect to the (a) HAT Non-License Assets with
respect to WNAC and WPRI to SAC, and (b) HAT License Assets with respect to WNAC
to SALC. The STC Parties and the Smith Parties agree, jointly and severally, to
perform all obligations of the STC Parties under the Asset Exchange Agreement
with respect to WNAC and WPRI, subject to the limitations and conditions
contained therein, including but not limited to (i) the indemnification of HAT
pursuant to Section 10.2 of the Asset Exchange Agreement with respect to the HAT
Assets relating to WNAC and WPRI subject to the indemnification provisions of
Article X of the Asset Exchange Agreement, and (ii) the assumption of
liabilities and indemnification of HAT pursuant to Section 2.9 of the Asset
Exchange Agreement with respect to WNAC and WPRI (and their employees). HAT
hereby acknowledges and agrees that the Smith Parties shall have all the rights
of STC under Section 10.3 of the Asset Exchange Agreement with respect to the
HAT Assets relating to WNAC and WPRI subject to the indemnification provisions
of Article X of the Asset Exchange Agreement.
<PAGE> 2
Dean H. Blythe
July 2, 1998
Page 2
2. USE OF QUALIFIED INTERMEDIARY. The parties hereto acknowledge
and agree that in order to facilitate an orderly Closing under the Asset
Exchange Agreement the parties desire to use Chicago Deferred Exchange
Corporation ("Chicago") as the QI for certain of the transactions pursuant to
that certain Joint Exchange Agreement, dated as of the date hereof, (the "QI
Agreement") by and among the STC Parties, the Smith Parties, HAT and Chicago. In
connection with the use of the QI, the parties acknowledge and agree that the
following provisions of the Asset Exchange Agreement shall be amended:
(a) AMENDMENT TO RECITALS. The eleventh recital to the
Asset Exchange Agreement is hereby deleted in its entirety.
(b) TRANSFER BY THE STC EXCHANGE ENTITIES. Section 2.1 of
the Asset Exchange Agreement is hereby amended in its entirety to read as
follows:
"Subject to the terms and conditions of this Agreement and the QI
Agreement and in reliance upon the representations, warranties and agreements
contained herein, (a) STC Broadcasting shall assign, transfer, convey and
deliver to HAT free and clear of any Encumbrances other than Permitted
Encumbrances, and HAT shall acquire and accept from STC Broadcasting, all right,
title and interest of STC Broadcasting in, to and under all real, personal and
mixed assets, rights, benefits and privileges, both tangible and intangible,
owned, leased, used or useful by STC Broadcasting in connection with the
business and operations of the STC Stations other than the STC License Assets
(collectively, the "STC Non-License Assets") with respect to KSBW; (b) STCBV Sub
shall assign, transfer, convey and deliver to HAT free and clear of any
Encumbrances other than Permitted Encumbrances, and HAT shall acquire and accept
from STCBV Sub, all right, title and interest of STCBV Sub in, to and under all
STC Non-License Assets and all STC License Assets (the STC Non-License Assets
and the STC License Assets are collectively referred to herein as the "STC
Assets") with respect to WPTZ and WNNE; and (c) STC License Company shall
assign, transfer, convey and deliver to HAT free and clear of any Encumbrances
other than Permitted Encumbrances, and HAT shall acquire and accept from STC
License Company, all right, title and interest of STC License Company in, to and
under all STC License Assets with respect to KSBW. The STC Assets shall exclude
the STC Excluded Assets described in Section 2.4. STC Broadcasting, STCBV, STCBV
Sub, STC License Company, SAC and SALC are sometimes referred to herein as the
"STC Exchange Entities"."
(c) TRANSFER BY HAT. Section 2.2 of the Asset Exchange
Agreement is hereby amended in its entirety to read as follows:
"Subject to the terms and conditions of this Agreement and the QI
Agreement and in reliance upon the representations, warranties and agreements
contained herein, (a) HAT shall assign, transfer, convey and deliver to STC
Broadcasting free and clear of any Encumbrances other than Permitted
Encumbrances, and STC Broadcasting shall acquire and accept from HAT, all right,
title and interest of HAT in, to and under all real, personal
<PAGE> 3
Dean H. Blythe
July 2, 1998
Page 3
and mixed assets, rights, benefits and privileges, both tangible and intangible,
owned, leased, used or useful by HAT in connection with the business and
operations of the HAT Stations other than the HAT License Assets (collectively,
the "HAT Non-License Assets") with respect to WDTN; (b) HAT shall assign,
transfer, convey and deliver to STC (subject, however, to STC's right to assign
STC's rights under this clause (b), with the prior consent of HAT, to Smith
Acquisition Company (d/b/a WNAC-TV), a Delaware corporation ultimately
controlled by Robert N. Smith ("SAC")) free and clear of any Encumbrances other
than Permitted Encumbrances and STC (or SAC, if STC has assigned STC's rights to
SAC) shall acquire and accept from HAT, all right, title and interest of HAT in,
to the HAT Non-License Assets with respect to WNAC; (c) HAT shall assign,
transfer, convey and deliver to STC License Company free and clear of any
Encumbrances other than Permitted Encumbrances, and STC License Company shall
acquire and accept from HAT, all right, title and interest of HAT in, to and
under all HAT License Assets (the HAT License Assets and the HAT Non-License
Assets are collectively referred to herein as the "HAT Assets"; the STC Assets
and the HAT Assets are sometimes each individually referred to herein as
"Assets") with respect to WDTN; and (d) HAT shall assign, transfer, convey and
deliver to STC (subject, however, to STC's right to assign STC's rights under
this cause (d), with the prior written consent of HAT, to Smith Acquisition
License Company, a Delaware corporation ultimately controlled by Robert N. Smith
("SALC")), free and clear of any Encumbrances other than Permitted Encumbrances
and STC (or SALC, if STC has assigned STC's rights to SALC) shall acquire and
accept from HAT, all right, title and interest of HAT in, to the HAT License
Assets with respect to WNAC. The HAT Assets shall exclude the HAT Excluded
Assets described in Section 2.4."
(d) EXCHANGE OF ASSETS. Section 2.5.1 of the Asset
Exchange Agreement is hereby amended in its entirety to read as follows:
"Subject to the terms and conditions of the QI Agreement and for and in
consideration of the conveyance of the STC Assets to HAT and in addition to the
assumption of Liabilities by HAT as set forth in Section 2.10, at the Closing
HAT agrees to (a) transfer to STC Broadcasting the HAT Non-License Assets with
respect to WDTN and transfer to Smith Acquisition Company the HAT Non-License
Assets with respect to WNAC and WPRI, as provided for in Section 2.2, (b)
transfer to STC License Company the HAT License Assets with respect to WDTN and
transfer to Smith Acquisition License Company the HAT License Assets with
respect to WNAC, as provided for in Section 2.2, and (c) pay to STC by wire
transfer of immediately available funds to an account designated by STC the
amount of Twenty-One Million Three Hundred Sixty-Six Thousand Six Hundred and
Fifty Dollars ($21,366,650) (the "Cash Consideration"), less (i) any Burlington
Financing Amount which is not repaid by STCBV Sub as of the Closing Date, and
(ii) plus any adjustments, if any, with respect to the ABC Affiliation Agreement
as described in Section 7.5."
(e) ASSIGNMENT OF THE SINCLAIR DOCUMENTS. Section 2.11.2
of the Asset Exchange Agreement is hereby amended in its entirety to read as
follows:
<PAGE> 4
Dean H. Blythe
July 2, 1998
Page 4
"At the Closing, STCBV Sub agrees to assign to HAT all of STCBV Sub's
right, title and interest in, to and under the Sinclair Documents that relate to
WPTZ, WNNE and any assets related thereto (but not including the assets of
WFFF). In the event that any such rights and interests are not assignable, STC
shall use commercially reasonable efforts (a) to provide HAT the financial and
business benefits HAT would have enjoyed had such rights and interests been
assignable as of the date hereof, and (b) upon the request of HAT, to enforce in
STCBV Sub's name for the account of HAT any rights that would otherwise have
been available to HAT had the rights and interests under the Sinclair Documents
been assignable as of the date hereof."
(f) WFFF TBA. Section 2.11.3 of the Asset Exchange
Agreement is hereby amended by deleting the second and third sentences thereof.
(g) LIKE-KIND EXCHANGE TREATMENT. Section 6.12.2 is
hereby amended in its entirety to read as follows:
"The parties intend that the following exchanges of Assets pursuant to
this Agreement shall qualify as "like kind" exchanges under Section 1031 of the
Code: (a) for the STC Exchange Entities, the exchange by the STC Exchange
Entities of KSBW for WDTN, and (b) for HAT, the exchange by HAT of the HAT
Assets for the STC Assets. The parties acknowledge and agree that the exchange
by the STC Exchange Entities of WNNE and WPTZ for any of the HAT Assets is not
intended to qualify for the STC Exchange Entities as a "like kind" exchange
under Section 1031 of the Code."
(h) ELECTION OF A QUALIFIED INTERMEDIARY. Section 6.12.5
of the Asset Exchange Agreement is hereby amended in its entirety to read as
follows
"HAT acknowledges and agrees that the STC Exchange Entities have
elected to facilitate the exchanges contemplated by this Agreement by the use of
a "qualified intermediary" as defined in Treas. Reg. (S)1.1031(k)-1(g)(4) (the
"QI") for purposes of engaging in the exchange of the HAT Assets and the STC
Assets. Both HAT and the STC Exchange Entities agree at Closing (but immediately
prior to the consummation of the exchange of Assets contemplated in Article II)
to assign such party's rights in respect of such party's Assets (other than the
Cash Consideration) under this Agreement to the QI (but such assignment shall
not relieve any party of such party's obligations under this Agreement and such
assignment shall be conditioned upon the QI re-assigning such rights to such
party immediately after the consummation of the exchange of Assets contemplated
by Article II). Each party shall cooperate with all reasonable requests of the
other party and the QI in arranging and effecting the transfer of the Assets to
and from the QI. Without limiting the generality of the foregoing, at Closing,
each of the STC Exchange Entities and HAT agree to comply with the terms and
conditions of the QI Agreement and to (i) deliver such party's Assets (other
than the Cash Consideration) to the QI rather than to the other party (which
<PAGE> 5
Dean H. Blythe
July 2, 1998
Page 5
delivery shall discharge the obligation of such party to make delivery of the
Assets hereunder), and (ii) to accept delivery of the other party's Assets from
the QI rather than from the other party."
3. PRORATION DETERMINATION DATE; NO PRORATION FOR WPTZ AND WNNE.
Notwithstanding anything to the contrary set forth in Section 2.6 of the Asset
Exchange Agreement or otherwise, STC and HAT acknowledge and agree that (i) the
date and time to be used for calculating the Proration Amount under Section 2.6
of the Purchase Agreement shall be June 1, 1998 at 12:01 AM with respect to the
Closing under the Asset Exchange Agreement on the date hereof, and (ii) there
shall be no Proration Amount calculated by STC for WPTZ and WNNE and there shall
be no proration adjustment for WPTZ and WNNE.
4. CERTAIN FINANCIAL ARRANGEMENTS FOR WDTN AND KSBW. In order to
facilitate an orderly transition of KSBW to HAT and WDTN to STC, the parties
acknowledge and agree that the date and time to be used for calculating the
Accounts Receivable for KSBW and WDTN for purposes of Section 2.7 of the Asset
Exchange Agreement shall be June 1, 1998 at 12:01 AM (the "Accounts Receivable
Transfer Date") with respect to the Closing under the Asset Exchange Agreement
on the date hereof. The parties further acknowledge and agree that any cash or
other revenue collected during the period between the Accounts Receivable
Transfer Date and the date hereof (the "Interim Period") shall be allocated
between the parties as follows: (a) STC shall receive the benefit of all cash or
other revenue received with respect to WDTN during the Interim Period, and (b)
HAT shall receive the benefit of all cash or other revenue received with respect
to KSBW during the Interim Period. Consequently, each of HAT and STC shall
receive an adjustment to the Base Purchase Price for such cash collected by HAT
and STC, respectively, during the Interim Period as provided for in that certain
Settlement Statement and Agreement Regarding Flow of Funds, dated as of the date
hereof, by and among the STC Exchange Entities and HAT (the "Settlement
Statement"). The parties further acknowledge and agree that (a) any accounts
payable relating to the operation of WDTN in the ordinary course of business
consistent with past practice, up to and including May 31, 1998, shall be paid
by HAT, and any accounts payable relating to the operation of WDTN in the
ordinary course of business consistent with past practice on or after June 1,
1998 shall be paid by STC, unless otherwise provided for in the Proration Amount
for WDTN, and (b) any accounts payable relating to the operation of KSBW in the
ordinary course of business consistent with past practice, up to and including
May 31, 1998, shall be paid by STC, and any accounts payable relating to the
operation of KSBW in the ordinary course of business consistent with past
practice on or after June 1, 1998 shall be paid by HAT, unless otherwise
provided for in the Proration Amount for KSBW.
<PAGE> 6
Dean H. Blythe
July 2, 1998
Page 6
5. CERTAIN FINANCIAL ARRANGEMENTS FOR WNAC AND WPRI. In order to
facilitate an orderly transition of WNAC and WDTN to SAC, the parties
acknowledge and agree that all amounts payable under the Clear Channel
Agreements in respect of the period on or after June 1, 1998 shall be for the
benefit and account of SAC.
6. TERMINATION AND RELEASE UNDER STCBV SUB/HAT CREDIT AGREEMENT.
The parties acknowledge and agree that the transfer of funds on the date hereof
in accordance with the Settlement Statement constitutes full, satisfactory and
complete performance of all obligations of the parties under the Credit
Agreement dated as of April 24, 1998 by and between STCBV Sub and HAT (the
"Credit Agreement"), specifically including but not limited to the obligations
of full repayment of principal and payment of all interest by STCBV Sub; and
that, subject only to such transfer of funds, as of the date hereof, there are
no further obligations or performances of any kind required of either STC or HAT
under the Credit Agreement. The parties acknowledge that, subject only to the
transfer of such funds on the date hereof described in the preceding sentence,
this shall act as a full and complete release of any and all further obligation
under the Credit Agreement or any other document or agreement executed in
connection therewith. HAT further acknowledges and agrees that upon receipt of
the amounts payable to HAT as provided for in the Settlement Statement, HAT
shall immediately release the Note (as defined in the Credit Agreement) and any
securities pledged in connection therewith and deliver the same by overnight
courier to counsel for STC.
7. COBRA MATTERS FOR HAT TERMINATED EMPLOYEES. The parties
acknowledge and agree that notwithstanding the terms and conditions of the Asset
Exchange Agreement, STC agrees to make available to any Non-Transferred Employee
of WDTN the option to obtain COBRA benefits from the HMO plan which STC offers
to other Designated Employees at WDTN; provided, however, STC shall not be
required to provide such COBRA benefits if the provision of such COBRA benefits
would result in any material adverse economic effect to STC. The parties further
acknowledge and agree that STC shall not be obligated to provide the COBRA
benefits described in the preceding sentence for more than twelve (12) months
after the date hereof.
8. ENVIRONMENTAL MATTERS. The parties acknowledge and agree that
certain environmental remediation required at WDTN and KSBW under Section 6.17
of the Agreement have not been completed as of the date hereof. Each of HAT and
STC agrees to use its best efforts to complete the environmental remediation
described in Section 6.17 as promptly as possible, but in no event later than
ninety (90) days after the date hereof.
<PAGE> 7
Dean H. Blythe
July 2, 1998
Page 7
9. DEFERRED REAL PROPERTY. The parties acknowledge and agree that
as of the date hereof HAT has been unable to transfer and convey that certain
parcel of unimproved real property located in the town of Rehoboth, Bristol
County, Massachusetts consisting of approximately 18.98 acres, as is more
particularly described on Schedule 2.3.2 of the HAT Disclosure (the "Deferred
Real Property") and for which the current title holder of record is Rhode Island
Broadcasting Corporation ("RIBC"). From and after the date hereof, HAT agrees to
use its best efforts to purchase the Deferred Real Property from RIBC and
transfer and convey the Deferred Real Property to SAC and in accordance with the
terms and conditions of the Asset Exchange Agreement. If HAT has not transferred
the Deferred Real Property to SAC on or prior to the one hundred and eightieth
(180th) day after the date hereof, HAT shall immediately pay to SAC the amount
of $103,000 as liquidated damages for HAT failing to transfer and convey the
Deferred Real Property to SAC, upon such payment, and HAT shall not be obligated
to transfer the Deferred Real Property to SAC.
10. MISCELLANEOUS. Except as expressly modified hereby, all other
terms and conditions of the Asset Exchange Agreement shall remain in full force
and effect in accordance with their terms.
* * * * * * * * * *
<PAGE> 8
Dean H. Blythe
July 2, 1998
Page 8
Please acknowledge your understanding of and agreement with the
foregoing by signing this Letter Agreement in the spaces provided below.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC LICENSE COMPANY
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
STC BROADCASTING OF VERMONT
SUBSIDIARY, INC.
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
<PAGE> 9
Dean H. Blythe
July 2, 1998
Page 9
SMITH ACQUISITION COMPANY (d/b/a
WNAC-TV)
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
SMITH ACQUISITION LICENSE COMPANY
By: /s/ David A. Fitz
-----------------
David A. Fitz
Chief Financial Officer
ACKNOWLEDGED AND AGREED:
HEARST-ARGYLE STATIONS, INC.
By: /s/ Dean H. Blythe
------------------
Dean H. Blythe
Senior Vice President
ccs: David A. Fitz
Steven A. Hobbs
William S. Reyner, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF STC BROADCASTING, INC. FOR THE SIX MONTHS ENDED
JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,998,000
<SECURITIES> 0
<RECEIVABLES> 14,120,000
<ALLOWANCES> 451,000
<INVENTORY> 0
<CURRENT-ASSETS> 26,158,000
<PP&E> 54,724,000
<DEPRECIATION> 4,974,000
<TOTAL-ASSETS> 327,774,000
<CURRENT-LIABILITIES> 71,650,000
<BONDS> 124,500,000
34,728,000
0
<COMMON> 10
<OTHER-SE> 64,012,000
<TOTAL-LIABILITY-AND-EQUITY> 327,774,000
<SALES> 28,327,000
<TOTAL-REVENUES> 28,327,000
<CGS> 16,814,000
<TOTAL-COSTS> 28,614,000
<OTHER-EXPENSES> (61,000)
<LOSS-PROVISION> 70,000
<INTEREST-EXPENSE> 7,331,000
<INCOME-PRETAX> 7,546,000
<INCOME-TAX> 5,072,000
<INCOME-CONTINUING> 2,474,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,474,000
<EPS-PRIMARY> 2,474
<EPS-DILUTED> 2,474
</TABLE>
